Focusing on growth through acquisitions,
Marsh & McLennan Companies Inc.
) leading insurance brokerage wing - Marsh Inc. - announced its
intention to purchase a leading insurance advisor in the
Dominican Republic - Franco & Acra Tecniseguros. While the
terms of deal remain undisclosed, it is expected to culminate
later this month.
The intention to buy Franco & Acra Tecniseguros stems from
its longstanding alliance with Marsh, whereby the former
continues to Marsh's franchise broker since 1977. However, post
acquisition Franco & Acra Tecniseguros will operate under
Marsh's brand name.
The deal complements Marsh & McLennan's strategy of
expansion into potentially strong markets through mergers and
acquisitions. Moreover, Dominican Republic is among the leading
economies of the Caribbean region and lays ample growth
opportunities for Marsh & McLennan.
Additionally, Franco & Acra Tecnise will bring a strong
management team with a comprehensive understanding of the local
market. This will be an added advantage for Marsh.
Through such acquisitions, Marsh & McLennan has expanded
its operations in over 100 countries globally. Last month, Marsh
acquired Peru-based insurer - Rehder y Asociados Group. The
latest acquisition substantiates the company's efforts to enhance
manpower resources in order to expand clientele.
Despite the acquisition-related costs, Marsh & McLennan
posted impressive results in first quarter 2013 based on modest
growth at Marsh, Guy Carpenter and Mercer; coupled with lower
expenses that drove the top line and operating margin. Even the
unutilized $1.0 billion revolving credit facility shall provide
cushion to the company's liquidity, thereby eliminating any
significant risk from the company's financial leverage.
Overall, as a leading global broker, Marsh & McLennan has
a history of outperforming its peers banking on its size, diverse
product offering, global presence and technical expertise. We
believe that the company has the ability to remain focused on
this growth approach with a prudent management, thereby driving
the earnings in the future as well.
While Marsh & McLennan carries a Zacks #3 Rank (Hold),
other outperformers in the financial services industry include
Validus Holdings Ltd.
Platinum Underwriters Holdings Ltd.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
MARSH &MCLENNAN (MMC): Free Stock Analysis
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VALIDUS HOLDING (VR): Free Stock Analysis
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