Expanding its employee benefit coverage,
Marsh & McLennan Companies Inc.
) Marsh & McLennan Agency LLC (MMA) announced the acquisition
of South Carolina-based employee-benefit oriented services provider
Rosenfeld Einstein. However, the terms and financials details of
the agreement are not divulged. MMA is a subsidiary of MMC's
leading insurance brokerage wing - Marsh Inc.
Accordingly, Rosenfeld Einstein will function as a part of
Rutherfoord, a wing of MMA, to extend the capabilities and
resources of property-casualty (P&C) and employee benefits in
Southeast and mid-Atlantic regions. Armed with 55 employees and
annual revenues worth $9 million, Rosenfeld Einstein has been in
operations since 1933 and enjoys an authentic standing for its
prompt specialty services.
On the other hand, the latest acquisition is another attempt by
Marsh & McLennan to consolidate its manpower resources in order
to expand its clientele. The company also aims to stretch its
business dimensions and gain competitive edge by providing a broad
suite of products that suit the customers' needs and evade complex
Increasing Horizons Inorganically
MMA is pursuing consistent expansion through inorganic growth.
Earlier this year, MMA acquired Progressive Benefit
Solutions,Security Insuranceand Eidson Insurance, which was
preceded by the acquisitions of the employee benefits
division of Kaeding, Seitlin Insurance, Ernst & Co. and
Gallagher Associates Inc. in November last year.
Following the acquisition of Rosenfeld Einstein, MMA has
acquired about 21 firms since November 2009, which include Prescott
Pailet Benefits LP (PPB), Insurance Alliance, The NIA Group, Haake
Cos., Thomas Rutherfoord Inc., Bostonian Group and Kinloch
These acquisitions have also enabled MMA to generate about $380
million in annualized revenue. The acquisitions are a part of MMA's
long-term growth strategy to build a national platform that serves
the P&C insurance and employee benefits needs of the companies
across the US.
Further, after the successful asset disposition of its redundant
Kroll and Putnam units in 2010, the acquisitions bode well for the
overall restructuring of Marsh & McLennan. The acquisition is
also crucial for new business generation and client retention,
which faces substantial declines due to the company's antitrust
litigation charges coupled with a soft-pricing environment.
However, despite the acquisition related costs, Marsh &
McLennan posted impressive results in the first half of 2012 on
account of top-line growth in all lines of businesses and higher
investment income. Even lower operating and tax expenses supported
margin growth. In addition, a stable outlook affirmation from the
ratings agencies boosts the optimism about Marsh & McLennan's
credibility and operating leverage.
While the company is able to concentrate on its core
efficiencies, Marsh & McLennan's unutilized $1.0 billion
revolving credit facility along with expected tax benefits in the
upcoming quarters shall provide cushion to the company's liquidity,
thus eliminating any significant risk from the company's financial
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. Despite
the sluggish organic growth, the company is still a dominant player
in its industry, quite next to the leading
Currently, Marsh & McLennan carries a long-term Neutral
recommendation and a Zacks Rank #3, which translates into a
short-term Hold rating.
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