Marsh & McLennan Companies Inc.’s (MMC) leading insurance brokerage wing – Marsh Inc. has announced the purchase of Montana-based flood insurance specialist – Torrent Technologies Inc. The move serves to shore up the company’s presence in the flood insurance market. Notably, the terms and value of the deal were not revealed.
Armed with a staff strength of 100 employees, Torrent Technologies offers a complete range of products and services to cover flood insurance. The firm also provides services to theWrite Your Own (WYO) insurers, who participate in the National Flood Insurance Program (NFIP), through its efficient cloud-based technology that enables paperless claims management and web-based pricing techniques in minimum time.
Post-acquisition, Marsh & McLennan plans to merge Torrent Technologies with Marsh’s flood insurance operations. Both the merged firms project to form a Flood Center of Excellence, which will accentuate their combined flood insurance capabilities.
With this acquisition, Marsh will have made about 46 acquisitions in the insurance brokerage space since Nov 2009, thereby amplifying its scale and size of business. Conversely, Marsh & McLennan maintains low capital requirements despite steady investments in acquisitions. Such strategic acquisitions not only generate new clients but also enhance its competitive edge in the market, thereby triggering growth.
Overall, we believe that with a history of outpacing its peers, Marsh & McLennan has a strong potential to outperform, banking on its size, diverse product offering, global presence and technical expertise. Despite sluggish organic growth due to tough macro factors, Marsh & McLennan is a dominant player in its industry. Going forward, a stable economy and improvement in the insurance cycle should help boost the company’s growth profile.
Investors interested in the financial sector could consider stocks like Blue Capital Reinsurance Holdings Ltd. (BCRH), Validus Holdings Ltd. (VR) and Erie Indemnity Co. (ERIE).
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