Marsh & McLennan Companies Inc.’s (MMC) leading insurance brokerage wing – Marsh Inc. announced the purchase of Belgium’s leading credit insurance distributor –Trade Insure NV – for undisclosed terms and value.
Based in Aalst, Belgium, Trade Insure will operate in coordination with Marsh’s stables in Brussels, Antwerp, Roeselare, Liège and Luxembourg under the banner of ‘Marsh Trade Insure’, thereby covering the major markets of Europe. Marsh & McLennan has also absorbed all the staff of Trade Insure with the acquisition.
Founded in 1990, Trade Insure is armed with $40 million in annual premiums along with a base of 500 clients, which ranges from small and medium enterprises to large multinationals. The insurance firm enjoys the largest 20% market share in Belgium, offering credit insurance that protects against risks entailing higher operating and borrowing costs as well as bad debts, thereby improving cash flow and funds for its businesses.
Our Take
The deal appears a sound strategic fit for Marsh & McLennan as it blends well the company’s long-term objective of expansion and growth across global markets. Moreover, including the latest one, Marsh will have made over 60 acquisitions in the insurance brokerage space since Nov 2009, thereby amplifying its scale and size of business.
Despite sluggish organic growth due to tough macro factors, Marsh & McLennan has been a dominant player in its industry.Overall, we believe that with a history of outpacing its peers, Marsh & McLennanhas a strong potential to outperform in the future as well, banking on its size, diverse product offering, global presence and technical expertise. Even the company’s long-term growth rate is pegged at 12.6%, above the peer group average of 11.3%.
Zacks Rank
Marsh & McLennan carries a Zacks Rank #2 (Buy). Some similar-ranked stocks in the insurance brokerage sector like Aon Plc (AON), Platinum Underwriters Holdings Ltd. (PTP) and eHealth Inc. (EHTH) are also worth considering.
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