Marsh & McLennan Buys Kinker-Eveleigh - Analyst Blog

Fortifying its roots in the U.S., Marsh & McLennan Companies Inc.'s MMC Marsh & McLennan Agency LLC (MMA) announced the acquisition of Ohio-based Kinker-Eveleigh Insurance Agency. However, the value and terms and conditions of the buyout were not disclosed.

MMA is a subsidiary of Marsh & McLennan's leading insurance brokerage wing – Marsh Inc. Following the announcement, the stock price of Marsh & McLennan gained 0.7% and closed at $48.93 on May 9.

Armed with annual revenues of $3.5 million, Kinker-Eveleigh is operational in the Midwest hub of the U.S. for about 95 years now. The agency specializes in property-casualty (P&C) and employee benefit solutions as well as offersexcellent market expertiseto its superior clientele.

Meanwhile, the acquisition will enable Kinker-Eveleigh to maintain its existing business model and work culture, while also add to Marsh & McLennan's technical expertise and vast resources that were inaccessible to the firm until now.

On the other hand, this deal will help Marsh & McLennan to expand its insurance brokering coverage by consolidating individual outperforming agencies across the Midwest of the U.S. Backed by the same intention, the company had also acquired Michigan-based Cambridge Property & Casualty in Dec 2013.

Outlook

Marsh & McLennan boasts a history of well-aligned strategic growth through acquisitions. This is also reflected in the company's consistent financials in the past quarters. Additionally, a healthy balance-sheet and adequate liquidity not only eliminates significant risks from debt leverage, but also positions Marsh & McLennan as one of the dominant industry players.

These factors project an optimistic growth outlook for the company in the future. The Zacks Consensus Estimate for 2014 and 2015 currently pegged at $2.79 and $3.13 reflect year-over-year growth of 12.7% and 11.9%, respectively.

Moreover, the Most Accurate Estimate for Marsh & McLennan's 2014 and 2015 earnings stands at $2.80 and $3.15 a share, resulting in an Earnings ESP of +0.4% and +0.6%, respectively.

Other Stocks to Consider

Along with Marsh & McLennan, stocks in the same sector such as Aon Plc AON, Erie Indemnity Co. ERIE and Arthur J. Gallagher & Co. AJG also bear a Zacks Rank #2 (Buy) and are worth reckoning.