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Marsh & McLennan's (MMC) Unit Purchases Pelnik Insurance

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Marsh & McLennan Companies’ MMC unit Marsh McLennan Agency (MMA) recently announced the buyout of Pelnik Insurance, a leading independent agency in North Carolina. MMA is a subsidiary of Marsh, which is a leader in insurance brokering, providing risk management, insurance and reinsurance broking and insurance program management services across public and private entities. However, terms of the deal were kept under wraps.

Pelnik Insurance was found in 1994 and provides business insurance, employee health and benefits, and private client services to midsize businesses and individuals in the Mid-Atlantic.

MMA will be able to boost its capabilities with this latest addition. It looks forward to expanding its reach and widen its client offerings in the North Carolina region. The unit has been making concerted efforts for a while to bolster its presence in various regions.

The company recently completed the purchase of Vaaler Insurance, Inc., which is one of the largest independent agencies in North Dakota.

Inorganic Growth Story

Acquisitions form one of the core growth strategies at this currently Zacks Rank #3 (Hold) company. The leading insurance broker made numerous purchases within its different operating units that enabled it to enter new geographies, expand within the existing locations, foray into new businesses, develop new segments and specialize within its current businesses. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It continued to build its arm Marsh & McLennan Agency LLC (MMA) through buyouts. The year 2020 marked a record phase for MMA with regard to acquired revenues since its establishment in 2009. MMA completed eight transactions last year fetching combined revenues of around $235 million. Marsh is steadily contributing to growth of the Risk and Insurance Services segment.

In the first nine months of 2021, revenues from this business segment amounted to $9 billion, up 15.8% from the year-ago figure in the comparable period, on an underlying basis.

On Apr 1, 2021, the company bought PayneWest, one of the largest independent agencies in the United States. The Risk and Insurance Services segment also acquired The Pryor Group, LLC, a Texas-based full-service broker providing business insurance with a specialty in quick service restaurants and the personal lines of franchise owners.

Shares of the company have gained 46% in a year's time, outperforming its industry's growth of 30.8%.

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Other Buyouts in the Insurance Broker Space

This industry is known for acquiring to boost respective company portfolios. Last month, Arthur J. Gallagher & Co.’s AJG specialist underwriting subsidiary Pen Underwriting acquired Manchester Underwriting Agencies Limited and its wholly-owned subsidiary Manchester Underwriting Management Limited (MUM). Also, Willis Towers Watson plc WLTW inked an initial, non-binding deal to acquire Leaderim to strengthen its presence in Israel.

Brown & Brown BRO purchased Remedy Analytics to boost its product portfolio.

The traditionally fragmented industry is well-poised for growth on the back of a slew of M&A activities taken up by the leading players.


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