MMC Marsh and McLennan Companies Inc

As per media release, Marsh & McLennan (MMC) is set to buy a minority stake in Bermuda-based investment management company, Juniperus Capital, offering hedge funds for catastrophe reinsurance and insurance-linked securities. The terms of the deal remained undisclosed.

With Marsh investing in Juniperus Capital, the company looks to diversify its management team along with Aquiline Capital Partners, who also became a stakeholder in the company earlier this year and is also a private equity provider for Juniperus Capital.

Now with Marsh & McLennan on board, Juniperus Capital intends to develop a dynamic and an alternative structure of fund offering for its investors, which otherwise caters to the capital market with catastrophe bonds and other insurance products.

Juniperus will offer two to three “Commingled Fund” and other managed accounts to its investors. Added to this, they also wish to blend in the pension funds in the Commingled Fund and eventually convert them to managed-accounts over the years after being adept at the reinsurance business.

Earlier, the company acquired Alexander Forbes, a South Africa-based broking firm. These recent acquisitions are of immense significance for Marsh & McLennan. The company confronted certain antitrust litigation charges in recent times.

We also expect Marsh & McLennan to remain focused on generating new business opportunities in order to counter the low pricing environment. However, improved earnings, steady cash flow and an excellent expense management continues to be a growth driver for the company.

Aon Corp. (AON), an arch rival of Marsh & McLennan, acquired an 80% stake in GDS insurance broker in January 2012 and plans to take over the remaining stake soon. It also entered into an agreement with La Caixa and Banca March, a stakeholder in GDS and will eventually become a partner in Aon Corp to support the company’s growth strategies.

Marsh & McLennan is scheduled to release its first quarter earnings on May 1, 2012. The Zacks Consensus Estimate is pegged at 61 cents, reflecting a year-over-year increase of 9.2%.

We retain our long term Neutral recommendation on Marsh & McLennan. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.

 
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