(Reuters) -Insurance brokerage Marsh McLennan (NYSE:) said on Monday it has agreed to buy smaller rival McGriff Insurance Services for $7.75 billion, as the industry gears up for higher spending on policies from businesses amid an improving economic outlook.
Wage growth and increasing expectations of a soft-landing have allowed companies across different sectors to revive spending on insurance policies despite higher prices, boosting commissions earned by brokerages tied to the premiums insurers charge.
Marsh said it expects the deal to enhance its capabilities across commercial property and casualty, employee benefits, management liability and personal insurance lines.
Founded in 1886, McGriff is an affiliate of TIH Insurance Holdings and a provider of insurance broking and risk management services in the U.S.
The company generated $1.3 billion in revenue for the trailing 12 months ended June 30, 2024. Its coverage also includes corporate bonding and surety services, cyber and title insurance, among others.
Marsh said it expects the cash deal, struck through its Marsh McLennan Agency business, to close by the end of the year. It would be funded by a combination of cash and proceeds from debt financing.
In conjunction with the deal, Marsh said it will assume a deferred tax asset valued at about $500 million.
Its shares were last trading flat before the bell. The stock has gained about 18% so far this year, while the benchmark is up 20% over the same period.
