Top insurance brokers, No. 1: Marsh & McLennan Cos. Inc.

2024 brokerage revenue: $25.33B
Percent increase: 13.4%

Marsh & McLennan Cos. Inc. strengthened its position as the world’s largest broker and expanded the scale of its middle-market operations last year with the acquisition of McGriff Insurance Services LLC.

The $7.75 billion deal, completed in November, added about $1.3 billion in annual revenue and 3,500 employees to Marsh McLennan’s mid-market platform, Marsh McLennan Agency.

Marsh McLennan reported $25.33 billion in brokerage revenue for 2024, including McGriff revenue on a pro forma basis, a 13.4% increase from the prior year. The brokerage reported 7% organic revenue growth for 2024, but that slowed to 4% in the first quarter of this year.

Property rates have dropped significantly, benefiting clients, and economic uncertainty is affecting construction and other sectors, said Martin South, president and CEO of Marsh LLC, Marsh McLennan’s main brokerage arm.

“Given what’s going on, people are being a little cautious and some of those lines of business tend to be high-margin jam on top of our business,” he said.

The deal for McGriff, which was an affiliate of bank-owned brokerage TIH Insurance Holdings LLC, brought expertise in specialty areas such as construction, surety and energy, Mr. South said.

“It was the biggest deal in the history of the company in terms of cost. Jardine Lloyd Thompson was bigger in terms of revenue acquired,” he said. JLT added about $1.9 billion in revenue when Marsh McLennan acquired the business in 2019.

With the addition of McGriff, Marsh McLennan Agency has approximately $5 billion in revenue.

Pricing tends to be less volatile in the middle-market segment, which improves growth, Mr. South said. “It’s a material part of the recurring revenue in the business,” he said.

The company also has expanded its middle-market presence in Australia, the United Kingdom, Canada, Latin America and Europe, he said.

Marsh McLennan spent a record $9.4 billion on acquisitions in 2024. Other deals included Marsh McLennan Agency’s purchase of Orland Park, Illinois-based The Horton Group Inc. and Jackson, Mississippi-based Fisher Brown Bottrell Insurance Inc. — two former Top 100 brokerages of U.S. business.

M&A remains a core part of the company’s growth strategy, though “We kiss a lot of frogs, and there are many that we don’t think will be good fits for us,” Mr. South said.

Marsh McLennan’s first-quarter slowdown in organic growth was driven by lower growth in Guy Carpenter & Co. LLC, its reinsurance brokerage arm, and Marsh in the U.S. and Canada, said Elyse Greenspan, managing director, equity research, insurance, at Wells Fargo Securities LLC in New York.

McGriff hasn’t contributed to organic growth in the U.S. and Canada because it’s still considered part of M&A activity for a year post-acquisition, Ms. Greenspan said. “There could be a little bit of noise there from the transaction,” she said.

Marsh McLennan’s consulting business is “typically where you see more of a pullback in any economic contraction,” she added.

Marsh McLennan has successfully expanded its profit margin and made quality acquisitions, but it faces challenges from a slowing global economy and a softening commercial insurance market, said J. Paul Newsome, managing director with Piper Sandler & Co. in Minneapolis.

“We’re in a decelerating organic growth environment, so things are still improving, but not as fast as they used to be, and Marsh is decelerating more than others. Their growth overall is right in there with their peers, but they’ve lost their lead a little bit,” he said.

After a significant hiring surge in past years that boosted revenue, the workforce has matured, “so that benefit on a relative basis is going away,” Mr. Newsome said.

Marsh McLennan expects to recognize $450 million to $500 million in costs over the next three years, primarily for retention incentives linked to the McGriff acquisition.

Tariffs are expected to be broadly inflationary, affecting the cost of goods such as autos, parts, timber, aluminum and steel, Mr. South said. “That will impact our clients and decisions, but it’s still early,” he said.

In April, Marsh McLennan’s AI-powered supply chain platform, Sentrisk, added a tariff simulator, which enables clients to model their exposures to various trade scenarios.