NU Online News Service, June 11, 12:05 p.m. EDT
Moody's Investors Service has affirmed the ratings of Marsh & McLennan Companies, Inc. following the announcement that MMC has agreed to sell Kroll Inc. to Altegrity, Inc. for $1.13 billion in cash.
Moody's said it expects that the New York-based parent company of insurance broker Marsh and reinsurance broker Guy Carpenter will use proceeds from the sale for general corporate purposes, such as debt reduction, acquisitions and contingencies.
The rating outlook for MMC is stable.
"The all-cash transaction will enhance MMC's financial flexibility while moderately reducing its business diversification," said Bruce Ballentine, Moody's lead analyst for MMC in a statement. "MMC has the world's largest insurance brokerage and consulting operations, and it is well diversified in terms of products, clients and geographic scope. The proposed divestiture will allow the company to focus on these core businesses."
MMC's ratings reflect its strong market presence in insurance brokerage, its product and geographic diversification and its expertise in providing complex risk management solutions, according to Moody's.
These strengths are tempered by the company's relatively weak, albeit improving, operating margins and its volatile net profits, along with financial flexibility metrics that are well below expectations for the rating category, Moody's noted.
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