Marsh McLennan (MRSH) vs Aon (AON): Which Insurance Broker is a Better Buy?
Marsh McLennan (MRSH) and Aon (AON) are insurance brokers with different recent performances. MRSH closed at $177.01, up 2% in six months, while AON closed at $274.71, down 15.6%. MRSH grew revenue 6.2% in the latest quarter, while AON grew 2.2% and saw earnings fall 4.8%. MRSH trades at 14.97x next year's earnings, while AON is cheaper at 13.48x. Both have high operating margins and strong client relationships.
How this was made
The 30-second read
Why it matters
Marsh's faster growth and cash generation may attract investors, while Aon's slower performance could lead to relative underperformance.
Market read
Provides a comparative view that may influence relative positioning of MRSH and AON in portfolios.
What to watch
Potential impact of underwriting cycles and macro‑insurance loss trends not fully addressed.
Background
The article compares two major U.S. insurance brokers, Marsh & McLennan (MRSH) and Aon (AON), focusing on recent growth, cash conversion, and valuation multiples.
Ticker impact
Marsh & McLennan reported 6.2% revenue growth in the latest quarter, outpacing Aon and indicating compounding earnings.
likely upward pressure as investors favor faster growth and higher cash flow conversion
Revenue growth and cash generation are better than peers, supporting a relative buy case.
Aon posted only 2.2% revenue growth and a 4.8% earnings decline, making it slower than Marsh.
potential downside pressure as investors discount slower performance
Falling earnings and weak revenue growth reduce relative attractiveness versus Marsh.
Market effects
Highlights divergence within insurance brokerage sector, may shift relative valuations.
U.S. insurance brokerage stocks could see re‑rating based on growth differentials.
Limited to North American insurers; no broader macro impact.
Counterpoint
Aon's lower valuation could still be justified if premium softening continues, making the discount appropriate.
Key entities
- companyMarsh & McLennan Companies, Inc.
U.S. insurance brokerage with recent 6.2% revenue growth.
- companyAon plc
U.S. insurance brokerage with 2.2% revenue growth and earnings decline.
