NEW YORK (CNNfn) - Marsh & McLennan Cos. announced Wednesday that it will acquire insurance broker Johnson & Higgins for $1.8 billion.
The acquisition is will be paid for with a mix of stock and cash. The new company will be known as J&H Marsh & McLennan Inc.
Marsh chairman A.J.C. Smith will be named chairman and chief executive officer of the new venture.
The company said it expects the transaction to close in the second quarter, pending regulatory approval.
The deal will once again establish Marsh & McLennan as the world's biggest insurance broker. It lost that title in January with Aon Corp.'s agreement to buy Alexander & Alexander Services Inc. for $1.2 billion.
Marsh & McLennan has 400 sales offices worldwide. The company will add 145 United States, Canadian and overseas offices by acquiring Johnson & Higgins, the third largest insurance broker in the country, with annual revenue of about $1.2 billion.
The deal marks the latest in a trend of consolidation in the insurance brokerage industry, which has endured a long slump in premium rates.
Insurance brokers act as middlemen between commercial insurers and their policyholders, and their commissions are generally based on property-casualty premium rates.
Marsh & McLennan's shares closed at 122, up 3/4 in Tuesday trading on the New York Stock Exchange.