Deal Would Create Insurance Giant

Marsh & McLennan Cos. said Wednesday that it will buy Johnson & Higgins for $1.8 billion in stock and cash, forming the world’s largest insurance brokerage company.

New York-based Marsh & McLennan said it will pay about $600 million in cash and the rest in stock for closely held Johnson & Higgins, an insurance broker and consulting company with more than $1.2 billion of revenue last year. Marsh & McLennan surged $7 to $129 on the New York Stock Exchange.

The companies would be combining their more than 36,000 employees amid a consolidation in the insurance industry driven by shrinking profit margins. Marsh & McLennan would reclaim its position as the largest broker of insurance, a place it lost this year to Aon Corp.