Marsh: Modest Gains in Global P&C Pricing; Firm’s Net Income Up

Global P&C insurance-pricing trends have led to modest gains for Marsh clients—with the U.S. leading price increases of more than 2 percent, says an executive with the industry’s top insurance brokerage.

Responding to a question today during Marsh & McLennan Co.’s fourth-quarter earnings call, Marsh President/CEO Peter Zaffino said insurance-premium prices rose 1.2 percent in the quarter based on the firm’s Risk Management Global Insurance Index.

Premiums for U.S. Property increased modestly, Zaffino said, adding that he’s also seeing “more momentum” in pricing among stressed Casualty lines.

On the international side, which accounts for 51 percent of the firm’s business, Zaffino said it is more difficult to extrapolate pricing trends overall because of geographic differences. However, he did characterize pricing on that side of the market as generally flat.

On U.S. pricing, he said, “we had a little bit of an impact from [Superstorm] Sandy, but not much, and that started to fall off a little bit in the fourth quarter.”

In the latest barometer reflecting market increases released by the Council of Insurance Agents & Brokers, average commercial rate increases in Q4 stood at 5 percent. Another index of price increase, MarketScout’s monthly commercial rate barometer, said rates increased by 5 percent last month and December. 

Turning to reinsurance, Alexander Moczarski, president and CEO of Guy Carpenter, Marsh & McLennan’s reinsurance brokerage subsidiary, said there was some general softening.

“Sandy strengthened the resolve of some underwriters to keep some pricing [up], and if you had a portfolio that was affected by Sandy indeed there were some surprise increases,” said Moczarski. But so far in 2013, he added, that has not translated into higher rates.

This fourth-quarter report was the first for new Marsh & McLennan Cos. President and CEO Dan Glaser, who has succeeded Brian Duperreault (who retired at the end of last year).

“My principal role as CEO of MMC will be to build on our success, finding new ways to grow, invest, innovate and realize the full potential of our businesses,” says Glaser.

MMC reported across-the-board increases in its insurance and consulting businesses.

Fourth-quarter net income for the New York-based services firm came in at $259 million, up 1 percent, or $3 million. Revenues increased 3 percent, or $94 million, to more than $3 billion.

For the year, net income jumped 18 percent to $1.17 billion, an increase of $183 million. Revenues came in at $11.9 billion, up 3 percent, or $398 million.

In the insurance segment, organic growth for the year was up 5 percent, with revenues rising overall by 5 percent to $6.5 billion.

Revenues for 2012 at Marsh were up 5 percent, or $250 million, to $5.5 billion. Guy Carpenter also increased revenues on the year by 4 percent, or $38 million, to $1.08 billion.

In its consulting business, Mercer and Oliver Wyman Group, the year’s revenues were up 2 percent, or $117 million, to $5.38 billion. While Mercer’s revenues increased, Oliver Wyman Group’s revenues dropped 1 percent on the year, in part because of the weak economic environment in Europe and timing of revenue recognition between the first and fourth quarters. 

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