NU Online News Service, Nov. 4, 1:20 p.m. EST
Marsh & McLennan Companies Inc. reported third-quarter profit of $221 million that the firm's chief executive touted as a strong showing of the company's plans to get back on the track of profitability.
Net income rose from a net loss for the third quarter last year of $8 million, or loss of 2 cents a share, to $221 million, or 41 cents a share. Revenues declined 11 percent, or $296 million, to $2.5 billion.
"MMC's third-quarter performance was very strong," said Brian Duperreault, MMC president and chief executive officer, during a conference call with financial analysts, crediting the work of executives for restructuring the businesses and returning the company to profitability.
For the first nine months, net income has risen from a net loss last year of $153 million, or negative 30 cents a share, to net income of $204 million, or 38 cents a share. Revenues dropped 13 percent, or $1.12 billion, to $7.76 billion.
Revenues at MMC's Marsh brokerage unit for the third quarter compared to the same period last year were off 5 percent, or $51 million, to $989 million in the quarter with organic growth of negative 2 percent. For the nine months, revenues were off 7 percent, or $251 million, to $3.2 billion and organic growth of negative 1 percent.
The Guy Carpenter reinsurance brokerage unit third-quarter revenues increased 13 percent, or $26 million, to $223 million with organic growth of 6 percent. Nine-month revenues rose 11 percent, or $74 million, to $731 million with organic growth at 9 percent.
In the company's other two segments, Consulting revenues stood at negative 14 percent, down $184 million to $1.14 billion for the quarter, and negative 16 percent, or $627 million, to $3.37 billion for the nine months; Risk Consulting and Technology dropped 27 percent, or $65 million, to $170 million for the quarter and for the nine months, 33 percent, or $245 million, to $498 million.
Mr. Duperreault said management at Marsh has improved efficiency, brought in "strong new business and improved colleague morale," while at Guy Carpenter management has improved retentions, brought in new business and paid great attention to expense management.
The performance at Marsh, where the operating margin has improved to more than 18 percent, is all the more impressive in the face of the current economic crisis and soft market, he said.
On the acquisition front, Mr. Duperreault said the company will continue to make deals when it deems them to be favorable and advantageous to the company.
He said Marsh & McLennan Agencies, its mid-market brokerage arm, is gearing up to announce several acquisitions near year's end to create a "hub and spoke" operation in select geographic regions.
The agencies will provide commercial property and casualty insurance, directors and officers liability, surety, employee benefits, and personal lines products through a dedicated line and service force, he added.
Marsh & McLennan Agencies, established last year, has taken as long as it has to, to announce acquisitions because of "the measured approach we have taken to build" the unit, Mr. Duperreault said, making sure the acquisition candidates meet MMC's requirements regarding "quality, cultural compatibility, consistent business approach and, lastly, pricing."
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