NU Online News Service, Aug. 3, 12:17 p.m. EDT
Marsh & McLennan Companies reported solid gains in the 2010 second quarter, improving over last year's earnings loss from the same period.
The New York-based services firm, the parent company of insurance broker Marsh and reinsurance broker Guy Carpenter, today reported second-quarter net income rose $429 million to $236 million, compared to last year's loss of $193 million. Earnings per share improved 80 cents a share from a loss of 37 cents a share to 43 cents. Revenues increased 6 percent, or $136 million, to $2.6 billion for the quarter.
For the six months, net income rose $501 million from a loss of $17 million, or negative 3 cents a share, last year to $484 million, or 88 cents a share. Revenues grew 7 percent, or $328 million, to $5.24 billion.
Brian Duperreault, president and chief executive officer of MMC, emphasized during a conference call with investment analysts that the firm's performance was impressive given the challenges "presented by soft market conditions in the global [property and casualty] insurance marketplace–which shows no signs of abating–and the overall weak economic environment in developed markets."
He said capacity remains abundant and competition among carriers "remains intense."
Mr. Duperreault emphasized that MMC is once again becoming a "world class growth company" and has ample resources to make sizable acquisitions it deems appropriate.
MMC's risk and insurance segment, which includes Marsh and Guy Carpenter, reported organic growth of 1 percent. Revenues at Marsh rose 9 percent, or $102 million, to $1.2 billion for the quarter, with 1 percent organic growth.
Guy Carpenter's revenues increased 7 percent, or $16 million, to $243 million over the same period last year. Organic growth stood at 2 percent.
Revenues at Marsh were driven by double-digit increases in its Asia Pacific and Latin America segments, which grew by 28 percent and 17 percent, respectively, with organic growth of 12- and 13 percent.
The only negative was in the United States-Canada segment, where organic growth registered a negative 4 percent but revenues increased by 6 percent.
MMC's consulting division, Mercer and Oliver Wyman Group, also reported gains, with organic growth of 2 percent and revenues rising 2 percent, or $25 million, to $1.17 billion.
MMC said Marsh and Guy Carpenter's performance reflected strong growth in new business in the quarter.
During the quarter, Marsh completed its acquisition of HSBC Insurance Brokers and acquired Bostonian Group Insurance Agency.
MMC said its sale of the investigative and risk firm Kroll will be completed next week, ahead of schedule.
Cash at the end of the quarter was $1.5 billion, and there will be an additional $1.3 billion from the sale of Kroll.
During the conference call, Vanessa A. Wittman, chief financial officer for MMC, said the firm will receive an additional cash tax benefit of $260 million from the sale of Kroll and the sale of other interests in the risk consulting and technology segment.
She said MMC will use $400 million cash in August to pay a portion of its $1.8 billion settlement in the Alaska retirement plan suit and it will pay $550 million debt maturity in September. No other debt matures until 2012, she added.
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