Marsh & McLennan Q2 Profit Up 18%, Beats View; But Revenues Miss

(RTTNews) - Insurance brokerage Marsh & McLennan Companies Inc. (MMC) on Wednesday reported an 18 percent increase in profit for the second quarter from last year, reflecting higher revenues and margins. Adjusted earnings per share beat analysts' expectations, while revenues missed their estimates.

Dan Glaser, President and CEO, said: "Adjusted operating income grew 13%, reflecting excellent margin expansion in both the Risk and Insurance Services and Consulting segments. In the quarter, Marsh produced underlying revenue growth across all major geographies. Guy Carpenter generated impressive underlying revenue growth, driven by its U.S. and International operations."

Glaser added, "The Consulting segment, led by Mercer, produced strong growth in earnings with meaningful margin expansion."

Risk and Insurance Services segment revenue for the second quarter rose 3 percent on both a reported and underlying basis from the prior-year period to $1.69 billion.

Marsh's revenue grew 3 percent on both a reported an underlying basis to $1.40 billion. International operations underlying revenue grew 3 percent, reflecting growth of 10 percent in Latin America, 5 percent in Asia Pacific and 1 percent in EMEA. In the U.S./Canada division, underlying revenue grew 2 percent.

Guy Carpenter's revenue for the quarter was $285 million, an increase of 4 percent on a reported basis, and 5 percent on an underlying basis.

Meanwhile, consulting segment revenues rose 1 percent on a reported basis and 2 percent on an underlying basis from the year-ago period to $1.41 billion. Of this, Mercer's revenue increased 3 percent on a reported basis and 4 percent on an underlying basis to $1.04 billion.

New York-based Marsh & McLennan's second-quarter net income was $388 million or $0.69 per share, up from $329 million or $0.59 per share in the prior-year period.

Adjusted earnings per share for the quarter were $0.72, compared to $0.61 in the same period last year. On average, twenty one analysts polled by Thomson Reuters expected the company to report earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated revenue for the quarter rose 2 percent to $3.09 billion from $3.03 billion in the year-ago period. On an underlying basis, revenue increased 3 percent compared to the prior-year period. Analysts had a consensus revenue estimate for the quarter of $3.14 billion.

Operating expenses for the quarter were $2.511 billion, almost flat with $2.508 billion in the same period last year. Operating margin was 18.7 percent, up from 17.1 percent in the previous-year quarter.

In Wednesday's regular trading session, MMC is trading at $41.76, down $0.24 or 0.58 percent on a volume of 253,591 shares.