Marsh & McLennan Q3 Profit Up 5%, Matches View; But Revenues Miss

(RTTNews) - Insurance brokerage Marsh & McLennan Companies Inc. (MMC) on Wednesday reported a 5 percent increase in profit for the third quarter from last year, reflecting higher margins and revenues at its risk and insurance as well as consulting segments. Adjusted earnings per share matched analysts' expectations, while revenues missed their estimates.

Dan Glaser, president and CEO, said, "In Risk and Insurance Services, Marsh produced underlying revenue growth across all major geographies, and Guy Carpenter continued its long-term trend of underlying revenue growth. In Consulting, both operating companies contributed to underlying revenue growth, as Mercer increased revenue across all lines of business, and Oliver Wyman returned to growth."

Risk and Insurance Services segment revenue for the third quarter rose 4 percent on a reported basis, or 3 percent on an underlying basis, from the prior-year period to $1.50 billion.

Marsh's revenue grew 4 percent on a reported basis, or 3 percent on an underlying basis to $1.24 billion. International operations underlying revenue grew 6 percent, reflecting growth of 15 percent in Latin America, 7 percent in Asia Pacific and 3 percent in EMEA. In the U.S./Canada division, underlying revenue grew 1 percent.

Guy Carpenter's revenue for the quarter was $262 million, an increase of 5 percent on both reported and underlying basis. The increase reflects broad-based growth in North America, International, Global Specialties, and UK Facultative.

Meanwhile, consulting segment revenues rose 2 percent on a reported basis and 4 percent on an underlying basis from the year-ago period to $1.44 billion. Of this, Mercer's revenue increased 2 percent on a reported basis and 4 percent on an underlying basis to $1.07 billion.

New York-based Marsh & McLennan's third-quarter net income was $253 million or $0.45 per share, up from $241 million or $0.44 per share in the prior-year period.

Adjusted earnings per share for the quarter were $0.46, compared to $0.39 in the same period last year. On average, twenty one analysts polled by Thomson Reuters expected the company to report earnings of $0.46 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated revenue for the quarter rose 3 percent to $2.93 billion from $2.85 billion in the year-ago period. On an underlying basis, revenue increased 4 percent compared to the prior-year period. Analysts had a consensus revenue estimate for the quarter of $2.95 billion.

Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items, such as acquisitions, dispositions, and transfers among businesses.

In the latest quarter, the company had investment income of $14 million, compared with investment loss of $4 million in the year-ago period. Investment income in the latest quarter includes $13 million of carried interest from Trident III no longer subject to claw-back.

Adjusted operating income increased 15 percent to $413 million, reflecting margin expansion in both of the operating segments. Operating margin was 13.8 percent, up from 13.3 percent in the previous-year quarter.

Operating expenses for the quarter increased to $2.53 billion from $2.47 billion in the same period last year.

MMC closed Tuesday's regular trading session at $45.65, down $0.16 on a volume of 2.44 million shares.