Marsh & McLennan Q4 Profit Up 17%, Beats View

(RTTNews) - Insurance brokerage Marsh & McLennan Companies Inc. (MMC) on Tuesday reported a 17 percent increase in profit for the fourth quarter from last year, reflecting higher revenues and margins at its risk and insurance as well as consulting segments.

Adjusted earnings per share beat analysts' expectations, while revenues came in slightly below their estimates.

Dan Glaser, CEO said, "Marsh had underlying revenue growth of 4%, with all geographic regions contributing. Guy Carpenter generated underlying revenue growth of 6%, its best performance in 2013. Mercer grew underlying revenue 4%, driven by outstanding performance in Health and Investments. Oliver Wyman's 5% increase in underlying revenue was its strongest performance in the past six quarters."

Risk and Insurance Services segment revenue for the fourth quarter rose 4 percent on both reported and underlying basis, from the prior-year period to $1.63 billion.

Of this, Marsh's revenue grew 4 percent on both a reported and underlying basis, to $1.4 billion. International operations underlying revenue grew 4 percent, reflecting growth of 13 percent in Latin America, 4 percent in Asia Pacific and 3 percent in EMEA. In the U.S./Canada division, underlying revenue grew 3 percent.

Guy Carpenter's revenue for the quarter was $209 million, an increase of 6 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 for the quarter rose 4 percent on a reported basis and 4 percent on an underlying basis from the year-ago period to $1.49 billion. Of this, Mercer's revenue increased 2 percent on a reported basis and 4 percent on an underlying basis to $1.08 billion.

New York-based Marsh & McLennan's fourth-quarter net income was $303 million or $0.54 per share, up from $259 million or $0.47 per share in the prior-year period. The latest quarter's results include an expense of $24 million, or $0.03 per share, related to the cost of extinguishment of debt.

Adjusted earnings for the latest quarter were $0.57 per share, compared to $0.52 per share in the same period last year. On average, twenty two analysts polled by Thomson Reuters expected the company to report earnings of $0.56 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated revenue for the quarter rose 4 percent to $3.12 billion from $3.00 billion in the year-ago period. On an underlying basis too, revenue increased 4 percent from the prior-year period. Analysts had a consensus revenue estimate for the quarter of $3.13 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 $11 million, compared with investment income of $4 million in the year-ago period.

Adjusted operating income increased 13 percent to $509 million, reflecting margin expansion in both of the operating segments. Operating margin was 15.7 percent, up from 13.5 percent in the previous-year quarter.

For fiscal 2013, net income attributable to Marsh & McLennan was $1.36 billion or $2.43 per share, up from $1.18 billion or $2.13 per share in the previous year. Adjusted earnings for the year were $2.48 per share, compared to $2.15 per share in the prior year.

Revenue for the year rose 3 percent to $12.26 billion from $11.92 billion last year.

Street expected the company to earn $2.47 per share for the year on revenues of $12.29 billion.

MMC closed Monday's regular trading session at $45.88 on a volume of 2.18 million shares.