Marsh & McLennan posts higher quarterly profitReprints
Continuing to add capabilities across its various operating segments, Marsh & McLennan Cos. Inc. posted higher profit Thursday in the face of global economic pressures and a softening property/casualty insurance market.
The company posted consolidated revenue of $3.21 billion in the first quarter of 2015, essentially flat from the same period a year ago. However, net income was $482 million in the first quarter, up 8.8% from the prior-year period.
During a call with analysts, Marsh & McLennan President and CEO Dan Glaser said he was pleased with the company’s operating performance noting that the revenue numbers reflected a 6% negative currency impact due to fluctuations in foreign exchange rates.
“Like a lot of U.S.-based multinational companies, we are faced with challenges presented by the current global economic environment,” Mr. Glaser said. “In particular we are weathering substantial headwinds posed by low interest rates and a strong U.S. dollar.”
Mr. Glaser noted the 3% underlying revenue growth exhibited by the company’s Marsh L.L.C. insurance brokerage unit. “Strong new business drove the revenue increase,” he said. Marsh posted first-quarter revenue of $1.43 billion, down slightly from the $1.45 billion in the same period a year ago.
He also acknowledged the performance of reinsurance brokerage Guy Carpenter & Co. L.L.C., where underlying revenue grew 2%, due to increased demand for services in the marine and Lloyd’s of London property segments. However, once currency impact was accounted for, revenue fell 3.4% to $368 million for the quarter, compared with the same period a year ago.
Guy Carpenter President and CEO Alex Moczarski said the company would continue to grow despite widespread price declines in the reinsurance market. Mr. Moczarski said the company has adjusted the influx of alternative capital into the reinsurance market and will target specialized sectors of the reinsurance market, noting that the company has opened specialty practices for mutual companies, surplus lines, cyber solutions and the public sector in the last few years.
“The first quarter was actually a little bit stronger than we expected,” he said. “We continue to seek relevance and innovation, and are optimistic about our growth practice this year, albeit at a slight to moderate pace.”
On the consulting side, Mr. Glaser noted the ongoing investments being made by employee benefits and human resources consulting unit Mercer L.L.C., which saw revenue dip slightly to $1.03 billion in the first quarter from $1.06 billion a year ago.
In February, the company made a strategic equity investment in Charleston, South Carolina-based Benefitfocus Inc., which makes technology that underpins Mercer’s private health insurance exchange. The investment is part of a companywide focus to expand with new capabilities in growth markets, Mr. Glaser said.
“Obviously, we have a big investment going on in our exchange business and bought 75 million newly issued shares of Benefitfocus representing 9.9% of outstanding shares,” he said. “We are really pleased with the partnership and are developing proprietary approaches to the exchange space and we wanted to make sure that that was sustainable over a long period of time.”
Elsewhere, management consulting unit Oliver Wyman Group reported first-quarter 2015 revenue of $384 million, up 3.5% compared with the same period a year ago.