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Marsh & McLennan reports higher quarterly revenue

Posted On: Feb. 4, 2016 12:00 AM CST

Marsh & McLennan Cos. Inc.'s fourth-quarter 2015 revenue rose 2.8% over the corresponding period a year earlier to $3.34 billion, Marsh & McLennan announced Thursday.

Net income also rose 27.6% over that of the fourth quarter of 2014 to $375 million. The fourth-quarter 2014 income, however, had been affected by the extinguishing of a $137 million debt, the company said at the time.

Broken down by segments, Marsh & McLennan's risk and insurance services operations — which consist of insurance brokerage unit Marsh L.L.C. and reinsurance brokerage Guy Carpenter & Co. L.L.C. — reported a revenue increase of 2.5% to $1.73 billion over the fourth quarter of 2014. Marsh L.L.C.'s revenue rose 2.5% to $1.51 billion, while Guy Carpenter's rose 2.4% to $217 million. Fiduciary interest income dropped 16.7% to $5 million

Revenue for Marsh & McLennan's consulting operation, which includes employee benefits and human resources consulting unit Mercer L.L.C. and consultant Oliver Wyman, rose 3.2% from that of fourth quarter 2014 to $1.62 billion. Mercer's revenues grew 3.1% to $1.14 billion, while Wyman rose 3.5% to $476 million.

For 2015 as a whole, revenue dropped by less than 1% to $12.89 billion, while net income rose 9.1% to $1.60 billion.

The risk and insurance services unit's revenue for the year as a whole decreased by less than 1% to $6.90 billion. Marsh L.L.C. revenues fell by less than 1% to $5.73 billion, while Guy Carpenter's revenues fell 2.9% to $1.12 billion. Fiduciary interest income dropped 12.5% to $21 million.

Revenue for the consulting operation remained virtually flat at $6.06 billion. Mercer's revenues fell less than 1% to $4.31 billion, while Wyman's grew 2.5% to $1.75 billion.

“We are very pleased with our fourth-quarter and full-year results,” said Marsh & McLennan President and CEO Dan Glaser during a Thursday morning earnings call. He said demand for the company's services remains strong” and “our fundamentals are rock solid.”

Market analysts reacted positively in general to Marsh & McLennan's performance.

Paul Newsome, managing director at Sandler O'Neill & Partners L.P. in Chicago, noted higher-than-expected revenues from the risk and insurance segment. “Organic growth actually accelerated to 5% from 4% in 3Q15 led by acceleration in the Risk & Insurance Services (insurance brokerage) segment to 4% from 2% in 3Q15 while Consulting decelerated to 5% from 6% in 3Q15,” he wrote.

In a note, Mark Dwelle, an insurance analyst with RBC Capital Markets Inc. in Richmond, Virginia, called the fourth-quarter performance a “good result overall and one which we think will be well received.” He cited strong organic growth in the risk segment as “particularly notable.”