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Marsh & McLennan revenue up, tax charge dents profit


Marsh & McLennan Cos. Inc. on Thursday said 2017 fourth-quarter revenue grew 9.5% over the year-ago period to $3.69 billion, even as profit took a hit from a one-time charge due to U.S. tax law changes.

Revenue for risk and insurance services, which include Marsh L.L.C. and Guy Carpenter & Co. L.L.C., grew 9.4% to $1.96 billion compared with the same period last year, while consulting revenue from Mercer L.L.C. and Oliver Wyman Group grew 9.9% to $1.74 billion, the brokerage said in its earnings statement.

The broker pegged organic growth at 4% for the fourth quarter, including 3% for risk and insurance services and 6% for consulting.

The broker reported fourth-quarter net income of $29 million compared with $436 million in the same period last year, as a $460 million tax charge consumed profit even though revenue grew steadily. The charge was “related to changes in U.S tax reform,” according to the statement.

“While we are not in a hard market, it is fair to say that the rate of change in pricing is slightly higher than it has been for the last several years,” Dan Glaser, Marsh & McLennan president and CEO, said on the company’s Thursday morning earnings call.

Rates for the fourth quarter showed positive movement, Mr. Glaser said.

“In primary lines, the Marsh global insurance rate composite saw a slight increase, up 1% on average, compared to previous low-single-digit declines,” Mr. Glaser said.

Global property lines showed the largest degree of rate increases, while casualty and financial and professional liability were flat to slightly down, Mr. Glaser said.

For the year, revenue was up 6.2% over 2016 to $14.02 billion. Net income fell 15.6% to $1.49 billion. Revenue in risk and insurance services grew 6.8% to $7.63 billion, and consulting revenue grew 5.4% to $6.44 billion.

Mr. Glaser said he sees continued steady growth for the company.

“For 2018, we see the potential for a slightly better operating environment than in 2017,” Mr. Glaser said on the call. “Our consolidated underlying revenue growth has been 3% to 5% for the past eight years, and this remains our expectation for 2018.”