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Marsh & McLennan Cos. Inc. reported revenue of $3.97 billion for the third quarter of 2019, a 13.2% increase over the same period in 2018, as the brokerage continues to merge operations with Jardine Lloyd Thompson Group PLC, which it bought in April.
The $5.6 billion deal, which was announced last year, led to staff defections at high and lower levels to a range of rivals, but Marsh & McLennan President and CEO Dan Glaser said on a conference call with analysts Tuesday that the merger of the now 75,000-person company was progressing as expected.
“We are meeting our expectations in terms of our financial targets, revenue growth and colleague retention now our businesses are coming together,” he said.
The brokerage will bring together most of the staff from the two firms to the same locations by the end of the year and has “undertaken significant work” to integrate the firms’ operating systems, Mr. Glaser said.
“Our progress to date makes me confident that we will comfortably exceed our $250 million savings target over three years,” he said.
Marsh LLC, the insurance brokerage unit of Marsh & McLennan, reported revenue of $1.9 billion for the third quarter of 2019, a 16.7% increase over the same period in 2018. Its U.S. and Canada revenue increased 10% to $1.01 billion, and international increased 26% to $888 million, with the strongest growth rate in Asia-Pacific.
Guy Carpenter & Co. LLC, its reinsurance brokerage unit, reported $273 million in the third quarter, which traditionally is a slow quarter for the unit, a 27% increase over the 2018 third quarter. The revenue jump in part reflected a single large contract placed during the quarter.
Much of the growth reported by the units is attributable to the addition of business from JLT. Still, underlying revenue growth, including JLT business but excluding the effect of foreign exchange, acquisitions, dispositions and business transfers, also increased, with Marsh underlying revenue growing 5% in the quarter, Guy Carpenter revenue growing 11%, U.S. and Canada revenue growing 6%, and international revenue growing 3%.
Profit for the 2019 third quarter grew 9.8% over the same period last year to $303 million.
The brokerage is seeing premium rates rise on many lines of business it places, with excess casualty and property catastrophe showing the biggest increases, but the length of pricing cycles is changing, said John Doyle, president of Marsh.
“I do expect upward pricing pressure to continue throughout next year. However, I think we’ll see shorter and shallower cycles than we have on average in the past,” he said. “It’s really kind of micro cycles. Underwriters are moving quickly, and they have better data, better management information; they are moving more quickly to deal with things, and the capital moves very quickly, too.”
2018 brokerage revenue: $16.84B