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Marsh & McLennan Cos. Inc. said Thursday it is on track for its best annual revenue growth in a decade as it reported a 16% increase in revenue in the third quarter, buoyed by strong momentum across all its businesses.
The brokerage said it has added nearly 5,000 staff year-to-date, up about 7%, mostly in client-facing roles, Marsh McLennan’s top executive said.
While there continues to be uncertainty and volatility in the macroeconomic environment, Marsh McLennan is seeing “solid demand” for its differentiated advice, Dan Glaser, president and CEO of Marsh McLennan, said in a conference call with analysts Thursday.
Since closing its acquisition of Jardine Lloyd Thompson Group PLC in 2019, Marsh McLennan’s employee base has grown by 22%, he said.
“We expect this influx of talent will drive growth, add to our capabilities and enhance our ability to serve clients,” Mr. Glaser said.
The highest percentage of growth in hiring by far is in Marsh LLC, its commercial broking unit, and Guy Carpenter & Co. LLC, its reinsurance broking unit, he said.
Marsh McLennan reported third-quarter revenue of $4.58 billion, a 16% increase over the same period in 2020, and up 13% on an underlying basis, according to the brokerage’s earnings statement released Thursday before the markets opened.
Net income for the third quarter was $537 million, up 70%.
Risk and insurance services, which includes its insurance and reinsurance broking units, reported third-quarter revenue of $2.67 billion, a 17% increase overall and up 13% on an underlying basis.
Many of the factors that drove the market hardening over the last few years continue, and an “inflection” to a soft market is “unlikely in the near-term,” Mr. Glaser said.
Property/casualty insurance rates continue to increase, with the third quarter marking the 16th consecutive quarter of rate increases, according to Marsh’s Global Insurance Market Index.
Marsh reported $2.35 billion in revenue, a 17% increase over 2020’s third quarter and up 13% on an underlying basis, as it benefited from strong new business and renewal growth. In the U.S. and Canada, Marsh reported $1.37 billion in revenue, up 16% on an underlying basis.
Guy Carpenter reported $314 million in third-quarter revenue, up 15% both overall and on an underlying basis.
Global insurance rates were up 15% in the third quarter, the same as in the second quarter, according to Marsh’s analysis.
Global property was up 9%, while financial and professional lines were up 32%, driven by a near doubling in cyber rates, Mr. Glaser said. Global casualty rates were up in the high single digits, he said.
Small and mid-market insurance rates continue to rise as well, though less than for large, complex accounts, he said.
In reinsurance, “measured and moderate” rate increases witnessed in the first half could persist through the remainder of the year, reflecting “adequate capacity offset by elevated global catastrophes, concerns around real and social inflation, and continuation of large individual losses,” Mr. Glaser said.
One of the biggest pandemic impacts for Marsh McLennan, as for similar-sized organizations, has been the shift to a hybrid working model and a reduction in travel and expenses. Travel and expenses won’t come back quickly and may not reach the level seen in 2019 for a while, he said. The expense implications for Marsh McLennan will be positive in the long term, he said.
2020 brokerage revenue: $17.27B