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Marsh & McLennan Cos. Inc. Wednesday reported increased revenue for the first quarter, with its main insurance and reinsurance broking units posting a combined 9% underlying growth rate.
Insurance rates continued to rise in the quarter, with the Marsh Global Insurance Market Index climbing 4%, John Doyle, Marsh McLennan’s president and CEO, said on a conference call with analysts to discuss the results.
Meanwhile, the company continued with the restructuring program it announced in January.
Marsh McLennan reported revenue of $5.92 billion for the first quarter, a 6.8% increase over the same period last year and up 9% on an underlying or organic basis, which excludes the effect of foreign currency fluctuations and acquisitions.
Revenue at its main insurance brokerage unit Marsh LLC rose 7.8% to $2.74 billion, up 9% on an underlying basis. Guy Carpenter & Co. LLC, its reinsurance brokerage, reported a 7.2% increase in revenue to $1.07 billion, up 10% on an underlying basis.
In the United States and Canada, Marsh reported $1.39 billion in revenue, up 8.3% or 7% on an underlying basis. For Europe, the Middle East and Africa, it reported $932 million in revenue, up 7.2% or 10% on an underlying basis; Asia-Pacific revenue was $312 million, up 6.1% or 11% on an underlying basis. In Latin America revenue was $115 million, up 10.6% or 10% on an underlying basis.
Marsh McLennan’s consulting operations, Mercer LLC and Oliver Wyman LLC, reported a combined $2.03 billion in revenue, up 1% or 5% on an underlying basis.
Net income from the quarter was $1.24 billion, a 15.3% increase over the same period last year.
Marsh clients globally continued to see increased insurance rates in many lines, Mr. Doyle said.
Property insurance rates increased 10%, and casualty rates were up in the low single-digits, he said. Workers compensation rates were flat, and management and professional liability rates were down in the mid-single-digits.
“Cyber insurance saw the highest increase in our index, although the rate of increase continued to moderate,” he said.
Reinsurance rates increased significantly during the quarter, with U.S. property catastrophe rates jumping 40% to 60% during April 1 renewals for accounts not affected by losses and rate hikes were even higher for accounts with losses, Mr. Doyle said. U.S. casualty reinsurance rate increases “were more modest,” he said.
Marsh McLenann expects increased annual savings from the restructuring plan focused on staffing, technology and real estate that it announced in January.
“We now expect roughly $300 million of savings by 2024 with total cost to achieve these savings of $375 (million) to $400 million,” he said.
Marsh, which hired thousands of new employees in 2021 and 2022, will likely see a slowdown in hiring this year but recruitment will remain active, Mr. Doyle said.