Marsh & McLennan Companies Inc. (MMC) announced first quarter adjusted earnings of 51 cents per share, which was in line with the Zacks Consensus Estimate and also up from 39 cents in the year-ago quarter.
Results were aided by strong revenues in the Risk and Insurance Services as a result of improved profitability at Guy Carpenter and Marsh. There was also help from higher revenues in the Consulting business and higher investment income, partially offset by an increase in expenses and a stronger US dollar.
Consolidated revenue was $2.8 billion, up 7% year over year but flat on an underlying basis.
Revenue for the Risk and Insurance Services segment was $1.5 billion, up 9% year over year but flat on an underlying basis. However, operating income was significantly higher by 17% year over year, reflecting improved benefits of cost-containment measures. Marsh’s revenue was $1.2 billion, up 8% year over year. Guy Carpenter’s revenue during the reported quarter was $315 million, up 12% year over year.
The Consulting segment’s revenue increased 7% year over year to $1.2 billion, up 1% on an underlying basis. Mercer’s revenue increased 6% year over year to $849 million but declined 1% on underlying basis. Mercer’s consulting operations had underlying revenue of $598 million, outsourcing revenue increased 3% year over year to $162 million, whereas, investment consulting and management revenue increased 17% year over year to $89 million.
Revenue in the Risk Consulting and Technology business, which includes Kroll’s operations, was $162 million, down 3% from the prior year period or 2% on an underlying basis.
Marsh & McLennan had an investment income of $8 million, up significantly from a loss of $15 million in the year-ago quarter, largely due to mark-to-market gains in private equity investments.
However, total expenses increased 3.1% year over year to $2.4 billion due to an increase in compensation and benefits.
During the quarter, Marsh & McLennan completed the previously-announced acquisition of HSBC Insurance Brokers Ltd.
The company continues to experience decent growth expansion as a result of well-executed restructuring initiatives, including the recent divestment plan for Kroll. Going forward, results should somewhat benefit from improved pricing, which will be largely offset by the volatility of the U.S. dollar and tepid revenue growth from the consulting business due to the ongoing sluggish economic recovery.
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