Marsh & McLennan Companies, Inc. (MMC) reported that for this year’s second quarter consolidated revenue was $2.8 billion, up 7 percent from the second quarter of 2006, or 4 percent on an underlying basis.
Its various risk and insurance services companies including insurance broker Marsh reported total revenue in the second quarter of $1.4 billion, an increase of 2 percent from the second quarter of 2006.
Profitability in MMC’s risk and insurance services segment declined from the prior year, reflecting the absence of market services revenue. Also, expenses to support Marsh’s long-term growth initiatives impacted this quarter to a greater extent than expected.
In the quarter, insurance broker Marsh’s revenue was up 2 percent to $1.1 billion. Excluding the impact of market services revenue of $34 million in the year ago period, underlying revenue increased 2 percent in the quarter with 3 percent growth in the Americas. The second quarter of 2006 was the last period in which Marsh recorded significant revenue from prior market service agreements, and there was no such revenue in this year’s second quarter.
Geographically, Marsh’s revenue included $627 million in the Americas, $392 million in EMEA and $105 million in Asia Pacific. New business increased in the second quarter, marking the fifth consecutive quarter that new business increased. Premium rate declines in the commercial insurance marketplace continued.
Guy Carpenter’s second quarter revenue was $217 million, representing 2 percent growth on a reported basis and 1 percent growth on an underlying basis.
Risk Capital Holdings had revenue of $32 million in the second quarter, compared with $28 million in the same period of 2006.
For the first six months of 2007, revenue for the risk and insurances segment was $2.9 billion, an increase of 1 percent from the year-ago period. Marsh revenue of $2.3 billion rose 1 percent from the year-ago period, and Guy Carpenter’s revenue rose 3 percent to $509 million.
MMC overall income from continuing operations was $140 million, or $.25 per share, compared with $131 million, or $.24 per share, last year. Income from discontinued operations, net of tax, which primarily reflects the results of Putnam Investments, was $37 million, or $.06 per share, compared with $41 million, or $.07 per share, last year. Net income rose 3 percent to $177 million, or $.31 per share, from $172 million, or $.31 per share, a year ago.
“Although profitability varied across our business segments, the overall revenue gain illustrates our long-term growth strategy,” said Michael G. Cherkasky, president and chief executive officer of MMC. “We will continue our strategy of growing revenue and investing in the future, with continued attention on expense discipline. The sale of Putnam Investments, completed last week, will allow us to concentrate on our core businesses and return a substantial amount of capital to shareholders.”
As announced on Aug. 3, 2007, Great-West Lifeco, a financial holding company controlled by Power Financial Corp., completed its purchase of Putnam Investments for $3.9 billion in cash. The cash proceeds to MMC after taxes and minority interest are expected to approach $2.5 billion.
MMC’s net debt position, which is total debt less cash and cash equivalents, was $3.8 billion at the end of the second quarter, compared with $4 billion at the end of the 2006 second quarter.
In July 2007, MMC completed a previously announced $500 million accelerated share repurchase program.
Was this article valuable?
Here are more articles you may enjoy.