DOW JONES NEWSWIRES
Marsh & McLennan Cos. (MMC) swung to a third-quarter profit on sharply lower costs as the insurance broker saw particular strength at its risk and insurance-services segment amid sharp margin gains. But the consulting business continued to be impacted by the economy.
Overall, "Marsh reported another excellent quarter significantly increasing its profitability," said President and Chief Executive Brian Duperreault. He added the Guy Carpenter insurance business "produced strong new business and continued growth in profitability."
The industry has largely been unable to raise prices because of competition and customers trying to save money amid the recession and lower-than-usual catastrophe losses. Last week, rivals Aon Corp. (AOC), Arthur J. Gallagher & Co. (AJG) and Willis Group Holdings Ltd. (WSH) said soft prices and the weak economy were limiting growth.
Marsh & McLennan, one of the world's biggest insurance brokerages, has been reducing debt and increasing profit margins in the brokerage unit in recent quarters.
For the latest quarter, Marsh & McLennan reported a profit of $221 million, or 41 cents a share, compared with a year-earlier loss of $8 million, or 2 cents a share. Excluding restructuring and other impacts as well as a tax gain in the latest quarter, earnings rose to 30 cents from 20 cents.
Revenue dropped 11% to $2.52 billion, or 7% on an underlying basis, which excludes acquisitions, divestitures and other impacts.
Analysts' estimates were for per-share earnings of 26 cents on revenue of $2.6 billion, according to a poll by Thomson Reuters.
The company's largest business, the risk and insurance division, which includes its core Marsh Inc. insurance brokerage business and the Guy Carpenter unit, swung to a profit even as underlying revenue fell 3%.
Underlying revenue at its Mercer and Oliver Wyman consulting businesses, more exposed to economic woes, declined 10%.
Marsh & McLennan's shares closed Tuesday at $23.37 and were inactive premarket. The stock is down 21% the past year.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com
(END) Dow Jones Newswires
November 04, 2009 07:39 ET (12:39 GMT)