Marsh & McLennan posts 1Q profit, shares rise

The Associated Press
May 6, 2009

NEW YORK (AP) — Marsh & McLennan Cos. said Wednesday it returned to profitability in the first quarter, bouncing back from a loss a year ago when it absorbed a big write-down.

Its shares rose more than 8 percent.

"Overall I'm pleased with our first-quarter results, despite the significant hurdles we faced in the quarter," said Brian Duperreault, president and chief executive of Marsh & McLennan, on a conference call with analysts.

The New York-based insurance broker and consulting firm said it earned $176 million, or 33 cents per share, during the quarter ended March 31. It lost $210 million, or 40 cents per share, during the first quarter in 2008.

The year-ago loss was primarily the result of a $425 million asset impairment charge on the company's corporate security business, Kroll.

Adjusted earnings, which excludes restructuring and other special charges such as the asset impairment charge, totaled 40 cents per share in the latest quarter versus adjusted earnings of 45 cents per share a year ago.

Analysts polled by Thomson Reuters, on average, forecast a profit of 43 cents per share during the quarter. Analysts estimates typically do not include special charges.

Marsh & McLennan said its total revenue during the first quarter fell 13 percent to $2.63 billion from $3.04 billion during the first quarter in 2008. That was also short of analysts' forecasts of revenue of $2.95 billion.

Revenue declined across each of the firm's three types of businesses: risk and insurance services, consulting and risk consulting and technology.

Risk and insurance services revenue fell 8 percent to $1.37 billion during the quarter. However, adjusted operating income in the division rose 30 percent to $343 million because of expense controls and improved profitability at its units, Guy Carpenter and Marsh.

Consulting revenue, which includes Mercer and Oliver Wyman, tumbled 16 percent to $1.08 billion. Adjusted operating income in the consulting operations fell by more than half to $74 million, in part because of adverse foreign currency translation.

Revenue from the risk consulting and technology businesses, which includes Kroll, fell 27 percent to $187 million. The revenue decline was due primarily to the divestiture of corporate advisory and restructuring operations in the fourth quarter. The reduction in business in the division led to a 25 percent drop in adjusted operating income to $12 million.

Marsh & McLennan also reported a $15 million loss due to write-downs on the value within its private equity fund investments.

Shares of Marsh & McLennan rose $1.70, or 8.3 percent, to close at $22.29.

AP Business Writer Ieva M. Augstums in Charlotte, N.C., contributed to this report.

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