Guy Carpenter shines as MMC Q3 revenues fall 11 percent
MMC, the holding company for the resurgent Marsh and Guy Carpenter global (re)insurance broking operations, has reported Q3 consolidated revenue of $2.5bn - down 11 percent from the third quarter of 2008.
On an underlying basis, which strips out the impact of acquisitions, disposals and currencies, the revenue drop was a more modest 7 percent.
However, the efficiency drives at its core broking businesses - implemented with the arrival of Marsh CEO Dan Glaser and group CEO Brian Duperreault - meant MMC reported net income of $221mn for the quarter. This compares with a net loss of $8mn in the same period of 2008.
Unveiling a 5 percent headline and 2 percent underlying decline in Marsh's revenue to $989mn, MMC pointed to continued falling premium rates in the property and casualty marketplace, continuing the trend seen throughout the year.
The group said that as a result of the global economic recession, demand for commercial insurance has moderated over the last year. Revenue from international operations was flat, including 7 percent growth in Asia Pacific and 8 percent growth in Latin America.
However, the group said Marsh had a "significant increase in profitability in the quarter as a result of a substantial reduction in expenses".
Reinsurance broker Guy Carpenter's revenue in the third quarter was $223mn, an increase of 13 percent, or 6 percent on an underlying basis. MMC attributed this to an increase in new business. The trend-bucking performance contrasted with the reinsurance broker's main rival, market leader Aon Benfield, which reported organic Q3 revenues down 4 percent - at $379mn - last week.
Aon blamed clients' self-reinsuring and a timing mismatch for Benfield reporting as reasons for the fall.
Elsewhere, MMC's consulting arm Kroll was much harder hit, seeing a revenue decline of 14 percent from the third quarter of 2008, or 10 percent on an underlying basis, due to "continued adverse global economic conditions".
Also, Kroll's Q3 revenue, at $170mn, declined 14 percent from the same period a year earlier.
Brian Duperreault, MMC president and CEO, said: "MMC reported strong earnings growth in the third quarter. The Risk and Insurance Services segment produced a significant increase in operating income, with substantial margin improvement. Marsh reported another excellent quarter, significantly increasing its profitability. Guy Carpenter produced strong new business and continued growth in profitability.
"While the economic environment continues to be challenging, MMC's results reflect the effective management actions taken by our business leaders over the past year, including significant expense reduction," Duperreault concluded.