Marsh & McLennan Companies, Inc. (MMC) reported that for the third quarter of 2009, its consolidated revenue was $2.5 billion, a decline of 11 percent from the third quarter of 2008. Insurance revenue was down 5 percent.
Expenses were reduced by more than 16 percent to $2.3 billion.
MMC net income in the third quarter was $221 million, compared to a net loss of $8 million in the third quarter of 2008.
MMC’s risk and insurance services division doubled its operating income, while its consulting businesses cut costs to deal with declining revenue.
The risk and insurance segment revenue, which includes broker Marsh, Guy Carpenter and consulting services, was $1.2 billion in the third quarter, a decline of 4 percent from the third quarter of 2008. Operating income in the third quarter increased substantially to $127 million from a loss of $28 million last year.
Insurance premium rates in the property/ casualty marketplace declined in the third quarter, continuing the trend seen throughout the year, and demand for commercial insurance has moderated over the last year due to the global economic recession. Marsh’s insurance revenue in the third quarter was $989 million, a decline of 5 percent from last year. Revenue from international operations was flat, including 7 percent growth in Asia Pacific and 8 percent growth in Latin America.
However, Marsh had a significant increase in profitability in the quarter as a result of a substantial reduction in expenses.
In September, Marsh acquired International Advisory Services Ltd., the largest independent manager of captives and third-party insurance companies in Bermuda.
Guy Carpenter’s revenue in the third quarter was $223 million, an increase of 13 percent. An increase in new business as well as cost discipline led to continued growth in Guy Carpenter’s profitability. In October, Guy Carpenter completed the acquisition of London-based specialty reinsurance broker Rattner Mackenzie Limited from HCC Insurance Holdings, Inc.
Consulting segment revenue was $1.1 billion in the third quarter of 2009, a decline of 14 percent from the third quarter of 2008. The revenue decline was largely due to the impact of continued adverse global economic conditions.
Risk Consulting and Technology
Kroll’s revenue of $170 million in the third quarter of 2009 declined 14 percent from the year-ago quarter. Revenue in the litigation support and data recovery business was up 1 percent from last year’s third quarter. Background screening was down 8 percent, and risk mitigation and response decreased 25 percent.
“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,” said Brian Duperreault, MMC CEO.
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