Marsh Reports 2016 and Q4 Results

February 2, 2017

Global insurance and consulting firm Marsh & McLennan Companies Inc. reported financial results for the fourth quarter and full 2016 year showing underlying revenue growth of 3 percent on a consolidated basis, including 5 percent growth in Risk & Insurance Services and 2 percent in Consulting.

“In addition to our strong operating performance, we had another active year of acquisitions while delivering on our commitments to shareholders to grow dividends by double digits and reduce our share count through meaningful share repurchase,” Dan Glaser, president and CEO.

Acquisitions completed in the fourth quarter included Marsh’s acquisition of U.K.-based insurance broker Bluefin Insurance Group Ltd., and Mercer’s acquisition of Thomsons Online Benefits, a global SAS company.

Earlier this week Marsh closed its previously announced acquisition of J. Smith Lanier, one of the largest privately held insurance brokers in the U.S.

Glaser told analysts on a Thursday call that the firm intends to continue to grow both organically and through acquisitions.

Consolidated Results

Consolidated revenue in the fourth quarter of 2016 was $3.4 billion, an increase of 1 percent compared with the fourth quarter of 2015, or 3 percent on an underlying basis. Operating income rose 6 percent to $633 million. Net income was up 16 percent to $436 million.

For the year 2016, revenue was $13.2 billion, an increase of 2 percent compared with 2015, or 3 percent on an underlying basis. Net income attributable was up 11 percent to $1.8 billion.

Risk & Insurance Services

Risk & Insurance Services revenue was $1.8 billion in the fourth quarter of 2016, an increase of 4 percent, or 5 percent on an underlying basis. Operating income was $413 million, an increase of 17 percent. Adjusted operating income rose 15 percent to $421 million compared with $364 million in the prior fourth quarter. For the year 2016, revenue was $7.1 billion, an increase of 4 percent, or 3 percent on an underlying basis. Operating income rose 14 percent to $1.8 billion. Adjusted operating income rose 10 percent to $1.8 billion, compared with $1.6 billion in 2015.

Marsh’s revenue in the fourth quarter of 2016 was $1.6 billion, an increase of 5 percent on an underlying basis. The U.S./Canada division produced underlying revenue growth of 4 percent, while the International division rose 5 percent: EMEA increased 5 percent, Asia Pacific was up 4 percent and Latin America increased 7 percent.

Guy Carpenter’s fourth quarter revenue was $222 million, up 3 percent on an underlying basis.

Other

Consulting revenue was $1.6 billion in the fourth quarter of 2016, a decrease of 2 percent. Revenue rose 2 percent on an underlying basis. For the year 2016, revenue was $6.1 billion, up 1 percent, or 3 percent on an underlying basis with both Mercer and Oliver Wyman delivering underlying growth of 3 percent for the year.

The company had investment income of $2 million in the fourth quarter of 2016, compared with a loss of $1 million in the fourth quarter of 2015. For the year, investment income was less than $1 million compared with $38 million in 2015.

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