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MMC results reflect strong revenue growth for Marsh & Guy Carpenter

25th April 2019 - Author: Matt Sheehan

Broking and advisory giant Marsh & McLennan Companies, Inc. (MMC) has released its results for the first quarter of 2019, posting underlying revenue growth of 4%, buoyed by the performance of its re/insurance broking subsidiaries, Marsh and Guy Carpenter.

MMC’s consolidated revenue in the first quarter of 2019 was $4.1 billion, an increase of 2%, or 4% on an underlying basis, when compared with the first quarter of 2018.

This reflects Q1 revenue of $663 million for Guy Carpenter, representing an increase of 6% on an underlying basis, and $1.7 billion for Marsh, with a 5% increase on an underlying basis.

Marsh’s underlying revenue also rose 5% in the U.S/Canada, as well as for its international operations, reflecting growth of 11% in Latin America, 8% in Asia Pacific, and 3% in EMEA.

Collectively, MMC’s Risk & Insurance Services segment posted revenue of $2.4 billion in Q1 2019, an increase of 3% compared with the first quarter of 2018, or 5% on an underlying basis.

MMC also recorded operating income of $938 million in Q1 2019, compared with $908 million in the prior year, while its adjusted operating income rose 11% to $1.0 billion.

Again, this reflected operating income of $733 million for its Risk & Insurance Services operations, which increased 2% from the prior year, as well as a 7% increase in adjusted operating income, which grew to $775 million from $723 million in the prior year.

Dan Glaser, President and CEO of MMC, commented on the results: “We delivered strong growth in underlying revenue and profitability in the first quarter, including double-digit adjusted earnings growth and meaningful adjusted margin expansion in both Risk & Insurance Services and Consulting.

“The Company’s underlying revenue growth was 4%, adjusted operating income rose 11%, and the adjusted margin increased 210 basis points to 26.2%.”

MMC also completed its $5.6 billion acquisition of Jardine Lloyd Thompson Group (JLT) in the first quarter of 2019, and assumed existing JLT debt of approximately $1 billion.

As part of the financing for the acquisition, MMC issued $5 billion of senior notes in January 2019, followed by the issuance of €1.1 billion of senior notes in March, and a further issuance of $250 million of senior notes in the same month.

The company used the net proceeds of these offerings to fund the acquisition of JLT, including the payment of related fees and expenses, and to repay in part certain existing JLT debt.

“With our successful completion of the acquisition of Jardine Lloyd Thompson Group and a great start to the year we believe the Company is well positioned to deliver solid results in 2019,” Glaser concluded.

On the consulting side, MMC posted Q1 revenue of $1.7 billion, representing an increase of 2% on an underlying basis, while its adjusted operating income increased 18% to $291 million, compared with $248 million in the prior year.

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