62% drop in net income for MMC

by David Masters

Story link: 62% drop in net income for MMC

Marsh and McLennan Group this week announced a 62% drop in net income, which fell to $85 million in the fourth quarter.

Consolidated revenue for the quarter, including the broker giant Marsh, were $2.9 billion, an 8% increase compared to the same period the previous year. However, income from continuing operations was $90 million, down from $168 million in the same period the previous year.

The group’s consolidated revenue total for 2007 was $11.4 billion, an 8% increase on 2006. Their income from continuing operations dropped to $538 million, down from $632 million in 2006.

Their risk and insurance services division reported fourth quarter revenue of $1.37 billion, the same as for the fourth quarter in 2006. Operating income for the quarter fell by over 50%, down to $58 million from $127 million. MMC blames this on a $66 million reduction in revenue from Risk Capital Holdings.

Marsh’s revenue for the quarter was $1.2 billion, a 6% increase on year. However, operating margin fell 5% on year to 4.2%. For 2007, Marsh saw a 3.3% decline in its margin to 9.2%.

Marsh’s revenue for 2007 was up 3% at $.5 billion; Guy Carpenter’s revenue was up 2% at $902 million. Guy Carpenter’s fourth quarter revenue was $167 million, a 4% fall on an underlying basis.

In a statement regarding their results, MMC said: “Marsh’s new business production was strong, increasing 8% on an underlying basis, with the strongest growth generated in the US. Premium rate declines in the commercial insurance marketplace continued to accelerate as 2007 progressed, continuing into the January 2008 renewals.”

President and CEO of MMC, Brian Deuperreault, who joined the company in January, said: “Our immediate focus is to improve profitability at Marsh and Kroll.”