DOW JONES NEWSWIRES
Marsh & McLennan Cos. (MMC) posted a 5.9% drop in
fourth-quarter net income on higher restructuring costs as soaring
earnings at its core insurance-brokerage business were offset by a
slump at its consulting arm, which is more susceptible to the
economy's ups and downs.
For insurance brokers, the economic recession comes on top of a
bruising policy price war tied to below-average catastrophe rates.
Last week, rival Aon Corp. (AOC) posted a 95% net-income drop, hurt
by an expected loss tied to a unit sale and higher restructuring
costs.
Fitch Ratings last month had projected flat to modestly weaker
profits for insurance brokerages this year amid economic
pressures.
Marsh & McLennan, one of the world's largest insurance
brokerages, reported net income of $80 million, or 15 cents a
share, compared with $85 million, or 16 cents a share, a year
earlier. Excluding restructuring charges and other items, earnings
rose to 37 cents a share from 24 cents.
Revenue fell 8.7% to $2.66 billion.
Analysts surveyed by Thomson Reuters were expecting earnings,
excluding items, of 32 cents a share on revenue of $2.98
billion.
Earnings at Marsh & McLennan's risk and insurance division -
including its core brokerage unit Marsh Inc. and the Guy Carpenter
business - more than doubled on improved results at both
operations. Revenue fell 6% on lower reinsurance rates, but
operating margin soared to 8.2% from 3.7%.
Profit at the company's Mercer and Oliver Wyman consulting units
fell 25% amid a 9% revenue drop as economic and financial-market
turmoil took its toll. Operating margin tumbled to 6.8% from
12.3%.
March & McLennan shares finished Tuesday at $18.71 and were
inactive pre-market. The stock is down by nearly half the past five
months, including 23% already this year.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com