Canadian Underwriter

How COVID-19 could permanently alter Marsh & McLennan

August 19, 2020   by Greg Meckbach

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Travel and entertainment spending could be down permanently for Marsh & McLennan Companies Inc., though it’s sure to rise again somewhat later this year, suggests CEO Dan Glaser.

“I am not sure we will go running back to hopping on an airplane to go to Singapore for a $100,000 opportunity,” Glaser said during a conference call discussing Marsh & McLennan’s financial results for the three months ending June 30.

New York City-based Marsh & McLennan owns commercial brokerage Marsh, reinsurance brokerage Guy Carpenter and consulting firms Oliver Wyman and Mercer.

Marsh & McLennan officials were asked July 30 by investment banking analysts about the impact of the ongoing COVID-19 pandemic on Marsh & McLennan’s travel and entertainment (T&E) expenses. Though Marsh & McLennan does not release specific numbers, Glaser did say T&E spending was down significantly in the three months ending June 30 because of the pandemic. It will rise in the future, relative to the latest quarter, simply because T&E spending fell to near zero.

“I am not sure (T&E) will ever be at the same level as it was, pre-COVID,” Glaser said during the earnings call. “I don’t know that people will travel as much because I don’t think it’s as necessary as what the perception was…

“Maybe we will be a little more cautious about the T&E [travel and entertainment] type of spending. So while it will come back, maybe it will not return to previous levels for a long time, and maybe never.”

Marsh & McLennan reported net income of $572 million on revenue of $4.189 billion in the three months ending June, compared to a profit of $332 million on revenue of $4.349 billion in 2019 Q2. All figures are in United States dollars. Expenses dropped from $3.669 billion in 2019 Q2 to $3.304 billion in 2020 Q2.

Risk and insurance services revenue from Marsh was $2.161 billion in 2020 Q2, up slightly from $2.156 billion in 2019 Q2.

“We live in troubled times,” Glaser said of the COVID-19 pandemic and the resultant economic disruption. “The world may have avoided the worst-case health and economic scenarios, but the downturn may be longer than many initially expected, with waves of virus resurgence in certain geographies.”

Marsh & McLennan is considered the world’s largest commercial P&C brokerage by A.M. Best Company Inc. Aon PLC had top spot until 2019, when Marsh & McLennan closed its acquisition of Jardine Lloyd Thompson.


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