Canadian Underwriter

Marsh & McLennan Companies’ net income up 16% in Q4 2016 to US$436 million

February 3, 2017   by Canadian Underwriter

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Marsh & McLennan Companies, Inc. (MMC) has reported net income attributable to company of US$436 million, up 16% from the prior-year quarter’s total of US$375 million. For the full year 2016, revenue was US$13.2 billion, a 2% increase.

time is moneyMMC, a global professional services firm, includes insurance broking and risk management firm Marsh; risk and reinsurance intermediary services provider Guy Carpenter; talent, health, retirement and investment consulting firm Mercer; and management consulting firm Oliver Wyman. It released its financial results on Thursday.

The company said in a press release that reported consolidated revenue in the fourth quarter of 2016 ending Dec. 31 was US$3.4 billion, an increase of 1% compared with the fourth quarter of 2015 (US$3.3 billion). For the full year of 2016, consolidated revenue was US$13.2 billion compared to US$12.9 billion in the prior year. For MMC’s U.S./Canada segment specifically, revenue was US$809 million for the three months ending Dec. 31, 2016 compared to US$768 million in Q4 2015, MMC said in the release.

Operating income rose 6% to US$633 million from US$594 million in Q4 2015. For the full year, operating income was US$2.7 billion, up from US$2.4 billion in 2015.

Risk & Insurance Services revenue was US$1.8 billion in the fourth quarter of 2016, an increase of 4% from the prior-year quarter. Operating income was US$413 million, an increase of 17%. For the full year 2016, revenue was US$7.1 billion, an increase of 4%. Operating income rose 14% to US$1.8 billion, MMC noted in the release.

Consulting revenue was US$1.6 billion in the fourth quarter of 2016, a decrease of 2%, while operating income was US$25 million. For the year 2016, revenue was US$6.1 billion, up 1%, with both Mercer and Oliver Wyman delivering underlying growth of 3% for the year. Operating income was US$1.1 billion, the company said.

Mercer’s revenue was US$1.1 billion in the fourth quarter, an increase of 1% on an underlying basis. Oliver Wyman Group’s revenue was US$486 million in the fourth quarter, an increase of 4% on an underlying basis.

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, the release pointed out. Earlier this week, Marsh also closed its previously announced acquisition of J. Smith Lanier, one of the largest privately held insurance brokers in the United States.

MMC president and CEO Dan Glaser said in the release that the company had a “strong finish” to the year. In the fourth quarter, we produced underlying revenue growth of 3% on a consolidated basis, including 5% growth in Risk & Insurance Services and 2% in Consulting. We also delivered double-digit growth in both GAAP and adjusted EPS with margin expansion in both segments.”

“For the year, our results were excellent,” Glaser continued. “In addition to our strong operating performance, we had another active year of acquisitions while delivering on our commitments to shareholders.”