August 5, 2009 by Canadian Underwriter
Marsh & McLennan Companies Inc. (MMC) reported a net loss in 2009 Q2 of US$193 million, compared to a profit of US$65 million in 2008 Q2.
Marsh’s quarterly result includes a US$315-million writedown related to Kroll Government Services, a U.S. government security clearance screening business that Marsh owns. Marsh has indicated it plans to sell parts of Kroll so that it can focus on the insurance side of its business.
In its risk and insurance services segment, Marsh reported that it faced a squeeze in 2009 Q2 arising from the contracted market (which in turn led to a decrease in the amount of premium purchased), and an ongoing decline in commercial insurance rates.
“In the second quarter, insurance premiums in the property and casualty marketplace continued to decline — similar to what was seen earlier in the year,” Marsh reported. “Additionally, the global economic recession reduced demand for commercial insurance. Marsh’s revenue in the second quarter declined 7% from last year to [US]$1.1 billion. On an underlying basis, revenue was flat in the quarter.”
Guy Carpenter, which reportedly produced double-digit underlying revenue growth, was a bright spot in the Marsh results. Guy Carpenter’s success reflected “strong new business, with increased profitability resulting from its continuing focus on expenses,” MMC said in a press release.