Marsh’s third-quarter net income triples

Marsh & McLennan Companies, Inc. (MMC) reported its net income in the third quarter tripled from $21 million to $65 million.
“Marsh’s parent company, MMC, continued in the quarter to make progress and take the steps which will make it a better and more profitable company next year,” Michael G. Cherkasky, MMC president and CEO, said in a press release. “Cost savings from the restructuring programs are being realized as anticipated, and we expect to see improved earnings performance beginning next year.
“Marsh continues successfully, but slowly, to restore its business from the effects of the events of last fall.”
Last fall, Marsh reached an $850-million settlement in a civil lawsuit with New York state attorney general Eliot Spitzer. The lawsuit included allegations of fraud and anti-competitive practices. The settlement contained conditions that required Marsh to replace the top management in the company, apologize for its business practices, and implement reforms. The company faces no criminal sanctions.
The company says its 2004 restructuring program has been fully implemented, resulting in annualized cost savings totaling $400 million. “The 2005 restructuring program should be completed in early 2006 and result in $375 million of annualized savings in risk and insurance services — $60 million of which was realized in the third quarter,” the company reports.
“Risk and insurance services revenues declined 6% to $1.4 billion in the third quarter,” the company notes. “Third quarter revenues were affected by declining commercial insurance premium rates, a trend that has continued throughout the year.
“Although it is too early to assess the total effect of recent hurricanes on insurance marketplace conditions, insurance premium rates in U.S. property catastrophe and certain specialty lines appear to be strengthening.”
Marsh’s risk management and insurance broking revenues declined 11% in the third quarter to $885 million. “Weaker revenues in Europe in the third quarter reflected the sale of a small affinity business in France and delays due to restructuring efforts and the implementation of compliance protocols,” the company says. “Strong new business gains in Latin America and Asia Pacific led to growth in client revenues in those regions.”