Marsh & McLennan Cos. Inc.
) reported its fourth-quarter 2012 operating earnings of 52 cents
per share, in line with the Zacks Consensus Estimate. However,
the results were modestly higher than the year-ago quarter's
earnings of 46 cents per share.
Operating net income, which excludes one-time items in both
the periods, increased 12.5% year over year to $287 million. On a
reported basis, Marsh & McLennan recorded net income of $260
million or 47 cents per share in the reported quarter, up from
$239 million or 44 cents per share in the prior-year quarter.
Marsh & McLennan posted improved results on account of
modest underlying revenue growth and new business development
across its businesses, which also drove the operating margin. The
lower-than-expected operating and tax expense growth also
supported the bottom line.
Consolidated revenues were $3.0 billion, climbing 3.2% year
over year and 3% on an underlying basis. However, it fell short
of the Zacks Consensus Estimate of $3.02 billion.
Further, total operating expenses grew 3.1% year over year to
$2.6 billion as compensation and benefits rose 2.0% to $1.8
billion, while other expenses climbed 5.9% to $794 million.
Additionally, tax expenses escalated to $105 million against $100
million in the year-ago quarter. Nevertheless, adjusted operating
margin improved to 15.0% from 14.1% in the year-ago period.
Revenues for the
Risk and Insurance Services
segment were $1.6 billion, up 3% on a year-over-year basis.
Moreover, adjusted operating income was up 8% year over year
reaching $312 million, reflecting improved performance at
Marsh's revenues came in at $1.4 billion, up 4% year over year
and 3% on an underlying basis, driven by strong new businesses
and growth across geography in the quarter. Underlying revenue
grew in international operations reflecting 13% growth in Latin
America and 3% in both EMEA and Asia Pacific. Meanwhile,
underlying revenue was flat in the U.S.-Canada region.
Guy Carpenter's revenues during the reported quarter were $198
million, up 3% on both year-over-year and underlying basis.
segment's revenues moved up 3% on both year-over-year and
underlying basis to $1.4 billion. Additionally, adjusted
operating income grew 8% year over year to $179 million.
's revenues stood at $1.0 billion, up 7% year over year and 6% on
an underlying basis. Mercer's retirement operations generated
revenues of $269 million, up 3% on a year-over-year
basis.Additionally, Health & Benefits' revenue grew 9% to
$247 million, whereas revenues from Talent, Rewards &
Communications were flat year over year at $168 million, and that
of Outsourcing increased 8% to $187 million. Revenue from
Investments increased 10% to $133 million, on underlying
's revenues dipped 3% on an underlying basis to $378 million in
the reported quarter.
Full-Year 2012 Highlights
For full-year 2012, Marsh & McLennan's operating earnings
per share stood at $2.15, a penny lower than the Zacks Consensus
Estimate. However, earnings were noticeably higher than $1.77 a
share recorded in 2011.
Operating net income escalated 22.1% year over year to $1.19
billion. On a reported basis, net income grew to $1.18 billion or
$2.13 per share in 2012, up from $954 million or $1.73 per share
Consolidated revenues were $11.92 billion, climbed 3.5% year
over year and 4% on an underlying basis. However, it slightly
lagged the Zacks Consensus Estimate of $11.94 billion. Total
operating expenses inched up 2.1% year over year to $10.1
billion, while adjusted operating margin improved to 15.6% in
2012 from 14.4% in 2011.
During the reported quarter, Marsh & McLennan's total
investment loss, including mark-to-market gains in private equity
investments, grew to $4 million against a loss of $4 million in
the year-ago quarter. Meanwhile, capital expenditure escalated
14.3% year over year to $320 million in 2012, although it dipped
5.3% to $71 million during the reported quarter.
Marsh & McLennan exited 2012 with cash and cash
equivalents of more than $2.3 billion, down from $2.1 billion in
2011. Long-term debt marginally declined to $2.66 billion from
$2.67 billion at the end of 2011.
As of December 31, 2012, Marsh & McLennan's total assets
appreciated to $16.31 billion, while total shareholders' equity
increased to $6.61 billion from 2011-end.
Additionally, the company bought back 1.4 million shares for
$50 million during the reported quarter, while $323 million worth
of stock remains available for repurchases under the current
On January 16, 2013, the board of Marsh & McLennan
announced a quarterly common stock dividend of 23 cents a share,
which is payable on February 15, 2013 to the shareholders of
record as on January 28, 2013.
On November 15, 2012, Marsh & McLennan paid a quarterly
common stock dividend of 23 cents a share to the shareholders of
record as on October 11, 2012.
Marsh & McLennan carries a Zacks Rank #3 (Hold). Other
strong performers in the insurance sector include
White Mountains Insurance Group
First American Financial Corp.
), all of which carry a Zacks Rank #1 (Strong Buy).
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