Marsh & McLennan Cos. Inc.
) reported second-quarter 2013 operating earnings of 72 cents per
share. The results exceededthe Zacks Consensus Estimate of 68
cents and the year-ago quarter earnings of 60 cents per
Operating net income, which excludes one-time items in both
the periods, increased 19.6% year over year to $403 million. On a
reported basis, Marsh & McLennan recorded net income of $388
million or 69 cents per share in the reported quarter, up from
$329 million or 59 cents per share in the prior-year quarter.
Marsh & McLennan posted improved results on account of
modest revenue growth across its Risk and Insurance business
along with strict expense control, which also drove the operating
margin. These were partially offset by weakness in the Oliver
Wyman segment and higher tax expense.
Consolidated revenues were $3.09 billion, up 2% year over year
and 3% on an underlying basis. However, it fell short of the
Zacks Consensus Estimate of $3.15 billion.
Meanwhile, total operating expenses edged up 0.1% year over
year to $2.51 billion as other operating expenses marginally rose
0.2% to $745 million, while compensation and benefits decreased
0.6% to $1.77 billion. Additionally, adjusted operating margin
improved to 19.2% from 17.3% in the year-ago period.
Nevertheless, tax expenses escalated to $164 million against $144
million in the year-ago quarter.
Revenues for the
Risk and Insurance Services
segment were $1.7 billion, up 3% on both year-over-year and
underlying basis. Moreover, adjusted operating income was up 10%
year over year reaching $432 million, reflecting improved
Marsh's revenues came in at $1.4 billion, up 3% on both
year-over-year and underlying basis, driven by strong new
businesses and growth across geography in the quarter. Underlying
revenue grew 3% in international operations reflecting 10% growth
in Latin America, 5% in Asia Pacific and 1% in EMEA. Meanwhile,
underlying revenue growth in the U.S.-Canada region was 2%.
Guy Carpenter's revenues during the reported quarter were $285
million, up 4% on year-over-year and 5% on an underlying
segment's revenues inched up 1% on year over year and 2% on an
underlying basis at $1.4 billion. Additionally, adjusted
operating income grew 10% year over year to $205 million.
's revenues stood at $1.0 billion, up 3% year over year and 4% on
underlying basis. Mercer's retirement operations generated
revenues of $338 million, up 2% on an underlying
basis.Additionally, Health revenue grew 6% to $376 million, while
revenues from Talent decreased 2% to $133 million. Revenue from
Investments increased 9% to $197 million, on an underlying
's revenues decreased 4% both on year over year and underlying
basis to $366 million in the reported quarter.
During the reported quarter, Marsh & McLennan total
investment income, including private equity investments, surged
to $23 million against $4 million in the year-ago quarter.
Meanwhile, capital expenditure climbed to $104 million from $98
million in the year-ago period.
Marsh & McLennan exited the reported quarter with cash and
cash equivalents of $1.23 billion, down from $2.3 billion in
2012. Long-term debt increased to $2.70 billion from $2.66
billion at the end of 2012.
As of Jun 30, 2013, Marsh & McLennan's total assets
depreciated to $15.84 billion, while total equity increased to
$6.85 billion from 2012-end.
Share Repurchase Update
Concurrently, the board sanctioned the expansion of the share
buyback program to $1.0 billion.
Meanwhile, the company bought back 3.7 million shares for $150
million during the reported quarter.
Additionally, Marsh & McLennan hiked the quarterly common
stock dividend by 9% to 25 cents per share from the prior 23
cents. The raised dividend will be payable on Aug 15, 2013.
On May 15, 2013, the company paid a quarterly dividend of 23
cents a share, to the shareholders of record as on Apr 10,
Marsh & McLennan carries a Zacks Rank #4 (Sell). Other
strong performers in the insurance sector include
Hilltop Holdings Inc.
Everest Re Ltd.
), all of which carry a Zacks Rank #2 (Buy).
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MARSH &MCLENNAN (MMC): Free Stock Analysis
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