Marsh & McLennan Cos. Inc.
) reported first-quarter 2014 operating earnings per share of 81
cents. The results were in line with the Zacks Consensus Estimate
but outpaced the year-ago quarter earnings of 73 cents.
Operating net income, which excludes one-time items in both
the comparable periods, increased 10.8% year over year to $450
million. On a reported basis, Marsh & McLennan recorded net
income of $457 million or 80 cents per share, up from $412
million or 72 cents per share in the prior-year quarter.
Marsh & McLennan posted improved results led by modest
revenue growth across its insurance and consulting businesses,
which also drove the operating margin. These were, however,
partially offset by higher operating, commissions and tax
Consolidated revenues were $3.26 billion, up 4.4% year over
year and 4% on an underlying basis. However, the top line
marginally missed the Zacks Consensus Estimate of $3.28
Meanwhile, total operating expenses edged up 2.9% year over
year to $2.59 billion. This was on account of other operating
expenses, which climbed 5% to $752 million, and an increase of 2%
in compensation and benefits to $1.84 billion.
Consequently, adjusted operating margin improved to 20.9% from
19.7% in the year-ago period. However, tax expenses escalated
9.1% to $192 million.
Revenues for the
Risk and Insurance Services
segment were $1.84 billion, up 4% year over year and 3% on
underlying basis. Moreover, adjusted operating income scaled up
6.2% year over year to $500 million, reflecting improved
Marsh's revenues came in at $1.45 billion, up 5% year over
year and 4% on underlying basis, driven by modest growth in new
businesses and across different geographical regions. Underlying
revenues grew 4% in international operations reflecting 11%
growth in Latin America, 9% in Asia Pacific and 2% each in both
EMEA and the U.S.-Canada region.
Guy Carpenter's revenues during the reported quarter were $381
million, up 2% year over year and nil on underlying basis.
segment's revenues rose 5% on both year-over-year and underlying
basis to $1.43 billion. Additionally, adjusted operating income
grew 19% year over year to $225 million.
's revenues stood at $1.06 billion, up 2% year over year and 3%
on underlying basis. Mercer's retirement operations generated
revenues of $354 million, with 4% growth on an underlying
basis.Additionally, Health revenues grew 2% to $388 million,
while revenues from Talent dipped 1% to $117 million. Revenues
from Investments increased 8% to $199 million, on an underlying
's revenues rose 16% year over year and 11% on an underlying
basis to $371 million in the reported quarter.
During the reported quarter, Marsh & McLennan's total
investment income, including private equity investments, declined
to $13 million from $21 million recorded in the year-ago quarter.
Capital expenditure escalated 12.5% year over year to $99 million
in the reported quarter.
Marsh & McLennan exited the quarter with cash and cash
equivalents of $1.38 billion, lower than $2.3 billion at
2013-end. Long-term debt of $2.62 billion was at par with the
As of Mar 31, 2014, Marsh & McLennan's total assets
marginally depreciated to $16.58 billion, while total equity
increased to $8.04 billion from 2013-end.
Share Repurchase Update
Marsh & McLennan bought back 2.05 million shares for $100
million during the reported quarter.
In Aug 2013, the board sanctioned the expansion of the share
buyback program to $1.0 billion, of which approximately $462
million worth of stock remains available for repurchase at the
end of Mar 2014.
On Mar 19, 2014, the board of Marsh & McLennan declared a
quarterly dividend of 25 cents a share, payable on May 15, 2014,
to shareholders of record as on Apr 10.
On Feb 18, 2014, Marsh & McLennan paid a quarterly
dividend of 25 cents a share to shareholders of record as on Jan
Along with Marsh & McLennan, other insurers like
) carry a Zacks Rank #2 (Buy). Another top-ranked insurer,
OneBeacon Insurance Group Ltd.
), with a Zacks Rank #1 (Strong Buy), is also worth
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