Marsh & McLennan Cos. Inc.
) reported fourth-quarter 2013 operating earnings per share of 57
cents. The results were a penny higher thanthe Zacks Consensus
Estimate of 56 cents a nickel higher than the year-ago quarter
earnings of 52 cents.
Operating net income, which excludes one-time items in both
the comparable periods, increased 9.7% year over year to $316
million. On a reported basis, Marsh & McLennan recorded net
income of $303 million or 54 cents per share, up from $261
million or 47 cents per share in the prior-year quarter.
Marsh & McLennan posted improved results led by modest
revenue growth across its insurance and consulting businesses
along with strict expense control, which also drove the operating
margin. These were, however, partially offset by higher tax
Consolidated revenues were $3.12 billion, up 3.8% year over
year and 4% on an underlying basis. However, top line marginally
missed the Zacks Consensus Estimate of $3.14 billion.
Meanwhile, total operating expenses inched up 1.2% year over
year to $2.63 billion. This was on account of other operating
expenses remaining flat at $793 million, and an increase of 1.7%
in compensation and benefits to $1.83 billion.
Consequently, adjusted operating margin improved to 16.3% from
15.0% in the year-ago period. However, tax expenses escalated
24.8% to $131 million.
Revenues for the
Risk and Insurance Services
segment were $1.63 billion, up 4% on both year-over-year and
underlying basis. Moreover, adjusted operating income scaled up
9% year over year to $327 million, reflecting improved
Marsh's revenues came in at $1.41 billion, up 4% on both
year-over-year and underlying basis, driven by strong new
businesses and growth across the different geographical regions.
Underlying revenues grew 4% in international operations
reflecting 13% growth in Latin America, 4% in Asia Pacific and 3%
each in both EMEA and U.S.-Canada region.
Guy Carpenter's revenues during the reported quarter were $209
million, up 6% on both year-over-year and underlying basis.
segment's revenues rose 4% on both year-over-year and underlying
basis to $1.49 billion. Additionally, adjusted operating income
grew 16% year over year to $222 million.
's revenues stood at $1.08 billion, up 2% year over year and 4%
on underlying basis. Mercer's retirement operations generated
revenues of $338 million, with nil growth on an underlying
Additionally, Health revenues grew 6% to $376 million, while
revenues from Talent dipped 3% to $171 million. Revenues from
Investments increased 10% to $199 million, on an underlying
's revenues increased 8% year over year and 5% on an underlying
basis to $408 million in the reported quarter.
Full-Year 2013 Highlights
For full-year 2013, Marsh & McLennan's operating earnings
per share stood at $2.48, a penny above the Zacks Consensus
Estimate of $2.47. However, earnings were noticeably higher than
$2.15 a share recorded in 2012.
Operating net income jumped 16.3% year over year to $1.38
billion. On a reported basis, net income grew to $1.35 billion or
$2.42 per share in 2013, up from $1.18 billion or $2.13 per share
Consolidated revenues grossed $12.26 billion, up 2.8% year
over year and 3% on an underlying basis. However, it slightly
lagged the Zacks Consensus Estimate of $12.29 billion. Total
operating expenses inched up 0.9% year over year to $10.2
billion, while adjusted operating margin improved to 17.4% in
2013 from 15.6% in 2012.
During the reported quarter, Marsh & McLennan's total
investment income, including private equity investments, surged
to $11 million from $4 million recorded in the year-ago
Meanwhile, capital expenditure escalated 59.2% year over year
to $131 million in the reported quarter, while it rose 25.3% to
$402 million in 2013.
Marsh & McLennan exited 2013 with cash and cash
equivalents of $2.3 billion, at par with the 2012-end level.
Long-term debt dipped to $2.62 billion from $2.66 billion at the
end of 2012.
As of Dec 31, 2013, Marsh & McLennan's total assets
appreciated to $16.93 billion, while total equity increased to
$7.98 billion from 2012-end.
Share Repurchase Update
Marsh & McLennan bought back 3.2 million shares for $150
million during the reported quarter, while 13.2 million shares
worth $550 million were repurchased in 2013.
In Aug 2013, the board sanctioned the expansion of the share
buyback program to $1.0 billion, of which approximately $562
million worth of stock remains available for repurchase at the
end of Dec 2013.
On Jan 15, 2014, the board of Marsh & McLennan declared a
quarterly dividend of 25 cents a share, payable on Feb 18, 2014,
to shareholders of record as on Jan 29.
On Nov 15, 2013, Marsh & McLennan paid a quarterly
dividend of 25 cents a share to shareholders of record as on Oct
11, 2013. In Aug 2013, Marsh & McLennan hiked the quarterly
common stock dividend by 9% to 25 cents per share from the prior
Marsh & McLennan currently carries a Zacks Rank #3 (Hold).
Other better-ranked insurers include
White Mountains Insurance Group Ltd.
OneBeacon Insurance Group Ltd.
), each sporting a Zacks Rank #1 (Strong Buy).
MARSH &MCLENNAN (MMC): Free Stock Analysis
ONEBEACON INSUR (OB): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
WHITE MTN INS (WTM): Free Stock Analysis
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