Marsh & McLennan Cos. Inc
) reported third-quarter 2013 operating earnings of 46 cents per
share. The results were in line with the Zacks Consensus Estimate
but outpaced the year-ago quarter earnings of 39 cents per share.
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Operating net income, which excludes one-time items in both the
periods, increased 19.9% year over year to $259 million. On a
reported basis, Marsh & McLennan recorded net income of $254
million or 45 cents per share, up from $240 million or 43 cents
per share in the prior-year quarter.
Marsh & McLennan posted improved results on account of 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 $2.93 billion, up 3% year over year
and 4% on an underlying basis. However, it marginally missed the
Zacks Consensus Estimate of $2.96 billion.
Meanwhile, total operating expenses edged up 2.5% year over year
to $2.53 billion. This was on account of a marginal increase of
0.4% in other operating expenses to $704 million, and an increase
of 3.6% in compensation and benefits to $1.82 billion.
Additionally, adjusted operating margin improved to 14.1% from
12.6% in the year-ago period. The increase came in despite tax
expenses escalating 36.7% to $123 million from $90 million in the
Revenues for the
Risk and Insurance Services
segment were $1.5 billion, up 4% year-over-year and 3% on an
underlying basis. Moreover, adjusted operating income scaled up
14% year over year to $228 million, reflecting improved
Marsh's revenues came in at $1.2 billion, up 4% year-over-year
and 3% on an underlying basis, driven by strong new businesses
and growth across the different geographical regions. Underlying
revenues grew 6% in international operations reflecting 15%
growth in Latin America, 7% in Asia Pacific and 3% in EMEA.
Meanwhile, underlying revenue growth in the U.S.-Canada region
was a mere 1%.
Guy Carpenter's revenues during the reported quarter were $262
million, up 5% on both year-over-year and underlying basis.
segment's revenues inched up 2% year over year and 4% on an
underlying basis at $1.4 billion. Additionally, adjusted
operating income grew 13% year over year to $231 million.
's revenues stood at $1.1 billion, up 2% year over year and 4% on
underlying basis. Mercer's retirement operations generated
revenues of $325 million, up 2% on an underlying basis.
Additionally, Health revenue grew 5% to $378 million, while
revenues from Talent rose 2% to $179 million. Revenue from
Investments increased 8% to $190 million, on an underlying basis.
Moreover, Oliver Wyman's revenues increased 4% year over year and
2% on an underlying basis to $365 million in the reported
During the reported quarter, Marsh & McLennan's total
investment income, including private equity investments, surged
to $14 million rebounding from a loss of $4 million incurred in
the year-ago quarter. Meanwhile, capital expenditure dipped to
$96 million from $100 million in the year-ago period.
Marsh & McLennan exited the reported quarter with cash and
cash equivalents of $2.17 billion, down from $2.3 billion at
2012-end level. Long-term debt dipped to $2.62 billion from $2.66
billion at the end of 2012.
As of Sep 30, 2013, Marsh & McLennan's total assets
appreciated to $16.98 billion, while total equity increased to
$7.12 billion from 2012-end.
On Sep 27, 2013, Marsh & McLennan raised $500 million by
vending senior unsecured notes, in a two- part offering. The
proceeds are expected to be utilized for enhancing business
operations and to redeem $250 million of long-term notes that are
due for maturity in 2015.
Accordingly, one part of the long-term notes are worth $250
million and are dated to mature in 2018. These five-year fixed
rate notes bear an interest of 2.55%. The remaining tranche of
$250 million notes are slated to mature in 2023. These ten-year
fixed rate senior notes carry an interest of 4.05%.
Share Repurchase Update
In Aug 2013, the board sanctioned the expansion of the share
buyback program to $1.0 billion.
Meanwhile, the company bought back 3.6 million shares for $150
million during the reported quarter.
On Sep 18, 2013, the board of Marsh & McLennan declared a
quarterly dividend of 25 cents a share, payable on Nov 15, 2013,
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 23
cents. The raised dividend was paid on Aug 15, 2013.
Along with Marsh & McLennan, strong performers in the
insurance sector include
Hilltop Holdings Inc
Everest Re Ltd
), each carrying a Zacks Rank #2 (Buy).