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Marsh CEO: US Sees Improvement in Rates

Source: A.M. Best

Posted on 15 Feb 2012

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Marsh & McLennan Cos. saw growth in all of its subsidiaries in the fourth quarter and company leaders spoke of segmented insurance markets that are generally improving.

Brian Duperreault, Marsh & McLennan Cos. president and chief executive officer, paid special attention during an earnings call to a "milestone" for reinsurance broker subsidiary Guy Carpenter, which had year-end revenues exceed $1 billion for the first time. Growth was attributed to the company's international business.

That performance fit into a larger theme of growth. Daniel Glaser, group president and chief operating officer, said Marsh, the company's flagship brokerage arm, grew across all geographies with notable gains in Asia and Latin America. He said there were smaller increases in the United States and Canada. He also noted the company's significant market share gain in South Africa, Botswana and Namibia, with the completion of their purchase of Alexander Forbes.

Driving growth was higher-than-normal client retention, along with new business. Duperreault said the company built a platform on which to grow in the coming year.

"As we move forward, we remain committed to focusing on profitable growth and prudent deployment of our excess cash flow," he said.

Marsh & McLennan Cos. reported a 2011 fourth-quarter net income of $256 million, which is a $53 million gain over the previous fourth quarter. The company reported a $4 million investment loss in the fourth quarter, putting them $23 million behind their investments a year ago.

Peter Zaffino, president and CEO of Marsh, said U.S. and Pacific insurance markets range from favorable to stable heading into 2012.

"There absolutely is a trend of rate improving when you look at earlier in the year as well as year over year ... that would generally speak about a theme of rate stabilization. But you need to really to break it down into components," Zaffino said.

Zaffino said property rates are having the most impact overall, with catastrophe-exposed areas, including Australia, Japan, New Zealand, Chile and Thailand, driving rates. Zaffino also paid special attention to the U.S. markets as opposed to international ones. He said the United Kingdom, and parts of Europe and Asia still have "a little bit of headwinds."

"In the U.S., we've seen property, workers' comp, as well as excess casualty and general liability, starting to increase," Zaffino said. "We'll see that trend probably into 2012, but when looking at the rest of the international geography there are still headwinds, particularly in casualty where rates are stable and improving, but still generally speaking down year over year."

Glaser said subsidiaries Mercer and Oliver Wyman Group both turned in a good performance, with Mercer well positioned to continue to expand. Mercer, the company's human resource consulting subsidiary, is under the new leadership of Julio A. Portalatin, who started about two weeks ago and comes from senior positions at Chartis Growth Economies and American International Group Inc.