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Marsh & McLennan Companies Reports Second Quarter 2012 Results


Posted on 08 Aug 12 by Annie George

Marsh & McLennan Companies, Inc., a global professional services firm providing advice and solutions in risk, strategy and human capital, today reported financial results for the second quarter, ended June 30, 2012.

Brian Duperreault, President and CEO, said: “Our outstanding second quarter results successfully built on our strong first quarter. We produced revenue growth in each of our Operating Companies as well as excellent growth in operating income in both Risk and Insurance Services and Consulting, with meaningful margin improvement.

“Marsh continued its strong performance, including underlying revenue growth across all geographies and excellent new business development. Guy Carpenter produced impressive results, continuing its long-term trend of underlying revenue growth driven by international operations.

“Our Consulting segment produced underlying revenue growth, with a strong increase in profitability. Both Mercer and Oliver Wyman contributed to the segment's double-digit growth in earnings and improved margins.

"Our operating results in the second quarter demonstrate that we continue to track favorably against our long-term performance goals,” concluded Mr. Duperreault.

Consolidated Results

Consolidated revenue in the second quarter of 2012 was $3 billion, an increase of 3%, or 5% on an underlying basis from the second quarter of 2011. Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of items such as acquisitions, dispositions and transfers among businesses. Operating income rose 11% to $518 million. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 13% to $523 million in the second quarter.

Income from continuing operations in the second quarter of 2012 was $339 million, or $.60 per share, compared with $286 million, or $.50 per share, in the second quarter of 2011. Adjusted earnings per share in the quarter was $.61, an increase of 22% from $.50 in the second quarter of 2011. Net income was $329 million, compared with $282 million in the second quarter of 2011.

For the six months ended June 30, 2012, income from continuing operations was $693 million, or $1.23 per share, compared with $605 million, or $1.06 per share, in 2011. Adjusted earnings per share for the six months increased 17% to $1.24, compared with $1.06 last year.

Risk and Insurance Services

Risk and Insurance Services segment revenue in the second quarter of 2012 was $1.7 billion, an increase of 5%, or 6% on an underlying basis. Operating income increased 12% to $401 million, compared with $356 million in last year's second quarter. Adjusted operating income in the second quarter increased 14% to $402 million from $352 million. For the first six months of 2012, segment revenue was $3.4 billion, an increase of 6% from the prior year period, and 7% growth on an underlying basis. Operating income increased 11% to $818 million, compared with $739 million in 2011. Adjusted operating income rose 11% to $818 million, compared with $735 million last year.

Marsh's revenue in the second quarter of 2012 increased 4% to $1.4 billion, or 6% on an underlying basis. International operations reported underlying revenue growth of 7% in the second quarter, reflecting growth of 14% in Latin America, 10% in Asia Pacific, and 5% in EMEA. In the United States/Canada division, underlying revenue grew 4%. Guy Carpenter's second quarter revenue was $275 million, an increase of 7%, or 10% on an underlying basis.

Consulting

Consulting segment revenue in the second quarter of 2012 was $1.3 billion, an increase of 2%, or 4% on an underlying basis. Operating income increased 13% to $172 million, compared with $152 million in the prior year period. Adjusted operating income rose 14% to $176 million, compared with $154 million. For the six months of 2012, segment revenue increased 3% to $2.7 billion, or 4% on an underlying basis. Operating income increased 18% to $331 million, compared with $280 million in 2011. Adjusted operating income rose 18% to $338 million, compared with $285 million last year.

Mercer’s revenue in the second quarter of 2012 was $960 million, an increase of 2% on a reported basis, and 3% underlying. Retirement, with revenue of $267 million, rose 1% on an underlying basis; Health & Benefits, with revenue of $255 million, was up 6%; Talent, Rewards & Communications, with revenue of $132 million, was up 1%; Outsourcing, with revenue of $178 million, increased 1%; and Investments, with revenue of $128 million, rose 7%. Oliver Wyman's revenue increased 2% to $381 million in the second quarter of 2012, or 8% on an underlying basis.

Other Items

Investment income, including mark-to-market gains in private equity investments, was $4 million in the second quarter of 2012, compared with an investment loss of $6 million in 2011. At the end of the second quarter of 2012, cash and cash equivalents was $1.5 billion.
In the second quarter of 2012, the Company repurchased 3.1 million shares of its common stock for $100 million. The Company has $453 million remaining under the share repurchase program authorized by the Board of Directors. In addition, the Company increased its quarterly dividend 5% to $.23 per share, effective with the third quarter payment on August 15, 2012.

About Marsh & McLennan Companies

MARSH & McLENNAN COMPANIES is a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. Marsh is a global leader in insurance broking and risk management; Guy Carpenter is a global leader in providing risk and reinsurance intermediary services; Mercer is a global leader in human resource consulting and related services; and Oliver Wyman is a global leader in management consulting. Marsh & McLennan Companies' 53,000 colleagues worldwide provide analysis, advice and transactional capabilities to clients in more than 100 countries. The Company prides itself on being a responsible corporate citizen and making a positive impact in the communities in which it operates.


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