Firms cutting back and monitoring insurer credit-worthiness
Companies are cutting back on insurance and examining the credit-worthiness of their insurers carefully, Marsh warned when it announced Q1 profits of $176m up from a $210m loss a year ago, Dow Jones reported.
"Many more clients are seeking alternatives" as a handful of major insurance companies face financial problems, said Daniel Glaser, chairman and chief executive of Marsh, Marsh & McLennan's insurance broking subsidiary. "We are spending more time marketing existing business, leaving less time to get new business."
"Large accounts have more wherewithal in terms of reducing costs," by cutting the overall amount of coverage they buy."
Financial highlights
- Revenue was $2.6 billion, down 13%
- Net income was $176m
- Risk and Insurance Services revenue $1.4bn, down 8%
- Operating income $297m up 27%
- Adjusted operating income $343m up 30% - improved performance at Marsh and Guy Carpenter.
- Marsh's revenue $1.1bn down 10%
- Guy Carpenter's revenue$281m up 7%
- Consulting revenue $1.1bn down 16%
- Investment loss $15m
"I am pleased with MMC's overall results in the first quarter of 2009 despite a difficult economic environment," said MMC president and CEO Brian Duperreault.
"Results for Risk and Insurance Services were outstanding, with underlying revenue rising 1%, excluding fiduciary income, and significantly improved margins. Marsh continued to achieve a substantial increase in profitability through expense discipline. Significantly improved profitability at Guy Carpenter was a result of strong new business and continued focus on expenses. As a result, operating margin in the segment increased to 21.6% from 15.6% and adjusted operating margin increased to 25% from 17.6%.
"Overall, growth in profitability in risk and insurance services offset the decline in consulting," Duperreault concluded.
