MMC net income falls by 62 per cent

Marsh and McLennan Group has reported a 62% decline in net income to $85m in its fourth quarter results.

Consolidated revenue for the group, which includes broker giant Marsh, was $2.9bn, up 8% from the fourth quarter of 2006. Income from continuing operations was $90m, compared with $168m in the fourth quarter of 2006.

For the full year, the group's consolidated revenue was $11.4bn, up 8% year on year. Income from continuing operations fell from $632m to $538m.

The risk and insurance services division saw revenue in the fourth quarter of $1.37bn, unchanged from the fourth quarter of 2006. Operating income more than halved in the current quarter to $58m from $127m; MMC said this was due to a $66m reduction in revenue from Risk Capital Holdings.

In the quarter, Marsh's revenue was $1.2bn, up 6% from last year. Operating margin, however, fell by 5% year on year to 4.2%. For the full year, Marsh reported a 3.3% decline in its margin to 9.2%.

Marsh's revenue in 2007 rose 3% to $4.5bn, and Guy Carpenter's revenue rose 2% to $902m. Guy Carpenter's fourth quarter revenue was $167m, a decline of 4% on an underlying basis.

Geographically, revenue included $659m in the Americas, an increase of 3% from the prior year; $427m in Europe, the Middle East and Africa, up 9%; and $109m in Asia Pacific, an increase of 11%.

In a statement MMC said: "Marsh's new business production was strong, increasing 8% on an underlying basis, with the strongest growth generated in the US. Premium rate declines in the commercial insurance marketplace continued to accelerate as 2007 progressed, continuing into the January 2008 renewals."

MMC added that incremental costs associated with the departure of former chief executive officer Michael Cherkasky had negatively impacted earnings per share, while costs of $44m associated with restructuring and $13m in legal fees relating to the Spitzer investigation had also taken their toll.

Brian Duperreault, who joined MMC as president and chief executive officer last month, concluded: "Our immediate focus is to improve profitability at Marsh and Kroll."