MMC nine-month profit triples as Q3 declines

Broking and consulting group Marsh & McLennan Companies (MMC) made a net profit of $652m in the first nine months of 2010, up 220% from the $204m it made in the same period last year.

The stark difference it attributable to the performance of MMC’s discontinued operations, which made a $292m profit in the first nine months of 2010 compared with a loss of $320m in the same period of 2009.

Income from continuing operations was $373m, down 30% from the $536m made in the first nine months of 2009.

“We are pleased with the progress our company has made, not only in the third quarter but throughout the year,” said MMC chief executive Brian Duperreault in a statement. “In the quarter, all four of our operating companies produced strong underlying revenue growth, the first time this has occurred since 2007.”

While nine-month revenues were up 7% to $7.77bn from $7.27bn, total expenses were up 11% to $7.15bn from $6.46bn, resulting in a smaller operating profit of $614m in 2010 versus $806m in 2009.

Net profit for the third quarter of 2010 alone, however, was down 24% to $168m from $221m. While revenues in the third quarter increased 7%, the third-quarter profit was impacted by higher expenses, a net investment loss of $2m versus a profit of $22m in the third quarter of 2009, and an income tax expense of $55m versus a $46m credit in the third quarter of 2009.

Marsh, MMC’s insurance broking division, brought in revenues of $3.45bn in the first nine months of 2010, up 9% from $3.17bn in the first nine months of 2010. Reinsurance broker Guy Carpenter’s nine-month revenues increased 8% to $791m from $731m.

The risk and insurance division as a whole, which comprises Marsh and Guy Carpenter, made a nine-month operating profit of $747m, up 12% on 2009’s $669m. Nine month profits in the risk and insurance division were offset by operating losses of $21m and $112m in the consulting and corporate/other units respectively.

“The risk and insurance services segment grew revenue in an environment of continued soft market conditions in the property and casualty marketplace,” Duperreault said. “Marsh produced strong new business globally, with revenue growth across all geographic regions. Guy Carpenter generated excellent revenue growth, reflecting new business production and high retention rates.”