31 January 2019Insurance

Marsh/Guy Carpenter boost growth at MMC; Glaser highlights JLT deal

Broker Marsh & McLennan Companies’ (MMC) posted growth in both its 2018 and Q4 results as the company’s CEO highlighted the importance of its recent acquisition of Jardine Lloyd Thompson (JLT).

MMC’s revenues for the year grew by 4 percent in 2018 to $14.9 billion up from $14 billion a year earlier; its net income rose to $1.65 billion compared with $1.49 billion in 2017.

In the fourth quarter of last year it posted growth of 5 percent to reach $3.7 billion in revenues.

Its risk & insurance services revenue reached $1.9 billion in the fourth quarter of 2018, down 2 percent compared with the fourth quarter of 2017, or an increase of 5 percent excluding the impact of ASC 606, a new revenue standard it adopted on January 1, 2018. On an underlying basis, it said revenues increased by 6 percent.

Operating income in this unit was $383 million down 7 percent from the prior year, and adjusted operating income declined by 1 percent to $418 million. Excluding the impact of ASC 606, adjusted operating income increased 16 percent.

For the year 2018, revenue was $8.2 billion, an increase of 8 percent, or 5 percent on an underlying basis. Operating income rose 8 percent to $1.9 billion while adjusted operating income rose 11 percent.

Marsh's revenue in the fourth quarter of 2018 was $1.8 billion, up 6 percent on an underlying basis. In US/Canada, underlying revenue rose 7 percent. International operations produced underlying revenue growth of 5 percent, reflecting underlying growth of 8 percent in Asia Pacific, 8 percent in Latin America and 3 percent in EMEA. For the year 2018, Marsh's revenue increased to $6.9 billion, up 4 percent on an underlying basis.

Guy Carpenter's fourth quarter revenue was $102 million, up 5 percent on an underlying basis. For the year 2018, Guy Carpenter's revenue increased to $1.3 billion, up 7 percent on an underlying basis.

Dan Glaser, MMC president and CEO, said: "[We] had an outstanding finish to the year. In the fourth quarter, we produced strong underlying revenue growth of 5 percent, including 6 percent in risk and insurance services and 3 percent in consulting.

“Excluding the impact of the new revenue standard, we generated adjusted operating income growth of 15 percent in the quarter and delivered 180 basis points of overall adjusted margin expansion."

He said that annual growth had been strong emphasising the 4 percent revenue increase, the 8 percent adjusted operating income growth of 8 percent and adjusted EPS growth of 11 percent. “This marks another year of double-digit adjusted EPS growth following 15 percent growth in 2017," Glaser said.

"In addition to our impressive underlying performance, we had another active year of acquisitions and delivered on our capital return commitments. The highlight of the year was our agreement to acquire Jardine Lloyd Thompson Group. This combination will enhance capabilities for our clients, increase opportunities for our colleagues and create value for our shareholders."

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