Marsh restructures business to free capital for investments

Broker Marsh is “simplifying” the business structure, a move that is expected to profitability and allow for investments, management explained during the group’s second quarter 2018 earnings call.

“We continue to execute on our effort to simplify our structure,” said Marsh CEO John Doyle.

“We'll have fewer layers or leaders will have increased spans of control,” Doyle noted.

“That's part of the effort. We're going to have greater consistency in how we're organized around the world. There will be increased focus on the three client segments we serve: our large risk management clients, the middle market or corporate accounts as we call it and the small commercial and consumer segment,” Doyle added.

“We expect to be simpler, more agile, and we're pushing decision-making authority closer to the client. The effort is also about enabling us to accelerate some investments in support of our strategy. The areas of investment are our digital capabilities, data and analytics, strengthening our middle market or corporate accounts value proposition. We're going to be adding some talent in key growth areas. And we also expect to continue to invest in our MGA operation.”

Daniel Glaser, CEO of Marsh & McLennan, added: “There are certainly going to be some efficiencies that are derived from the restructuring activity. And some of that cost savings is going to be flowing to the bottom line.”

“We want to get out in front of it in areas like digitalization. So, part of our strategy is to free up some capital so we can accelerate investment in some of these critical areas,” Glaser added.

In the second quarter of 2018 the group grew consolidated revenue by 7 percent year on year to $3.7 billion. On an underlying basis, revenue increased 3 percent year on year. Net income attributable to the company was $531 million, up from $501 million in the same period of 2017.

Risk & Insurance Services revenue was $2.1 billion in the second quarter of 2018, an increase of 9 percent or 5 percent on an underlying basis.

Guy Carpenter's revenue in the second quarter was $332 million, an increase of 5 percent on an underlying basis.

Marsh's revenue in the second quarter was $1.7 billion, an increase of 5 percent on an underlying basis.

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