Marsh & McLennan Reports Higher 3Q Profits

From Yahoo News



NEW YORK - Marsh & McLennan Companies Inc., the nation's largest insurance brokerage, reported Tuesday that its profits rose in the third quarter despite a drop in revenue.



The New York-based company said net income for the July-September period rose to $65 million, or 12 cents a share, from $21 million, or 4 cents a share, a year earlier.



The company, which is still recovering from last year's regulatory challenges to the way it conducted its property and casualty sales, said excluding special items, profits for the quarter were $189 million, or 35 cents a share, compared with earnings of $225 million, or 42 cents a share, a year earlier. The results included expensing of stock options and other adjustments that shaved 5 cents from the third-quarter results, the company said.



Revenue was $2.9 billion, down 2 percent from $2.95 billion a year earlier.



Analysts surveyed by Thomson Financial had projected earnings of 38 cents a share on $3 billion in revenue.



Marsh & McLennan was at the center of an investigation launched by New York Attorney General Eliot Spitzer last year into bid rigging, price fixing and the use of hidden incentive fees to steer property and casualty insurance contracts.



In January, the company agreed to pay $850 million in restitution over several years to settle Spitzer's allegations. It also pledged to reform its commission practices.



Michael G. Cherkasky, president and chief executive of Marsh & McLennan, said in a statement accompanying the results that the company "continued in the quarter to make progress and take steps which will make it a better and more-profitable company next year."



He said the changes included new rate cards and the restructuring of several units, expected to result in some $400 million in cost savings.



Revenue declined 6 percent to $1.4 billion in the company's risk and insurance services business and dropped 11 percent to $371 at Putnam Investments, the firm's money management arm. But revenue was up 22 percent to $268 million at Kroll, the company's risk consulting division, and advanced 4 percent to $936 million in the Mercer Human Resource Consulting unit.



Net income for the first nine months of the year totaled $365 million, or 67 cents a share, on revenue of $9.2 billion. That compared with profits of $856 million, or $1.60 a share, on about the same revenue in 2004.



Excluding special items, net income for the first nine months totaled $700 million, or $1.30 a share, down from profits of $1.1 billion, or $2.11 a share in 2005.