Marsh & McLennan Companies, Inc. reported first-quarter 2016 operating earnings per share of 92 cents, which beat the Zacks Consensus Estimate by 3.4%. Earnings also improved 1.1% year over year.
Quarterly Details
Marsh & McLennan’s consolidated revenues were $3.3 billion, up 3.8% year over year. Revenues marginally surpassed the Zacks Consensus Estimate.
Total operating expenses of $2.6 billion increased nearly 5% year over year on higher compensation and benefits.
Adjusted operating margin at Marsh & McLennan contracted 120 bps to 22.1% from 23.3% in the year-ago quarter.
Segment Results
Revenues from the Risk and Insurance Services segment were $1.9 billion, up 2% on an underlying basis. However, adjusted operating income decreased 3% year over year to $543 million.
Marsh's revenues came in at $1.5 billion, up 2% on an underlying basis. Underlying revenues grew 2% year over year in international operations, which reflects 6% growth in Latin America, 3% in Asia Pacific and 1% in EMEA (Europe, the Middle East and Africa). The U.S.-Canada region reported a 2% year-over-year increase in revenues.
Guy Carpenter's revenues during the reported quarter were $374 million, up 3% year over year on an underlying basis.
The Consulting segment's revenues increased 6% year over year on an underlying basis to $1.5 billion. Additionally, adjusted operating income decreased 3.6% year over year to $238 million.
Mercer's revenues were $1 billion, up 3% on an underlying basis. The segment's Retirement operations generated revenues of $312 million, flat on an underlying basis. Additionally, underlying revenues grew 6% to $400 million for Health, 1% to $131 million for Talent and 1% to $196 million for Investments, all on a year-over-year basis. Oliver Wyman’s revenues increased 15% on an underlying basis to $439 million in the reported quarter.
Financial Update
Marsh & McLennan exited the quarter with cash and cash equivalents of $0.9 billion, down 33.2% from $1.4 billion at year-end 2015.
As of Mar 31, 2016, Marsh & McLennan’s total assets were $18.1 billion, down 0.5% from $18.2 billion at the end of 2015. Total equity was $6.8 billion, up 2.6% from $6.6 billion at year-end 2015 end.
Share Buyback
Marsh & McLennan bought back 3.5 million shares for $200 million during the quarter.
Zacks Rank & Performance of Other Insurers
Marsh & McLennan holds a Zacks Rank #2 (Buy). Some other insurers too recently released their first-quarter earnings results. While the bottom line at RLI Corp. and First American Financial Corp. beat their respective Zacks Consensus Estimate, Progressive Corp. missed the same in the first quarter.
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