Brian Duperreault: “Double-Digit Growth”
Marsh & McLennan Companies, Inc., the global professional services firm headed by Bermudian Brian Duperreault, today [Nov.2] reported financial results for the third quarter ended September 30, 2011.
Mr. Duperreault, President and CEO, said: “Third quarter results reflect our ongoing strong performance. All of our businesses continued to generate revenue growth and double-digit growth in profitability. Marsh’s high client revenue retention rates and new business development produced underlying revenue growth across all geographies. Guy Carpenter produced strong results, continuing a long-term trend of underlying revenue growth.
“Mercer’s underlying revenue growth has continued for more than a year, driven by strong results in its consulting and investments businesses. Oliver Wyman’s strong underlying revenue growth was broad-based across industry sectors.
“Our progress in re-establishing Marsh & McLennan Companies as a global growth company has been excellent, as reflected in our performance over the last four quarters,” concluded Mr. Duperreault.
Marsh & McLennan Companies Inc. has a number of long-established Bermuda operations, including Marsh and reinsurance specialist company Guy Carpenter.
Consolidated Results
Consolidated revenue in the third quarter of 2011 was $2.8 billion, an increase of 11 percent from the third quarter of 2010, or 5 percent on an underlying basis. Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as: acquisitions, dispositions and transfers among businesses. Operating income rose 30 percent to $310 million, compared with $239 million in the prior year period. Adjusted operating income in the third quarter, which excludes noteworthy items as presented in the attached supplemental schedules, rose 18 percent to $317 million.
Income from continuing operations, which includes a charge of $72 million related to the early extinguishment of debt, was $133 million, or $.23 per share, in the third quarter. This compares with $128 million, or $.22 per share, in the third quarter of 2010. Discontinued operations, net of tax, was $2 million in the third quarter, or $.01 per share, compared with $43 million, or $.08 per share, in the prior year period. Net income was $130 million, or $.24 per share, compared with $168 million in the third quarter of last year, or $.30 per share. Adjusted earnings per share in the quarter was also $.24.
For the nine months ended September 30, 2011, operating income was $1.2 billion, compared with $614 million in the prior year period. Income from continuing operations was $738 million, or $1.30 per share, compared with $373 million, or $.65 per share, in 2010. Discontinued operations, net of tax, was $17 million, or $.03 per share, compared with $292 million, or $.53 per share, for the nine months of 2010. Net income was $737 million, or $1.33 per share, compared with $652 million, or $1.18 per share, in the prior year period. Adjusted earnings per share for the nine months of 2011 increased to $1.30 from $1.23.
Risk and Insurance Services
Risk and Insurance Services revenue increased 11 percent to $1.5 billion in the third quarter of 2011, or 5 percent on an underlying basis. Operating income increased 31 percent to $186 million, compared with $142 million. Adjusted operating income in the quarter increased 13 percent to $186 million from $165 million. For the nine months of 2011, Risk and Insurance Services revenue was $4.7 billion, an increase of 11 percent from the prior year period, and 5 percent on an underlying basis.
Marsh’s revenue in the third quarter of 2011 was $1.2 billion, an increase of 12 percent, or 6 percent on an underlying basis. International operations reported underlying revenue growth of 8 percent in the third quarter, reflecting growth of 13 percent in both Asia Pacific and Latin America, with 6 percent growth in EMEA. In the United States/Canada division, underlying revenue grew 3 percent. Guy Carpenter’s third quarter revenue increased 8 percent from the third quarter of 2010 to $251 million, or 3 percent on an underlying basis. In August, Marsh announced it signed an agreement to acquire the brokerage business of Alexander Forbes, which will significantly expand Marsh’s presence in South Africa. The transaction is subject to regulatory and other approvals and is targeted for completion in the fourth quarter of 2011.
Consulting
Consulting revenue increased 11 percent to $1.3 billion in the third quarter of 2011, or 6 percent on an underlying basis. Operating income increased 17 percent to $161 million in the third quarter, compared with $138 million. Adjusted operating income increased 17 percent to $168 million in the third quarter of 2011, compared with $144 million. For the nine months of 2011, Consulting revenue increased 11 percent from the prior year period to $3.9 billion, or 6 percent on an underlying basis. Adjusted operating income rose 17 percent to $453 million, compared with $387 million in 2010.
Mercer’s revenue increased 11 percent to $975 million in the third quarter of 2011, an increase of four percent on an underlying basis. Mercer’s consulting operations produced revenue of $673 million, an increase of five percent on an underlying basis; outsourcing, with revenue of $186 million, was up one percent; and investment consulting and management, with revenue of $116 million, grew 10 percent. Oliver Wyman’s revenue increased 13 percent to $364 million in the third quarter of 2011, or nine percent on an underlying basis.
Other Items
At the end of the third quarter of 2011, cash and cash equivalents was $1.7 billion, unchanged from the third quarter of 2010. Net debt, which is total debt less cash and cash equivalents, was $1.2 billion, compared with $1.3 billion at the end of the third quarter of 2010.
In August, the Board of Directors of Marsh & McLennan Companies authorized an increase in the company’s share repurchase program to $1 billion from $500 million. Over the last year, the company has repurchased a total of 15.6 million shares of its common stock for $447 million, including 4.4 million shares in the third quarter of 2011. The Company increased its quarterly dividend 5 percent to $.22 per share, effective with the third quarter payment on August 15, 2011.
In the third quarter, Marsh & McLennan Companies completed a tender offer that resulted in the retirement of an aggregate of $600 million of the senior notes scheduled to mature in 2014 and 2015. Also in the third quarter, the company issued $500 million of 4.80 percent senior notes due 2021.
Marsh & McLennan Companies is a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. Marsh is a global leader in delivering risk and insurance services and solutions; Guy Carpenter is a global leader in providing risk and reinsurance intermediary services; Mercer is a global leader in human resource consulting, outsourcing and investment services; and Oliver Wyman is a global leader in management consulting.
Marsh & McLennan Companies’ 52,000 employees worldwide provide analysis, advice and transactional capabilities to clients in more than 100 countries.
Wow, this Global Recession is really impacting International Business, the business that supported Bermuda so well. Double digit growth no less. Puts a different spin on the Government’s continual blame of Bermuda’s woes on the Global scene.
Let’s hope they can now revist their retirement package for their employees to include insurance benefits. Or will it be another case of the person at the top benefiting the most.
Congratulations Brian,
They certainly made a great choice.
Everything this man does turns to gold, it seems.