“Those were unusual spikes,” Mr. Plumeri said. “Rates are now moderating, but we would categorize [the market] as being on the hard side.”

Willis Group Holdings Ltd. reversed a net loss of $7 million one year ago and posted a second-quarter profit of $80 million, attributing the result to higher premium rates. The U.K.-based broker's total revenue for the 2003 second quarter also improved, to $492 million from $411 million one year ago.

Mr. Plumeri also said that non-U.S. insurers still have some catching up to do. “From our global vantage, some markets have lagged the United States in rate increases and have further to go to reach appropriate rate levels,” he observed. “Many clients continue to see rate increases, especially for casualty lines.”

Meanwhile, Marsh & McLennan Companies Inc., the parent company of global insurance broker Marsh Inc., posted second-quarter net income of $365 million–8.6 percent higher than $336 million in profit it reported a year ago.

The company attributed this improvement to higher revenues, led by its Marsh risk and insurance services unit which posted double-digit revenue growth.

The company said its consolidated revenue jumped to $2.87 billion in the second quarter, from $2.61 billion one year ago. Marsh & McLennan achieved this improvement, the company said, despite the declining revenue at its Putnam Investments unit. The investment management unit saw its revenue fall to $495 million from $581 million one year ago.

But the risk and insurance services at its Marsh Inc. unit revenue rose 17 percent to $1.68 billion from $1.44 billion reported in 2002 second quarter.

Commenting on the strong performance of risk and insurance services, Marsh & McLennan chairman Jeffrey Greenberg said, “Marsh was the biggest contributor to our growth in the quarter, once again generating strong revenues and increased profitability.”

Chicago-based Aon showed much improvement in its second quarter for 2003 after reporting no income for the second quarter of 2002.

Net income in the second quarter of 2003 stood at $146 million. Revenues rose 15 percent, or $316 million, to $2.44 billion from $2.12 billion for the period.

For the six months, net income increased $138 million, or 87 percent, going to $297 million from $159 million. Revenues increased $616 million, or 15 percent, from $4.2 billion to $4.83 billion.

However, the firm reported an 8 percent decline in its underwriting that it said was due to a “back-to-basics strategy” in its accident and life and health underwriting.

During an analysts conference call, Patrick G. Ryan, chairman and chief executive officer of Aon, said the firm needed to improve its margins. Aon also reported a $9 million World Trade Center related charge for lease space and $34 million benefit pension cost increase that affected earnings. The firms claims service segment was also off by $19 million.

Arthur J. Gallagher, based in Itasca, Ill., said profit rose 5 percent, or $1.7 million for the second quarter, going to $36.2 million from $34.5 million for the three months ending June 30, 2002. Revenues rose 12 percent, or $32.2 million, going to $299 million.

For the six months ending June 30, the broker reported a 30 percent drop in net profit, which fell to $48.1 million from $68.2 million for the first half of 2002.

The firm took a charge of $19.3 million in the first quarter to exit investments in venture capital, development stage enterprises and turnarounds. The firm said it no longer planned to make investments in these enterprises.

The firms brokerage segment lead net income improvements in the quarter, increasing by $8 million, or 39 percent, to $28.6 million. Risk management net income rose 28 percent to $7.7 million. Financial services net income reported a loss of $100,000 compared to a gain of $7.9 million in 2002 for the three-month period.

Overall, first-half revenues rose 9 percent for the period, or $47.5 million, going to $553.3 million from $505.8 million.

Revenues for the brokerage and risk management segments increased 17 percent, or $40.1 million, rising to $281.1 million this quarter. Financial services declined 31 percent going from $25.8 million in 2002 to $17.9 million.

Explaining the financial services segment decline, the company noted that a $9.3 million non-recurring investment gain was recorded in the second quarter of 2002.

During a conference call in late July, J. Patrick Gallagher, the firms president and chief executive officer, said he was “bullish” about the firms third- and fourth-quarter performance.

He also said that the insurance industry is seeing some moderation in rate increases, “but strong underwriting with upward pressures remains the rule.”

Also reporting improved earnings for the quarter were Daytona, Fla.-based Brown & Brown; Richmond, Va.-based Hilb, Rogal & Hamilton Co.; Chicago-based Hub International Ltd.; and U.S.I. Holdings headquartered in Briarcliff Manor, N.Y.

Brown & Brown reported that net income in the second quarter of 2003 rose $6.5 million to $28 million from $21.4 million in second-quarter 2002. Revenues rose $23 million during the period, to $137.9 million.

For the first six months of 2003, net income increased 41 percent to $58.5 million and revenue rose 25 percent to $282.6 million.

Hilb, Rogal & Hamilton reported that second-quarter net income rose $6.7 millionrising to $19.1 million from $12.5 million for the second quarter of 2002. Revenues increased $43.8 million to $139.5 million during this period.

For the six months, revenues rose 44 percent, or $86 million, to $281.5 million. Net income rose 18 percent, or $5.5 million, to $37.2 million.

The firm attributed its results to a combination of growth from acquisitions, new business and continued premium rate growth in the insurance industry.

Martin L. Vaughan III, the firms chairman and chief executive officer, reaffirmed the brokers full-year guidance for growth for this year at between 9 and 11 percent. Mr. Vaughan said growth would occur despite the moderation in price increases the insurance industry is seeing. He added that no one “expected increases to continue this year at last years levels.”

The firm is looking to continue to grow especially in the area of its excess and surplus lines business, he said, adding that the firm is looking to grow this side of the business through acquisitions and/or creation of new offices.

U.S.I. Holdings reported net income for the second quarter of $7.6 million, a $13 million jump from the loss of $5.6 million that the firm reported in second-quarter 2002. Revenues increased 8 percent for the period, or $6 million, rising to $86 million from $80 million.

For the first six months, net income rose $37 million, turning a loss of $24.7 million in 2002 to a $12.5 million profit in 2003. Revenues increased 7 percent, or $11.3 million, to $169 million.

The firm recently moved its headquarters from San Francisco to New York. David L. Eslick, chairman, president and chief executive officer of the firm, said the move made sense because 75 percent of the firms business is east of Mississippi.

At Hub International, for the second quarter, net income was $10.6 million, compared to $11.5 million for second-quarter 2002. According to Hubs July 31 earnings announcement, factors contributing to the 8 percent decline included revenue and expense timing shifts, as well as the fact that a one-time gain was reported from the sales of two agencies in 2002.

Revenues in the quarter rose 29 percent to $74.2 million.

(Additional reporting by Michael Ha.)

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 1, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.