Revenue growth in both its consulting and risk and insurance services boosted Marsh & McLennan Companies' 2013 fourth-quarter net income to $303 million, compared to $259 million in the previous year's fourth quarter.
Revenue in the quarter grew to $3.1 billion compared to $3 billion in 2012's fourth quarter.
MMC's risk and insurance services revenue grew 4%, with Marsh contributing $1.4 billion in revenue (up 4% compared to 2012's fourth quarter) and Guy Carpenter contributing $209 million (up 6%). MMC says Marsh's revenue grew 13% in Latin America, 4% in Asia-Pacific, 3% in EMEA and 3% in Marsh's U.S./Canada division. Guy Carpenter revenue consisted of “broad-based growth in North America, international, global specialties and UK facultative,” MMC says.
Consulting revenue was also up 4%, with Mercer contributing just under $1.1 billion (up 2%) and Oliver Wyman Group contributing $408 million (up 8%).
For the year, MMC says net income was $1.4 billion in 2013 compared to $1.2 billion in 2012. Revenue for the year was $12.3 billion, compared to $11.9 billion in 2012.
In the Q&A portion of MMC's Q4 conference call, President and CEO Dan Glaser discussed the growth in Guy Carpenter given the pricing declines in the reinsurance sector overall. He said pricing levels have an impact on Guy Carpenter's results, but that impact is more muted than 5 or 10 years ago as the reinsurance broker has built other capabilities that it has used to serve clients, such as its advisory and analytic capabilities.
Glaser's answer is similar to Aon President and CEO Greg Case's statement during Aon's Q4 conference call, when he noted the headwinds in the reinsurance sector due to alternative capital, but said Aon succeeds by providing a mix of services to clients, including data and analytics.
Alex Moczarski, president and CEO of Guy Carpenter, also said that Guy Carpenter will grow in the future because of its segmentation strategy.
Peter Zaffino, president and CEO of Marsh, outlined MMC's strategy with respect to Marsh & McLennan Agency, which was started in 2008 to serve midsize businesses. Zaffino stated that it's been “a journey,” adding that 35 agencies have been acquired since 2009. Recently acquired Barney & Barney, LLC, based in San Diego, will serve as Marsh & McLennan Agency's western-region hub, he added.
In general, Zaffino said he's been pleased with organic growth, adding he believes Marsh & McLennan Agency is building a platform “that will be the premier agency in the U.S. over time.”
He said Marsh & McLennan Agency will likely look to acquire a few more hubs, but said there is no prescription for how many hubs the agency wants.
Glaser added the strategy is more about finding high-quality agencies rather than focusing more on geography.
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