Marsh & McLennan Cos. Inc. MMC reported second-quarter 2015 operating earnings per share of 80 cents, which came in line with the Zacks Consensus Estimate. Earnings improved 1.3% year over year.

Quarterly Details

Marsh & McLennan consolidated revenues was $3.23 billion were down 2% year over year but up 3% on an underlying basis. The top line missed the Zacks Consensus Estimate of $3.4 billion.

Total operating expenses of $2.6 billion declined 2% year over year owing to lower compensation and benefits. A decrease in other operating expenses also contributed to the decline in total operating expenses.

Adjusted operating margin at Marsh & McLennan remained unchanged year over year at 19.9%. Meanwhile, interest expenses declined 4.8% to $40 million. Investment income reported was $3 million against investment loss of $2 million in the year-ago quarter.

Segment Results

Revenues for the Risk and Insurance Services segment were $1.7 billion, down 2% year over year but up 2% on an underlying basis. Moreover, adjusted operating income declined 2% year over year to $445 million.

Marsh's revenues came in at $1.5 billion, down 1% year over year but up 3% on an underlying basis. Underlying revenues grew 2% year over year in international operations, reflecting growth of 5% in Latin America and 3% in EMEA (Europe, the Middle East and Africa). The U.S.-Canada region reported a 4% year over year increase in revenues.

Guy Carpenter's revenues during the reported quarter were $275 million, down 6% year over year and 2% on an underlying basis.

The Consulting segment's revenues decreased 2% year over year but increased 4% on an underlying basis to $1.5 billion. Additionally, adjusted operating income was down 1.2% year over year to $244 million.

Mercer's revenues were $1.05 billion, down 2% year over year but up 4% on an underlying basis. The segment's retirement operations generated revenues of $325 million, up 2% on an underlying basis. Additionally, underlying revenues grew 3% year over year to $391 million for Health, 4% year over year to $123 million for Talent and 8% year over year to $207 million for Investments.

Moreover, Oliver Wyman’s revenues declined 2% year over year but increased 3% on an underlying basis to $441 million in the reported quarter.

Financial Update

Marsh & McLennan exited the quarter with cash and cash equivalents of $930 million, lower than $2 billion at 2014 end. Long-term debt of $3.8 billion was higher than $3.4 billion at 2014 end.

As of Jun 30, 2015, Marsh & McLennan’s total assets were $17.4 billion (down from $17.8 billion at 2014 end), while total equity was $6.9 billion (down from $7.1 billion at 2014 end).

Dividend and Share Buyback

During the quarter, the company increased quarterly cash dividend to 31 cents per share from 28 cents paid earlier. The raised dividend will be paid on Aug 14, to shareholders on record as of Jul 10.

Marsh & McLennan bought back 8.2 million shares for $475 million during the quarter.

Developments During the Quarter

In June, the company announced the acquisition of Texas-based MHBT Inc. and its another wholly owned subsidiary of Marsh & McLennan – Marsh – announced the takeover of Leeds-based SME Insurance Services. Another acquisition by the company in June was that of Sumitomo Life Insurance Agency America, Inc.

In May, the company’s subsidiary Mercer bought Kepler Associates, one of the leading U.K.-based executive remuneration specialists.

Zacks Rank & Other Insurance Brokers’ Performance

Currently, Marsh & McLennan carries a Zacks Rank #3 (Hold).
The bottom line at Brown & Brown Inc. BRO was in line with the Zacks Consensus Estimate. Wells Fargo WFC earned $1.03 a share, missing the Zacks Consensus Estimate by a penny. Another player, eHealth Inc. EHTH is expected to release earnings on Jul 29.

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