Marsh & McLennan Cos. Inc. reported a nearly 20{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} jump in revenue in the second quarter as economies continued to reopen after going into lockdown ahead of the comparable reporting period last year.
The world’s largest brokerage also added about 2,000 staff in the first half, which included a significant increase in its rate of hiring from rivals Aon PLC and Willis Towers Watson PLC since those companies announced merger plans last year, Marsh McLennan’s senior executive said.
Its insurance and reinsurance broking units continued to benefit from higher insurance pricing pushing up commissions and fees, but price increases are moderating, Dan Glaser, president and CEO of Marsh McLennan, said in a conference call with analysts Thursday.
Key concerns for Marsh McLennan clients include the effect of climate change and cyber risk, he said, as cyberattacks accelerate. Marsh McLennan itself was hit by a cyber breach in April.
Marsh McLennan reported $5.02 billion in revenue for the second quarter, a 19.8{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} increase over the same period last year and up 13{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} on an underlying basis, which excludes the effect of foreign exchange fluctuations, mergers and acquisitions, and other factors.
“We are benefiting from what may be the strongest economic rebound in nearly four decades, led by our largest region, the U.S.,” Mr. Glaser said.
Net income for the second quarter was $820 million, up 43.4{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}.
The company’s risk and insurance services division, which includes its insurance and reinsurance broking units, reported revenue of $3.14 billion, up 20.7{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} and a 13{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} increase on an underlying basis. Marsh LLC, its main insurance broking unit, reported revenue of $2.65 billion, up 22.6{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} and a 14{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} increase on an underlying basis. In the United States and Canada, Marsh reported underlying revenue growth of 15{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}.
Marsh reported $796 million in revenue for Europe, the Middle East and Africa, up 33.3{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}. Asia Pacific revenue was $347 million, up 16.4{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}, and Latin America revenue was $103 million, up 4{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}.
Guy Carpenter & Co. LLC, its reinsurance broking unit, reported $488 million in revenue, up 12.7{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} and 12{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} on an underlying basis.
Property/casualty insurance rates continue to increase, with the second quarter marking the 15th consecutive quarter of commercial insurance rate increases, Mr. Glaser said.
According to Marsh’s analysis, global insurance rates increased 15{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} in the second quarter, compared with 18{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} in the first quarter, he said.
“The pace of price increases continued to moderate but still remains high, reflecting elevated loss activity and concerns about inflation and low interest rates,” Mr. Glaser said.
Global property insurance rates were up 12{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}, and global financial and professional lines rates were up 34{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}, driven in part by steep cyber insurance increases, he said. Global casualty rates were up 6{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}, and U.S. workers compensation rates “declined modestly,” he said.
In reinsurance, single-digit increases were typical in the second quarter, following two years of double-digit increases, he said.
Marsh McLennan added nearly 2,000 staff in the first half of 2021, Mr. Glaser said, which includes about 700 employees from Missoula, Montana-based PayneWest Insurance Inc., which Marsh bought in April.
Marsh also increased its rate of hiring from Aon and Willis, whose merger has been delayed over antitrust concerns.
Since the announcement of the Aon-Willis deal in March 2020, Marsh’s hiring from its two main rivals has been “three times higher on a net basis than it was in the 15 months prior to the announcement. That’s not going to run forever, but ultimately we’re doing our best to continue to build talent and capabilities,” he said.
Aon and Willis declined to comment on Mr. Glaser’s remarks.
While the pandemic remains a concern, Marsh McLennan is “focused on resurgence and expansion,” Mr. Glaser said. Two major areas where the company seeks to help its clients are cyber risk and climate change, he said.
Cyberattacks on supply chains and ransomware incidents continue to rise and are affecting organizations across all sectors, he said.
Mr. Glaser did not comment during the call on the April breach affecting Marsh McLennan, and a spokeswoman said the company did not have any additional comments on the breach, which was disclosed earlier this month.
For the first six months of 2021, Marsh McLennan reported $10.1 billion in revenue, a 14{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} increase over the same period last year and up 9{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4} on an underlying basis. Net income was $1.8 billion, up 36{0018ee5a413206d5867d4650a6cb0bf5e2f9c77ab1c1dc5336e75263ef8a33b4}.
