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Marsh McLennan reports revenue growth; sees interest rate increases in the future



Buyers of reinsurance and primary commercial property insurance are likely to see significant rate increases in upcoming renewals, executives at Marsh & McLennan Cos. said. Inc. on Thursday while discussing the company’s third quarter results.

Losses from Hurricane Ian will lead to significant increases in property catastrophe reinsurance rates, which were already expected to rise more than 20% by the end of the year, as well as property insurance rates, they said on the call with analysts.

Rates on other lines also continue to rise, including a sharp increase in cyber liability rates, they said.

The world’s largest brokerage reported $4.77 billion in revenue for the quarter, up 4% from the same period last year and up 8% on an underlying or organic basis, which excludes the impact of mergers and acquisitions and currency fluctuations.

Net income rose 1

.8% to $546 million.

Marsh LLC, its prime brokerage arm, reported $2.47 billion in revenue, up 5% from the same period in 2021, largely reflecting the impact of currency changes, with the dollar rising against several currencies, including the British pound and the euro. Revenue increased 8% on an underlying basis.

Marsh’s US and Canada operations reported $1.45 billion in revenue, up 6.2% overall and 5% on an underlying basis. Its Europe, Middle East and Africa operations reported $589 million in revenue, down 1.8% overall but up 9% on an underlying basis, reflecting currency changes.

Reinsurance broker Guy Carpenter & Co. LLC reported $328 million in quarterly revenue, up 4.5% year-over-year and up 8% on an underlying basis.

Looking ahead, John Q. Doyle, president and chief operating officer of Marsh McLennan, said losses from Hurricane Ian, which hit Florida’s Gulf Coast last month and caused by multiple estimates more than $50 billion in insured losses, will have a strong influence on the market.

“Ian’s Category 4 strength, incredible size and slow pace resulted in massive damage, the cost of which is compounded by the effects of coastal development, escalating property values, general inflation and persistent supply chain challenges,” he said.

Mr. Doyle will take over as president and CEO of the company when Dan Glaser retires at the end of the year.

Buyers of property tax reinsurance will see some of the biggest rate increases, said Dean Klisura, president and CEO of Guy Carpenter.

Before Hurricane Ian, cat losses had exceeded modeled losses for several years, so prices were expected to rise 20% to 25% or more, he said.

“Now it’s likely, of course, to be higher than that,” Mr. Klisura In addition, reinsurers will be more likely to use their capital with cedants where they also cover other lines, such as casualty risks, he said.

Property insurance prices are also expected to rise. So far this year property prices have risen by 6%, said Martin South, president and CEO of Marsh.

“We would have thought at this point in the cycle after such consistent property growth that we would have started to see some relief. Sadly, the reverse will be true for our clients,” he said.

Cyber ​​rates are also rising significantly, with rates up 53% in the third quarter. said mr. South.


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