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Marsh & McLennan show strong Q1 revenue, profit



Marsh & McLennan Cos. Inc. expects organic sales growth for the full year 2021 to top its guidance of 3% to 5% as the economy turns the corner and growth accelerates, the company's top executives said Tuesday during a first-quarter earnings call with analysts.

The New York-based broker said that the recovering economy and fixed real estate / accident insurance pricing were reasons for optimism as it reported underlying revenue growth in the first quarter of 6%.

The company reported a profit of $ 983 million for the quarter, an increase of 30% over the previous year.

Marsh LLC, its commercial broker, had organic sales growth of 8% during the first quarter, while Guy Carpenter & Co. LLC, the company's reinsurance agency, reported organic growth of 7%. Both companies benefited from strong growth for new business and solid retention.

During the conversation, Dan Glaser, Marsh McLennan's President and CEO, said that US GDP was close to flat during the first quarter and strong growth levels are expected in the current quarter due to "a recovery in demand" as the impact of vaccines seizes economic comparisons with a year ago. 1

purchase of PayneWest Insurance Inc.

“Overall, we are heading for a very good year. Demand for our advice and solutions is strong, the economy is recovering, pricing for non-life insurance remains stable and we are benefiting from industry disruptions, says Glaser.

Cyber ​​was the outlier in a quarter that saw global property / accident insurance pricing moderate, say Marsh McLennan executives.

The average price increase for cyber doubled from high teens to the mid-30s due to the exposure environment, says John Doyle, Marsh's President and CEO, during the interview.

Marsh's global insurance market index showed an increase of 18% compared to the previous year compared to 22% in the fourth quarter.

“Price increases gradually slowed during the first quarter after accelerating for 11 straight quarters. However, the 18% increase is still one of the highest since we started publishing the index in 2012, says Glaser.

Global property insurance prices increased by 15% during the first quarter and global financial and professional lines rose. 40%. The global number of accidents increased by an average of 6%, while the compensation levels of American workers were modestly negative. pricing for small and medium-sized markets continues to increase, although the increases are smaller than for large, complex accounts.

With reinsurance, Guy Carpenter's global P / C interest rate index rose just below 5% in January. 1 reinsurance renewal, Glaser said.

Reinsurance rates and terms in the United States on April 1 were largely a continuation of the pricing environment on January 1.

"Capacity is more than adequate and demand remains high," but reinsurance capacity is still limited in some industries, especially for cyber risk, Glaser said.

“The total price increases continue to exist in both the property / accident insurance and reinsurance markets. "We work hard to help customers navigate these challenges," said Glaser.

Marsh McLennan reported consolidated revenue of $ 5.1 billion for the first quarter, an increase of 9% or 6% on an underlying basis from the previous year.

Mark McGivney, Marsh McLennan's CFO, said the company is positioned for a "very good 2021" despite the continuing uncertainty surrounding the pandemic.

"Underlying growth accelerated in all of our operations, and our margin increase in profit growth was impressive" in the first quarter, McGivney said.

Marsh reported $ 2.33 billion in revenue, an 8% increase on an underlying basis compared to with the same period last year.

This was Marsh's highest level of underlying growth in nearly two decades, "said McGivney.

Special growth was particularly strong during the quarter in Marsh's FinPro, private equity practices, construction and energy lines., Said Doyle.

Guy Carpenter, its reinsurance brokerage unit, reported revenue of $ 895 million in the first quarter, an increase by 7% on an underlying basis.

Peter Hearne, CEO of Guy Carpenter, said the majority of his revenue comes from new business profits ter. “It is well-balanced in all our companies, from North America, Latin America, the Middle East, Asia Pacific and global specialties. Everyone has felt strong growth during the first quarter and we see the same holdings for the second quarter, "Hearne said during the conversation.

The company's consulting business, consisting of Mercer LLC and Oliver Wyman LLC, had sales of $ 1.87 billion, up 3% on an underlying basis.

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