Marsh & McLennan
announced today that it missed Wall Street expectations -- despite moving back into the black with its first-quarter earnings after a big loss last year.
Still, the company said that its core business -- risk and insurance services -- saw increased profitability and underlying growth in the quarter, buoyed by clients who are seeking risk-management services amid a volatile market.
With that hopeful sign, investors bid up shares in the New York insurance broker and consultancy by as much as 6% Wednesday morning. The stock changed hands recently at $21.90, up $1.31.
The firm said it made $176 million, or 33 cents a share, in the just-ended quarter, compared with a loss of $210 million, or 40 cents a share, a year ago. Those 2008 figures included a $425 million writedown on the value of its Kroll security business.
Excluding restructuring charges and other items, the company said its adjusted earnings in the first quarter were 40 cents a share, compared with a comparable EPS of 54 cents a year ago. Analysts polled by Thomson Financial expected adjusted earnings of 43 cents a share.
Revenue fell 13% to $2.63 billion, hurt primarily by declines at the company's consulting arm, where revenue tumbled 16% during the quarter to $1.1 billion. Marsh & McLennan blamed the results on the effects of a stronger dollar and a general recessionary slackening in demand for those advisory services.
At the risk and insurance services division, revenue declined 8% to $1.4 billion. The company said, however, that if fiduciary interest is taken into account, underlying revenue growth in the quarter totaled 1%. The division's operating income, meanwhile, rose 27% to $297 million, as profit margins widened in the quarter on "expense discipline."
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