Marsh & McLennan profits drop

Marsh & McLennan Companies Inc. earnings have recently been lowered in its insurance services and investment management divisions. In addition, the Company’s restructuring charges have reduced the second-quarter profit to 57%.In the April to June period, the Company’s net income totaled $166 million, $0.31/share and this represents a fall from $389 million, $0.73/share, at the same time last year. Earnings for the quarter were $0.43/share, not including restructuring, employee retention or regulatory expenses. The quarter revenue was $3.1 billion, a slight increase from last years $3.03 billion.Marsh & McLennan has been in the spotlight of investigations launched by New York Attorney General Eliot Spitzer regarding bid rigging, price fixing and the use of hidden incentive fees to steer property and casualty insurance contracts. The Company has agreed to pay $850 million in restitution of Spitzer’s allegations. In a statement Marsh & McLennan’s president and CEO Michael G. Cherkasky says although much of the company’s focus in the second quarter was on restructuring, “we have made significant strides across all of MMC’s businesses to position the company for long-term, profitable growth.” Cherkasky adds that the company may delay the rollout of its new pricing agreements to the fourth quarter from the third quarter so to increase commissions and rectify lost income. The Company’s revenue declined 11% in the second quarter in its risk and insurance services division and was off 13% in its investment management business. However its risk consulting arm Kroll and in its consulting division Mercer saw growth. By June earnings were $300 million, or $0.56/share, down from $835 million, or $1.56/share, at the same period last year. Earnings in the first half totaled $0.95/share, with revenue rising to $6.3 billion from $6.2 billion in the first six months of 2004.