But second quarter profit drops as foreign exchange losses hit revenues

Dan Glaser

The broking division of Marsh & McLennan Companies (MMC) made an operating profit of $960m (£618m) in the first half of 2015, up 2% on the £941m it reported in the same period last year.

The profit boost came despite a 2% drop in revenue at the division, which comprises insurance broker Marsh and reinsurance broker Guy Carpenter, to $3.55bn (H1 2014: $3.63bn).

The revenue drop was mainly caused by foreign exchange losses because of the strong US dollar.

First half organic growth for the division was 2%.

Within the division, Marsh’s revenue fell 1% to $2.90bn (H1 2014: $2.94bn) and organic growth was 3%.

Guy Carpenter’s revenue fell 5% to $643m (H1 2014: $676m) and organic growth was flat.

MMC’s group profit before tax for the first half of 2015 was $1.30bn, up 3.3% on the $1.26bn it reported for the same period last year .

Group revenue fell 1.9% to $6.44bn (H1 2014: $6.56bn).

MMC president and chief executive Dan Glaser (pictured above) said: “Given the macro headwinds we are facing, I am pleased with our performance in the first half of the year.

“Looking forward, we’re on track to deliver underlying revenue growth, margin expansion and strong growth in earnings per share in the second half of the year.”

Second quarter dip

The picture for the second quarter alone was different.

Profit at MMC’s broking unit fell 4.7% to $427m (Q2 2014: $448m) on the back of a 2% drop in revenue to $1.75bn (Q2 2014: $1.79bn).

The division’s organic growth was 2%.

Marsh revenue fell 1% to $1.47bn from $1.49bn, while Guy Carpenter’s fell 6% to $275m from $295m.

Group profit before tax fell to $595m in the second quarter of 2015 from $608m in the second quarter of 2014.