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Insurance demand propels Marsh McLennan to another strong quarter

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Consulting giant Marsh McLennan closed the books on its fourth quarter with sales of $6.1 billion, a 9% improvement over the prior-year period.

The sales increase was mainly driven by strong demand for insurance services.

Marsh McLennan has more than 90,000 employees in 130-plus countries. One part of the company provides insurance brokerage services to businesses. Another subsidiary specializes in reinsurance, the process whereby one insurer transfers some customer policies to another in order to optimize its portfolio. Marsh McLennan also has a consulting arm that helps companies set up employee benefits plans, modernize their software and cut costs.

Marsh McLennan’s risk and insurance business was the star of its fourth quarter earnings report. Revenue from the segment rose 14% year-over-year to $3.6 billion, outpacing the company as a whole. The one weak point was the reinsurance group, which saw its sales drop 20% to $201 million. However, its relatively small share of Marsh McLennan’s total revenue mitigated the impact of the lower demand.

The company’s second largest business, its consulting arm, fared well too in the fourth quarter. Revenue grew 6% year-over-year to $2.4 billion. Marsh McLennan’s management consulting subsidiary, Oliver Wyman, grew its top line nearly twice as fast with a year-over-year sales increase of 11%. The subsidiary ended the quarter with $954 million in revenue.

Unsurprisingly, the sales growth across Marsh McLennan’s core business units had a positive impact on its bottom line. The company’s adjusted operating income climbed 9% year-over-year to $1.3 billion. Adjusted earnings increased at an even faster clip, 11%, to $1.87 per share.

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