Marsh & McLennan Cos. Inc. Thursday reported 6% underlying revenue growth in the second quarter as its reinsurance brokerage arm saw double-digit growth, but organic growth slowed in its consulting business.
Despite uncertainty in the economic outlook, the environment remains “supportive of growth,” John Doyle, Marsh McLennan’s president and CEO, said on a conference call with analysts to discuss the results.
“In general, we see continued economic growth in most of our major markets. The cost of risk in health care continues to rise, and labor markets remain tight, and the consensus probability of a near-term recession for major economies continues to decrease,” Mr. Doyle said.
Insurance and reinsurance pricing continues to moderate in some segments of the market, but certain lines, including U.S. excess casualty, are “showing early signs of stress,” Mr. Doyle said.
Marsh McLennan reported second-quarter revenue of $6.22 billion, up 6% overall and also on an underlying basis over the same period in 2023. Revenue in its risk and insurance services segment grew 7% on an underlying basis versus 4% in its consulting business. The broker continues to expect mid-single-digit or better underlying revenue growth for the year.
Net income for the second quarter rose 9% year-over-year to $1.13 billion.
Revenue at Marsh LLC, Marsh McLennan’s main brokerage arm totaled $3.27 billion, up 8% overall and 7% on an underlying basis. Marsh’s business in the U.S. and Canada generated $1.83 billion in revenue, up 8% overall and 6% on an underlying basis.
Its Europe, Middle East and Africa business reported $912 million in revenue, a 6% increase overall and 7% on an underlying basis. Asia-Pacific revenue was $391 million, up 9% overall and 7% on an underlying basis, and Latin America revenue totaled $137 million, up 1% overall and 8% on an underlying basis.
Reinsurance brokerage arm Guy Carpenter & Co. LLC reported $632 million in second-quarter revenue, a 10% increase over the prior-year period and up 11% on an underlying basis.
Demand for property catastrophe coverage increased at midyear renewals, as rates eased after significant increases in 2023, Mr. Doyle said.
Marsh McLennan’s consulting operations, Mercer LLC and Oliver Wyman LLC, reported a combined $2.22 billion in revenue, up 2% overall and 4% on an underlying basis.
Primary insurance rates were flat in the quarter, versus up 1% in the first quarter of this year, according to the Marsh Global Insurance Market Index.
Global property rates were flat in the quarter, compared with up 3% in the first quarter, Mr. Doyle said.
Casualty rates increased in the low single-digits, but U.S. excess casualty was up 10% in the quarter, he said.
Workers compensation rates saw low-single-digit decreases, while financial and professional liability rates and cyber pricing were down 5% and 6%, respectively.
The majority of property placements at midyear reinsurance renewals were completed with adequate capacity, Mr. Doyle said.
“Global property cat reinsurance rates were generally flat to down mid-single digits, with greater decreases for upper layers on accounts without losses,” he said.
The catastrophe bond market had its most active quarter on record with over 30 new bonds issued involving approximately $8 billion of limit, he said.
Casualty programs face continued underwriting scrutiny, but there was adequate capacity in the market. “Excess of loss programs with U.S. exposure saw upward pricing pressure, while U.S. ceding commissions were flat to down slightly,” Mr. Doyle said.