Insurance rate increases slowed in the first quarter in several major lines, and prices fell for some specialty coverages, executives at Marsh & McLennan Cos. Inc. said Thursday, as the brokerage reported higher revenue and profit for the quarter.
The reinsurance market is also improving for cedents, the executives said.
Meanwhile, the brokerage is stepping up its direct involvement in the wholesale brokerage market through its recently launched Victor Access unit, they said.
Marsh McLennan reported $6.47 billion in revenue for the first quarter, a 9.3% increase from the same period last year.
The company’s revenue increased a similar amount on an underlying basis, which excludes the effect of foreign exchange fluctuations, and acquisitions and dispositions.
In its risk and insurance services division, Marsh reported revenue of $3 billion for the quarter, a 9.4% increase over the same period last year and up 8% on an underlying basis. Guy Carpenter, its reinsurance brokerage unit, reported revenue of $1.15 billion, a 7.2% increase and up 8% on an underlying basis.
In its consulting business, Mercer reported $1.43 billion in revenue, a 6% increase, and Oliver Wyman reported revenue of $789 million, up 14.8%.
Net income increased to $1.4 billion, a 13.4% increase over last year’s first quarter.
Marsh’s global insurance rate index increased 1% in the first quarter, compared with 2% in the fourth quarter, Marsh McLennan President and CEO John Doyle said on an earnings call with analysts Thursday morning.
He noted the index skews toward large account business and that middle-market rates are generally renewing higher.
In individual lines, global property rates increased 3%, compared with 6% in the prior quarter, casualty rates rose 3%, similar to the fourth quarter, and workers compensation rates declined in the mid-single digits, he said.
In specialty lines, financial and professional liability rates were down 7%, and cyber liability rates fell 6%, Mr. Doyle said.
Reinsurance pricing remained stable, he said.
“In the April renewal period, U.S. property cat reinsurance rates were flat, with some decreases for accounts without losses. Loss-impacted accounts averaged increases in the 10% to 20% range,” Mr. Doyle said.
And cedents will likely see improved market conditions for June 1 Florida property cat renewals, he said.
Cedents are looking to buy more property catastrophe reinsurance coverage, said Dean Klisura, president and CEO of Guy Carpenter.
“Reinsurer appetite has increased for property cat. There’s an inflow of capital and capacity, competition at the top end of programs; it’s been good for both buyers and sellers,” he said.
Meanwhile, Marsh, which signaled last year that it was looking to develop more wholesale capabilities for the excess and surplus lines market, recently launched Victor Access, a wholesale brokerage unit of Victor, its managing general underwriter unit.
“We’re not looking to build a third-party wholesale business,” Mr. Doyle said. “We actually access most of our E&S market solutions directly today, but we want to continue to press and make sure that we can access as much of that market directly. … We’ll continue to use wholesalers for niche expertise.”