Insurance and security-services broker Marsh & McLennan Cos., which has operations and customers in Connecticut, said today it recorded a loss in the second quarter because of an impairment charge tied to the value of one of its divisions.
Excluding the special charge, Marsh & McLennan was able to turn a profit that narrowly beat analysts’ expectations as the New York-based insurance broker and consulting firm said profitability improved in its core risk and insurance services segment.
However, ongoing weakness in the economy continued to hurt its consulting businesses.
Overall, Marsh & McLennan lost $193 million, or 37 cents per share. It earned $65 million, or 12 cents per share, during the same quarter last year.
The quarterly loss was the result of a $315 million goodwill impairment charge taken against the value of its corporate security business, Kroll. The charge reduced results by 60 cents per share.
Marsh & McLennan took the charge after reviewing Kroll’s operations amid the sale in the second quarter of Kroll Government Services, a government security clearance screening business.
Excluding the impairment charge and other one-time items, Marsh & McLennan earned 33 cents per share, topping analysts expectations by 1 cent. Analysts typically do not include special charges in their estimates.
Shares of Marsh & McLennan rose 98 cents, or 4.6 percent, to $22.48 in morning trading.
Like many other companies that have reported earnings in recent weeks, profits were helped by cutting costs and not necessarily from generating revenue.
Marsh & McLennan said its revenue fell 13 percent to $2.63 billion from $3.03 billion last year. Revenue declined in each of Marsh & McLennan’s three major operating divisions; risk and insurance services, consulting and risk consulting and technology.
Analysts polled by Thomson Reuters, on average, forecast revenue of $2.76 billion for the quarter.
Risk and insurance services revenue fell 5 percent to $1.34 billion primarily due to a decline in interest income. However, operating income rose sharply because of improvements at both Marsh and Guy Carpenter, its two risk and insurance services subsidiaries. (AP)
