Marsh & McLennan posts loss on impairment charge

Marsh & McLennan Cos. reported today that it recorded a loss in the second quarter because of an impairment charge tied to the value of one of its divisions. The New York-based insurance broker and consulting firm said it 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 would have earned 33 cents per share. Analysts polled by Thomson Reuters, on average, forecast earnings of 32 cents per share on revenue of $2.76 billion. Analysts estimates do not typically include special charges. 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. 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 improving operations at both Marsh and Guy Carpenter, its two risk and insurance services subsidiaries. Marsh's profitability improved despite a drop in revenue because of cost-cutting measures. Guy Carpenter's earnings improved due to an increase in business and expense reductions. Consulting revenue fell 17 percent to $1.14 billion due to steep declines at both Mercer and Oliver Wyman Group. Profitability in the division was hurt by $30 million in liability costs, which were mostly tied to a legal settlement at Mercer. Foreign currency translation also hurt operating income in Marsh & McLennan's consulting division. Revenue from the risk consulting and technology division, which includes Kroll, fell 40 percent to $161 million.