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Top 5 industry news stories of the week: February 7 – 13, 2014 | Canadian Insurance
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Top 5 industry news stories of the week: February 7 – 13, 2014

Marsh & McLennan and Willis report Q4 results; RSA appoints new group chief executive

Get up-to-date on the latest P&C insurance industry news, company reports and ratings, and product releases.

The Top 5 industry news stories of the week:   

1. Marsh & McLennan Companies reports Q4 results: Marsh & McLennan Companies, Inc. have reported financial results for the fourth quarter and year ended December 31, 2013. Risk and Insurance Services revenue was $1.6 billion in the fourth quarter of 2013, an increase of 4% on both a reported and underlying basis. Adjusted operating income increased 9% to $327 million. For the full year 2013, segment revenue was $6.6 billion, an increase of 4% from the prior year period, or 3% on an underlying basis. Adjusted operating income rose 11% to $1.5 billion, compared with $1.3 billion last year. Marsh’s revenue in the fourth quarter of 2013 was $1.4 billion, an increase of 4% on both a reported and underlying basis. International operations had underlying revenue growth of 4% in the fourth quarter, reflecting growth of 13% in Latin America; 4% in Asia Pacific; and 3% in EMEA. In the US/Canada division, underlying revenue grew 3%. Guy Carpenter’s fourth quarter revenue was $209 million, an increase of 6% on both a reported and underlying basis, reflecting broad-based growth in North America, International, Global Specialties, and UK Facultative. Dan Glaser, president and CEO, said in a press release: “For the full year, Marsh & McLennan Companies’ results were outstanding. On a consolidated basis, adjusted operating income grew 14%, and the consolidated margin increased 180 basis points to 17.4% from 15.6%. Marsh produced another year of strong performance, with underlying revenue growth across all major geographies and record new business development. Guy Carpenter’s results for the year were excellent, with underlying revenue growth of 5%. Mercer’s strong performance included 4% underlying revenue growth, fueling the Consulting segment’s record profitability. Oliver Wyman’s underlying revenue growth improved sequentially throughout the year. For the fourth consecutive year, the Risk and Insurance Services and Consulting segments both achieved double-digit growth in adjusted operating income.”

Read: Global insurance pricing declines in Q4 in 2013: Marsh

2. Willis reports Q4 results: Willis Group Holdings plc has reported results for the three and twelve months ended December 31, 2013. “Willis closed 2013 with another quarter of solid organic revenue growth, and each of our businesses achieved our goal of mid-single digit organic growth for the full year. In addition, we delivered strong earnings per share growth and grew cash flow from operations during the year,” said Willis Group CEO Dominic Casserley in a press release. “Based on that performance, and confidence in our strategy, we are increasing our dividend by 7%. We also announced a share buyback to offset the increase in shares outstanding resulting from the exercise of employee stock options. As the new year begins, we are committed across the firm to our goals of growing revenues with positive operating leverage to improve cash flow and create strong shareholder returns.” Willis Group reported fourth quarter 2013 net income from continuing operations of $68 million, or $0.37 per diluted share. Total revenues, which include commissions and fees, investment income and other income, were $919 million in the fourth quarter of 2013, an increase of 5.5% from $871 million in the fourth quarter of 2012. Total reported commissions and fees improved to $911 million in the fourth quarter of 2013, up 5.1% from $867 million in the prior year quarter. Commissions and fees in the fourth quarter of 2013 were unfavorably impacted by $1 million of foreign currency movements. Organic commissions and fees growth in the fourth quarter of 2013 was 3.7% compared to the same quarter in 2012. The North America segment achieved 5.8% organic commissions and fees growth in the fourth quarter of 2013 compared with the fourth quarter of 2012. Organic growth in the quarter was increased by a $5 million adjustment to align the recognition of revenue in the North America Personal Lines business with the rest of the Group. Excluding the 160 basis point impact of this adjustment, organic growth in North America would have been 4.2%. Growth in commissions and fees was reported across most of North America’s geographic regions. Similarly, most of the major industry practices recorded positive growth including Construction, which grew low-single digits in the quarter. However, after a series of strong quarters, organic growth in the Human Capital & Benefits practice was flat this quarter. 

3. RSA appoints new group chief executive: RSA Insurance Group plc (RSA) has appointed Stephen Hester as group chief executive and a director of the company. Martin Scicluna, chairman of RSA, who has been acting in an executive capacity pending the appointment of a chief executive, will revert to non-executive chairman. Hester was most recently Chief Executive Officer at Royal Bank of Scotland (RBS) where he led the UK’s largest ever corporate restructuring and recovery programme. 

Read: For RSA, underwriting the first commercial bulk carrier trip through the Northwest Passage was no easy feat

4. SGI asks to increase auto insurance rates by 5.25%: Insurance costs could go up an average of $49 a year for most vehicles, if a request made by Saskatchewan Government Insurance is approved. SGI has submitted a proposal to the Saskatchewan Rate Review Panel for a net increase of 5.2% on vehicle insurance rates. For more on this story click here.

5. ACE Global Markets increases environmental insurance capacity for global clients: ACE Global Markets, the London-based wholesale insurance division of ACE Group, has announced that it will offer increased capacity of US$50 million for global clients seeking environmental liability insurance coverage. According to an ACE release, the announcement follows recent research by ACE that highlights environmental risk as the second highest ranking emerging risk concern for businesses across the EMEA region. It also responds to an increasingly complex global regulatory environment in which the coverage provided by more traditional insurance policies is not sufficient for the exposures that companies face today

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