Marsh & McLennan Companies, Inc. Q4 2010 Earnings Conference Call Transcript - Thomson StreetEvents

Marsh & McLennan Companies, Inc. Q4 2010 Earnings Conference Call Transcript

19 pages (9638 words) — Published Feb 15, 2011
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Abstract:

Final Transcript of MMC earnings conference call or presentation, 15-Feb-11 8:30am ET

  
Brief Excerpt:

...Brian Duperreault Marsh & McLennan Companies, Inc. - President and CEO Vanessa Wittman Marsh & McLennan Companies, Inc. - EVP and CFO Dan Glaser Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh Michele Burns Marsh & McLennan Companies, Inc. - Chairman and CEO of Mercer John Drzik Marsh & McLennan Companies, Inc. - President and CEO, Oliver Wyman Group Peter Zaffino Marsh & McLennan Companies, Inc. - President and CEO of Guy Carpenter...

  
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The following is excerpted from the question-and-answer section of the transcript.

(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)

Question: Keith Walsh - Citigroup - Analyst: Good morning, everyone. I have two questions. First for Dan, just thinking about you guys are more of primarily a fee business, Marsh in the US. Can you talk a little bit about the leverage to improving exposures in a fee business versus maybe your competitors a little more commission based? And then the second piece of that, it seems every broker is facing expense inflation. How do you think about that to make sure shareholders are getting the leverage of a better top line? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Keith Walsh - Citigroup - Analyst: Okay, great. And then just for Vanessa, thinking about -- you mentioned the pension expense. I think you guys are the only ones out there that still have an active pension plan if I'm correct. Why not freeze the plan at this point? If you could just talk to that.

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Keith Walsh - Citigroup - Analyst: Yes.

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Keith Walsh - Citigroup - Analyst: Thanks a lot.


Question: Brian Meredith - UBS - Analyst: Two questions for you all. The first one on the Consulting side. Can you dig in a little bit on the outsourcing revenue growth in the quarter? Was it new business, or was it growth from just exposures, payrolls? Can you give us a little more detail on that?

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: Michele Burns - Marsh & McLennan Companies, Inc. - Chairman and CEO of Mercer


Question: Brian Meredith - UBS - Analyst: Are you seeing any benefit from the other large merger in the industry?

Answer By: Michele Burns - Marsh & McLennan Companies, Inc. - Chairman and CEO of Mercer


Question: Brian Meredith - UBS - Analyst: Great. And then for Dan, could you -- we know what the organic revenue growth and obviously know what the revenues look like from the recent acquisitions. What was the earnings contribution like from some of the recent acquisitions? Are they still a pretty big drag on margins? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Brian Meredith - UBS - Analyst: Okay. And I was thinking specifically also on the HSBC acquisition, whether -- because I know there was several -- some of the restructuring charges coming through were on that one. Is that positive from an earnings perspective yet?

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Brian Meredith - UBS - Analyst: Excellent. Thank you.


Question: Matthew Heimermann - JPMorgan Chase & Co. - Analyst: Two questions. First, for Dan, just on the agency acquisition, so could you give us a sense of what inning we are in, in terms of building a platform? And then also, I guess for John, can you just give us a sense of where the pipeline is in Oliver Wyman today and how that maybe compares to 12 months ago?

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Matthew Heimermann - JPMorgan Chase & Co. - Analyst: Is that -- is that -- so is the delta between the $750 to $1 billion and the $300 million today all going to be acquisitions or what role will organic growth play in getting you there? ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Matthew Heimermann - JPMorgan Chase & Co. - Analyst: Okay. Thank you.

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: John Drzik - Marsh & McLennan Companies, Inc. - President and CEO, Oliver Wyman Group


Question: Matthew Heimermann - JPMorgan Chase & Co. - Analyst: Okay. Thank you very much.


Question: Larry Greenberg - Langen McAlenney - Analyst: Good morning. I might have misheard this, but it almost sounded as if in your opening comments and in Vanessa's comments, that you were kind of emphasizing the competitive conditions in the reinsurance business. And I'm just wondering if you are all sensing that perhaps reinsurance competition is taking a ratchet up a little bit? And maybe you could just -- maybe Dan and Peter and Brian, certainly, if you want to chime in, just on what pricing looks like out there on the underwriting side. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: Peter Zaffino - Marsh & McLennan Companies, Inc. - President and CEO of Guy Carpenter

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Larry Greenberg - Langen McAlenney - Analyst: Great, thanks. Just a follow-up. We could play around with the numbers, but do you have what the underlying growth in the business units would have been excluding pension in 2010?

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: Vanessa Wittman - Marsh & McLennan Companies, Inc. - EVP and CFO


Question: Larry Greenberg - Langen McAlenney - Analyst: Great. That's helpful. Thank you.


Question: Meyer Shields - Stifel Nicolaus - Analyst: Brian, I saw you quoted at a conference saying that you don't necessarily need a macro event to change pricing. Sometimes carriers just get exhausted by the fact that their business is unprofitable. Is there any actual sign of that yet?

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Meyer Shields - Stifel Nicolaus - Analyst: No; I'm sorry to hear that.

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Meyer Shields - Stifel Nicolaus - Analyst: Yes, no, that's very helpful. One quick question for Vanessa. I might have missed it, but the tax rate was higher than we anticipated in the quarter, and I was hoping you could explain that.

Answer By: Vanessa Wittman - Marsh & McLennan Companies, Inc. - EVP and CFO


Question: Meyer Shields - Stifel Nicolaus - Analyst: Okay, great. Thanks so much.


Question: Yaron Kinar - Deutsche Bank Securities - Analyst: Good morning. I was wondering if you could maybe give a little more color on the, what I would say is robust underlying revenue growth, in both RIS and consulting. Are you achieving that through improved pricing, more discretionary spending, exposure growth, taking market share?

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh

Answer By: Michele Burns - Marsh & McLennan Companies, Inc. - Chairman and CEO of Mercer

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: John Drzik - Marsh & McLennan Companies, Inc. - President and CEO, Oliver Wyman Group

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: Peter Zaffino - Marsh & McLennan Companies, Inc. - President and CEO of Guy Carpenter

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Jay Gelb - Barclays Capital - Analyst: Just first, a detailed question, the double-digit earnings growth outlook for 2011, is the baseline for 2010 the $1.64 of adjusted earnings?

Answer By: Vanessa Wittman - Marsh & McLennan Companies, Inc. - EVP and CFO


Question: Jay Gelb - Barclays Capital - Analyst: Okay. And then, Brian, maybe you can give some insight in terms of where you expect the majority of the growth to come from? Is it both Risk and Insurance Services and Consulting? Or should one grow faster than the other earnings-wise?

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Jay Gelb - Barclays Capital - Analyst: All right. And then on a separate issue, we've been hearing more from our conversations with risk managers that there's increased interest in multi-year deals in terms of fee arrangements with the major brokers. Can you comment on that? And also, if there are multi-year deals written, as all that revenue recognized in the initial year?

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Jay Gelb - Barclays Capital - Analyst: Dan, I should have clarified. I meant multi-year fee arrangements with the brokers. ¬2011 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Jay Gelb - Barclays Capital - Analyst: And are those fees earned over the course of the arrangement?

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh


Question: Jay Gelb - Barclays Capital - Analyst: Great. Thank you.


Question: Thomas Mitchell - Miller Tabak - Analyst: I'm wondering if -- looking at your prospects, you certainly have a lot of cash. How do you view today, as compared to three months ago or six months ago, the opportunities to grow through acquisition, either on the Consulting side or through organic growth that might take some additional investment? What are the best kinds of opportunities out there today?

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Thomas Mitchell - Miller Tabak - Analyst: Thanks very much.


Question: Scott Heleniak - RBC Capital Markets - Analyst: In Mercer, if you saw any improvement in organic growth trends in retirement over the past few months -- I know it was down 6% for the fourth quarter. I'm just wondering if you saw any improvement toward the end of the year and the beginning into 2011 at all? Because obviously there's pretty big upside if that gets turned around relative to Consulting.

Answer By: Michele Burns - Marsh & McLennan Companies, Inc. - Chairman and CEO of Mercer


Question: Scott Heleniak - RBC Capital Markets - Analyst: Okay. That makes sense. And then one last question on the -- I know you haven't talked about it specifically, but the hub strategy you talked about a couple of years ago. Have you filled all the hubs? Are you at a point where you have all those completed and your service is going to -- I think you termed it as spoke acquisitions. Are you to the point where most of those are going to be those type of acquisitions, or is there still more left for the kind of big focal-point hubs?

Answer By: Dan Glaser - Marsh & McLennan Companies, Inc. - Chairman and CEO of Marsh

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO


Question: Scott Heleniak - RBC Capital Markets - Analyst: Thanks.

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Answer By: Brian Duperreault - Marsh & McLennan Companies, Inc. - President and CEO

Table Of Contents

Marsh & McLennan Companies Inc Q2 2011 Earnings Conference Call Summary – 2011-08-03 – $54.00 – Final Brief of MMC earnings conference call or presentation 3-Aug-11 12:30pm GMT

Marsh and Mclennan Companies Inc Shareholders Meeting Transcript – 2011-05-19 – $54.00 – Final Transcript of MMC shareholder or annual meeting 19-May-11 2:00pm GMT

Marsh and Mclennan Companies Inc Q1 2011 Earnings Conference Call Summary – 2011-05-04 – $54.00 – Edited Brief of MMC earnings conference call or presentation, 4-May-11 8:30am ET

Marsh and Mclennan Companies Inc Q1 2011 Earnings Conference Call Transcript – 2011-05-04 – $54.00 – Final Transcript of MMC earnings conference call or presentation, 4-May-11 8:30am ET

Marsh & McLennan Companies, Inc. Q4 2010 Earnings Conference Call Summary – 2011-02-15 – $54.00 – Edited Brief of MMC earnings conference call or presentation, 15-Feb-11 8:30am ET

Marsh & McLennan Companies, Inc. Q3 2010 Earnings Conference Call Summary – 2010-11-09 – $54.00 – Edited Brief of MMC earnings conference call or presentation, 9-Nov-10 8:30am ET

Marsh & McLennan Companies, Inc. Q3 2010 Earnings Conference Call Transcript – 2010-11-09 – $54.00 – Final Transcript of MMC earnings conference call or presentation, 9-Nov-10 8:30am ET

Marsh & McLennan Companies, Inc. Analyst Meeting Transcript – 2010-09-30 – $54.00 – Final Transcript of MMC corporate analyst meeting, 30-Sep-10 8:30am ET

Marsh & McLennan Companies, Inc. Q2 2010 Earnings Conference Call Summary – 2010-08-03 – $54.00 – Edited Brief of MMC earnings conference call or presentation, 3-Aug-10 8:30am ET

Marsh & McLennan Companies, Inc. Q2 2010 Earnings Conference Call Transcript – 2010-08-03 – $54.00 – Final Transcript of MMC earnings conference call or presentation, 3-Aug-10 8:30am ET

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Thomson StreetEvents. "Marsh & McLennan Companies, Inc. Q4 2010 Earnings Conference Call Transcript" Feb 15, 2011. Alacra Store. Sep 02, 2014. <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2010-Marsh-McLennan-Companies-Inc-Earnings-Conference-Call-T3698353>
  
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Thomson StreetEvents. (2011). Marsh & McLennan Companies, Inc. Q4 2010 Earnings Conference Call Transcript Feb 15, 2011. New York, NY: Alacra Store. Retrieved Sep 02, 2014 from <http://www.alacrastore.com/thomson-streetevents-transcripts/Q4-2010-Marsh-McLennan-Companies-Inc-Earnings-Conference-Call-T3698353>
  
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