Insurance giant reports a surprise in earnings

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Marsh & McLennan Headquarters in New YorkThe world’s second largest insurance company, Marsh & McLennan Cos. Inc., has defied predictions by analysts and reported strong fourth quarter earnings. The insurer is also declaring earnings growth in 2011 driven by a recovering economy. The growth is estimated to affect all segments of the insurer.

Last year, MMC completed a deal to acquire the HSBC Insurance Brokers unit. The deal had an impact on the company’s earnings as they took restructuring charges to the acquisition. MMC expects to continue to acquire smaller regional insurance brokerages in the future to bolster its agency business.

Dan Glaser, chief executive officer of March & McLennan, reported that the agency businesses had earned nearly $300 million in revenue last year. Glaser anticipates that revenue will grow to reach $1 billion as the company continues its acquisitions.

MMC is targeting the middle market and is in competition with Aon Corp. and Willis group.

Companies have struggled to generate revenue growth in the past due to the economic climate and people’s weariness to continue purchasing insurance policies. Some insurers continue to show the trend of losses but other are reporting gains over the last year. With more companies growing, the outlook of the future is improving.

Reports from 2010 suggest that more people are buying insurance, but they also show that insurance is becoming more costly. With recent announcements of rate hikes from Blue Cross and other insurance groups, consumers are looking for a balance in what they can afford and what they need.

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