US-based Marsh and McLennan, the largest insurance broker in the world, has reported a major reduction in profits for its first quarter as the effects of damaging investigations continued to take their toll.
The global insurance brokers’ profits more than halved in the first quarter of the year to $134 million, or 25 cents per share, from $446 million, or 83 cents per share in 2004. The reduction represented a fall of 70%. However, on an encouraging note, revenues remained relatively stable at $3.18 billion, which was just $20 million down on the previous year.
The poor outcome was the result of hefty charges for restructuring and legal costs. Results included $225 million of pretax charges for restructuring, regulatory and compliance matters, and possible reimbursements related to mutual funds. Excluding these items and charges in the year-earlier quarter, Marsh said profit per share would have been 52 cents from 96 cents.
Marsh agreed to pay $850 million in January to settle a lawsuit by New York Attorney General Eliot Spitzer accusing it of rigging bids, business steering and price fixing. The agreement came at the end of a damaging period for the company, which has seen 40% wiped off its share value.