Marsh & McLennan posts 1Q loss as Kroll business loses value

Marsh & McLennan lost $210 million, or 40 cents per share, in the first quarter. In the first quarter last year, Marsh & McLennan earned $268 million, or 49 cents per share.

The company attributed the loss mainly to a $425 million "asset impairment" charge incurred by Marsh's corporate security firm, Kroll.

Marsh is examining how best to create value from the business, which the company bought in 2004. In completing its assessment, the company determined the value of the business has fundamentally deteriorated, warranting a goodwill impairment charge.

Core profit, excluding the Kroll charge and other unusual costs, was 46 cents per share in the first quarter. Analysts polled by Thomson Financial forecast profit of 45 cents per share.

Revenue climbed 8 percent to $3.05 billion from $2.81 billion. Analysts expected revenue of $2.92 billion.

The company's insurance brokerage business, Marsh, reported 7 percent growth in revenue to $1.2 billion, fueled by growth in the Asia Pacific region. Marsh said it achieved revenue growth "in an environment of significant price competition in the global commercial property and casualty insurance marketplace."

Marsh charges commissions for matching insurers with clients who need insurance. Insurers, padded with cash after two years without a major catastrophe, are competing for clients by slashing prices. With premium rates tumbling around the industry, insurers are reluctant to pay brokers fatter commissions.

An industry group, the Council of Insurance Agents & Brokers, reported insurance premiums declined an average of 13.5 percent in the first quarter. Insurance commissions are typically assessed as a percentage of premium.

The company's reinsurance brokerage business -which brokers a type of insurance covering losses on other insurers' policies -slipped 6 percent to $273 million. Reinsurance prices continue to dwindle as insurers opt to shoulder risk instead of passing it off to a reinsurer, the company said.