* Rates may rise in Northeast and mid-Atlantic United States
* Third-quarter profit beats estimate, revenue misses
* Shares up 2 pct
By Ashutosh Pandey
Nov 6 (Reuters) - Marsh & McLennan Co Inc, the world’s second-largest insurance broker, said global insurers had the capacity to weather the impact from superstorm Sandy.
“Generally, there is sufficient capital in the market,” MMC Chief Executive Brian Duperreault said on post-earnings conference call.
However, the company said insurance rates in the Northeast and mid-Atlantic regions of the United States can be expected to increase after two major storms in 14 months.
“And we would expect that it could be tough for an underwriter to say that they are going to reduce rates,” said Alex Moczarski, CEO of Guy Carpenter, the company’s risk and reinsurance intermediary services.
Catastrophe forecasting company AIR Worldwide, one of the three primary firms used by the insurance industry to calculate disaster exposures, has indicated that Sandy is likely to have caused insured losses of up to $15 billion. Another firm Eqecat estimated the losses at $5 billion to $10 billion.
Brokers like Marsh & McLennan have benefited as global insurers have raised rates in response to higher catastrophe losses last year.
Improving insurance prices and lower costs helped MMC beat analysts’ profit estimates for the sixth straight quarter.
Income from continuing operations almost doubled in the third quarter to $246 million, or 43 cents per share.
Excluding one-time items, the company earned 39 cents per share, which was marginally above analysts’ average estimate of 38 cents, according to Thomson Reuters I/B/E/S.
Total revenue rose 1 percent to $2.8 billion, but fell short of analysts’ expectations of $2.92 billion.
The company provides management consulting, human resource consulting, outsourcing and risk and reinsurance intermediary services.
Underlying revenue at the company’s risk and insurance services segment increased 4 percent to $1.5 billion, while that from consulting rose 3 percent to $1.3 billion.
“Each of our operating companies continued to generate growth in underlying revenue, which, combined with ongoing expense discipline, produced across-the-board improvement in operating margins and profitability,” said sixty-five-year old Duperreault, who will retire at the end of the year.
MMC expects a modest decline in fourth-quarter revenue from Oliver Wyman, its management consulting unit that contributes about 13 percent of the total revenue.
“In Europe, Oliver Wyman continues to feel the impact of slower economic growth and declining business confidence,” CEO-designate Daniel Glaser said on the call.
MMC, which has a market capitalization of $18.64 billion, competes with Aon Plc in negotiating insurance and reinsurance policies for corporate clients.
Last month, Aon, the world’s largest insurance broker, posted a better-than-expected quarterly profit, and saw its profit grow for the first time in three quarters.
MMC shares have risen about 8 percent this year, trailing the broader S&P Insurers Index, which has gained 15 percent during the same period.
They were up 2 percent at $34.86 on Tuesday on the New York Stock Exchange.