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It's a rough world out there; luckily for you, there are plenty of insurers to help you get back on your feet when the world throws you for a loop. One company in particular won't just insure you -- it could also help your portfolio profit: Marsh & McLennan (NYSE: MMC ) .
M&M: Not just a great candy
Marsh & McLennan is the second largest insurance broker in the world. The company has two main segments" Risk and Insurance Services, and Consulting. The R&I division is the largest division at the company, consisting of Marsh, the insurance brokerage, and Guy Carpenter, the reinsurance division. This past quarter the R&I division brought in $1.7 billion in revenue, a 5% increase and 56% of the company's Q2 revenue. The division also saw operating income grow 14% year over year.
Meanwhile, the consulting division did nearly as well. In Q2 the segment increased revenue to $1.3 billion, a 4% increase year over year. Operating income also rose drastically, increasing 14% to $176 million, the highest quarterly consulting earnings ever.
All of this great performance from its divisions created an excellent quarter for Marsh & McLennan. The company increased revenue 3% to $3 billion, with operating income rising 11%. This translated to income of $339 million and an adjusted EPS of $0.61 (up from $0.50 year over year).
A lot of this financial strength is due to overall growth seen at M&M, which Marsh Inc. CEO Peter Zaffino attributes to strong client retention, rollover from new business (which has grown 10% year over year), and fewer economic headwinds than in 2011. If these trends continue, M&M will continue to have an excellent year.
M&M: Not just a great rapper
Perhaps most impressive is M&M's performance overseas; the company's international operations saw its Latin America segment increase revenue 14%, while the Asia-Pacific region rose 10%, and the Europe/Middle East/Asia sector grew 5%. The company has seen strong growth abroad in all segments of its business, perhaps thanks in part to business growth in emerging markets.
As great as this emerging-market growth may be, though, investors should be aware that a lot of Marsh & McLennan's revenue comes from Europe. The company makes about $12 billion in annual revenue, and one-third of that comes from the Old World. That's a lot of exposure for a company that reinsures businesses in a part of the world as volatile as Europe is now.
On the other hand, Marsh & McLennan looks reasonable compared with its peers:
Net Profit Margin
Debt to Equity
|Marsh & McLennan||18.4||2.7%||48%||9%||47%|
|Aon (NYSE: AON )||18.0||1.2%||21%||9%||53%|
|Willis Group Holdings (NYSE: WSH )||15.0||3%||45%||13%||92%|
Source: Motley Fool CAPS.
It doesn't yield quite as high a dividend as Willis Group Holdings, but M & M's debt-to-equity ratio is drastically healthier. The company has a reasonable valuation, and with earnings as strong as this quarter's, Marsh & McLennan looks like an intriguing stock.
If you're looking for some other great stock ideas, check out our special free report, aptly titled The Motley Fool's Top Stock for 2012.