Marsh & McLennan said on Tuesday that its first-quarter profit fell 36 per cent from a year earlier, when the company gained $178m from selling its stake in a claims-management business.
Revenue at the world's biggest insurance broker was up 5 per cent to $2.8bn from $2.67bn last year.
Marsh & McLennan's insurance-brokerage unit, Marsh, had flat revenue of $1.14bn, as international growth made up for a weakening in the US market, where retention rates decreased.
In an interview with the Financial Times, Michael Cherkasky, chief executive officer, said that “change always has a short-term cost”.
“Any time you make a change – a change in leadership, a change in compensation, or a change in technology, you distract your people. It’s part of it,” he said. “We knew there would be a cost, because it takes time to work.”
Mr Cherkasky has cut more than 5,000 jobs since a 2004 investigation by Eliot Spitzer, then New York attorney-general, accused the company of rigging bids on insurance sales in exchange for payoffs from insurers. The company paid $850m to clients to settle the matter in 2005, without admitting or denying wrongdoing.
In a research note entitled, “Results Fall Short in Many Areas” – Brian Meredith, an analyst at UBS – said that: “It looks like Aon took market-share from Marsh” during the quarter.
Mr Cherkasky, however, said he isn’t concerned. “No one took our institutional business in the US. Our problem was in the middle-market. If there weren’t a cause, it would worry me. But we know precisely what happened.”
In February, Marsh agreed to sell its Boston-based Putnam Investments unit to Canadian mutual-fund company Power Corp.'s Great-West Lifeco for $3.9bn. The deal is set to close later this year.
Mr Cherkasky said he hoped to use the gains from the Putnam sale for acquisitions, however, he warned: “We’re not going to do silly deals. The multiples that are being paid now [are too high]. We’re cautious.”
The company also announced a plan to buy back $500m in shares. “Why now? It’s the opportunity,” said Mr Cherkasky. “We’re going to be aggressive about not keeping cash on our balance sheet.”
Shares in Marsh & McLennan were down about 1 per cent to $31.59 at midday on Tuesday.