Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Keith Walsh - Citi.
Keith Walsh - Citi
I guess just for Dan, to start with, just North America, if you give some color there, the minus 8% looking at some of your competitors at least in the U.S. minus 5% was sort of the standard. What was the real downfall there if you can give us some more color? Thanks.
Dan Glaser
Well, most of the U.S. and Canada top-line result was driven by difficult economic conditions, particularly in the U.S. We are seeing clients delay decisions, cut back discretionary work and purchase less insurance in certain instances. All of which are affecting our revenue retention in new business.
Now there’s a few important things to point out. At least a point of the reduction was due to the fact that we simply walked away from small under-priced consulting engagements for clients. We also estimate that we lost a couple of points due to timing of certain large renewals. I expect to get that back later in the year, so those two factors explains about half of the drop.
Keith Walsh - Citi
Then the second thing; follow up question just on margin, Dan. Great margin this quarter, but I guess, you’re creating tougher comps as we go out, which I guess is a good problem to have, but excluding the non-core headwinds like FX and interest income, are there additional underlying improvements as we go out into 2010 that you can still get-to, to get that margin to continue to increase at Marsh? Thanks.
Dan Glaser
Well, the answer is absolutely. I have absolutely no doubt that we have a great deal of work still to accomplish within Marsh and we will continue to deliver margin improvement.
We drove down our underlying expenses last year by 6% and as you can see in the first quarter our underlying expenses were down 8%. I don’t expect the 8% to continue for the entire year, but we will see meaningful reductions in our expenses and just to give you one thought, if I exclude compensation and benefits; our expenses were actually down 11% in the first quarter.
So, we are finding lots of areas of real estate, technology, facilities, T&E where we are eliminating waste and we are continuing to be able to find items which we can drive out of the business.
- To read the full transcript on Seeking Alpha, click here »
