The economy may be in recovery these days, but it's anything but stable, especially in the capital markets and financial system. For a financial services firm, it helps to run a large, diversified group of business units, and that's exactly what's boosting both top and bottom lines at Marsh & McLennan Companies (MMC). Cost cutting, debt reduction, and adding new customers tend to help as well.

Revenue during the second quarter rose 12 percent from the same quarter in 2010 to hit $2.9 billion. Net income rose 19 percent to $282 million compared with $236 million last year.

It's good to be big. "Each of our four operating companies produced strong growth in revenue and profitability in the second quarter. In Risk and Insurance Services, Marsh’s underlying revenue grew across all geographies, reflecting increases in new business development and client revenue retention rates,” said Marsh Mac CEO Brian Duperreault in an earnings statement.
Reinsurer “Guy Carpenter continued to produce impressive results, reporting its tenth consecutive quarter of underlying revenue growth," Duperreault said.

The company has been paying down debts, which ratings agencies like, including Moody's Investors Service. "We expect MMC's credit metrics to benefit from restructuring steps and debt reduction achieved over the past few years," says Bruce Ballentine, Moody's lead analyst for the company, who has given the company a stable outlook.

"The stable rating outlook reflects our view that the company will gradually improve its operating margins and remain a market leader in insurance brokerage and consulting."

Thumbs up

Wall Street likes what it's seeing in MMC's numbers this year. In April, RBC Capital Markets upgraded its recommendation on the company's stock to outperform from sector perform. In February, Barclays Capital upgraded its recommendation to equal weight from underweight, while FBR Capital reiterated an outperform recommendation. The company should report next on or around Nov. 9.