For more than five years, Marsh & McLennan (NYSE:MMC), a company that specializes in insurance, consulting and risk management, has dealt with a slew of regulatory issues and related litigation matters. It released 2010 results on Tuesday that indicated the majority of its company-specific problems have finally been put to rest, and what remains is a firm focused on two primary businesses with solid profit potential. The businesses are performing well, but there is still some uncertainty as to how fast they can grow on their own going forward.

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MMC's Fourth Quarter Recap
Marsh & McLennan's revenues improved a healthy 9% to $2.8 billion. The insurance brokerage business, which competes with the likes of Aon (NYSE:AON) and Willis Group (NYSE:WSH), weighed in at 53.3% of total sales and experienced strong 11% growth, which is impressive considering the insurance industry is currently in what is referred to as a soft market where competition is intense and insurance prices are declining. This division consists primarily of the Marsh business at 87% of divisional revenue as well as Guy Carpenter, which brokers business in the reinsurance market. Growth in these units was 12% and 2%, respectively.

Marsh & McLennan also operates a sizable consulting business that consists of Mercer and the Oliver Wyman Group, which consult on human resources and investment-related matters to compete with Aon's Hewitt business as well as Towers Watson & Co. (NYSE:TW) and Heidrick & Struggles (Nasdaq:HSII), the last of which is doing business with Marsh. Both divisions reported 6% growth to account for the rest of total company sales.

Operating income came in at a positive $325 million after a $28 million loss in last year's quarter. Marsh McLennan's operations had been in constant flux in recent years and contained many restructuring items to sell non-core assets and settle quite a few lawsuits, including allegations over the handling of contingent commissions back in 2004 and an ERISA class action settlement last year. In management's estimates of continuing operations, quarterly adjusted operating income grew about 22% to $379 million.

Reported earnings were $203 million, or 37 cents per diluted share, but 41 cents on an adjusted basis, which beat analyst projections.

Annual Review
Full year revenues increased 7% to $10.6 billion as the brokerage business reported 9% growth and consulting grew 5%. On an adjusted basis, operating income improved 14% to $1.5 billion. Reported net income reached $855 million, or $1.55 per diluted share. Cash flow details were not provided.

Marsh & McLennan's Outlook
The company didn't provided forward guidance but analysts currently project sales growth of almost 2% for the coming year to $10.7 billion. Earnings expectations are currently $1.62 per share.

The Bottom Line
Strong overall stock market performance and a solid earnings report have sent Marsh & McLennan shares to highs over the past year. The forward P/E is currently quite high at nearly 17 as there is still uncertainty over how fast Marsh can grow organically going forward. It is seeing a nice recovery in its operations due to a stronger economy and having finally settled what seemed like an insurmountable number of company-specific problems and allegations. But at the current valuation, investors would be better off waiting for a pullback in the stock price or for more tangible signs of sustainable sales and profit growth over the next few quarters. (For related reading, also take a look at 4 Steps To Picking A Stock.)

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