Insurance Subsidiary Paces Big Gain for Merrill Lynch

Merrill Lynch & Co., a leading financial services concern, said its first-quarter profit surged 25% from a year ago, as revenue climbed 24% led by a huge rise in its insurance unit.

The New York-based company, which operates a retail brokerage as well as serving corporate and institutional clients, posted a profit of $108.6 million on revenue of $2.70 billion. A year earlier Merrill Lynch reported an $86.8-million profit on revenue of $2.17 billion.

William A. Schreyer, chief executive, said the company’s “progress was broadly based, with every major revenue category up from the first quarter of 1986.”

Schreyer said the biggest single gain was posted in insurance, where revenue more than tripled to $242 million, principally because of the popularity of a new single-premium whole life policy, which its insurance unit began offering last June. Increases in related reserves for policyholder benefits drove insurance expenses higher as well.

Revenue from brokerage activities, its own investments and from custodial and asset management fees set new quarterly records.

Overall first-quarter expenses were up 26%, the company said.

That included increases in compensation and benefits largely related to increased business volume, intensified advertising, and higher occupancy and depreciation costs reflecting business expansion and office relocation.