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MHM Marsh & Mclennan Cos. Inc

81.00
0.00 (0.00%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Marsh & Mclennan Cos. Inc LSE:MHM London Ordinary Share COM US$1
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 81.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Ins Agents,brokers & Service 22.74B 3.76B 7.6395 26.96 101.27B

MARSH MCLENNAN: Marsh McLennan Reports Fourth Quarter and Full-Year 2022 Results

26/01/2023 12:00pm

UK Regulatory


Marsh & Mclennan Cos (LSE:MHM)
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TIDMMHM 
 
 

Marsh McLennan (NYSE: MMC), the world's leading professional services firm in the areas of risk, strategy and people, today reported financial results for the fourth quarter and year ended December 31, 2022.

 

John Doyle, President and CEO, said: "2022 was an outstanding year for Marsh McLennan. We generated underlying revenue growth of 9%, grew adjusted EPS by 11%, and expanded adjusted margins for the 15th consecutive year. We achieved these strong results while continuing to invest in our talent and capabilities, both organically and through acquisitions."

 

"It is a privilege to lead this exceptional firm. Our expertise across the important areas of risk, strategy and people is more relevant than ever as we help clients navigate an uncertain world. I am excited about the possibilities ahead."

 

Consolidated Results

 

Consolidated revenue in the fourth quarter of 2022 was $5.0 billion, a decrease of 2% compared with the fourth quarter of 2021, or an increase of 7% on an underlying basis. Operating income was $680 million compared with $986 million in the prior year period. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 13% to $1.0 billion, compared with $905 million in the prior year period. Net income attributable to the Company was $466 million, or $0.93 per diluted share, compared with $1.57 in the fourth quarter of 2021. Adjusted earnings per share was $1.47, compared with $1.36 for the prior year period.

 

For the year 2022, revenue was $20.7 billion, an increase of 5% compared with 2021, or 9% on an underlying basis. Operating income was $4.3 billion, and adjusted operating income rose 11% to $4.8 billion. Net income attributable to the Company was $3.0 billion. Earnings per share decreased 1% to $6.04. Adjusted earnings per share increased 11% to $6.85 compared with $6.17 in 2021.

 

Risk & Insurance Services

 

Risk & Insurance Services revenue was $2.9 billion in the fourth quarter of 2022, a decrease of 3%, or an increase of 8% on an underlying basis. Operating income was $472 million, compared with $667 million in the fourth quarter of 2021. Adjusted operating income increased 23% to $685 million. For the year 2022, revenue was $12.6 billion, an increase of 5%, or 9% on an underlying basis. Operating income was $3.1 billion. Adjusted operating income rose 15% to $3.5 billion.

 

Marsh's revenue in the fourth quarter of 2022 was $2.7 billion, a decrease of 6%, or an increase of 6% on an underlying basis. In U.S./Canada, underlying revenue rose 5%. International operations produced underlying revenue growth of 8%, reflecting underlying growth of 12% in Asia Pacific, 7% in EMEA, and 4% in Latin America. For the year 2022, Marsh's revenue growth was 3%, or 8% on an underlying basis.

 

Guy Carpenter's fourth quarter revenue was $171 million, an increase of 1%, or 5% on an underlying basis. For the year 2022, Guy Carpenter's revenue grew 8% compared to a year ago, or 9% on an underlying basis.

 

Consulting

 

Consulting revenue was $2.1 billion in the fourth quarter of 2022, an increase of 6% on an underlying basis. Operating income decreased 15% to $336 million, compared with $395 million in the fourth quarter of 2021. Adjusted operating income was $407 million, a decrease of 1% compared with $410 million in the fourth quarter of 2021. For the year 2022, revenue was $8.1 billion, an increase of 5%, or 8% on an underlying basis. Operating income was $1.6 billion, compared with $1.5 billion in 2021. Adjusted operating income increased 4% to $1.5 billion.

 

Mercer's revenue was $1.3 billion in the fourth quarter of 2022, a decrease of 3%, or an increase of 5% on an underlying basis. Wealth, with revenue of $591 million, was unchanged on an underlying basis. Health, with revenue of $455 million, increased 8% on an underlying basis. Career revenue of $283 million increased 12% on an underlying basis. For the year 2022, Mercer's revenue increased 2%, or 6% on an underlying basis.

 

Oliver Wyman's revenue was $765 million in the fourth quarter of 2022, an increase of 8% on an underlying basis. For the year 2022, Oliver Wyman's revenue was $2.8 billion, an increase of 13% on an underlying basis.

 

Other Items

 

The Company repurchased 2.2 million shares of stock for $350 million in the fourth quarter. For the year 2022, the Company repurchased 12.2 million shares for $1.9 billion.

 

In the fourth quarter of 2022, the Company raised $1 billion of senior notes and repaid $350 million of senior notes due in March 2023.

 

In December, Marsh McLennan Agency (MMA) acquired HMS Insurance Associates, Inc., a leading independent agency based in Maryland.

 

The fourth quarter results include $344 million of noteworthy items, primarily related to severance and lease exit charges for activities focused on workforce actions, technology rationalization and reductions in real estate.

 

Conference Call

 

A conference call to discuss fourth quarter 2022 results will be held today at 8:30 a.m. Eastern time. The live audio webcast may be accessed at marshmclennan.com. A replay of the webcast will be available approximately two hours after the event. The webcast is listen-only. Those interested in participating in the question-and-answer session may register here to receive the dial-in numbers and unique PIN to access the call.

 

About Marsh McLennan

 

Marsh McLennan (NYSE: MMC) is the world's leading professional services firm in the areas of risk, strategy and people. The Company's more than 85,000 colleagues advise clients in 130 countries. With annual revenue of over $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, reshape retirement and investment outcomes, and unlock health and well being for a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit marshmclennan.com, or follow us on LinkedIn and Twitter.

 

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

 

This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should, " "will" and "would".

 

Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:

   -- the impact of geopolitical or macroeconomic conditions on us, our clients 
      and the countries and industries in which we operate, including from 
      conflicts such as the war in Ukraine, slower GDP growth or recession, 
      capital markets volatility and inflation; 
 
   -- the increasing prevalence of ransomware, supply chain and other forms of 
      cyber attacks, and their potential to disrupt our operations and result 
      in the disclosure of confidential client or company information; 
 
   -- the impact from lawsuits or investigations arising from errors and 
      omissions, breaches of fiduciary duty or other claims against us in our 
      capacity as a broker or investment advisor, including claims related to 
      our investment business' ability to execute timely trades; 
 
   -- the financial and operational impact of complying with laws and 
      regulations, including domestic and international sanctions regimes, 
      anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. 
      Anti Bribery Act and cybersecurity and data privacy regulations; 
 
   -- our ability to attract, retain and develop industry leading talent; 
 
   -- our ability to compete effectively and adapt to competitive pressures in 
      each of our businesses, including from disintermediation as well as 
      technological change, digital disruption and other types of innovation; 
 
   -- our ability to manage potential conflicts of interest, including where 
      our services to a client conflict, or are perceived to conflict, with the 
      interests of another client or our own interests; 
 
   -- the impact of changes in tax laws, guidance and interpretations, or 
      disagreements with tax authorities; and 
 
   -- the regulatory, contractual and reputational risks that arise based on 
      insurance placement activities and insurer revenue streams. 
 

The factors identified above are not exhaustive. Marsh McLennan and its subsidiaries (collectively, the "Company") operate in a dynamic business environment in which new risks emerge frequently. Accordingly, we caution readers not to place undue reliance on any forward-looking statements, which are based only on information currently available to us and speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made.

 

Further information concerning Marsh McLennan and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the Company's filings with the Securities and Exchange Commission, including the "Risk Factors" section and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our most recently filed Annual Report on Form 10-K.

 
 
Marsh & McLennan Companies, Inc. 
 Consolidated Statements of Income 
 (In millions, except per share data) 
 (Unaudited) 
 
 
                   Three Months Ended      Twelve Months Ended 
                    December 31,            December 31, 
                   2022          2021      2022          2021 
Revenue            $   5,022     $5,137    $   20,720    $19,820 
Expense: 
Compensation and 
 benefits              3,038      2,905        12,071     11,425 
Other operating 
 expenses              1,304      1,246        4,369      4,083 
Operating 
 expenses              4,342      4,151        16,440     15,508 
Operating income       680        986          4,280      4,312 
Other net benefit 
 credits               57         66           235        277 
Interest income        9          --           15         2 
Interest expense       (127)      (109)        (469)      (444) 
Investment (loss) 
 income                (6)        18           21         61 
Income before 
 income taxes          613        961          4,082      4,208 
Income tax 
 expense               142        154          995        1,034 
Net income before 
 non-controlling 
 interests             471        807          3,087      3,174 
Less: Net income 
 attributable to 
 non-controlling 
 interests             5          4            37         31 
Net income 
 attributable to 
 the Company       $   466       $803      $   3,050     $3,143 
Net income per 
share 
attributable to 
the Company 
- Basic            $   0.94      $1.59     $   6.11      $6.20 
- Diluted          $   0.93      $1.57     $   6.04      $6.13 
Average number 
of shares 
outstanding 
- Basic                496        504          499        507 
- Diluted              501        511          505        513 
Shares 
 outstanding at 
 December 31           495        504          495        504 
 
 
 

Marsh & McLennan Companies, Inc.

Supplemental Information - Revenue Analysis

Three Months Ended December 31

 

(Millions) (Unaudited)

 

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

 
                                                       Components of Revenue Change** 
                                             % Change 
                                             Revenue 
                                  %          excl. 
                Three Months       Change    Marsh                   Acquisitions/ 
                Ended December     GAAP      India     Currency       Dispositions/   Underlying 
                31,                Revenue   Gain*      Impact        Other Impact     Revenue 
                2022     2021 
Risk and 
Insurance 
Services 
Marsh           $2,711   $2,876   (6   ) %   4%        (4  ) %       2  %             6 % 
Guy Carpenter    171      170     1  %                 (4  ) %       --               5 % 
Subtotal         2,882    3,046   (5   ) %   4%        (4  ) %       2  %             6 % 
Fiduciary 
 Interest 
 Income          63       3 
Total Risk and 
 Insurance 
 Services        2,945    3,049   (3   ) %   6%        (4  ) %       2  %             8 % 
Consulting 
Mercer           1,329    1,377   (3   ) %             (6  ) %       (2   ) %         5 % 
Oliver Wyman 
 Group           765      722     6  %                 (5  ) %       3  %             8 % 
Total 
 Consulting      2,094    2,099   --                   (6  ) %       --               6 % 
Corporate 
 Eliminations    (17  )   (11  ) 
Total Revenue   $5,022   $5,137   (2   ) %   3%        (5  ) %       1  %             7 % 
 
 

Revenue Details

 

The following table provides more detailed revenue information for certain of the components presented above:

 
                                                     Components of Revenue Change** 
                                            % 
                                            Change 
                                            Revenue 
                                   %        excl. 
                 Three Months      Change   Marsh              Acquisitions/ 
                 Ended December    GAAP     India    Currency  Dispositions/  Underlying 
                 31,               Revenue  Gain*     Impact   Other Impact    Revenue 
                 2022    2021 
Marsh: 
EMEA             $703    $713      (1) %             (9) %     --             7 % 
Asia Pacific      318     560      (43) %   8 %      (11) %    7 %            12 % 
Latin America     162     155      4 %               --        --             4 % 
Total 
 International    1,183   1,428    (17) %   2 %      (8) %     2 %            8 % 
U.S./Canada       1,528   1,448    5 %               (1) %     1 %            5 % 
Total Marsh      $2,711  $2,876    (6) %    4 %      (4) %     2 %            6 % 
Mercer: 
Wealth           $591    $648      (9) %             (8) %     (1) %          -- 
Health            455     457      (1) %             (4) %     (4) %          8 % 
Career            283     272      4 %               (8) %     --             12 % 
Total Mercer     $1,329  $1,377    (3) %             (6) %     (2) %          5 % 
 
 
* Percentage change excludes the gain from the consolidation of Marsh India of 
$267 million from prior year's GAAP revenue. 
** Components of revenue change may not add due to rounding. 
 
 

Marsh & McLennan Companies, Inc.

Supplemental Information - Revenue Analysis

Twelve Months Ended December 31

 

(Millions) (Unaudited)

 

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

 
                                                      Components of Revenue Change** 
                                             % 
                                             Change 
                                             Revenue 
                                    %        excl. 
                Twelve Months       Change   Marsh              Acquisitions/ 
                Ended December      GAAP     India    Currency  Dispositions/  Underlying 
                31,                 Revenue  Gain*     Impact   Other Impact    Revenue 
                2022     2021 
Risk and 
Insurance 
Services 
Marsh           $10,505  $10,203    3 %      6 %      (3) %     1 %            8 % 
Guy Carpenter    2,020    1,867     8 %               (2) %     1 %            9 % 
Subtotal         12,525   12,070    4 %      6 %      (3) %     1 %            8 % 
Fiduciary 
 Interest 
 Income          120      15 
Total Risk and 
 Insurance 
 Services        12,645   12,085    5 %      7 %      (3) %     1 %            9 % 
Consulting 
Mercer           5,345    5,254     2 %               (5) %     1 %            6 % 
Oliver Wyman 
 Group           2,794    2,535     10 %              (4) %     1 %            13 % 
Total 
 Consulting      8,139    7,789     5 %               (5) %     1 %            8 % 
Corporate 
 Eliminations    (64)     (54) 
Total Revenue   $20,720  $19,820    5 %      6 %      (4) %     1 %            9 % 
 
 

Revenue Details

 

The following table provides more detailed revenue information for certain of the components presented above:

 
                                                       Components of Revenue Change** 
                                              % 
                                              Change 
                                              Revenue 
                                     %        excl. 
                 Twelve Months       Change   Marsh              Acquisitions/ 
                 Ended December      GAAP     India    Currency  Dispositions/  Underlying 
                 31,                 Revenue  Gain*     Impact   Other Impact    Revenue 
                 2022     2021 
Marsh: 
EMEA             $2,879   $2,946     (2) %             (7) %     (3) %          8 % 
Asia Pacific      1,333    1,462     (9) %    12 %     (8) %     6 %            13 % 
Latin America     502      453       11 %              (1) %     --             11 % 
Total 
 International    4,714    4,861     (3) %    3 %      (7) %     --             10 % 
U.S./Canada       5,791    5,342     8 %               --        1 %            7 % 
Total Marsh      $10,505  $10,203    3 %      6 %      (3) %     1 %            8 % 
Mercer: 
Wealth           $2,366   $2,509     (6) %             (6) %     --             -- 
Health            2,017    1,855     9 %               (3) %     3 %            9 % 
Career            962      890       8 %               (6) %     --             14 % 
Total Mercer     $5,345   $5,254     2 %               (5) %     1 %            6 % 
 
 
* Percentage change excludes the gain from the consolidation of Marsh India of 
$267 million from prior year's GAAP revenue. 
** Components of revenue change may not add due to rounding. 
 
 

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Three Months Ended December 31

 

(Millions) (Unaudited)

 

Overview

 

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as in accordance with "GAAP" or "reported" results). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G in accordance with the Securities Exchange Act of 1934. These measures are: adjusted operating income (loss), adjusted operating margin, adjusted income, net of tax and adjusted earnings per share (EPS). The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables.

 

The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company's performance across periods. Management also uses these measures internally to assess the operating performance of its businesses, to assess performance for employee compensation, and to decide how to allocate resources. However, investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company's non-GAAP measures include adjustments that reflect how management views its businesses, and may differ from similarly titled non-GAAP measures presented by other companies.

 

Adjusted Operating Income (Loss) and Adjusted Operating Margin

 

Adjusted operating income (loss) is calculated by excluding the impact of certain noteworthy items from the Company's GAAP operating income (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income (loss), on a consolidated and reportable segment basis, for the three and twelve months ended December 31, 2022 and 2021. The following tables also present adjusted operating margin. For the three and twelve months ended December 31, 2022 and 2021, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue.

 
                   Risk & 
                   Insurance                    Corporate/ 
                   Services     Consulting       Eliminations     Total 
Three Months 
Ended December 
31, 2022 
Operating income 
 (loss)            $472         $   336         $   (128 )        $680 
Operating margin    16.0%           16.0 %          N/A            13.5 % 
Add (deduct) 
impact of 
noteworthy 
items: 
Restructuring, 
 excluding JLT 
 (a)                119             54              60             233 
Changes in 
 contingent 
 consideration 
 (b)                11              --              --             11 
JLT integration 
 and 
 restructuring 
 costs (c)          91              6               --             97 
Pre-acquisition 
 related costs 
 (d)                --              13              --             13 
JLT legacy legal 
 charges            --              (2   )          --             (2   ) 
Disposal of 
 businesses         (8  )           --              --             (8   ) 
Operating income 
 adjustments        213             71              60             344 
Adjusted 
 operating income 
 (loss)            $685         $   407         $   (68  )        $1,024 
Total identified 
 intangible 
 amortization 
 expense           $68          $   12          $   --            $80 
Adjusted 
 operating 
 margin             25.6%           20.0 %          N/A            22.0 % 
 
Three Months 
Ended December 
31, 2021 
Operating income 
 (loss)            $667         $   395         $   (76  )        $986 
Operating margin    21.9%           18.8 %          N/A            19.2 % 
Add (deduct) 
impact of 
noteworthy 
items: 
Restructuring, 
 excluding JLT 
 (a)                19              4               12             35 
Changes in 
 contingent 
 consideration 
 (b)                45              1               --             46 
JLT integration 
 and 
 restructuring 
 costs (c)          15              15              2              32 
JLT acquisition 
 related costs 
 and other (e)      45              1               --             46 
Legal claims (f)    33              --              --             33 
Gain on 
 consolidation of 
 business (g)       (267)           --              --             (267 ) 
JLT legacy legal 
 charges            --              (6   )          --             (6   ) 
Operating income 
 adjustments        (110)           15              14             (81  ) 
Adjusted 
 operating income 
 (loss)            $557         $   410         $   (62  )        $905 
Total identified 
 intangible 
 amortization 
 expense           $73          $   14          $   --            $87 
Adjusted 
 operating 
 margin             22.7%           20.2 %          N/A            20.4 % 
 
 
(a)    Primarily includes severance and lease exit charges for activities 
       focused on workforce actions, rationalization of technology and 
       functional resources, and reductions in real estate. Costs also reflect 
       charges for Marsh's operational excellence program. 
(b)    Change in fair value of contingent consideration related to 
       acquisitions and dispositions measured each quarter. 
(c)    Primarily reflects lease exit charges for a legacy JLT U.K. location. 
       In 2021, costs incurred include severance, lease exit charges, 
       technology costs, and consulting services related to the integration of 
       JLT. 
(d)    Integration costs for the Westpac superannuation fund transaction in 
       Australia, which is expected to close in the first half of 2023. 
(e)    Retention costs and legal charges related to the acquisition of JLT. 
(f)    Settlement charges and legal costs related to strategic recruiting. 
(g)    Gain from the fair value re-measurement of the Company's previously 
       held equity method investment in Marsh India upon the Company 
       increasing its ownership interest from 49% to 92%. This amount is 
       included in revenue in the consolidated statements of income and 
       excluded from underlying revenue and adjusted revenue in the 
       calculation of adjusted operating margin. 
 
 
 
 
Marsh & McLennan Companies, Inc. 
 Reconciliation of Non-GAAP Measures 
 Twelve Months Ended December 31 
 (Millions) (Unaudited) 
 
 
                       Risk & 
                       Insurance                     Corporate/ 
                       Services      Consulting       Eliminations     Total 
Twelve Months Ended 
December 31, 2022 
Operating income 
 (loss)                $3,089        $   1,553       $   (362 )        $4,280 
Operating margin        24.4 %           19.1  %         N/A            20.7 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring, 
 excluding JLT (a)      157              61              94             312 
Changes in contingent 
 consideration (b)      44               5               --             49 
JLT integration and 
 restructuring costs 
 (c)                    97               16              2              115 
JLT 
 acquisition-related 
 costs (d)              24               1               3              28 
JLT legacy legal 
 charges (e)            14               (13   )         --             1 
Legal claims (f)        30               --              --             30 
Disposal of 
 businesses (g)         (8   )           (114  )         --             (122 ) 
Pre-acquisition 
 related costs (h)      --               21              --             21 
Deconsolidation of 
 Russian businesses 
 and other related 
 charges (i)            42               10              --             52 
Operating income 
 adjustments            400              (13   )         99             486 
Adjusted operating 
 income (loss)         $3,489        $   1,540       $   (263 )        $4,766 
Total identified 
 intangible 
 amortization 
 expense               $291          $   47          $   --            $338 
Adjusted operating 
 margin                 29.8 %           19.7  %         N/A            24.7 % 
 
Twelve Months Ended 
December 31, 2021 
Operating income 
 (loss)                $3,080        $   1,504       $   (272 )        $4,312 
Operating margin        25.5 %           19.3  %         N/A            21.8 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring, 
 excluding JLT (a)      31               12              27             70 
Changes in contingent 
 consideration (b)      63               (3    )         (3   )         57 
JLT integration and 
 restructuring costs 
 (c)                    53               36              4              93 
JLT acquisition 
 related costs and 
 other (d)              77               3               1              81 
JLT legacy legal 
 charges (e)            --               (69   )         --             (69  ) 
Legal claims (f)        60               --              2              62 
Disposal of 
 businesses (g)         (52  )           3               --             (49  ) 
Gain on consolidation 
 of business (j)        (267 )           --              --             (267 ) 
Operating income 
 adjustments            (35  )           (18   )         31             (22  ) 
Adjusted operating 
 income (loss)         $3,045        $   1,486       $   (241 )        $4,290 
Total identified 
 intangible 
 amortization 
 expense               $309          $   56          $   --            $365 
Adjusted operating 
 margin                 28.5 %           19.8  %         N/A            23.9 % 
 
 
(a)    Primarily includes severance and lease exit charges for activities 
       focused on workforce actions, rationalization of technology and 
       functional resources, and reductions in real estate. Costs also reflect 
       charges for Marsh's operational excellence program. 
(b)    Change in fair value of contingent consideration related to 
       acquisitions and dispositions measured each quarter. 
(c)    Primarily reflects lease exit charges for a legacy JLT U.K. location. 
       In 2021, costs incurred include severance, lease exit charges, 
       technology costs, and consulting services related to the integration of 
       JLT. 
(d)    Retention costs and legal charges related to the acquisition of JLT. 
(e)    Charges and recoveries related to legacy JLT legal matters. 2021 
       reflects a reduction in the liability for a legacy JLT E&O relating to 
       suitability of advice provided to individuals for defined benefit 
       pension transfers in the U.K., as well as recoveries under indemnities 
       and insurance. 
(f)    Settlement charges and legal costs related to strategic recruiting. 
(g)    Primarily reflects a gain of $112 million during the second quarter of 
       2022 on the sale of the Mercer U.S. affinity business. In 2021, the 
       amount includes a gain of $49 million related to the sale of the U.K. 
       commercial networks business. These amounts are included in revenue in 
       the consolidated statements of income and excluded from underlying 
       revenue and adjusted revenue in the calculation of adjusted operating 
       margin. 
(h)    Integration costs for the Westpac superannuation fund transaction in 
       Australia, which is expected to close in the first half of 2023. 
(i)    Loss on deconsolidation of Russian businesses and other related 
       charges. The loss on deconsolidation of $39 million is included in 
       revenue in the consolidated statements of income and excluded from 
       underlying revenue and adjusted revenue used in the calculation of 
       adjusted operating margin. 
(j)    Gain from the fair value re-measurement of the Company's previously 
       held equity method investment in Marsh India upon the Company 
       increasing its ownership interest from 49% to 92%. The amount is 
       reflected in revenue in the consolidated statements of income and 
       excluded from underlying revenue and adjusted revenue in the 
       calculation of adjusted operating margin. 
 
 

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Three and Twelve Months Ended December 31

(In millions, except per share data)

 

(Unaudited)

 

Adjusted income, net of tax is calculated as the Company's GAAP income from continuing operations, adjusted to reflect the after tax impact of the operating income adjustments in the preceding tables and the additional items listed below. Adjusted EPS is calculated by dividing the Company's adjusted income, net of tax, by average number of shares outstanding-diluted for the relevant period. The following tables reconcile adjusted income, net of tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for the three and twelve month periods ended December 31, 2022 and 2021.

 
                  Three Months Ended         Three Months Ended 
                   December 31, 2022          December 31, 2021 
(In millions, 
except per share                 Adjusted                   Adjusted 
data)             Amount          EPS        Amount          EPS 
Net income 
 before 
 non-controlling 
 interests, as 
 reported                $471                       $807 
Less: 
 Non-controlling 
 interest, net 
 of tax                   5                          4 
Subtotal                 $466    $   0.93           $803    $   1.57 
Operating income 
 adjustments      $344                       $(81) 
Investments 
 adjustment (a)    1                          (4) 
Pension 
 settlement 
 adjustment (b)    1                          3 
Income tax 
 effect of 
 adjustments 
 (c)               (77)                       (33) 
Impact of U.K. 
 tax rate change 
 (d)               --                         5 
                          269        0.54            (110)      (0.21) 
Adjusted income, 
 net of tax              $735    $   1.47           $693    $   1.36 
 
                  Twelve Months Ended        Twelve Months Ended 
                   December 31, 2022          December 31, 2021 
(In millions, 
except per share                 Adjusted                   Adjusted 
data)             Amount          EPS        Amount          EPS 
Net income 
 before 
 non-controlling 
 interests, as 
 reported                $3,087                     $3,174 
Less: 
 Non-controlling 
 interest, net 
 of tax                   37                         31 
Subtotal                 $3,050  $   6.04           $3,143  $   6.13 
Operating income 
 adjustments      $486                       $(22) 
Investments 
 adjustment (a)    (3)                        (6) 
Pension 
 settlement 
 adjustment (b)    2                          5 
Income tax 
 effect of 
 adjustments 
 (c)               (78)                       (64) 
Impact of U.K. 
 tax rate change 
 (d)               --                         110 
                          407        0.81            23         0.04 
Adjusted income, 
 net of tax              $3,457  $   6.85           $3,166  $   6.17 
 
 
 
(a)    Represents mark-to-market losses and gains related to the Company's 
       investments. 
(b)    Charges resulting from lump sum pension settlements elected by 
       participants. 
(c)    For items with an income tax impact, the tax effect was calculated 
       using an effective tax rate based on the tax jurisdiction for each 
       item. 
(d)    Reflects the re-measurement of the Company's U.K. deferred tax assets 
       and liabilities upon enactment of legislation that increased the 
       corporate income tax rate applicable to U.K. based entities from 19% to 
       25%, effective April 1, 2023. 
 
 
 
 
Marsh & McLennan Companies, Inc. 
 Supplemental Information 
 Three and Twelve Months Ended December 31 
 (Millions) (Unaudited) 
 
 
                   Three Months Ended      Twelve Months Ended 
                    December 31,            December 31, 
                   2022          2021      2022          2021 
Consolidated 
Compensation and 
 benefits          $   3,038     $2,905    $   12,071    $11,425 
Other operating 
 expenses              1,304      1,246        4,369      4,083 
Total expenses     $   4,342     $4,151    $   16,440    $15,508 
 
Depreciation and 
 amortization 
 expense           $   122       $91       $   381       $382 
Identified 
 intangible 
 amortization 
 expense               80         87           338        365 
Total              $   202       $178      $   719       $747 
 
Risk and 
Insurance 
Services 
Compensation and 
 benefits          $   1,699     $1,630    $   6,938     $6,506 
Other operating 
 expenses              774        752          2,618      2,499 
Total expenses     $   2,473     $2,382    $   9,556     $9,005 
 
Depreciation and 
 amortization 
 expense           $   55        $44       $   178       $196 
Identified 
 intangible 
 amortization 
 expense               68         73           291        309 
Total              $   123       $117      $   469       $505 
 
Consulting 
Compensation and 
 benefits          $   1,210     $1,148    $   4,626     $4,435 
Other operating 
 expenses              548        556          1,960      1,850 
Total expenses     $   1,758     $1,704    $   6,586     $6,285 
 
Depreciation and 
 amortization 
 expense           $   32        $28       $   111       $115 
Identified 
 intangible 
 amortization 
 expense               12         14           47         56 
Total              $   44        $42       $   158       $171 
 
 
 
 
Marsh & McLennan Companies, Inc. 
 Consolidated Balance Sheets 
 (Millions) (Unaudited) 
                                            December 31,    December 31, 
                                             2022            2021 
ASSETS 
Current assets: 
Cash and cash equivalents                   $   1,442       $   1,752 
Net receivables                                 5,852           5,586 
Other current assets                            1,005           926 
Total current assets                            8,299           8,264 
 
Goodwill and intangible assets                  18,788          19,127 
Fixed assets, net                               871             847 
Pension related assets                          2,127           2,270 
Right of use assets                             1,562           1,868 
Deferred tax assets                             358             551 
Other assets                                    1,449           1,461 
TOTAL ASSETS                                $   33,454      $   34,388 
 
LIABILITIES AND EQUITY 
Current liabilities: 
Short-term debt                             $   268         $   17 
Accounts payable and accrued liabilities        3,278           3,165 
Accrued compensation and employee benefits      3,095           2,942 
Current lease liabilities                       310             332 
Accrued income taxes                            221             198 
Total current liabilities                       7,172           6,654 
 
Fiduciary liabilities                           10,660          9,622 
Less - cash and cash equivalents held in a 
 fiduciary capacity                             (10,660)        (9,622) 
                                                --              -- 
Long-term debt                                  11,227          10,933 
Pension, post-retirement and 
 post-employment benefits                       921             1,632 
Long-term lease liabilities                     1,667           1,880 
Liabilities for errors and omissions            355             355 
Other liabilities                               1,363           1,712 
 
Total equity                                    10,749          11,222 
TOTAL LIABILITIES AND EQUITY                $   33,454      $   34,388 
 
 
 
Marsh & McLennan Companies, Inc. 
 Consolidated Statements of Cash Flows 
 (Millions) (Unaudited) 
 
 
                                                  For the Years Ended 
                                                   December 31, 
                                                  2022           2021 
Operating cash flows: 
Net income before non-controlling interests       $   3,087      $3,174 
Adjustments to reconcile net income to cash 
provided by operations: 
Depreciation and amortization                         719         747 
Non-cash lease expense                                404         327 
Deconsolidation of Russian businesses                 39          -- 
Gain on consolidation of entity                       (2)         (267) 
Share-based compensation expense                      367         348 
Net gain on investments, disposition of assets 
 and other                                            (137)       (67) 
 
Changes in assets and liabilities: 
Accrued compensation and employee benefits            171         574 
Provision for taxes, net of payments and refunds      (54)        (33) 
Net receivables                                       (492)       (570) 
Other changes to assets and liabilities               71          4 
Contributions to pension and other benefit plans 
 in excess of current year credit                     (385)       (372) 
Operating lease liabilities                           (323)       (349) 
Net cash provided by operations                       3,465       3,516 
Financing cash flows: 
Purchase of treasury shares                           (1,950)     (1,159) 
Proceeds from issuance of debt                        984         743 
Repayments of debt                                    (365)       (1,016) 
Net issuance of common stock from treasury 
 shares                                               (72)        60 
Net distributions from non-controlling interests 
 and deferred/contingent consideration                (189)       (82) 
Dividends paid                                        (1,138)     (1,026) 
Increase in fiduciary liabilities                     1,684       1,183 
Net cash used for financing activities                (1,046)     (1,297) 
Investing cash flows: 
Capital expenditures                                  (470)       (406) 
Purchase of long-term investments and other           (13)        (29) 
Sales of long-term investments                        86          46 
Dispositions                                          119         84 
Acquisitions, net of cash and cash held in a 
 fiduciary capacity acquired                          (572)       (859) 
Net cash used for investing activities                (850)       (1,164) 
Effect of exchange rate changes on cash, cash 
 equivalents, and cash and cash equivalents held 
 in a fiduciary capacity                              (841)       (355) 
Increase in cash, cash equivalents, and cash and 
 cash equivalents held in a fiduciary capacity        728         700 
Cash, cash equivalents, and cash and cash 
 equivalents held in a fiduciary capacity at 
 beginning of period                                  11,374      10,674 
Cash, cash equivalents, and cash and cash 
 equivalents held in a fiduciary capacity at end 
 of period                                        $   12,102     $11,374 
 
 
 
Reconciliation of cash, cash equivalents, and cash and cash equivalents 
held in a fiduciary capacity to the Consolidated Balance Sheets 
For the Years Ended December 31,                        2022     2021 
(In millions of dollars) 
Cash and cash equivalents                               $1,442   $1,752 
Cash and cash equivalents held in a fiduciary capacity   10,660   9,622 
Total cash, cash equivalents, and cash and cash 
 equivalents held in a fiduciary capacity               $12,102  $11,374 
 

Media Contact:

Erick R. Gustafson

Marsh McLennan

+1 202 263 7788

 

erick.gustafson@mmc.com

Investor Contact:

Sarah DeWitt

Marsh McLennan

+1 212 345 6750

 

sarah.dewitt@mmc.com

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230125005833/en/

 
    CONTACT: 

Marsh McLennan

 
    SOURCE: Marsh McLennan 
Copyright Business Wire 2023 
 

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January 26, 2023 07:00 ET (12:00 GMT)

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