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Marsh & Mclennan Cos. Inc LSE:MHM London Ordinary Share COM US$1
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Nonlife Insurance 14,950.0 2,244.0 326.0 24.8 43,821

MARSH & MCLENNAN: Marsh McLennan Reports Second Quarter 2022 Results

21/07/2022 12:00pm

UK Regulatory (RNS & others)


Marsh & Mclennan Cos (LSE:MHM)
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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 second quarter ended June 30, 2022.

 

Dan Glaser, President and CEO, said: "Marsh McLennan delivered another strong quarter. We generated double-digit underlying growth, margin expansion and solid growth in adjusted EPS with momentum across all of our businesses. Our performance reflects continued demand for our advice and solutions and the value we deliver for clients."

 

Consolidated Results

 

Consolidated revenue in the second quarter of 2022 was $5.4 billion, an increase of 7% compared with the second quarter of 2021. On an underlying basis, revenue increased 10%. Operating income was $1.4 billion, an increase of 11% from the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 8% to $1.3 billion. Net income attributable to the Company was $967 million, or $1.91 per diluted share, compared with $1.60 in the second quarter of 2021. Adjusted earnings per share rose 8% to $1.89 per diluted share compared with $1.75 a year ago and included a headwind of 3 cents per share from foreign exchange.

 

For the six months ended June 30, 2022, consolidated revenue was $10.9 billion, an increase of 8% compared to the prior year period. On an underlying basis, revenue increased 10%. Operating income was $2.8 billion, an increase of 9% from a year ago. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 10% to $2.9 billion. Net income attributable to the Company was $2.0 billion, or $4.01 per diluted share, compared with $3.51 in the first six months of 2021. Adjusted earnings per share rose 12% to $4.19 per diluted share compared with $3.74 for the first six months of 2021.

 

Risk & Insurance Services

 

Risk & Insurance Services revenue was $3.3 billion in the second quarter of 2022, an increase of 5%, or 9% on an underlying basis. Operating income rose 2% to $967 million, and adjusted operating income was $1.0 billion, an increase of 9% versus a year ago. For the first six months ended June 30, 2022, revenue was $6.9 billion, an increase of 8%, or 10% on an underlying basis. Operating income rose 4% to $2.1 billion, and adjusted operating income was $2.2 billion, an increase of 11% versus a year ago.

 

Marsh's revenue in the second quarter was $2.8 billion, an increase of 9% on an underlying basis. In U.S./Canada, underlying revenue rose 10%. International operations produced underlying revenue growth of 9%, reflecting 14% growth in Latin America, 11% growth in Asia Pacific, and 7% growth in EMEA. For the first six months ended June 30, 2022, Marsh's underlying revenue growth was 10%.

 

Guy Carpenter's revenue in the second quarter was $522 million, an increase of 9% on an underlying basis. For the first six months ended June 30, 2022, Guy Carpenter's underlying revenue growth was 10%.

 

Consulting

 

Consulting revenue was $2.1 billion in the second quarter of 2022, an increase of 10% on both a reported and underlying basis. Operating income increased 39% to $475 million, and adjusted operating income increased 4% to $369 million. For the first six months ended June 30, 2022, Consulting revenue was $4.1 billion, an increase of 9%, or 10% on an underlying basis. Operating income of $867 million increased 23% and adjusted operating income increased 6% to $771 million.

 

Mercer's revenue in the second quarter was $1.4 billion, an increase of 7% on an underlying basis. Career revenue of $205 million was up 17% on an underlying basis. Health revenue of $587 million increased 10% on an underlying basis, and Wealth revenue of $597 million increased 1% on an underlying basis. For the first six months ended June 30, 2022, Mercer's revenue was $2.7 billion, an increase of 7% on an underlying basis.

 

Oliver Wyman's revenue in the second quarter was $695 million, an increase of 16% on an underlying basis. For the first six months ended June 30, 2022, Oliver Wyman's revenue was $1.4 billion, an increase of 16% on an underlying basis.

 

Other Items

 

The Company repurchased 3.8 million shares of stock for $600 million in the second quarter. Through six months, the Company has repurchased 7.0 million shares of stock for $1.1 billion.

 

Last week, the Board of Directors increased the quarterly dividend 10% to $0.590 per share, with the third quarter dividend payable on August 15, 2022.

 

In June, Marsh McLennan Agency (MMA) announced the acquisition of Clark Insurance, a leading independent insurance agency in Maine. In July, MMA announced the acquisition of CS Insurance Strategies, Inc., a full-service insurance agency based in Chicago.

 

Conference Call

 

A conference call to discuss second quarter 2022 results will be held today at 8:30 a.m. Eastern time. To participate in the teleconference, please dial +1 866 374 5140. Callers from outside the United States should dial +1 404 400 0571. The access code for both numbers is 24128163. The live audio webcast may be accessed at marshmclennan.com. A replay of the webcast will be available approximately two hours after the event.

 

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 83,000 colleagues advise clients in 130 countries. With annual revenue of approximately $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, follow us on LinkedIn and Twitter or subscribe to BRINK.

 

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      Six Months Ended 
                   Ended June 30,     June 30, 
                    2022     2021     2022      2021 
Revenue            $5,379   $5,017   $10,928   $10,100 
Expense: 
Compensation and 
 benefits           3,010    2,860    6,110     5,667 
Other operating 
 expenses           1,005    929      2,009     1,847 
Operating 
 expenses           4,015    3,789    8,119     7,514 
Operating income    1,364    1,228    2,809     2,586 
Other net benefit 
 credits            59       71       121       142 
Interest income     1        1        2         1 
Interest expense    (114 )   (110 )   (224  )   (228  ) 
Investment income   2        19       28        30 
Income before 
 income taxes       1,312    1,209    2,736     2,531 
Income tax 
 expense            334      382      672       706 
Net income before 
 non-controlling 
 interests          978      827      2,064     1,825 
Less: Net income 
 attributable to 
 non-controlling 
 interests          11       7        26        22 
Net income 
 attributable to 
 the Company       $967     $820     $2,038    $1,803 
Net income per 
share 
attributable to 
the Company: 
- Basic            $1.93    $1.61    $4.06     $3.55 
- Diluted          $1.91    $1.60    $4.01     $3.51 
Average number 
of shares 
outstanding: 
- Basic             501      508      502       508 
- Diluted           506      513      508       514 
Shares 
 outstanding at 
 June 30            499      507      499       507 
 

Marsh & McLennan Companies, Inc.

Supplemental Information - Revenue Analysis

Three Months Ended June 30

 

(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                 Acquisitions/ 
                Three Months       GAAP      Currency      Dispositions/   Underlying 
                Ended June 30,     Revenue    Impact       Other Impact     Revenue 
                 2022     2021 
Risk and 
Insurance 
Services 
Marsh           $2,778   $2,650   5  %       (3  ) %      (1    ) %        9  % 
Guy Carpenter    522      488     7  %       (3  ) %      1   %            9  % 
Subtotal         3,300    3,138   5  %       (3  ) %      (1    ) %        9  % 
Fiduciary 
 interest 
 income          13       3 
Total Risk and 
 Insurance 
 Services        3,313    3,141   5  %       (3  ) %      (1    ) %        9  % 
Consulting 
Mercer           1,389    1,274   9  %       (5  ) %      7   %            7  % 
Oliver Wyman 
 Group           695      618     12 %       (4  ) %      1   %            16 % 
Total 
 Consulting      2,084    1,892   10 %       (5  ) %      5   %            10 % 
Corporate 
 Eliminations    (18  )   (16  ) 
Total Revenue   $5,379   $5,017   7  %       (4  ) %      1   %            10 % 
 
 

Revenue Details

 

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

 
                                             Components of Revenue Change* 
                                  % 
                                   Change                 Acquisitions/ 
                 Three Months      GAAP      Currency      Dispositions/   Underlying 
                 Ended June 30,    Revenue    Impact       Other Impact     Revenue 
                  2022    2021 
Marsh: 
EMEA             $745    $796     (6   ) %   (7  ) %      (6    ) %        7  % 
Asia Pacific      382     347     10 %       (7  ) %      6   %            11 % 
Latin America     118     103     15 %       --           1   %            14 % 
Total 
 International    1,245   1,246   --         (6  ) %      (2    ) %        9  % 
U.S./Canada       1,533   1,404   9  %       --           --               10 % 
Total Marsh      $2,778  $2,650   5  %       (3  ) %      (1    ) %        9  % 
Mercer: 
Wealth           $597    $625     (5   ) %   (6  ) %      --               1  % 
Health            587     462     27 %       (3  ) %      20  %            10 % 
Career            205     187     11 %       (6  ) %      --               17 % 
Total Mercer     $1,389  $1,274   9  %       (5  ) %      7   %            7  % 
 
 
* Components of revenue change may not add due to rounding. 
 

Marsh & McLennan Companies, Inc.

Supplemental Information - Revenue Analysis

Six Months Ended June 30

 

(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                  Acquisitions/ 
                Six Months Ended     GAAP      Currency       Dispositions/   Underlying 
                 June 30,            Revenue    Impact        Other Impact     Revenue 
                 2022      2021 
Risk and 
Insurance 
Services 
Marsh           $5,324    $4,975    7  %       (3  ) %       --               10 % 
Guy Carpenter    1,521     1,383    10 %       (2  ) %       1   %            10 % 
Subtotal         6,845     6,358    8  %       (2  ) %       --               10 % 
Fiduciary 
 interest 
 income          17        8 
Total Risk and 
 Insurance 
 Services        6,862     6,366    8  %       (2  ) %       --               10 % 
Consulting 
Mercer           2,732     2,562    7  %       (3  ) %       4   %            7  % 
Oliver Wyman 
 Group           1,362     1,203    13 %       (3  ) %       --               16 % 
Total 
 Consulting      4,094     3,765    9  %       (3  ) %       2   %            10 % 
Corporate 
 Eliminations    (28   )   (31   ) 
Total Revenue   $10,928   $10,100   8  %       (3  ) %       1   %            10 % 
 
 

Revenue Details

 

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

 
                                             Components of Revenue Change* 
                                  % 
                                   Change                 Acquisitions/ 
                 Six Months        GAAP      Currency      Dispositions/   Underlying 
                 Ended June 30,    Revenue    Impact       Other Impact     Revenue 
                  2022    2021 
Marsh: 
EMEA             $1,587  $1,633   (3   ) %   (6  ) %      (5    ) %        8  % 
Asia Pacific      703     621     13 %       (6  ) %      5   %            14 % 
Latin America     222     193     15 %       (1  ) %      --               15 % 
Total 
 International    2,512   2,447   3  %       (5  ) %      (2    ) %        10 % 
U.S./Canada       2,812   2,528   11 %       --           2   %            10 % 
Total Marsh      $5,324  $4,975   7  %       (3  ) %      --               10 % 
Mercer: 
Wealth           $1,214  $1,248   (3   ) %   (4  ) %      --               1  % 
Health            1,111   949     17 %       (2  ) %      10  %            10 % 
Career            407     365     11 %       (4  ) %      --               16 % 
Total Mercer     $2,732  $2,562   7  %       (3  ) %      4   %            7  % 
 
 
* Components of revenue change may not add due to rounding. 
 

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Three Months Ended June 30

 

(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 six months ended June 30, 2022 and 2021. The following tables also present adjusted operating margin. For the three and six months ended June 30, 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 
June 30, 2022 
Operating income 
 (loss)                $967          $   475         $    (78  )       $1,364 
Operating margin        29.2 %           22.8 %           N/A           25.4 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring (a)       11               4                13            28 
Changes in contingent 
 consideration (b)      12               5                --            17 
JLT 
 acquisition-related 
 costs (c)              11               --               3             14 
JLT legacy legal 
 charges (d)            11               (1   )           --            10 
Disposal of 
 businesses (e)         --               (112 )           --            (112 ) 
Deconsolidation of 
 the Russian 
 businesses related 
 charges                2                (2   )           --            -- 
Operating income 
 adjustments            47               (106 )           16            (43  ) 
Adjusted operating 
 income (loss)         $1,014        $   369         $    (62  )       $1,321 
Total identified 
 intangible 
 amortization 
 expense               $71           $   12          $    --           $83 
Adjusted operating 
 margin                 32.8 %           19.3 %           N/A           26.7 % 
 
Three Months Ended 
June 30, 2021 
Operating income 
 (loss)                $950          $   344         $    (66  )       $1,228 
Operating margin        30.2 %           18.1 %           N/A           24.5 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring (a)       15               9                7             31 
Changes in contingent 
 consideration (b)      (5   )           1                (3   )        (7   ) 
JLT 
 acquisition-related 
 costs (c)              11               1                --            12 
Disposal of 
 businesses (e)         (51  )           1                --            (50  ) 
Other                   7                --               --            7 
Operating income 
 adjustments            (23  )           12               4             (7   ) 
Adjusted operating 
 income (loss)         $927          $   356         $    (62  )       $1,221 
Total identified 
 intangible 
 amortization 
 expense               $75           $   14          $    --           $89 
Adjusted operating 
 margin                 32.4 %           19.5 %           N/A           26.4 % 
 
 
 
(a)    Restructuring activities reflect costs related to the Company's global 
       information technology and HR functions, JLT integration costs, Marsh 
       operational excellence and adjustments to restructuring liabilities for 
       future rent under non-cancellable leases. 
(b)    Primarily includes the change in fair value of contingent consideration 
       related to acquisitions and dispositions as measured each quarter. 
(c)    Includes retention costs related to the acquisition of JLT. 
(d)    Reflects charges and recoveries related to legacy JLT legal matters. 
(e)    Reflects a gain of $112 million on the sale of the Mercer U.S. affinity 
       business during the second quarter of 2022. The second quarter of 2021 
       reflects a gain of $50 million primarily on 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. 
 
 
Marsh & McLennan Companies, Inc. 
Reconciliation of Non-GAAP Measures 
Six Months Ended June 30 
(Millions) (Unaudited) 
 
                       Risk & 
                       Insurance                     Corporate/ 
                       Services      Consulting       Eliminations     Total 
Six Months Ended 
June 30, 2022 
Operating income 
 (loss)                $2,088        $   867         $   (146 )        $2,809 
Operating margin        30.4 %           21.2 %          N/A            25.7 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring (a)       26               11              21             58 
Changes in contingent 
 consideration (b)      22               5               --             27 
JLT 
 acquisition-related 
 costs (c)              20               1               3              24 
JLT legacy legal 
 charges (d)            14               (11  )          --             3 
Disposal of 
 businesses (e)         --               (112 )          --             (112 ) 
Deconsolidation of 
 Russian businesses 
 and other related 
 charges (f)            42               10              --             52 
Legal claims (g)        30               --              --             30 
Operating income 
 adjustments            154              (96  )          24             82 
Adjusted operating 
 income (loss)         $2,242        $   771         $   (122 )        $2,891 
Total identified 
 intangible 
 amortization 
 expense               $149          $   25          $   --            $174 
Adjusted operating 
 margin                 34.7 %           19.9 %          N/A            28.2 % 
 
Six Months Ended 
June 30, 2021 
Operating income 
 (loss)                $2,010        $   705         $   (129 )        $2,586 
Operating margin        31.6 %           18.7 %          N/A            25.6 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring (a)       32               20              13             65 
Changes in contingent 
 consideration (b)      1                (5   )          (3   )         (7   ) 
JLT 
 acquisition-related 
 costs (c)              22               2               --             24 
Disposal of 
 businesses (e)         (53  )           4               --             (49  ) 
Other                   7                --              --             7 
Operating income 
 adjustments            9                21              10             40 
Adjusted operating 
 income (loss)         $2,019        $   726         $   (119 )        $2,626 
Total identified 
 intangible 
 amortization 
 expense               $161          $   28          $   --            $189 
Adjusted operating 
 margin                 34.5 %           20.0 %          N/A            28.0 % 
 
 
 
(a)    Restructuring activities reflect costs related to the Company's global 
       information technology and HR functions, JLT integration costs, Marsh 
       operational excellence and adjustments to restructuring liabilities for 
       future rent under non-cancellable leases. 
(b)    Primarily includes the change in fair value of contingent consideration 
       related to acquisitions and dispositions as measured each quarter. 
(c)    Includes retention costs related to the acquisition of JLT. 
(d)    Reflects charges and recoveries related to legacy JLT legal matters. 
(e)    Reflects a gain of $112 million on the sale of the Mercer U.S. affinity 
       business during the second quarter of 2022. The second quarter of 2021 
       reflects a gain of $49 million primarily on 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. 
(f)    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. 
(g)    Settlement charges and legal costs related to strategic recruiting. 
 

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Three and Six Months Ended June 30

(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 six months ended June 30, 2022 and 2021.

 
                  Three Months Ended          Three Months Ended 
                   June 30, 2022               June 30, 2021 
                                  Adjusted                   Adjusted 
                  Amount          EPS         Amount         EPS 
Net income 
 before 
 non-controlling 
 interests, as 
 reported                $978                        $827 
Less: 
 Non-controlling 
 interest, net 
 of tax                   11                          7 
Subtotal                 $967     $   1.91           $820    $   1.60 
Operating income 
 adjustments      $(43)                       $(7 ) 
Investments 
 adjustment (a)    1                           (1 ) 
Pension 
settlement 
adjustment (b)     1                           -- 
Income tax 
 effect of 
 adjustments 
 (c)               33                          (12) 
Impact of U.K. 
 tax rate change 
 (d)               --                          100 
                          (8   )      (0.02)          80         0.15 
Adjusted income, 
 net of tax              $959     $   1.89           $900    $   1.75 
 
 
                  Six Months Ended            Six Months Ended 
                   June 30, 2022               June 30, 2021 
                                  Adjusted                   Adjusted 
                  Amount          EPS         Amount         EPS 
Net income 
 before 
 non-controlling 
 interests, as 
 reported                $2,064                      $1,825 
Less: 
 Non-controlling 
 interest, net 
 of tax                   26                          22 
Subtotal                 $2,038   $   4.01           $1,803  $   3.51 
Operating income 
 adjustments      $82                         $40 
Investments 
 adjustment (a)    (8 )                        (1 ) 
Pension 
settlement 
adjustment (b)     1                           -- 
Income tax 
 effect of 
 adjustments 
 (c)               15                          (21) 
Impact of U.K. 
 tax rate change 
 (d)               --                          100 
                          90          0.18            118        0.23 
Adjusted income, 
 net of tax              $2,128   $   4.19           $1,921  $   3.74 
 
 
 
(a)    Represents mark-to-market losses and gains, primarily related to the 
       Company's investment in Alexander Forbes ("AF"). 
(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 Six Months Ended June 30 
(Millions) (Unaudited) 
 
                      Three Months Ended      Six Months Ended 
                       June 30,                June 30, 
                          2022       2021         2022      2021 
Consolidated 
Compensation and 
 benefits             $   3,010     $2,860    $   6,110    $5,667 
Other operating 
 expenses                 1,005      929          2,009     1,847 
Total expenses        $   4,015     $3,789    $   8,119    $7,514 
 
Depreciation and 
 amortization 
 expense              $   85        $104      $   174      $201 
Identified 
 intangible 
 amortization 
 expense                  83         89           174       189 
Total                 $   168       $193      $   348      $390 
 
Stock option expense  $   7         $4        $   12       $25 
 
Risk and Insurance 
Services 
Compensation and 
 benefits             $   1,750     $1,632    $   3,551    $3,242 
Other operating 
 expenses                 596        559          1,223     1,114 
Total expenses        $   2,346     $2,191    $   4,774    $4,356 
 
Depreciation and 
 amortization 
 expense              $   40        $58       $   83       $108 
Identified 
 intangible 
 amortization 
 expense                  71         75           149       161 
Total                 $   111       $133      $   232      $269 
 
Consulting 
Compensation and 
 benefits             $   1,145     $1,110    $   2,309    $2,184 
Other operating 
 expenses                 464        438          918       876 
Total expenses        $   1,609     $1,548    $   3,227    $3,060 
 
Depreciation and 
 amortization 
 expense              $   27        $29       $   53       $58 
Identified 
 intangible 
 amortization 
 expense                  12         14           25        28 
Total                 $   39        $43       $   78       $86 
 
 
 
Marsh & McLennan Companies, Inc. 
Consolidated Balance Sheets 
(Millions) 
 
                                        (Unaudited) 
                                         June 30,       December 31, 
                                         2022            2021 
ASSETS 
Current assets: 
Cash and cash equivalents               $   909         $   1,752 
Net receivables                             6,286           5,586 
Other current assets                        974             926 
Total current assets                        8,169           8,264 
 
Goodwill and intangible assets              18,501          19,127 
Fixed assets, net                           863             847 
Pension related assets                      2,160           2,270 
Right of use assets                         1,744           1,868 
Deferred tax assets                         537             551 
Other assets                                1,466           1,461 
TOTAL ASSETS                            $   33,440      $   34,388 
 
LIABILITIES AND EQUITY 
Current liabilities: 
Short-term debt                         $   1,311       $   17 
Accounts payable and accrued 
 liabilities                                3,029           3,165 
Accrued compensation and employee 
 benefits                                   1,914           2,942 
Current lease liabilities                   314             332 
Accrued income taxes                        448             198 
Total current liabilities                   7,016           6,654 
 
Fiduciary liabilities                       10,530          9,622 
Less - cash and cash equivalents held 
 in a fiduciary capacity                    (10,530  )      (9,622   ) 
                                            --              -- 
Long-term debt                              10,487          10,933 
Pension, post-retirement and 
 post-employment benefits                   1,407           1,632 
Long-term lease liabilities                 1,752           1,880 
Liabilities for errors and omissions        340             355 
Other liabilities                           1,521           1,712 
 
Total equity                                10,917          11,222 
TOTAL LIABILITIES AND EQUITY            $   33,440      $   34,388 
 
 
 
Marsh & McLennan Companies, Inc. 
Consolidated Statements of Cash Flows 
(Millions) (Unaudited) 
 
                                                  Six Months Ended 
                                                  June 30, 
                                                   2022      2021 
Operating cash flows: 
Net income before non-controlling interests       $2,064    $1,825 
Adjustments to reconcile net income to cash 
provided by operations: 
Depreciation and amortization                      348       390 
Non-cash lease expense                             152       158 
Deconsolidation of Russian businesses              39        -- 
Share-based compensation expense                   194       176 
Net (gain) loss on investments, disposition of 
 assets and other                                  (130  )   (66   ) 
 
Changes in assets and liabilities: 
Accrued compensation and employee benefits         (992  )   (630  ) 
Provision for taxes, net of payments and refunds   235       297 
Net receivables                                    (978  )   (626  ) 
Other changes to assets and liabilities            40        (415  ) 
Contributions to pension and other benefit plans 
 in excess of current year credit                  (226  )   (187  ) 
Operating lease liabilities                        (166  )   (172  ) 
Net cash provided by operations                    580       750 
Financing cash flows: 
Purchase of treasury shares                        (1,100)   (434  ) 
Net proceeds from issuance of commercial paper     944       -- 
Repayments of debt                                 (8    )   (509  ) 
Net issuance of common stock from treasury 
 shares                                            (115  )   (23   ) 
Net distributions of non-controlling interests 
 and deferred/contingent consideration             (104  )   (47   ) 
Dividends paid                                     (547  )   (478  ) 
Increase in fiduciary liabilities                  1,428     1,277 
Net cash provided by (used for) financing 
 activities                                        498       (214  ) 
Investing cash flows: 
Capital expenditures                               (239  )   (151  ) 
Net purchase of long-term investments and other    (3    )   (4    ) 
Dispositions                                       135       81 
Acquisitions, net of cash and cash held in a 
 fiduciary capacity acquired                       (151  )   (350  ) 
Net cash used for investing activities             (258  )   (424  ) 
Effect of exchange rate changes on cash, cash 
 equivalents, and cash and cash equivalents held 
 in a fiduciary capacity                           (755  )   38 
Increase in cash, cash equivalents, and cash and 
 cash equivalents held in a fiduciary capacity     65        150 
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                                        $11,439   $10,824 
 
 
 
Reconciliation of cash, cash equivalents, and cash and cash equivalents 
held in a fiduciary capacity to the Consolidated Balance Sheets 
Six Months Ended June 30,                                2022     2021 
(In millions) 
Cash and cash equivalents                               $909     $888 
Cash and cash equivalents held in a fiduciary capacity   10,530   9,936 
Total cash, cash equivalents, and cash and cash 
 equivalents held in a fiduciary capacity               $11,439  $10,824 
 

Media:

Erick R. Gustafson

Marsh McLennan

+1 202 263 7788

 

erick.gustafson@mmc.com

Investor:

Sarah DeWitt

Marsh McLennan

+1 212 345 6750

 

sarah.dewitt@mmc.com

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220720006022/en/

 
    CONTACT: 

Marsh & McLennan

 
    SOURCE: Marsh & McLennan 
Copyright Business Wire 2022 
 

(END) Dow Jones Newswires

July 21, 2022 07:00 ET (11:00 GMT)

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