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MHM Marsh & Mclennan Cos. Inc

81.00
0.00 (0.00%)
21 Jun 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 01:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Ins Agents,brokers & Service 22.74B 3.76B 7.6229 28.13 105.64B

MARSH MCLENNAN: Marsh McLennan Reports Second Quarter 2023 Results

20/07/2023 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 second quarter ended June 30, 2023.

 

Commenting on the results, John Doyle, President and CEO, said: "We delivered another excellent quarter, demonstrating continued momentum and strength across our business. We generated underlying revenue growth of 11%, adjusted EPS growth of 16%, and we continued to expand margins."

 

"I am proud of our performance in the first half of 2023. Our results reflect the strength of our position, the value we deliver to our clients, and terrific execution by our colleagues."

 

Consolidated Results

 

Consolidated revenue in the second quarter of 2023 was $5.9 billion, an increase of 9% compared with the second quarter of 2022. On an underlying basis, revenue increased 11%. Operating income was $1.5 billion, an increase of 7% from a year ago. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 17% to $1.5 billion. Net income attributable to the Company was $1.0 billion, or $2.07 per diluted share, compared with $1.91 in the second quarter of 2022. Adjusted earnings per share rose 16% to $2.20 per diluted share compared with $1.89 a year ago.

 

For the six months ended June 30, 2023, consolidated revenue was $11.8 billion, an increase of 8%, or 10% on an underlying basis compared to the prior period. Operating income was $3.2 billion, an increase of 13% from the prior year period. Adjusted operating income rose 15% to $3.3 billion. Net income attributable to the Company was $2.3 billion, or $4.55 per diluted share, compared with $4.01 in the first six months of 2022. Adjusted earnings per share increased 13% to $4.74 per diluted share compared with $4.19 for the first six months of 2022.

 

Risk & Insurance Services

 

Risk & Insurance Services revenue was $3.7 billion in the second quarter of 2023, an increase of 12%, or 13% on an underlying basis. Operating income rose 20% to $1.2 billion, and adjusted operating income was $1.2 billion, an increase of 18% versus a year ago. For the six months ended June 30, 2023, revenue was $7.6 billion, an increase of 11%, or 12% on an underlying basis. Operating income rose 22% to $2.6 billion, and adjusted operating income was $2.6 billion, an increase of 17% versus a year ago.

 

Marsh's revenue in the second quarter was $3.0 billion, an increase of 10% on an underlying basis. In U.S./Canada, underlying revenue rose 9%. International operations produced underlying revenue growth of 10%, reflecting 17% growth in Latin America, 11% growth in EMEA, and 6% growth in Asia Pacific. For the six months ended June 30, 2023, Marsh's underlying revenue growth was 9%.

 

Guy Carpenter's revenue in the second quarter was $576 million, an increase of 11% on an underlying basis. For the six months ended June 30, 2023, Guy Carpenter's underlying revenue growth was 10%.

 

Consulting

 

Consulting revenue was $2.2 billion in the second quarter of 2023, an increase of 4%, or 8% on an underlying basis. Operating income decreased 18% to $388 million, while adjusted operating income increased 9% to $403 million. For the first six months ended June 30, 2023, revenue was $4.2 billion, an increase of 3%, or 6% on an underlying basis. Operating income of $799 million decreased 8%, while adjusted operating income increased 5% to $809 million.

 

Mercer's revenue in the second quarter was $1.4 billion, an increase of 6% on an underlying basis. Health revenue of $518 million increased 10% on an underlying basis. Wealth revenue of $637 million increased 3% on an underlying basis. Career revenue of $219 million increased 6% on an underlying basis. For the six months ended June 30, 2023, Mercer's revenue was $2.7 billion, an increase of 7% on an underlying basis.

 

Oliver Wyman's revenue in the second quarter was $798 million, an increase of 11% on an underlying basis. For the six months ended June 30, 2023, Oliver Wyman's revenue was $1.5 billion, an increase of 6% on an underlying basis.

 

Other Items

 

The Company repurchased 1.7 million shares of stock for $300 million in the second quarter of 2023. Through six months ended June 30, 2023, the Company has repurchased 3.5 million shares of stock for $600 million.

 

Last week, the Board of Directors increased the quarterly dividend 20% to $0.710 per share, with the third quarter dividend payable on August 15, 2023.

 

Conference Call

 

A conference call to discuss second quarter 2023 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, instability in the banking sector and 
      inflation; 
   --  the increasing prevalence of ransomware, supply chain and other forms 
      of cyber attacks, and their potential to disrupt our operations, or the 
      operations of our third party vendors, 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, such 
      as the implementation of the Organization for Economic Cooperation and 
      Development international tax framework, 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 the Company, 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, 
                   2023     2022     2023      2022 
Revenue            $5,876   $5,379   $11,800   $10,928 
Expense: 
Compensation and 
 benefits           3,337    3,010    6,544     6,110 
Other operating 
 expenses           1,082    1,005    2,073     2,009 
Operating 
 expenses           4,419    4,015    8,617     8,119 
Operating income    1,457    1,364    3,183     2,809 
Other net benefit 
 credits            60       59       118       121 
Interest income     10       1        24        2 
Interest expense    (146 )   (114 )   (282  )   (224  ) 
Investment income   3        2        5         28 
Income before 
 income taxes       1,384    1,312    3,048     2,736 
Income tax 
 expense            337      334      749       672 
Net income before 
 non-controlling 
 interests          1,047    978      2,299     2,064 
Less: Net income 
 attributable to 
 non-controlling 
 interests          12       11       29        26 
Net income 
 attributable to 
 the Company       $1,035   $967     $2,270    $2,038 
Net income per 
share 
attributable to 
the Company: 
- Basic            $2.09    $1.93    $4.59     $4.06 
- Diluted          $2.07    $1.91    $4.55     $4.01 
Average number 
of shares 
outstanding: 
- Basic             495      501      495       502 
- Diluted           499      506      499       508 
Shares 
 outstanding at 
 June 30            494      499      494       499 
 
 

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 over period comparisons of revenue. Non-GAAP underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

 
                                              Components of Revenue Change* 
                                  % Change                  Acquisitions/     Non-GAAP 
                Three Months       GAAP       Currency       Dispositions/     Underlying 
                Ended June 30,     Revenue*    Impact        Other Impact**    Revenue 
                2023     2022 
Risk and 
Insurance 
Services 
Marsh           $3,038   $2,778   9  %        (1)%          1    %            10 % 
Guy Carpenter    576      522     10 %        (1)%          --                11 % 
Subtotal         3,614    3,300   9  %        (1)%          1    %            10 % 
Fiduciary 
 interest 
 income          108      13 
Total Risk and 
 Insurance 
 Services        3,722    3,313   12 %        (1)%          1    %            13 % 
Consulting 
Mercer           1,374    1,389   (1 )%       (1)%          (6   )%           6  % 
Oliver Wyman 
 Group           798      695     15 %        --            4    %            11 % 
Total 
 Consulting      2,172    2,084   4  %        --            (3   )%           8  % 
Corporate 
 Eliminations    (18  )   (18  ) 
Total Revenue   $5,876   $5,379   9  %        (1)%          (1   )%           11 % 
 
 

Revenue Details

 

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

 
                                              Components of Revenue Change* 
                                  % Change                 Acquisitions/     Non-GAAP 
                 Three Months      GAAP       Currency      Dispositions/     Underlying 
                 Ended June 30,    Revenue*    Impact       Other Impact**    Revenue 
                 2023    2022 
Marsh: 
EMEA (a)         $858    $780     10  %       (1)%         --                11 % 
Asia Pacific 
 (a)              357     347     3   %       (4)%         1     %           6  % 
Latin America     137     118     15  %       (1)%         --                17 % 
Total 
 International    1,352   1,245   9   %       (2)%         --                10 % 
U.S./Canada       1,686   1,533   10  %       --           1     %           9  % 
Total Marsh      $3,038  $2,778   9   %       (1)%         1     %           10 % 
Mercer: 
Wealth           $637    $597     7   %       (1)%         4     %           3  % 
Health            518     587     (12 )%      --           (19   )%          10 % 
Career            219     205     6   %       (1)%         1     %           6  % 
Total Mercer     $1,374  $1,389   (1  )%      (1)%         (6    )%          6  % 
 
 
(a)    In the first quarter of 2023, the Company began reporting the Marsh 
       India operations in EMEA. Prior year results for India have been 
       reclassified from Asia Pacific to EMEA for comparative purposes. 
 
*      Rounded to whole percentages. Components of revenue may not add due to 
       rounding. 
**     Acquisitions, dispositions, and other includes the impact of current 
       and prior year items excluded from the calculation of non-GAAP 
       underlying revenue for comparability purposes. Details on these items 
       are provided in the reconciliation of non-GAAP revenue to GAAP revenue 
       tables included in this release. 
 
 

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 over period comparisons of revenue. Non-GAAP underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

 
                                                Components of Revenue Change* 
                                    % Change                  Acquisitions/     Non-GAAP 
                Six Months Ended     GAAP       Currency       Dispositions/     Underlying 
                 June 30,            Revenue*    Impact        Other Impact**    Revenue 
                2023      2022 
Risk and 
Insurance 
Services 
Marsh           $5,782    $5,324    9  %        (2)%          1    %            9  % 
Guy Carpenter    1,647     1,521    8  %        (1)%          --                10 % 
Subtotal         7,429     6,845    9  %        (2)%          1    %            9  % 
Fiduciary 
 interest 
 income          199       17 
Total Risk and 
 Insurance 
 Services        7,628     6,862    11 %        (2)%          1    %            12 % 
Consulting 
Mercer           2,718     2,732    (1 )%       (2)%          (5   )%           7  % 
Oliver Wyman 
 Group           1,485     1,362    9  %        (1)%          4    %            6  % 
Total 
 Consulting      4,203     4,094    3  %        (2)%          (2   )%           6  % 
Corporate 
 Eliminations    (31   )   (28   ) 
Total Revenue   $11,800   $10,928   8  %        (2)%          --                10 % 
 
 

Revenue Details

 

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

 
                                              Components of Revenue Change* 
                                  % Change                 Acquisitions/     Non-GAAP 
                 Six Months        GAAP       Currency      Dispositions/     Underlying 
                 Ended June 30,    Revenue*    Impact       Other Impact**    Revenue 
                 2023    2022 
Marsh: 
EMEA (a)         $1,790  $1,649   9  %        (3)%         1     %           10 % 
Asia Pacific 
 (a)              669     641     4  %        (5)%         1     %           8  % 
Latin America     252     222     13 %        --           --                14 % 
Total 
 International    2,711   2,512   8  %        (3)%         1     %           10 % 
U.S./Canada       3,071   2,812   9  %        --           1     %           8  % 
Total Marsh      $5,782  $5,324   9  %        (2)%         1     %           9  % 
Mercer: 
Wealth           $1,218  $1,214   --          (3)%         --                3  % 
Health            1,063   1,111   (4 )%       (1)%         (12   )%          11 % 
Career            437     407     7  %        (3)%         1     %           9  % 
Total Mercer     $2,718  $2,732   (1 )%       (2)%         (5    )%          7  % 
 
 
(a)    In the first quarter of 2023, the Company began reporting the Marsh 
       India operations in EMEA. Prior year results for India have been 
       reclassified from Asia Pacific to EMEA for comparative purposes. 
 
*      Rounded to whole percentages. Components of revenue may not add due to 
       rounding. 
**     Acquisitions, dispositions, and other includes the impact of current 
       and prior year items excluded from the calculation of non-GAAP 
       underlying revenue for comparability purposes. Details on these items 
       are provided in the reconciliation of non-GAAP revenue to GAAP revenue 
       tables included in this release. 
 
 

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 and item 10(e) Regulation S-K in accordance with the Securities Exchange Act of 1934. These measures are: non-GAAP revenue, 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 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, 2023 and 2022. The following tables also present adjusted operating margin. For the three and six months ended June 30, 2023 and 2022, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue. The Company's adjusted revenue used in the determination of adjusted operating margin is calculated by excluding the impact of certain noteworthy items from the Company's GAAP revenue.

 
                       Risk & 
                       Insurance                     Corporate/ 
                       Services      Consulting       Eliminations     Total 
Three Months Ended 
June 30, 2023 
Operating income 
 (loss)                $1,157        $   388         $    (88  )       $1,457 
Operating margin        31.1 %           17.9 %           N/A           24.8 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring, 
 excluding JLT (a)      28               7                27            62 
Changes in contingent 
 consideration (b)      10               --               --            10 
JLT integration and 
 restructuring costs 
 (c)                    3                --               --            3 
Acquisition related 
 costs (d)              --               10               --            10 
Disposal of business    --               (2   )           --            (2   ) 
Operating income 
 adjustments            41               15               27            83 
Adjusted operating 
 income (loss)         $1,198        $   403         $    (61  )       $1,540 
Total identified 
 intangible 
 amortization 
 expense               $73           $   14          $    --           $87 
Adjusted operating 
 margin                 34.2 %           19.2 %           N/A           27.7 % 
 
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, 
 excluding JLT (a)      11               4                13            28 
Changes in contingent 
 consideration (b)      12               5                --            17 
JLT 
 acquisition-related 
 costs (e)              11               --               3             14 
JLT legacy legal 
 charges (f)            11               (1   )           --            10 
Disposal of business 
 (g)                    --               (112 )           --            (112 ) 
Deconsolidation of 
 Russian businesses 
 and other 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 % 
 
 
(a)    In 2023, costs primarily include severance and lease exit charges for 
       activities focused on workforce actions, rationalization of technology 
       and functional resources, and reductions in real estate. 
(b)    Change in fair value of contingent consideration related to 
       acquisitions and dispositions measured each quarter. 
(c)    Reflects adjustments to restructuring liabilities for future rent under 
       non-cancelable leases for a legacy JLT U.K. location. 
(d)    Integration costs for the Westpac superannuation fund transaction in 
       Australia, which closed on April 1, 2023. 
(e)    Retention costs related to the acquisition of JLT. 
(f)    Charges and recoveries related to legacy JLT legal matters. 
(g)    Reflects a gain of $112 million on the sale of the Mercer U.S. affinity 
       business in the second quarter of 2022. This amount is included in 
       revenue in the consolidated statements of income and excluded from 
       non-GAAP revenue and adjusted revenue used 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, 2023 
Operating income 
 (loss)                $2,552        $   799         $   (168 )        $3,183 
Operating margin        33.5 %           19.0 %          N/A            27.0 % 
Add (deduct) impact 
of noteworthy 
items: 
Restructuring, 
 excluding JLT (a)      47               16              39             102 
Changes in contingent 
 consideration (b)      16               1               --             17 
JLT integration and 
 restructuring costs 
 (c)                    16               --              --             16 
JLT legacy legal 
 charges (d)            --               (51  )          --             (51  ) 
Disposal of business 
 (e)                    --               17              --             17 
Acquisition related 
 costs (f)              --               27              --             27 
Operating income 
 adjustments            79               10              39             128 
Adjusted operating 
 income (loss)         $2,631        $   809         $   (129 )        $3,311 
Total identified 
 intangible 
 amortization 
 expense               $147          $   25          $   --            $172 
Adjusted operating 
 margin                 36.4 %           19.8 %          N/A            29.5 % 
 
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, 
 excluding JLT (a)      20               6               20             46 
Changes in contingent 
 consideration (b)      22               5               --             27 
JLT integration and 
 restructuring costs 
 (c)                    6                5               1              12 
JLT legacy legal 
 charges (d)            14               (11  )          --             3 
Disposal of business 
 (e)                    --               (112 )          --             (112 ) 
JLT 
 acquisition-related 
 costs (g)              20               1               3              24 
Legal claims (h)        30               --              --             30 
Deconsolidation of 
 Russian businesses 
 and other related 
 charges (i)            42               10              --             52 
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 % 
 
 
(a)    In 2023, costs primarily include 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)    Reflects adjustments to restructuring liabilities for future rent under 
       non-cancelable leases for a legacy JLT U.K. location. 
(d)    Reflects insurance and indemnity recoveries for a legacy JLT E&O matter 
       relating to suitability of advice provided to individuals for defined 
       benefit pension transfers in the U.K. 
(e)    Loss on sale of an individual financial advisory business in Canada. 
       The second quarter of 2022 reflects a gain of $112 million on the sale 
       of the Mercer U.S. affinity business. These amounts are included in 
       revenue in the consolidated statements of income and excluded from 
       non-GAAP revenue and adjusted revenue used in the calculation of 
       adjusted operating margin. 
(f)    Integration costs for the Westpac superannuation fund transaction in 
       Australia, which closed on April 1, 2023. 
(g)    Retention costs related to the acquisition of JLT. 
(h)    Settlement charges and legal costs related to strategic recruiting. 
(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 
       non-GAAP revenue and adjusted revenue used in the calculation of 
       adjusted operating margin. The remaining expense charges of $13 million 
       are included in other operating expenses in the consolidated statements 
       of income. 
 
 

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 the 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, 2023 and 2022.

 
                   Three Months Ended         Three Months Ended 
                    June 30, 2023              June 30, 2022 
                                  Adjusted                    Adjusted 
                   Amount          EPS        Amount           EPS 
Net income before 
 non-controlling 
 interests, as 
 reported                 $1,047                     $978 
Less: 
 Non-controlling 
 interest, net of 
 tax                       12                         11 
Subtotal                  $1,035  $   2.07           $967     $   1.91 
Operating income 
 adjustments       $83                        $(43) 
Investments 
 adjustment         (1 )                       1 
Pension 
 settlement 
 adjustment         --                         1 
Income tax effect 
 of adjustments 
 (a)                (17)                       33 
                           65         0.13            (8   )      (0.02) 
Adjusted income, 
 net of tax               $1,100  $   2.20           $959     $   1.89 
 
                   Six Months Ended           Six Months Ended 
                    June 30, 2023              June 30, 2022 
                                  Adjusted                    Adjusted 
                   Amount          EPS        Amount           EPS 
Net income before 
 non-controlling 
 interests, as 
 reported                 $2,299                     $2,064 
Less: 
 Non-controlling 
 interest, net of 
 tax                       29                         26 
Subtotal                  $2,270  $   4.55           $2,038   $   4.01 
Operating income 
 adjustments       $128                       $82 
Investments 
 adjustment         1                          (8 ) 
Pension 
 settlement 
 adjustment         --                         1 
Income tax effect 
 of adjustments 
 (a)                (33)                       15 
                           96         0.19            90          0.18 
Adjusted income, 
 net of tax               $2,366  $   4.74           $2,128   $   4.19 
 
 
(a)    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. 
 
 
 
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, 
                      2023          2022      2023         2022 
Consolidated 
Compensation and 
 benefits             $   3,337     $3,010    $   6,544    $6,110 
Other operating 
 expenses                 1,082      1,005        2,073     2,009 
Total expenses        $   4,419     $4,015    $   8,617    $8,119 
 
Depreciation and 
 amortization 
 expense              $   91        $85       $   175      $174 
Identified 
 intangible 
 amortization 
 expense                  87         83           172       174 
Total                 $   178       $168      $   347      $348 
 
Risk and Insurance 
Services 
Compensation and 
 benefits             $   1,923     $1,750    $   3,803    $3,551 
Other operating 
 expenses                 642        596          1,273     1,223 
Total expenses        $   2,565     $2,346    $   5,076    $4,774 
 
Depreciation and 
 amortization 
 expense              $   49        $40       $   86       $83 
Identified 
 intangible 
 amortization 
 expense                  73         71           147       149 
Total                 $   122       $111      $   233      $232 
 
Consulting 
Compensation and 
 benefits             $   1,271     $1,145    $   2,439    $2,309 
Other operating 
 expenses                 513        464          965       918 
Total expenses        $   1,784     $1,609    $   3,404    $3,227 
 
Depreciation and 
 amortization 
 expense              $   27        $27       $   48       $53 
Identified 
 intangible 
 amortization 
 expense                  14         12           25        25 
Total                 $   41        $39       $   73       $78 
 
 
 
Marsh & McLennan Companies, Inc. 
 Consolidated Balance Sheets 
 (Millions) 
 
                                             (Unaudited) 
                                              June 30,      December 31, 
                                              2023           2022 
ASSETS 
Current assets: 
Cash and cash equivalents                    $   1,171      $   1,442 
Cash and cash equivalents held in a 
 fiduciary capacity (a)                          11,564         10,660 
Net receivables                                  6,986          5,852 
Other current assets                             1,081          1,005 
Total current assets                             20,802         18,959 
 
Goodwill and intangible assets                   19,129         18,788 
Fixed assets, net                                870            871 
Pension related assets                           2,331          2,127 
Right of use assets                              1,569          1,562 
Deferred tax assets                              365            358 
Other assets                                     1,500          1,449 
TOTAL ASSETS                                 $   46,566     $   44,114 
 
LIABILITIES AND EQUITY 
Current liabilities: 
Short-term debt                              $   2,375      $   268 
Accounts payable and accrued liabilities         3,137          3,278 
Accrued compensation and employee benefits       2,021          3,095 
Current lease liabilities                        309            310 
Accrued income taxes                             407            221 
Fiduciary liabilities (a)                        11,564         10,660 
Total current liabilities                        19,813         17,832 
 
Long-term debt                                   10,247         11,227 
Pension, post-retirement and 
 post-employment benefits                        866            921 
Long-term lease liabilities                      1,699          1,667 
Liabilities for errors and omissions             364            355 
Other liabilities                                1,438          1,363 
 
Total equity                                     12,139         10,749 
TOTAL LIABILITIES AND EQUITY                 $   46,566     $   44,114 
 
 
(a)    In the second quarter of 2023, the Company changed the presentation of 
       fiduciary assets and liabilities on the consolidated balance sheets. 
       Cash and cash equivalents held in a fiduciary capacity was reclassified 
       from an offset to fiduciary liabilities to current assets, with the 
       corresponding fiduciary liabilities reclassified to current 
       liabilities. The presentation in the December 31, 2022 consolidated 
       balance sheet was conformed to the current presentation. 
 
 
 
Marsh & McLennan Companies, Inc. 
 Consolidated Statements of Cash Flows 
 (Millions) (Unaudited) 
 
                                                Six Months Ended 
                                                 June 30, 
                                                2023      2022 
Operating cash flows: 
Net income before non-controlling interests     $2,299    $2,064 
Adjustments to reconcile net income to cash 
provided by operations: 
Depreciation and amortization                    347       348 
Non-cash lease expense                           143       152 
Deconsolidation of Russian businesses            --        39 
Share-based compensation expense                 191       194 
Net gain on investments, disposition of assets 
 and other                                       (9    )   (130  ) 
 
Changes in assets and liabilities: 
Accrued compensation and employee benefits       (1,101)   (992  ) 
Provision for taxes, net of payments and 
 refunds                                         245       235 
Net receivables                                  (1,029)   (978  ) 
Other changes to assets and liabilities          (98   )   40 
Contributions to pension and other benefit 
 plans in excess of current year credit          (164  )   (226  ) 
Operating lease liabilities                      (159  )   (166  ) 
Net cash provided by operations                  665       580 
Financing cash flows: 
Purchase of treasury shares                      (600  )   (1,100) 
Borrowings from term-loan and credit 
facilities                                       200       -- 
Net proceeds from issuance of commercial paper   308       944 
Proceeds from issuance of debt                   589       -- 
Repayments of debt                               (8    )   (8    ) 
Net issuance of common stock from treasury 
 shares                                          (21   )   (115  ) 
Net distributions of non-controlling interests 
 and deferred/contingent consideration           (332  )   (104  ) 
Dividends paid                                   (591  )   (547  ) 
Change in fiduciary liabilities                  682       1,428 
Net cash provided by financing activities        227       498 
Investing cash flows: 
Capital expenditures                             (185  )   (239  ) 
Net purchases of long term investments and 
 other                                           (23   )   (3    ) 
Sales of long term investments                   16        -- 
Dispositions                                     (17   )   135 
Acquisitions, net of cash and cash held in a 
 fiduciary capacity acquired                     (292  )   (151  ) 
Net cash used for investing activities           (501  )   (258  ) 
Effect of exchange rate changes on cash, cash 
 equivalents, and cash and cash equivalents 
 held in a fiduciary capacity                    242       (755  ) 
Increase in cash, cash equivalents, and cash 
 and cash equivalents held in a fiduciary 
 capacity                                        633       65 
Cash, cash equivalents, and cash and cash 
 equivalents held in a fiduciary capacity at 
 beginning of period                             12,102    11,374 
Cash, cash equivalents, and cash and cash 
 equivalents held in a fiduciary capacity at 
 end of period                                  $12,735   $11,439 
 
Reconciliation of cash, cash equivalents, and cash and cash 
equivalents held in a fiduciary capacity to the Consolidated Balance 
Sheets 
Balance at June 30,                             2023      2022 
(In millions) 
Cash and cash equivalents                       $1,171    $909 
Cash and cash equivalents held in a fiduciary 
 capacity                                        11,564    10,530 
Total cash, cash equivalents, and cash and 
 cash equivalents held in a fiduciary 
 capacity                                       $12,735   $11,439 
 
 

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Three Months Ended June 30

 

(Millions) (Unaudited)

 

Non-GAAP revenue isolates the impact of foreign exchange rate movements and certain transaction-related items from the current period GAAP revenue. The non-GAAP revenue measure is presented on a constant currency basis, excluding the impact of foreign currency fluctuations. The Company isolates the impact of foreign exchange rate movements period over period, by translating the current period foreign currency GAAP revenue into U.S. Dollars based on the difference in the current and corresponding prior period exchange rates. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period over period comparisons of revenue and are consistently excluded from current and prior period GAAP revenues for comparability purposes. Percentage changes, referred to as non-GAAP underlying revenue, are calculated by dividing the period over period change in non-GAAP revenue by the prior period non-GAAP revenue.

 

The following table provides the reconciliation of GAAP revenue to non-GAAP revenue:

 
                2023                                                   2022 
Three Months                           Acquisitions/                            Acquisitions/ 
Ended June      GAAP     Currency       Dispositions/      Non-GAAP    GAAP      Dispositions/      Non-GAAP 
30,             Revenue   Impact        Other Impact        Revenue    Revenue   Other Impact        Revenue 
Risk and 
Insurance 
Services 
Marsh           $3,038   $   26        $    (24  )         $   3,040   $2,778   $    (5   )         $   2,773 
Guy Carpenter    576         5              (1   )             580      522          --                 522 
Subtotal         3,614       31             (25  )             3,620    3,300        (5   )             3,295 
Fiduciary 
 interest 
 income          108         --             --                 108      13           --                 13 
Total Risk and 
 Insurance 
 Services        3,722       31             (25  )             3,728    3,313        (5   )             3,308 
Consulting 
Mercer (a)       1,374       11             (4   )             1,381    1,389        (86  )             1,303 
Oliver Wyman 
 Group           798         (2 )           (26  )             770      695          --                 695 
Total 
 Consulting      2,172       9              (30  )             2,151    2,084        (86  )             1,998 
Corporate 
 Eliminations    (18  )      --             --                 (18  )   (18  )       --                 (18  ) 
Total Revenue   $5,876   $   40        $    (55  )         $   5,861   $5,379   $    (91  )         $   5,288 
 
 

Revenue Details

 

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

 
                 2023                                                 2022 
Three Months                          Acquisitions/                            Acquisitions/ 
Ended June       GAAP     Currency     Dispositions/      Non-GAAP    GAAP      Dispositions/      Non-GAAP 
30,              Revenue   Impact      Other Impact        Revenue    Revenue   Other Impact        Revenue 
Marsh: 
EMEA (b)         $858     $   5       $    (1   )         $   862     $780     $    (5    )        $   775 
Asia Pacific 
 (b)              357         14           (2   )             369      347          --                 347 
Latin America     137         1            --                 138      118          --                 118 
Total 
 International    1,352       20           (3   )             1,369    1,245        (5    )            1,240 
U.S./Canada       1,686       6            (21  )             1,671    1,533        --                 1,533 
Total Marsh      $3,038   $   26      $    (24  )         $   3,040   $2,778   $    (5    )        $   2,773 
Mercer: 
Wealth (a)       $637     $   7       $    (1   )         $   643     $597     $    26             $   623 
Health (a)        518         2            --                 520      587          (112  )            475 
Career            219         2            (3   )             218      205          --                 205 
Total Mercer     $1,374   $   11      $    (4   )         $   1,381   $1,389   $    (86   )        $   1,303 
 
 
(a)    Acquisitions, dispositions, and other in 2022 includes revenue from the 
       Westpac superannuation fund transaction in Wealth and a gain from the 
       sale of the Mercer U.S. affinity business of $112 million in Health. 
(b)    In the first quarter of 2023, the Company began reporting the Marsh 
       India operations in EMEA. Prior year results for India have been 
       reclassified from Asia Pacific to EMEA for comparative purposes. 
 
 

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Six Months Ended June 30

 

(Millions) (Unaudited)

 

The following table provides the reconciliation of GAAP revenue to Non-GAAP revenue:

 
                2023                                                2022 
Six Months                            Acquisitions/                           Acquisitions/ 
Ended June      GAAP      Currency     Dispositions/      Non-GAAP  GAAP       Dispositions/      Non-GAAP 
30,              Revenue   Impact      Other Impact        Revenue   Revenue   Other Impact        Revenue 
Risk and 
Insurance 
Services 
Marsh (a)       $5,782    $   97      $    (48  )         $5,831    $5,324    $    17             $5,341 
Guy Carpenter    1,647        23           (15  )          1,655     1,521         (19   )         1,502 
Subtotal         7,429        120          (63  )          7,486     6,845         (2    )         6,843 
Fiduciary 
 interest 
 income          199          2            --              201       17            --              17 
Total Risk and 
 Insurance 
 Services        7,628        122          (63  )          7,687     6,862         (2    )         6,860 
Consulting 
Mercer (b)       2,718        61           15              2,794     2,732         (113  )         2,619 
Oliver Wyman 
 Group (a)       1,485        14           (50  )          1,449     1,362         11              1,373 
Total 
 Consulting      4,203        75           (35  )          4,243     4,094         (102  )         3,992 
Corporate 
 Eliminations    (31   )      --           --              (31   )   (28   )       --              (28   ) 
Total Revenue   $11,800   $   197     $    (98  )         $11,899   $10,928   $    (104  )        $10,824 
 
 

Revenue Details

 

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

 
                 2023                                                 2022 
Six Months                            Acquisitions/                            Acquisitions/ 
Ended June       GAAP     Currency     Dispositions/      Non-GAAP    GAAP      Dispositions/      Non-GAAP 
30,              Revenue   Impact      Other Impact        Revenue    Revenue   Other Impact        Revenue 
Marsh: 
EMEA (a) (c)     $1,790   $   55      $    (4   )         $   1,841   $1,649   $    17             $   1,666 
Asia Pacific 
 (c)              669         29           (3   )             695      641          --                 641 
Latin America     252         1            --                 253      222          --                 222 
Total 
 International    2,711       85           (7   )             2,789    2,512        17                 2,529 
U.S./Canada       3,071       12           (41  )             3,042    2,812        --                 2,812 
Total Marsh      $5,782   $   97      $    (48  )         $   5,831   $5,324   $    17             $   5,341 
Mercer: 
Wealth (b)       $1,218   $   35      $    20             $   1,273   $1,214   $    24             $   1,238 
Health (b)        1,063       16           (1   )             1,078    1,111        (137  )            974 
Career            437         10           (4   )             443      407          --                 407 
Total Mercer     $2,718   $   61      $    15             $   2,794   $2,732   $    (113  )        $   2,619 
 
 
(a)    Acquisitions, dispositions and other in 2022 includes the loss on 
       deconsolidation of the Company's Russian businesses at Marsh of $27 
       million and Oliver Wyman Group of $12 million. 
(b)    Acquisitions, dispositions, and other in 2022 includes revenue from the 
       Westpac superannuation fund transaction in Wealth and a gain from the 
       sale of the Mercer U.S. affinity business of $112 million in Health. 
       Results for 2023 in Wealth include the loss on sale of an individual 
       financial advisory business in Canada of $17 million. 
(c)    In the first quarter of 2023, the Company began reporting the Marsh 
       India operations in EMEA. Prior year results for India have been 
       reclassified from Asia Pacific to EMEA for comparative purposes. 
 

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/20230719263083/en/

 
    CONTACT: 

Marsh McLennan

 
    SOURCE: Marsh McLennan 
Copyright Business Wire 2023 
 

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