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MHM Marsh & Mclennan Cos. Inc

81.00
0.00 (0.00%)
18 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 7.6395 27.84 104.59B

MARSH MCLENNAN: Marsh McLennan Reports Third Quarter 2023 Results

19/10/2023 12:00pm

UK Regulatory


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 third quarter ended September 30, 2023.

 

John Doyle, President and CEO, said: "Marsh McLennan's third quarter results were outstanding, reflecting strength across the business. We had another quarter of double-digit underlying revenue growth, strong adjusted EPS growth and margin expansion. We achieved these results while also continuing to make significant investments for the future."

 

"With our performance through the third quarter, we are on track for another terrific year."

 

Consolidated Results

 

Consolidated revenue in the third quarter of 2023 was $5.4 billion, an increase of 13% compared with the third quarter of 2022. On an underlying basis, revenue increased 10%. Operating income was $996 million, an increase of 26% from a year ago. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 24% to $1.1 billion. Net income attributable to the Company was $730 million, or $1.47 per diluted share, compared with $1.08 in the third quarter of 2022. Adjusted earnings per share rose 33% to $1.57 per diluted share compared with $1.18 a year ago and included a benefit of 10 cents per share from favorable discrete tax items.

 

For the nine months ended September 30, 2023, consolidated revenue was $17.2 billion, an increase of 9%, or 10% on an underlying basis compared to the prior period. Operating income was $4.2 billion, an increase of 16% from the prior year period. Adjusted operating income rose 17% to $4.4 billion.

 

Net income attributable to the Company was $3.0 billion, or $6.01 per diluted share, compared with $5.11 in the first nine months of 2022. Adjusted earnings per share increased 17% to $6.31 per diluted share compared with $5.38 for the first nine months of 2022.

 

Risk & Insurance Services

 

Risk & Insurance Services revenue was $3.2 billion in the third quarter of 2023, an increase of 12%, or 11% on an underlying basis. Operating income rose 21% to $640 million, and adjusted operating income was $671 million, an increase of 19% versus a year ago. For the nine months ended September 30, 2023, revenue was $10.8 billion, an increase of 12% both on a GAAP and underlying basis. Operating income rose 22% to $3.2 billion, and adjusted operating income was $3.3 billion, an increase of 18% versus a year ago.

 

Marsh's revenue in the third quarter was $2.7 billion, an increase of 8% on an underlying basis. In U.S./Canada, underlying revenue rose 6%. International operations produced underlying revenue growth of 10%, reflecting 14% growth in Latin America, 10% growth in Asia Pacific, and 9% growth in EMEA. For the nine months ended September 30, 2023, Marsh's underlying revenue growth was 9%.

 

Guy Carpenter's revenue in the third quarter was $359 million, an increase of 8% on an underlying basis. For the nine months ended September 30, 2023, Guy Carpenter's underlying revenue growth was 10%.

 

Consulting

 

Consulting revenue was $2.2 billion in the third quarter of 2023, an increase of 13%, or 9% on an underlying basis. Operating income increased 21% to $424 million, while adjusted operating income increased 24% to $447 million. For the first nine months ended September 30, 2023, revenue was $6.4 billion, an increase of 6%, or 7% on an underlying basis. Operating income of $1.2 billion rose 1% versus a year ago, while adjusted operating income increased 11% to $1.3 billion.

 

Mercer's revenue in the third quarter was $1.4 billion, an increase of 8% on an underlying basis. Health revenue of $496 million increased 8% on an underlying basis. Wealth revenue of $635 million increased 7% on an underlying basis. Career revenue of $294 million increased 7% on an underlying basis. For the nine months ended September 30, 2023, Mercer's revenue was $4.1 billion, an increase of 7% on an underlying basis.

 

Oliver Wyman's revenue in the third quarter was $781 million, an increase of 12% on an underlying basis. For the nine months ended September 30, 2023, Oliver Wyman's revenue was $2.3 billion, an increase of 8% on an underlying basis.

 

Other Items

 

The Company repurchased 1.6 million shares of stock for $300 million in the third quarter of 2023. Through nine months ended September 30, 2023, the Company has repurchased 5.1 million shares of stock for $900 million.

 

In the third quarter of 2023, the Company issued $1.6 billion of senior notes.

 

In August, Marsh McLennan Agency (MMA) acquired Graham Company, a leading risk management consultancy and one of the top independent insurance and employee benefits brokers in the U.S.

 

Conference Call

 

A conference call to discuss third 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, follow us on LinkedIn and X.

 

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 and the evolving events in 
      Israel and Gaza, 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, 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, data privacy and artificial 
      intelligence 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 
      such as artificial intelligence; 
   --  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 the increasing number of 
      disagreements with and challenges by tax authorities in the current 
      global tax environment; 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 Ended      Nine Months Ended 
                      September 30,           September 30, 
                         2023       2022         2023      2022 
Revenue              $   5,382     $4,770    $   17,182   $15,698 
Expense: 
Compensation and 
 benefits                3,287      2,923        9,831     9,033 
Other operating 
 expenses                1,099      1,056        3,172     3,065 
Operating expenses       4,386      3,979        13,003    12,098 
Operating income         996        791          4,179     3,600 
Other net benefit 
 credits                 62         57           180       178 
Interest income          16         4            40        6 
Interest expense         (145)      (118)        (427)     (342) 
Investment income 
 (loss)                  1          (1)          6         27 
Income before 
 income taxes            930        733          3,978     3,469 
Income tax expense       192        181          941       853 
Net income before 
 non-controlling 
 interests               738        552          3,037     2,616 
Less: Net income 
 attributable to 
 non-controlling 
 interests               8          6            37        32 
Net income 
 attributable to 
 the Company         $   730       $546      $   3,000    $2,584 
Net income per 
share attributable 
to the Company: 
- Basic              $   1.48      $1.10     $   6.07     $5.16 
- Diluted            $   1.47      $1.08     $   6.01     $5.11 
Average number of 
shares 
outstanding: 
- Basic                  494        498          494       501 
- Diluted                499        503          499       506 
Shares outstanding 
 at September 30         493        497          493       497 
 
 

Marsh & McLennan Companies, Inc.

Supplemental Information - Revenue Analysis

Three Months Ended September 30

 

(Millions) (Unaudited)

 

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period over 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* 
                Three Months      % Change               Acquisitions/    Non-GAAP 
                Ended September    GAAP       Currency    Dispositions/    Underlying 
                30,                Revenue*    Impact     Other Impact**   Revenue 
                 2023     2022 
Risk and 
Insurance 
Services 
Marsh           $2,700   $2,470   9  %        1%         1 %              8   % 
Guy Carpenter    359      328     9  %        1%         1 %              8   % 
Subtotal         3,059    2,798   9  %        1%         1 %              8   % 
Fiduciary 
 interest 
 income          131      40 
Total Risk and 
 Insurance 
 Services        3,190    2,838   12 %        1%         1 %              11  % 
Consulting 
Mercer           1,425    1,284   11 %        1%         2 %              8   % 
Oliver Wyman 
 Group           781      667     17 %        2%         3 %              12  % 
Total 
 Consulting      2,206    1,951   13 %        2%         2 %              9   % 
Corporate 
 Eliminations    (14  )   (19  ) 
Total Revenue   $5,382   $4,770   13 %        1%         2 %              10  % 
 
 

Revenue Details

 

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

 
                                               Components of Revenue Change* 
                 Three Months      % Change                  Acquisitions/    Non-GAAP 
                 Ended September    GAAP       Currency       Dispositions/    Underlying 
                 30,                Revenue*    Impact        Other Impact**   Revenue 
                  2023    2022 
Marsh: 
EMEA (a)         $692    $615      13 %        4 %           --               9  % 
Asia Pacific 
 (a)              311     286      9  %        (2)%          --               10 % 
Latin America     134     118      14 %        1 %           (1  )%           14 % 
Total 
 International    1,137   1,019    12 %        2 %           --               10 % 
U.S./Canada       1,563   1,451    8  %        --            2   %            6  % 
Total Marsh      $2,700  $2,470    9  %        1 %           1   %            8  % 
Mercer: 
Wealth           $635    $561      13 %        2 %           4   %            7  % 
Health            496     451      10 %        1 %           --               8  % 
Career            294     272      8  %        --            1   %            7  % 
Total Mercer     $1,425  $1,284    11 %        1 %           2   %            8  % 
 
 
(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

Nine Months Ended September 30

 

(Millions) (Unaudited)

 

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period over 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 
                Nine Months Ended    GAAP       Currency       Dispositions/    Underlying 
                 September 30,       Revenue*    Impact        Other Impact**   Revenue 
                 2023      2022 
Risk and 
Insurance 
Services 
Marsh           $8,482    $7,794    9  %        (1)%          1   %            9  % 
Guy Carpenter    2,006     1,849    8  %        (1)%          --               10 % 
Subtotal         10,488    9,643    9  %        (1)%          1   %            9  % 
Fiduciary 
 interest 
 income          330       57 
Total Risk and 
 Insurance 
 Services        10,818    9,700    12 %        (1)%          1   %            12 % 
Consulting 
Mercer           4,143     4,016    3  %        (1)%          (3  )%           7  % 
Oliver Wyman 
 Group           2,266     2,029    12 %        --            4   %            8  % 
Total 
 Consulting      6,409     6,045    6  %        (1)%          --               7  % 
Corporate 
 Eliminations    (45   )   (47   ) 
Total Revenue   $17,182   $15,698   9  %        (1)%          --               10 % 
 
 

Revenue Details

 

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

 
                                               Components of Revenue Change* 
                 Nine Months       % Change                  Acquisitions/    Non-GAAP 
                 Ended September    GAAP       Currency       Dispositions/    Underlying 
                 30,                Revenue*    Impact        Other Impact**   Revenue 
                  2023    2022 
Marsh: 
EMEA (a)         $2,482  $2,264    10 %        (1)%          1   %            10 % 
Asia Pacific 
 (a)              980     927      6  %        (4)%          --               9  % 
Latin America     386     340      13 %        --            --               14 % 
Total 
 International    3,848   3,531    9  %        (2)%          1   %            10 % 
U.S./Canada       4,634   4,263    9  %        --            2   %            7  % 
Total Marsh      $8,482  $7,794    9  %        (1)%          1   %            9  % 
Mercer: 
Wealth           $1,853  $1,775    4  %        (1)%          1   %            4  % 
Health            1,559   1,562    --          (1)%          (9  )%           10 % 
Career            731     679      8  %        (1)%          1   %            8  % 
Total Mercer     $4,143  $4,016    3  %        (1)%          (3  )%           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 September 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 nine months ended September 30, 2023 and 2022. The following tables also present adjusted operating margin. For the three and nine months ended September 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 September 
30, 2023 
Operating income 
 (loss)           $640         $   424         $    (68  )       $996 
Operating margin   20.0%           19.2 %           N/A           18.5 % 
Add (deduct) 
impact of 
noteworthy 
items: 
Restructuring, 
 excluding JLT 
 (a)               20              17               9             46 
Changes in 
 contingent 
 consideration 
 (b)               4               --               --            4 
JLT integration 
 and 
 restructuring 
 costs (c)         6               --               --            6 
Westpac 
 acquisition 
 related costs     --              5                --            5 
Other              1               1                --            2 
Operating income 
 adjustments       31              23               9             63 
Adjusted 
 operating 
 income (loss)    $671         $   447         $    (59  )       $1,059 
Total identified 
 intangible 
 amortization 
 expense          $74          $   11          $    --           $85 
Adjusted 
 operating 
 margin            23.4%           20.8 %           N/A           21.3 % 
 
Three Months 
Ended September 
30, 2022 
Operating income 
 (loss)           $529         $   350         $    (88  )       $791 
Operating margin   18.7%           17.9 %           N/A           16.6 % 
Add (deduct) 
impact of 
noteworthy 
items: 
Restructuring, 
 excluding JLT 
 (a)               18              --               14            32 
Changes in 
 contingent 
 consideration 
 (b)               11              --               --            11 
JLT integration 
 and 
 restructuring 
 costs (c)         --              5                1             6 
JLT acquisition 
 related 
 retention 
 costs             4               --               --            4 
Other              --              7                --            7 
Operating income 
 adjustments       33              12               15            60 
Adjusted 
 operating 
 income (loss)    $562         $   362         $    (73  )       $851 
Total identified 
 intangible 
 amortization 
 expense          $74          $   10          $    --           $84 
Adjusted 
 operating 
 margin            22.4%           19.1 %           N/A           19.6 % 
 
 
(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)    In 2023, reflects adjustments to restructuring liabilities for lease 
       exit charges for a legacy JLT U.K. location. 
 
 
 
 
Marsh & McLennan Companies, Inc. 
 Reconciliation of Non-GAAP Measures 
 Nine Months Ended September 30 
 (Millions) (Unaudited) 
 
 
                   Risk & 
                   Insurance                     Corporate/ 
                   Services      Consulting       Eliminations     Total 
Nine Months 
Ended September 
30, 2023 
Operating income 
 (loss)            $3,192        $   1,223       $   (236 )        $4,179 
Operating margin    29.5 %           19.1  %         N/A            24.3 % 
Add (deduct) 
impact of 
noteworthy 
items: 
Restructuring, 
 excluding JLT 
 (a)                67               33              48             148 
Changes in 
 contingent 
 consideration 
 (b)                20               1               --             21 
JLT integration 
 and 
 restructuring 
 costs (c)          22               --              --             22 
JLT legacy legal 
 charges (d)        --               (51   )         --             (51  ) 
Disposal of 
 business (e)       --               17              --             17 
Westpac 
 acquisition 
 related costs      --               32              --             32 
Other               1                1               --             2 
Operating income 
 adjustments        110              33              48             191 
Adjusted 
 operating income 
 (loss)            $3,302        $   1,256       $   (188 )        $4,370 
Total identified 
 intangible 
 amortization 
 expense           $221          $   36          $   --            $257 
Adjusted 
 operating 
 margin             32.6 %           20.1  %         N/A            26.9 % 
 
Nine Months 
Ended September 
30, 2022 
Operating income 
 (loss)            $2,617        $   1,217       $   (234 )        $3,600 
Operating margin    27.0 %           20.1  %         N/A            22.9 % 
Add (deduct) 
impact of 
noteworthy 
items: 
Restructuring, 
 excluding JLT 
 (a)                38               6               34             78 
Changes in 
 contingent 
 consideration 
 (b)                33               5               --             38 
JLT integration 
 and 
 restructuring 
 costs (c)          6                10              2              18 
JLT legacy legal 
 charges (d)        14               (11   )         --             3 
Disposal of 
 business (e)       --               (114  )         --             (114 ) 
JLT acquisition 
 related 
 retention costs    24               1               3              28 
Legal claims and 
 other (f)          30               9               --             39 
Deconsolidation 
 of Russian 
 businesses and 
 other related 
 charges (g)        42               10              --             52 
Operating income 
 adjustments        187              (84   )         39             142 
Adjusted 
 operating income 
 (loss)            $2,804        $   1,133       $   (195 )        $3,742 
Total identified 
 intangible 
 amortization 
 expense           $223          $   35          $   --            $258 
Adjusted 
 operating 
 margin             31.1 %           19.6  %         N/A            25.6 % 
 
 
(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)    In 2023, reflects adjustments to restructuring liabilities for lease 
       exit charges 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. In 
       2022, the amount 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)    Primarily reflects settlement charges and legal costs related to 
       strategic recruiting. 
(g)    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 expenses 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 Nine Months Ended September 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 three and nine months ended September 30, 2023 and 2022.

 
                  Three Months Ended        Three Months Ended 
                   September 30, 2023        September 30, 2022 
                                Adjusted                  Adjusted 
                  Amount         EPS        Amount         EPS 
Net income 
 before 
 non-controlling 
 interests, as 
 reported                $738                      $552 
Less: 
 Non-controlling 
 interest, net 
 of tax                   8                         6 
Subtotal                 $730   $   1.47           $546   $   1.08 
Operating income 
 adjustments      $63                       $60 
Investments 
 adjustment        1                         4 
Income tax 
 effect of 
 adjustments 
 (a)               (12)                      (16) 
                          52        0.10            48        0.10 
Adjusted income, 
 net of tax              $782   $   1.57           $594   $   1.18 
 
 
 
                  Nine Months Ended          Nine Months Ended 
                   September 30, 2023         September 30, 2022 
                                 Adjusted                   Adjusted 
                  Amount          EPS        Amount          EPS 
Net income 
 before 
 non-controlling 
 interests, as 
 reported                $3,037                     $2,616 
Less: 
 Non-controlling 
 interest, net 
 of tax                   37                         32 
Subtotal                 $3,000  $   6.01           $2,584  $   5.11 
Operating income 
 adjustments      $191                       $142 
Investments 
 adjustment        2                          (4 ) 
Pension 
 settlement 
 adjustment        --                         1 
Income tax 
 effect of 
 adjustments 
 (a)               (45)                       (1 ) 
                          148        0.30            138        0.27 
Adjusted income, 
 net of tax              $3,148  $   6.31           $2,722  $   5.38 
 
 
(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 Nine Months Ended September 30 
 (Millions) (Unaudited) 
 
 
                     Three Months Ended      Nine Months Ended 
                      September 30,           September 30, 
                         2023       2022         2023      2022 
Consolidated 
Compensation and 
 benefits            $   3,287     $2,923    $   9,831    $9,033 
Other operating 
 expenses                1,099      1,056        3,172     3,065 
Total expenses       $   4,386     $3,979    $   13,003   $12,098 
 
Depreciation and 
 amortization 
 expense             $   95        $85       $   270      $259 
Identified 
 intangible 
 amortization 
 expense                 85         84           257       258 
Total                $   180       $169      $   527      $517 
 
Risk and Insurance 
Services 
Compensation and 
 benefits            $   1,900     $1,688    $   5,703    $5,239 
Other operating 
 expenses                650        621          1,923     1,844 
Total expenses       $   2,550     $2,309    $   7,626    $7,083 
 
Depreciation and 
 amortization 
 expense             $   49        $40       $   135      $123 
Identified 
 intangible 
 amortization 
 expense                 74         74           221       223 
Total                $   123       $114      $   356      $346 
 
Consulting 
Compensation and 
 benefits            $   1,251     $1,107    $   3,690    $3,416 
Other operating 
 expenses                531        494          1,496     1,412 
Total expenses       $   1,782     $1,601    $   5,186    $4,828 
 
Depreciation and 
 amortization 
 expense             $   30        $26       $   78       $79 
Identified 
 intangible 
 amortization 
 expense                 11         10           36        35 
Total                $   41        $36       $   114      $114 
 
 
 
 
Marsh & McLennan Companies, Inc. 
 Consolidated Balance Sheets 
 (Millions) 
 
 
                                          (Unaudited) 
                                           September 30,    December 31, 
                                           2023              2022 
ASSETS 
Current assets: 
Cash and cash equivalents                 $   2,901         $   1,442 
Cash and cash equivalents held in a 
 fiduciary capacity (a)                       11,828            10,660 
Net receivables                               6,520             5,852 
Other current assets                          1,030             1,005 
Total current assets                          22,279            18,959 
 
Goodwill and intangible assets                19,153            18,788 
Fixed assets, net                             859               871 
Pension related assets                        2,310             2,127 
Right of use assets                           1,519             1,562 
Deferred tax assets                           348               358 
Other assets                                  1,532             1,449 
TOTAL ASSETS                              $   48,000        $   44,114 
 
LIABILITIES AND EQUITY 
Current liabilities: 
Short-term debt                           $   1,868         $   268 
Accounts payable and accrued liabilities      3,143             3,278 
Accrued compensation and employee 
 benefits                                     2,632             3,095 
Current lease liabilities                     303               310 
Accrued income taxes                          480               221 
Dividends payable                             351               -- 
Fiduciary liabilities (a)                     11,828            10,660 
Total current liabilities                     20,605            17,832 
 
Long-term debt                                11,781            11,227 
Pension, post-retirement and 
 post-employment benefits                     840               921 
Long-term lease liabilities                   1,643             1,667 
Liabilities for errors and omissions          319               355 
Other liabilities                             1,226             1,363 
 
Total equity                                  11,586            10,749 
TOTAL LIABILITIES AND EQUITY              $   48,000        $   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) 
 
 
                                               Nine Months Ended 
                                                September 30, 
                                                   2023      2022 
Operating cash flows: 
Net income before non-controlling interests    $   3,037    $2,616 
Adjustments to reconcile net income to cash 
provided by operations: 
Depreciation and amortization                      527       517 
Non-cash lease expense                             215       223 
Deconsolidation of Russian businesses              --        39 
Share-based compensation expense                   273       283 
Net gain on investments, disposition of 
 assets and other                                  (7    )   (139  ) 
 
Changes in assets and liabilities: 
Accrued compensation and employee benefits         (458  )   (451  ) 
Provision for taxes, net of payments and 
 refunds                                           242       156 
Net receivables                                    (670  )   (745  ) 
Other changes to assets and liabilities            (201  )   14 
Contributions to pension and other benefit 
 plans in excess of current year credit            (246  )   (306  ) 
Operating lease liabilities                        (237  )   (244  ) 
Net cash provided by operations                    2,475     1,963 
Financing cash flows: 
Purchase of treasury shares                        (900  )   (1,600) 
Net proceeds from issuance of commercial 
 paper                                             --        600 
Proceeds from issuance of debt                     2,170     -- 
Repayments of debt                                 (12   )   (14   ) 
Net issuance of common stock from treasury 
 shares                                            20        (105  ) 
Net distributions of non-controlling 
 interests and deferred/contingent 
 consideration                                     (342  )   (161  ) 
Dividends paid                                     (944  )   (840  ) 
Change in fiduciary liabilities                    1,223     2,148 
Net cash provided by financing activities          1,215     28 
Investing cash flows: 
Capital expenditures                               (296  )   (367  ) 
Net purchases of long term investments and 
 other                                             (28   )   (5    ) 
Sales of long term investments                     18        84 
Dispositions                                       (18   )   138 
Acquisitions, net of cash and cash held in a 
 fiduciary capacity acquired                       (619  )   (213  ) 
Net cash used for investing activities             (943  )   (363  ) 
Effect of exchange rate changes on cash, cash 
 equivalents, and cash and cash equivalents 
 held in a fiduciary capacity                      (120  )   (1,592) 
Increase in cash, cash equivalents, and cash 
 and cash equivalents held in a fiduciary 
 capacity                                          2,627     36 
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                                 $   14,729   $11,410 
 
 
Reconciliation of cash, cash equivalents, and cash and cash 
equivalents held in a fiduciary capacity to the Consolidated Balance 
Sheets 
Balance at September 30,                               2023     2022 
(In millions) 
Cash and cash equivalents                             $2,901   $802 
Cash and cash equivalents held in a fiduciary 
 capacity                                              11,828   10,608 
Total cash, cash equivalents, and cash and cash 
 equivalents held in a fiduciary capacity             $14,729  $11,410 
 
 

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Three Months Ended September 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 
Ended                                  Acquisitions/                            Acquisitions/ 
September       GAAP     Currency       Dispositions/      Non-GAAP    GAAP      Dispositions/     Non-GAAP 
30,             Revenue   Impact        Other Impact        Revenue    Revenue   Other Impact       Revenue 
Risk and 
Insurance 
Services 
Marsh           $2,700   $   (15 )     $    (31  )         $   2,654   $2,470   $    (2  )         $   2,468 
Guy Carpenter    359         (3  )          (3   )             353      328          --                328 
Subtotal         3,059       (18 )          (34  )             3,007    2,798        (2  )             2,796 
Fiduciary 
 interest 
 income          131         --             --                 131      40           --                40 
Total Risk and 
 Insurance 
 Services        3,190       (18 )          (34  )             3,138    2,838        (2  )             2,836 
Consulting 
Mercer (a)       1,425       (17 )          (4   )             1,404    1,284        21                1,305 
Oliver Wyman 
 Group           781         (15 )          (21  )             745      667          --                667 
Total 
 Consulting      2,206       (32 )          (25  )             2,149    1,951        21                1,972 
Corporate 
 Eliminations    (14  )      --             --                 (14  )   (19  )       --                (19  ) 
Total Revenue   $5,382   $   (50 )     $    (59  )         $   5,273   $4,770   $    19            $   4,789 
 
 

Revenue Details

 

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

 
                 2023                                                   2022 
Three Months                            Acquisitions/                            Acquisitions/ 
Ended            GAAP     Currency       Dispositions/      Non-GAAP    GAAP      Dispositions/     Non-GAAP 
September 30,    Revenue   Impact        Other Impact        Revenue    Revenue   Other Impact       Revenue 
Marsh: 
EMEA (b)         $692     $   (23 )     $    (2   )         $   667     $615     $    (1  )         $   614 
Asia Pacific 
 (b)              311         6              (1   )             316      286          --                286 
Latin America     134         (1  )          1                  134      118          --                118 
Total 
 International    1,137       (18 )          (2   )             1,117    1,019        (1  )             1,018 
U.S./Canada       1,563       3              (29  )             1,537    1,451        (1  )             1,450 
Total Marsh      $2,700   $   (15 )     $    (31  )         $   2,654   $2,470   $    (2  )         $   2,468 
Mercer: 
Wealth (a)       $635     $   (11 )     $    (1   )         $   623     $561     $    21            $   582 
Health            496         (6  )          --                 490      451          --                451 
Career            294         --             (3   )             291      272          --                272 
Total Mercer     $1,425   $   (17 )     $    (4   )         $   1,404   $1,284   $    21            $   1,305 
 
 
(a)    Acquisitions, dispositions, and other in 2022 includes revenue from the 
       Westpac superannuation fund transaction in Wealth. 
(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

Nine Months Ended September 30

 

(Millions) (Unaudited)

 

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

 
                2023                                                  2022 
Nine Months 
Ended                                   Acquisitions/                           Acquisitions/ 
September       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)       $8,482    $   82        $    (79   )        $8,485    $7,794    $    15            $7,809 
Guy Carpenter    2,006        20             (18   )         2,008     1,849         (19  )         1,830 
Subtotal         10,488       102            (97   )         10,493    9,643         (4   )         9,639 
Fiduciary 
 interest 
 income          330          2              --              332       57            --             57 
Total Risk and 
 Insurance 
 Services        10,818       104            (97   )         10,825    9,700         (4   )         9,696 
Consulting 
Mercer (b)       4,143        44             11              4,198     4,016         (92  )         3,924 
Oliver Wyman 
 Group (a)       2,266        (1  )          (71   )         2,194     2,029         11             2,040 
Total 
 Consulting      6,409        43             (60   )         6,392     6,045         (81  )         5,964 
Corporate 
 Eliminations    (45   )      --             --              (45   )   (47   )       --             (47   ) 
Total Revenue   $17,182   $   147       $    (157  )        $17,172   $15,698   $    (85  )        $15,613 
 
 

Revenue Details

 

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

 
                 2023                                                 2022 
Nine Months                           Acquisitions/                            Acquisitions/ 
Ended            GAAP     Currency     Dispositions/      Non-GAAP    GAAP      Dispositions/     Non-GAAP 
September 30,    Revenue   Impact      Other Impact        Revenue    Revenue   Other Impact       Revenue 
Marsh: 
EMEA (a) (c)     $2,482   $   32      $    (6   )         $   2,508   $2,264   $    16            $   2,280 
Asia Pacific 
 (c)              980         35           (4   )             1,011    927          --                927 
Latin America     386         --           1                  387      340          --                340 
Total 
 International    3,848       67           (9   )             3,906    3,531        16                3,547 
U.S./Canada       4,634       15           (70  )             4,579    4,263        (1    )           4,262 
Total Marsh      $8,482   $   82      $    (79  )         $   8,485   $7,794   $    15            $   7,809 
Mercer: 
Wealth (b)       $1,853   $   24      $    19             $   1,896   $1,775   $    45            $   1,820 
Health (b)        1,559       10           (1   )             1,568    1,562        (137  )           1,425 
Career            731         10           (7   )             734      679          --                679 
Total Mercer     $4,143   $   44      $    11             $   4,198   $4,016   $    (92   )       $   3,924 
 
 
(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/20231018447521/en/

 
    CONTACT: 

Marsh & McLennan Companies, Inc.

 
    SOURCE: Marsh McLennan 
Copyright Business Wire 2023 
 

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