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 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
(END) Dow Jones Newswires
October 19, 2023 07:00 ET (11:00 GMT)
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