REG-Marsh McLennan Marsh McLennan Reports Fourth Quarter and Full-Year 2022 Results
26/01/2023 12:00
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Marsh McLennan Reports Fourth Quarter and Full-Year 2022 Results
Full-Year Revenue Growth of 5%; Underlying Revenue Growth of 9%
Full-Year GAAP Operating Income Decreases 1%; Adjusted Operating Income
Increases 11%
Full-Year GAAP EPS of $6.04; Adjusted EPS Increases 11% to $6.85
Fourth Quarter GAAP EPS of $0.93; Adjusted EPS Increases 8% to $1.47
Marsh McLennan (NYSE: MMC), the world’s leading professional services firm
in the areas of risk, strategy and people, today reported financial results
for the fourth quarter and year ended December 31, 2022.
John Doyle, President and CEO, said: "2022 was an outstanding year for Marsh
McLennan. We generated underlying revenue growth of 9%, grew adjusted EPS by
11%, and expanded adjusted margins for the 15th consecutive year. We achieved
these strong results while continuing to invest in our talent and
capabilities, both organically and through acquisitions."
"It is a privilege to lead this exceptional firm. Our expertise across the
important areas of risk, strategy and people is more relevant than ever as we
help clients navigate an uncertain world. I am excited about the possibilities
ahead."
Consolidated Results
Consolidated revenue in the fourth quarter of 2022 was $5.0 billion, a
decrease of 2% compared with the fourth quarter of 2021, or an increase of 7%
on an underlying basis. Operating income was $680 million compared with $986
million in the prior year period. Adjusted operating income, which excludes
noteworthy items as presented in the attached supplemental schedules, rose 13%
to $1.0 billion, compared with $905 million in the prior year period. Net
income attributable to the Company was $466 million, or $0.93 per diluted
share, compared with $1.57 in the fourth quarter of 2021. Adjusted earnings
per share was $1.47, compared with $1.36 for the prior year period.
For the year 2022, revenue was $20.7 billion, an increase of 5% compared with
2021, or 9% on an underlying basis. Operating income was $4.3 billion, and
adjusted operating income rose 11% to $4.8 billion. Net income attributable to
the Company was $3.0 billion. Earnings per share decreased 1% to $6.04.
Adjusted earnings per share increased 11% to $6.85 compared with $6.17 in
2021.
Risk & Insurance Services
Risk & Insurance Services revenue was $2.9 billion in the fourth quarter
of 2022, a decrease of 3%, or an increase of 8% on an underlying basis.
Operating income was $472 million, compared with $667 million in the fourth
quarter of 2021. Adjusted operating income increased 23% to $685 million. For
the year 2022, revenue was $12.6 billion, an increase of 5%, or 9% on an
underlying basis. Operating income was $3.1 billion. Adjusted operating income
rose 15% to $3.5 billion.
Marsh's revenue in the fourth quarter of 2022 was $2.7 billion, a decrease of
6%, or an increase of 6% on an underlying basis. In U.S./Canada, underlying
revenue rose 5%. International operations produced underlying revenue growth
of 8%, reflecting underlying growth of 12% in Asia Pacific, 7% in EMEA, and 4%
in Latin America. For the year 2022, Marsh’s revenue growth was 3%, or 8% on
an underlying basis.
Guy Carpenter's fourth quarter revenue was $171 million, an increase of 1%, or
5% on an underlying basis. For the year 2022, Guy Carpenter’s revenue grew
8% compared to a year ago, or 9% on an underlying basis.
Consulting
Consulting revenue was $2.1 billion in the fourth quarter of 2022, an increase
of 6% on an underlying basis. Operating income decreased 15% to $336 million,
compared with $395 million in the fourth quarter of 2021. Adjusted operating
income was $407 million, a decrease of 1% compared with $410 million in the
fourth quarter of 2021. For the year 2022, revenue was $8.1 billion, an
increase of 5%, or 8% on an underlying basis. Operating income was $1.6
billion, compared with $1.5 billion in 2021. Adjusted operating income
increased 4% to $1.5 billion.
Mercer’s revenue was $1.3 billion in the fourth quarter of 2022, a decrease
of 3%, or an increase of 5% on an underlying basis. Wealth, with revenue of
$591 million, was unchanged on an underlying basis. Health, with revenue of
$455 million, increased 8% on an underlying basis. Career revenue of $283
million increased 12% on an underlying basis. For the year 2022, Mercer’s
revenue increased 2%, or 6% on an underlying basis.
Oliver Wyman’s revenue was $765 million in the fourth quarter of 2022, an
increase of 8% on an underlying basis. For the year 2022, Oliver Wyman’s
revenue was $2.8 billion, an increase of 13% on an underlying basis.
Other Items
The Company repurchased 2.2 million shares of stock for $350 million in the
fourth quarter. For the year 2022, the Company repurchased 12.2 million shares
for $1.9 billion.
In the fourth quarter of 2022, the Company raised $1 billion of senior notes
and repaid $350 million of senior notes due in March 2023.
In December, Marsh McLennan Agency (MMA) acquired HMS Insurance Associates,
Inc., a leading independent agency based in Maryland.
The fourth quarter results include $344 million of noteworthy items, primarily
related to severance and lease exit charges for activities focused on
workforce actions, technology rationalization and reductions in real estate.
Conference Call
A conference call to discuss fourth quarter 2022 results will be held today at
8:30 a.m. Eastern time. The live audio webcast may be accessed at
marshmclennan.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fmarshmclennan.com&esheet=53291256&newsitemid=20230125005833&lan=en-US&anchor=marshmclennan.com&index=1&md5=192254dbe70d9abfc3426f076360179b)
. 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
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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
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.marsh.com%2F&esheet=53291256&newsitemid=20230125005833&lan=en-US&anchor=Marsh&index=3&md5=77951c5a741227c1654480eddc9656e7)
provides data-driven risk advisory services and insurance solutions to
commercial and consumer clients. Guy Carpenter
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.guycarp.com%2F&esheet=53291256&newsitemid=20230125005833&lan=en-US&anchor=Guy+Carpenter&index=4&md5=f39df349db3aeceea641ec110f7b9419)
develops advanced risk, reinsurance and capital strategies that help clients
grow profitably and pursue emerging opportunities. Mercer
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.mercer.com%2F&esheet=53291256&newsitemid=20230125005833&lan=en-US&anchor=Mercer&index=5&md5=9524ff0d153e9d9bf1caade7f21b81ee)
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
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.oliverwyman.com%2F&esheet=53291256&newsitemid=20230125005833&lan=en-US&anchor=Oliver+Wyman&index=6&md5=e50c636831d9f86aa961dd6a8d83e1df)
serves as a critical strategic, economic and brand advisor to private sector
and governmental clients. For more information, visit marshmclennan.com
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, or follow us on LinkedIn
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.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as defined in the
Private Securities Litigation Reform Act of 1995. These statements, which
express management's current views concerning future events or results, use
words like "anticipate," "assume," "believe," "continue," "estimate,"
"expect," "intend," "plan," "project" and similar terms, and future or
conditional tense verbs like "could," "may," "might," "should," "will" and
"would".
Forward-looking statements are subject to inherent risks and uncertainties
that could cause actual results to differ materially from those expressed or
implied in our forward-looking statements. Factors that could materially
affect our future results include, among other things:
* the impact of geopolitical or macroeconomic conditions on us, our clients and
the countries and industries in which we operate, including from conflicts
such as the war in Ukraine, slower GDP growth or recession, capital markets
volatility and inflation;
* the increasing prevalence of ransomware, supply chain and other forms of cyber
attacks, and their potential to disrupt our operations and result in the
disclosure of confidential client or company information;
* the impact from lawsuits or investigations arising from errors and omissions,
breaches of fiduciary duty or other claims against us in our capacity as a
broker or investment advisor, including claims related to our investment
business’ ability to execute timely trades;
* the financial and operational impact of complying with laws and regulations,
including domestic and international sanctions regimes, anti-corruption laws
such as the U.S. Foreign Corrupt Practices Act, U.K. Anti Bribery Act and
cybersecurity and data privacy regulations;
* our ability to attract, retain and develop industry leading talent;
* our ability to compete effectively and adapt to competitive pressures in each
of our businesses, including from disintermediation as well as technological
change, digital disruption and other types of innovation;
* our ability to manage potential conflicts of interest, including where our
services to a client conflict, or are perceived to conflict, with the
interests of another client or our own interests;
* the impact of changes in tax laws, guidance and interpretations, or
disagreements with tax authorities; and
* the regulatory, contractual and reputational risks that arise based on
insurance placement activities and insurer revenue streams.
The factors identified above are not exhaustive. Marsh McLennan and its
subsidiaries (collectively, the "Company") operate in a dynamic business
environment in which new risks emerge frequently. Accordingly, we caution
readers not to place undue reliance on any forward-looking statements, which
are based only on information currently available to us and speak only as of
the dates on which they are made. The Company undertakes no obligation to
update or revise any forward-looking statement to reflect events or
circumstances arising after the date on which it is made.
Further information concerning Marsh McLennan and its businesses, including
information about factors that could materially affect our results of
operations and financial condition, is contained in the Company's filings with
the Securities and Exchange Commission, including the "Risk Factors" section
and the "Management’s Discussion and Analysis of Financial Condition and
Results of Operations" section of our most recently filed Annual Report on
Form 10-K.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2022 2021 2022 2021
Revenue $ 5,022 $ 5,137 $ 20,720 $ 19,820
Expense:
Compensation and benefits 3,038 2,905 12,071 11,425
Other operating expenses 1,304 1,246 4,369 4,083
Operating expenses 4,342 4,151 16,440 15,508
Operating income 680 986 4,280 4,312
Other net benefit credits 57 66 235 277
Interest income 9 — 15 2
Interest expense (127) (109) (469) (444)
Investment (loss) income (6) 18 21 61
Income before income taxes 613 961 4,082 4,208
Income tax expense 142 154 995 1,034
Net income before non-controlling interests 471 807 3,087 3,174
Less: Net income attributable to non-controlling interests 5 4 37 31
Net income attributable to the Company $ 466 $ 803 $ 3,050 $ 3,143
Net income per share attributable to the Company
- Basic $ 0.94 $ 1.59 $ 6.11 $ 6.20
- Diluted $ 0.93 $ 1.57 $ 6.04 $ 6.13
Average number of shares outstanding
- Basic 496 504 499 507
- Diluted 501 511 505 513
Shares outstanding at December 31 495 504 495 504
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended December 31
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result, foreign exchange
rate movements may impact period-to-period comparisons of revenue. Similarly,
certain other items such as acquisitions and dispositions, including transfers
among businesses, may impact period-to-period comparisons of revenue.
Underlying revenue measures the change in revenue from one period to the next
by isolating these impacts.
Components of Revenue Change**
Three Months Ended % % Currency Acquisitions/ Underlying
December 31,
Change
Change
Impact
Dispositions/
Revenue
GAAP
Revenue
Other Impact
Revenue
excl. Marsh
India
Gain*
2022 2021
Risk and Insurance Services
Marsh $ 2,711 $ 2,876 (6 ) % 4 % (4 ) % 2 % 6 %
Guy Carpenter 171 170 1 % (4 ) % — 5 %
Subtotal 2,882 3,046 (5 ) % 4 % (4 ) % 2 % 6 %
Fiduciary Interest Income 63 3
Total Risk and Insurance Services 2,945 3,049 (3 ) % 6 % (4 ) % 2 % 8 %
Consulting
Mercer 1,329 1,377 (3 ) % (6 ) % (2 ) % 5 %
Oliver Wyman Group 765 722 6 % (5 ) % 3 % 8 %
Total Consulting 2,094 2,099 — (6 ) % — 6 %
Corporate Eliminations (17 ) (11 )
Total Revenue $ 5,022 $ 5,137 (2 ) % 3 % (5 ) % 1 % 7 %
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
Components of Revenue Change**
Three Months Ended % % Currency Acquisitions/ Underlying
December 31,
Change
Change
Impact
Dispositions/
Revenue
GAAP
Revenue
Other
Revenue
excl. Marsh
Impact
India Gain*
2022 2021
Marsh:
EMEA $ 703 $ 713 (1) % (9) % — 7 %
Asia Pacific 318 560 (43) % 8 % (11) % 7 % 12 %
Latin America 162 155 4 % — — 4 %
Total International 1,183 1,428 (17) % 2 % (8) % 2 % 8 %
U.S./Canada 1,528 1,448 5 % (1) % 1 % 5 %
Total Marsh $ 2,711 $ 2,876 (6) % 4 % (4) % 2 % 6 %
Mercer:
Wealth $ 591 $ 648 (9) % (8) % (1) % —
Health 455 457 (1) % (4) % (4) % 8 %
Career 283 272 4 % (8) % — 12 %
Total Mercer $ 1,329 $ 1,377 (3) % (6) % (2) % 5 %
* Percentage change excludes the gain from the consolidation of Marsh India of
$267 million from prior year’s GAAP revenue.
** Components of revenue change may not add due to rounding.
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Twelve Months Ended December 31
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result, foreign exchange
rate movements may impact period-to-period comparisons of revenue. Similarly,
certain other items such as acquisitions and dispositions, including transfers
among businesses, may impact period-to-period comparisons of revenue.
Underlying revenue measures the change in revenue from one period to the next
by isolating these impacts.
Components of Revenue Change**
Twelve Months Ended % % Currency Acquisitions/ Underlying
December 31,
Change
Change
Impact
Dispositions/
Revenue
GAAP
Revenue
Other Impact
Revenue
excl. Marsh
India Gain*
2022 2021
Risk and Insurance Services
Marsh $ 10,505 $ 10,203 3 % 6 % (3) % 1 % 8 %
Guy Carpenter 2,020 1,867 8 % (2) % 1 % 9 %
Subtotal 12,525 12,070 4 % 6 % (3) % 1 % 8 %
Fiduciary Interest Income 120 15
Total Risk and Insurance Services 12,645 12,085 5 % 7 % (3) % 1 % 9 %
Consulting
Mercer 5,345 5,254 2 % (5) % 1 % 6 %
Oliver Wyman Group 2,794 2,535 10 % (4) % 1 % 13 %
Total Consulting 8,139 7,789 5 % (5) % 1 % 8 %
Corporate Eliminations (64) (54)
Total Revenue $ 20,720 $ 19,820 5 % 6 % (4) % 1 % 9 %
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
Components of Revenue Change**
Twelve Months Ended % % Currency Acquisitions/ Underlying
December 31,
Change
Change
Impact
Dispositions/
Revenue
GAAP
Revenue
Other Impact
Revenue
excl. Marsh
India Gain*
2022 2021
Marsh:
EMEA $ 2,879 $ 2,946 (2) % (7) % (3) % 8 %
Asia Pacific 1,333 1,462 (9) % 12 % (8) % 6 % 13 %
Latin America 502 453 11 % (1) % — 11 %
Total International 4,714 4,861 (3) % 3 % (7) % — 10 %
U.S./Canada 5,791 5,342 8 % — 1 % 7 %
Total Marsh $ 10,505 $ 10,203 3 % 6 % (3) % 1 % 8 %
Mercer:
Wealth $ 2,366 $ 2,509 (6) % (6) % — —
Health 2,017 1,855 9 % (3) % 3 % 9 %
Career 962 890 8 % (6) % — 14 %
Total Mercer $ 5,345 $ 5,254 2 % (5) % 1 % 6 %
* Percentage change excludes the gain from the consolidation of Marsh India of
$267 million from prior year’s GAAP revenue.
** Components of revenue change may not add due to rounding.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended December 31
(Millions) (Unaudited)
Overview
The Company reports its financial results in accordance with accounting
principles generally accepted in the United States (referred to in this
release as in accordance with "GAAP" or "reported" results). The Company also
refers to and presents certain additional non-GAAP financial measures, within
the meaning of Regulation G in accordance with the Securities Exchange Act of
1934. These measures are: adjusted operating income (loss), adjusted operating
margin, adjusted income, net of tax and adjusted earnings per share (EPS). The
Company has included reconciliations of these non-GAAP financial measures to
the most directly comparable financial measure calculated in accordance with
GAAP in the following tables.
The Company believes these non-GAAP financial measures provide useful
supplemental information that enables investors to better compare the
Company’s performance across periods. Management also uses these measures
internally to assess the operating performance of its businesses, to assess
performance for employee compensation, and to decide how to allocate
resources. However, investors should not consider these non-GAAP measures in
isolation from, or as a substitute for, the financial information that the
Company reports in accordance with GAAP. The Company's non-GAAP measures
include adjustments that reflect how management views its businesses, and may
differ from similarly titled non-GAAP measures presented by other companies.
Adjusted Operating Income (Loss) and Adjusted Operating Margin
Adjusted operating income (loss) is calculated by excluding the impact of
certain noteworthy items from the Company's GAAP operating income (loss). The
following tables identify these noteworthy items and reconcile adjusted
operating income (loss) to GAAP operating income (loss), on a consolidated and
reportable segment basis, for the three and twelve months ended December 31,
2022 and 2021. The following tables also present adjusted operating margin.
For the three and twelve months ended December 31, 2022 and 2021, adjusted
operating margin is calculated by dividing the sum of adjusted operating
income and identified intangible asset amortization by consolidated or segment
adjusted revenue.
Risk & Insurance Consulting Corporate/ Total
Services
Eliminations
Three Months Ended December 31, 2022
Operating income (loss) $ 472 $ 336 $ (128 ) $ 680
Operating margin 16.0 % 16.0 % N/A 13.5 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 119 54 60 233
Changes in contingent consideration (b) 11 — — 11
JLT integration and restructuring costs (c) 91 6 — 97
Pre-acquisition related costs (d) — 13 — 13
JLT legacy legal charges — (2 ) — (2 )
Disposal of businesses (8 ) — — (8 )
Operating income adjustments 213 71 60 344
Adjusted operating income (loss) $ 685 $ 407 $ (68 ) $ 1,024
Total identified intangible amortization expense $ 68 $ 12 $ — $ 80
Adjusted operating margin 25.6 % 20.0 % N/A 22.0 %
Three Months Ended December 31, 2021
Operating income (loss) $ 667 $ 395 $ (76 ) $ 986
Operating margin 21.9 % 18.8 % N/A 19.2 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 19 4 12 35
Changes in contingent consideration (b) 45 1 — 46
JLT integration and restructuring costs (c) 15 15 2 32
JLT acquisition related costs and other (e) 45 1 — 46
Legal claims (f) 33 — — 33
Gain on consolidation of business (g) (267 ) — — (267 )
JLT legacy legal charges — (6 ) — (6 )
Operating income adjustments (110 ) 15 14 (81 )
Adjusted operating income (loss) $ 557 $ 410 $ (62 ) $ 905
Total identified intangible amortization expense $ 73 $ 14 $ — $ 87
Adjusted operating margin 22.7 % 20.2 % N/A 20.4 %
(a) Primarily includes severance and lease exit charges for activities focused on
workforce actions, rationalization of technology and functional resources, and
reductions in real estate. Costs also reflect charges for Marsh's operational
excellence program.
(b) Change in fair value of contingent consideration related to acquisitions and
dispositions measured each quarter.
(c) Primarily reflects lease exit charges for a legacy JLT U.K. location. In 2021,
costs incurred include severance, lease exit charges, technology costs, and
consulting services related to the integration of JLT.
(d) Integration costs for the Westpac superannuation fund transaction in
Australia, which is expected to close in the first half of 2023.
(e) Retention costs and legal charges related to the acquisition of JLT.
(f) Settlement charges and legal costs related to strategic recruiting.
(g) Gain from the fair value re-measurement of the Company’s previously held
equity method investment in Marsh India upon the Company increasing its
ownership interest from 49% to 92%. This amount is included in revenue in the
consolidated statements of income and excluded from underlying revenue and
adjusted revenue in the calculation of adjusted operating margin.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Twelve Months Ended December 31
(Millions) (Unaudited)
Risk & Insurance Consulting Corporate/ Total
Services
Eliminations
Twelve Months Ended December 31, 2022
Operating income (loss) $ 3,089 $ 1,553 $ (362 ) $ 4,280
Operating margin 24.4 % 19.1 % N/A 20.7 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 157 61 94 312
Changes in contingent consideration (b) 44 5 — 49
JLT integration and restructuring costs (c) 97 16 2 115
JLT acquisition-related costs (d) 24 1 3 28
JLT legacy legal charges (e) 14 (13 ) — 1
Legal claims (f) 30 — — 30
Disposal of businesses (g) (8 ) (114 ) — (122 )
Pre-acquisition related costs (h) — 21 — 21
Deconsolidation of Russian businesses and other related charges (i) 42 10 — 52
Operating income adjustments 400 (13 ) 99 486
Adjusted operating income (loss) $ 3,489 $ 1,540 $ (263 ) $ 4,766
Total identified intangible amortization expense $ 291 $ 47 $ — $ 338
Adjusted operating margin 29.8 % 19.7 % N/A 24.7 %
Twelve Months Ended December 31, 2021
Operating income (loss) $ 3,080 $ 1,504 $ (272 ) $ 4,312
Operating margin 25.5 % 19.3 % N/A 21.8 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 31 12 27 70
Changes in contingent consideration (b) 63 (3 ) (3 ) 57
JLT integration and restructuring costs (c) 53 36 4 93
JLT acquisition related costs and other (d) 77 3 1 81
JLT legacy legal charges (e) — (69 ) — (69 )
Legal claims (f) 60 — 2 62
Disposal of businesses (g) (52 ) 3 — (49 )
Gain on consolidation of business (j) (267 ) — — (267 )
Operating income adjustments (35 ) (18 ) 31 (22 )
Adjusted operating income (loss) $ 3,045 $ 1,486 $ (241 ) $ 4,290
Total identified intangible amortization expense $ 309 $ 56 $ — $ 365
Adjusted operating margin 28.5 % 19.8 % N/A 23.9 %
(a) Primarily includes severance and lease exit charges for activities focused on
workforce actions, rationalization of technology and functional resources, and
reductions in real estate. Costs also reflect charges for Marsh's operational
excellence program.
(b) Change in fair value of contingent consideration related to acquisitions and
dispositions measured each quarter.
(c) Primarily reflects lease exit charges for a legacy JLT U.K. location. In 2021,
costs incurred include severance, lease exit charges, technology costs, and
consulting services related to the integration of JLT.
(d) Retention costs and legal charges related to the acquisition of JLT.
(e) Charges and recoveries related to legacy JLT legal matters. 2021 reflects a
reduction in the liability for a legacy JLT E&O relating to suitability of
advice provided to individuals for defined benefit pension transfers in the
U.K., as well as recoveries under indemnities and insurance.
(f) Settlement charges and legal costs related to strategic recruiting.
(g) Primarily reflects a gain of $112 million during the second quarter of 2022 on
the sale of the Mercer U.S. affinity business. In 2021, the amount includes a
gain of $49 million related to the sale of the U.K. commercial networks
business. These amounts are included in revenue in the consolidated statements
of income and excluded from underlying revenue and adjusted revenue in the
calculation of adjusted operating margin.
(h) Integration costs for the Westpac superannuation fund transaction in
Australia, which is expected to close in the first half of 2023.
(i) Loss on deconsolidation of Russian businesses and other related charges. The
loss on deconsolidation of $39 million is included in revenue in the
consolidated statements of income and excluded from underlying revenue and
adjusted revenue used in the calculation of adjusted operating margin.
(j) Gain from the fair value re-measurement of the Company’s previously held
equity method investment in Marsh India upon the Company increasing its
ownership interest from 49% to 92%. The amount is reflected in revenue in the
consolidated statements of income and excluded from underlying revenue and
adjusted revenue in the calculation of adjusted operating margin.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three and Twelve Months Ended December 31
(In millions, except per share data)
(Unaudited)
Adjusted income, net of tax is calculated as the Company's GAAP income from
continuing operations, adjusted to reflect the after tax impact of the
operating income adjustments in the preceding tables and the additional items
listed below. Adjusted EPS is calculated by dividing the Company’s adjusted
income, net of tax, by average number of shares outstanding-diluted for the
relevant period. The following tables reconcile adjusted income, net of tax to
GAAP income from continuing operations and adjusted EPS to GAAP EPS for the
three and twelve month periods ended December 31, 2022 and 2021.
Three Months Ended Three Months Ended
December 31, 2022
December 31, 2021
(In millions, except per share data) Amount Adjusted Amount Adjusted
EPS
EPS
Net income before non-controlling interests, as reported $ 471 $ 807
Less: Non-controlling interest, net of tax 5 4
Subtotal $ 466 $ 0.93 $ 803 $ 1.57
Operating income adjustments $ 344 $ (81)
Investments adjustment (a) 1 (4)
Pension settlement adjustment (b) 1 3
Income tax effect of adjustments (c) (77) (33)
Impact of U.K. tax rate change (d) — 5
269 0.54 (110) (0.21)
Adjusted income, net of tax $ 735 $ 1.47 $ 693 $ 1.36
Twelve Months Ended Twelve Months Ended
December 31, 2022
December 31, 2021
(In millions, except per share data) Amount Adjusted Amount Adjusted
EPS
EPS
Net income before non-controlling interests, as reported $ 3,087 $ 3,174
Less: Non-controlling interest, net of tax 37 31
Subtotal $ 3,050 $ 6.04 $ 3,143 $ 6.13
Operating income adjustments $ 486 $ (22)
Investments adjustment (a) (3) (6)
Pension settlement adjustment (b) 2 5
Income tax effect of adjustments (c) (78) (64)
Impact of U.K. tax rate change (d) — 110
407 0.81 23 0.04
Adjusted income, net of tax $ 3,457 $ 6.85 $ 3,166 $ 6.17
(a) Represents mark-to-market losses and gains related to the Company's
investments.
(b) Charges resulting from lump sum pension settlements elected by participants.
(c) For items with an income tax impact, the tax effect was calculated using an
effective tax rate based on the tax jurisdiction for each item.
(d) Reflects the re-measurement of the Company's U.K. deferred tax assets and
liabilities upon enactment of legislation that increased the corporate income
tax rate applicable to U.K. based entities from 19% to 25%, effective April 1,
2023.
Marsh & McLennan Companies, Inc.
Supplemental Information
Three and Twelve Months Ended December 31
(Millions) (Unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
2022 2021 2022 2021
Consolidated
Compensation and benefits $ 3,038 $ 2,905 $ 12,071 $ 11,425
Other operating expenses 1,304 1,246 4,369 4,083
Total expenses $ 4,342 $ 4,151 $ 16,440 $ 15,508
Depreciation and amortization expense $ 122 $ 91 $ 381 $ 382
Identified intangible amortization expense 80 87 338 365
Total $ 202 $ 178 $ 719 $ 747
Risk and Insurance Services
Compensation and benefits $ 1,699 $ 1,630 $ 6,938 $ 6,506
Other operating expenses 774 752 2,618 2,499
Total expenses $ 2,473 $ 2,382 $ 9,556 $ 9,005
Depreciation and amortization expense $ 55 $ 44 $ 178 $ 196
Identified intangible amortization expense 68 73 291 309
Total $ 123 $ 117 $ 469 $ 505
Consulting
Compensation and benefits $ 1,210 $ 1,148 $ 4,626 $ 4,435
Other operating expenses 548 556 1,960 1,850
Total expenses $ 1,758 $ 1,704 $ 6,586 $ 6,285
Depreciation and amortization expense $ 32 $ 28 $ 111 $ 115
Identified intangible amortization expense 12 14 47 56
Total $ 44 $ 42 $ 158 $ 171
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions) (Unaudited)
December 31, December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents $ 1,442 $ 1,752
Net receivables 5,852 5,586
Other current assets 1,005 926
Total current assets 8,299 8,264
Goodwill and intangible assets 18,788 19,127
Fixed assets, net 871 847
Pension related assets 2,127 2,270
Right of use assets 1,562 1,868
Deferred tax assets 358 551
Other assets 1,449 1,461
TOTAL ASSETS $ 33,454 $ 34,388
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 268 $ 17
Accounts payable and accrued liabilities 3,278 3,165
Accrued compensation and employee benefits 3,095 2,942
Current lease liabilities 310 332
Accrued income taxes 221 198
Total current liabilities 7,172 6,654
Fiduciary liabilities 10,660 9,622
Less - cash and cash equivalents held in a fiduciary capacity (10,660) (9,622)
— —
Long-term debt 11,227 10,933
Pension, post-retirement and post-employment benefits 921 1,632
Long-term lease liabilities 1,667 1,880
Liabilities for errors and omissions 355 355
Other liabilities 1,363 1,712
Total equity 10,749 11,222
TOTAL LIABILITIES AND EQUITY $ 33,454 $ 34,388
Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)
For the Years Ended
December 31,
2022 2021
Operating cash flows:
Net income before non-controlling interests $ 3,087 $ 3,174
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization 719 747
Non-cash lease expense 404 327
Deconsolidation of Russian businesses 39 —
Gain on consolidation of entity (2) (267)
Share-based compensation expense 367 348
Net gain on investments, disposition of assets and other (137) (67)
Changes in assets and liabilities:
Accrued compensation and employee benefits 171 574
Provision for taxes, net of payments and refunds (54) (33)
Net receivables (492) (570)
Other changes to assets and liabilities 71 4
Contributions to pension and other benefit plans in excess of current year (385) (372)
credit
Operating lease liabilities (323) (349)
Net cash provided by operations 3,465 3,516
Financing cash flows:
Purchase of treasury shares (1,950) (1,159)
Proceeds from issuance of debt 984 743
Repayments of debt (365) (1,016)
Net issuance of common stock from treasury shares (72) 60
Net distributions from non-controlling interests and deferred/contingent (189) (82)
consideration
Dividends paid (1,138) (1,026)
Increase in fiduciary liabilities 1,684 1,183
Net cash used for financing activities (1,046) (1,297)
Investing cash flows:
Capital expenditures (470) (406)
Purchase of long-term investments and other (13) (29)
Sales of long-term investments 86 46
Dispositions 119 84
Acquisitions, net of cash and cash held in a fiduciary capacity acquired (572) (859)
Net cash used for investing activities (850) (1,164)
Effect of exchange rate changes on cash, cash equivalents, and cash and cash (841) (355)
equivalents held in a fiduciary capacity
Increase in cash, cash equivalents, and cash and cash equivalents held in a 728 700
fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary 11,374 10,674
capacity at beginning of period
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary $ 12,102 $ 11,374
capacity at end of period
Reconciliation of cash, cash equivalents, and cash and cash equivalents held
in a fiduciary capacity to the Consolidated Balance Sheets
For the Years Ended December 31, 2022 2021
(In millions of dollars)
Cash and cash equivalents $ 1,442 $ 1,752
Cash and cash equivalents held in a fiduciary capacity 10,660 9,622
Total cash, cash equivalents, and cash and cash equivalents held in a $ 12,102 $ 11,374
fiduciary capacity
Media Contact:
Erick R. Gustafson
Marsh McLennan
+1 202 263 7788
erick.gustafson@mmc.com (mailto:erick.gustafson@mmc.com)
Investor Contact:
Sarah DeWitt
Marsh McLennan
+1 212 345 6750
sarah.dewitt@mmc.com (mailto:sarah.dewitt@mmc.com)
View source version on businesswire.com:
https://www.businesswire.com/news/home/20230125005833/en/
(https://www.businesswire.com/news/home/20230125005833/en/)
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