REG-Marsh McLennan Marsh McLennan Reports Second Quarter 2023 Results
20/07/2023 12:15
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Marsh McLennan Reports Second Quarter 2023 Results
GAAP Revenue Increases 9%; Underlying Revenue Rises 11%
Growth in GAAP Operating Income of 7% and Adjusted Operating Income of 17%
Second Quarter GAAP EPS Rises 8% to $2.07 and Adjusted EPS Increases 16% to
$2.20
Six Months GAAP EPS Rises 13% to $4.55 and Adjusted EPS Increases 13% to $4.74
Marsh McLennan (NYSE: MMC), the world’s leading professional services firm
in the areas of risk, strategy and people, today reported financial results
for the second quarter ended June 30, 2023.
Commenting on the results, John Doyle, President and CEO, said: "We delivered
another excellent quarter, demonstrating continued momentum and strength
across our business. We generated underlying revenue growth of 11%, adjusted
EPS growth of 16%, and we continued to expand margins."
"I am proud of our performance in the first half of 2023. Our results reflect
the strength of our position, the value we deliver to our clients, and
terrific execution by our colleagues."
Consolidated Results
Consolidated revenue in the second quarter of 2023 was $5.9 billion, an
increase of 9% compared with the second quarter of 2022. On an underlying
basis, revenue increased 11%. Operating income was $1.5 billion, an increase
of 7% from a year ago. Adjusted operating income, which excludes noteworthy
items as presented in the attached supplemental schedules, rose 17% to $1.5
billion. Net income attributable to the Company was $1.0 billion, or $2.07 per
diluted share, compared with $1.91 in the second quarter of 2022. Adjusted
earnings per share rose 16% to $2.20 per diluted share compared with $1.89 a
year ago.
For the six months ended June 30, 2023, consolidated revenue was $11.8
billion, an increase of 8%, or 10% on an underlying basis compared to the
prior period. Operating income was $3.2 billion, an increase of 13% from the
prior year period. Adjusted operating income rose 15% to $3.3 billion. Net
income attributable to the Company was $2.3 billion, or $4.55 per diluted
share, compared with $4.01 in the first six months of 2022. Adjusted earnings
per share increased 13% to $4.74 per diluted share compared with $4.19 for the
first six months of 2022.
Risk & Insurance Services
Risk & Insurance Services revenue was $3.7 billion in the second quarter
of 2023, an increase of 12%, or 13% on an underlying basis. Operating income
rose 20% to $1.2 billion, and adjusted operating income was $1.2 billion, an
increase of 18% versus a year ago. For the six months ended June 30, 2023,
revenue was $7.6 billion, an increase of 11%, or 12% on an underlying basis.
Operating income rose 22% to $2.6 billion, and adjusted operating income was
$2.6 billion, an increase of 17% versus a year ago.
Marsh's revenue in the second quarter was $3.0 billion, an increase of 10% on
an underlying basis. In U.S./Canada, underlying revenue rose 9%. International
operations produced underlying revenue growth of 10%, reflecting 17% growth in
Latin America, 11% growth in EMEA, and 6% growth in Asia Pacific. For the six
months ended June 30, 2023, Marsh’s underlying revenue growth was 9%.
Guy Carpenter's revenue in the second quarter was $576 million, an increase of
11% on an underlying basis. For the six months ended June 30, 2023, Guy
Carpenter’s underlying revenue growth was 10%.
Consulting
Consulting revenue was $2.2 billion in the second quarter of 2023, an increase
of 4%, or 8% on an underlying basis. Operating income decreased 18% to $388
million, while adjusted operating income increased 9% to $403 million. For the
first six months ended June 30, 2023, revenue was $4.2 billion, an increase of
3%, or 6% on an underlying basis. Operating income of $799 million decreased
8%, while adjusted operating income increased 5% to $809 million.
Mercer's revenue in the second quarter was $1.4 billion, an increase of 6% on
an underlying basis. Health revenue of $518 million increased 10% on an
underlying basis. Wealth revenue of $637 million increased 3% on an underlying
basis. Career revenue of $219 million increased 6% on an underlying basis. For
the six months ended June 30, 2023, Mercer’s revenue was $2.7 billion, an
increase of 7% on an underlying basis.
Oliver Wyman’s revenue in the second quarter was $798 million, an increase
of 11% on an underlying basis. For the six months ended June 30, 2023, Oliver
Wyman’s revenue was $1.5 billion, an increase of 6% on an underlying basis.
Other Items
The Company repurchased 1.7 million shares of stock for $300 million in the
second quarter of 2023. Through six months ended June 30, 2023, the Company
has repurchased 3.5 million shares of stock for $600 million.
Last week, the Board of Directors increased the quarterly dividend 20% to
$0.710 per share, with the third quarter dividend payable on August 15, 2023.
Conference Call
A conference call to discuss second quarter 2023 results will be held today at
8:30 a.m. Eastern time. The live audio webcast may be accessed at
marshmclennan.com
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. A replay of the webcast will be available approximately two hours after the
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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=https%3A%2F%2Fwww.marsh.com&esheet=53468914&newsitemid=20230719263083&lan=en-US&anchor=Marsh&index=3&md5=5100386485319b74e037de8375137564)
provides data-driven risk advisory services and insurance solutions to
commercial and consumer clients. Guy Carpenter
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develops advanced risk, reinsurance and capital strategies that help clients
grow profitably and pursue emerging opportunities. Mercer
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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
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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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.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements," as defined in the
Private Securities Litigation Reform Act of 1995. These statements, which
express management's current views concerning future events or results, use
words like "anticipate," "assume," "believe," "continue," "estimate,"
"expect," "intend," "plan," "project" and similar terms, and future or
conditional tense verbs like "could," "may," "might," "should," "will" and
"would".
Forward-looking statements are subject to inherent risks and uncertainties
that could cause actual results to differ materially from those expressed or
implied in our forward-looking statements. Factors that could materially
affect our future results include, among other things:
* the impact of geopolitical or macroeconomic conditions on us, our clients and
the countries and industries in which we operate, including from conflicts
such as the war in Ukraine, slower GDP growth or recession, capital markets
volatility, instability in the banking sector and inflation;
* the increasing prevalence of ransomware, supply chain and other forms of cyber
attacks, and their potential to disrupt our operations, or the operations of
our third party vendors, and result in the disclosure of confidential client
or company information;
* the impact from lawsuits or investigations arising from errors and omissions,
breaches of fiduciary duty or other claims against us in our capacity as a
broker or investment advisor, including claims related to our investment
business’ ability to execute timely trades;
* the financial and operational impact of complying with laws and regulations,
including domestic and international sanctions regimes, anti-corruption laws
such as the U.S. Foreign Corrupt Practices Act, U.K. Anti Bribery Act and
cybersecurity and data privacy regulations;
* our ability to attract, retain and develop industry leading talent;
* our ability to compete effectively and adapt to competitive pressures in each
of our businesses, including from disintermediation as well as technological
change, digital disruption and other types of innovation;
* our ability to manage potential conflicts of interest, including where our
services to a client conflict, or are perceived to conflict, with the
interests of another client or our own interests;
* the impact of changes in tax laws, guidance and interpretations, such as the
implementation of the Organization for Economic Cooperation and Development
international tax framework, or disagreements with tax authorities; and
* the regulatory, contractual and reputational risks that arise based on
insurance placement activities and insurer revenue streams.
The factors identified above are not exhaustive. Marsh McLennan and its
subsidiaries (collectively, the "Company") operate in a dynamic business
environment in which new risks emerge frequently. Accordingly, we caution
readers not to place undue reliance on any forward-looking statements, which
are based only on information currently available to us and speak only as of
the dates on which they are made. The Company undertakes no obligation to
update or revise any forward-looking statement to reflect events or
circumstances arising after the date on which it is made.
Further information concerning the Company, including information about
factors that could materially affect our results of operations and financial
condition, is contained in the Company's filings with the Securities and
Exchange Commission, including the "Risk Factors" section and the
"Management’s Discussion and Analysis of Financial Condition and Results of
Operations" section of our most recently filed Annual Report on Form 10-K.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30,
June 30,
2023 2022 2023 2022
Revenue $ 5,876 $ 5,379 $ 11,800 $ 10,928
Expense:
Compensation and benefits 3,337 3,010 6,544 6,110
Other operating expenses 1,082 1,005 2,073 2,009
Operating expenses 4,419 4,015 8,617 8,119
Operating income 1,457 1,364 3,183 2,809
Other net benefit credits 60 59 118 121
Interest income 10 1 24 2
Interest expense (146 ) (114 ) (282 ) (224 )
Investment income 3 2 5 28
Income before income taxes 1,384 1,312 3,048 2,736
Income tax expense 337 334 749 672
Net income before non-controlling interests 1,047 978 2,299 2,064
Less: Net income attributable to non-controlling interests 12 11 29 26
Net income attributable to the Company $ 1,035 $ 967 $ 2,270 $ 2,038
Net income per share attributable to the Company:
- Basic $ 2.09 $ 1.93 $ 4.59 $ 4.06
- Diluted $ 2.07 $ 1.91 $ 4.55 $ 4.01
Average number of shares outstanding:
- Basic 495 501 495 502
- Diluted 499 506 499 508
Shares outstanding at June 30 494 499 494 499
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended June 30
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result, foreign exchange
rate movements may impact period-to-period comparisons of revenue. Similarly,
certain other items such as acquisitions and dispositions, including transfers
among businesses, may impact period over period comparisons of revenue.
Non-GAAP underlying revenue measures the change in revenue from one period to
the next by isolating these impacts.
Components of Revenue Change*
Three Months Ended % Change Currency Acquisitions/ Non-GAAP
June 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
Other Impact**
Revenue
2023 2022
Risk and Insurance Services
Marsh $ 3,038 $ 2,778 9 % (1 )% 1 % 10 %
Guy Carpenter 576 522 10 % (1 )% — 11 %
Subtotal 3,614 3,300 9 % (1 )% 1 % 10 %
Fiduciary interest income 108 13
Total Risk and Insurance Services 3,722 3,313 12 % (1 )% 1 % 13 %
Consulting
Mercer 1,374 1,389 (1 )% (1 )% (6 )% 6 %
Oliver Wyman Group 798 695 15 % — 4 % 11 %
Total Consulting 2,172 2,084 4 % — (3 )% 8 %
Corporate Eliminations (18 ) (18 )
Total Revenue $ 5,876 $ 5,379 9 % (1 )% (1 )% 11 %
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
Components of Revenue Change*
Three Months Ended % Change Currency Acquisitions/ Non-GAAP
June 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
Other Impact**
Revenue
2023 2022
Marsh:
EMEA (a) $ 858 $ 780 10 % (1 )% — 11 %
Asia Pacific (a) 357 347 3 % (4 )% 1 % 6 %
Latin America 137 118 15 % (1 )% — 17 %
Total International 1,352 1,245 9 % (2 )% — 10 %
U.S./Canada 1,686 1,533 10 % — 1 % 9 %
Total Marsh $ 3,038 $ 2,778 9 % (1 )% 1 % 10 %
Mercer:
Wealth $ 637 $ 597 7 % (1 )% 4 % 3 %
Health 518 587 (12 )% — (19 )% 10 %
Career 219 205 6 % (1 )% 1 % 6 %
Total Mercer $ 1,374 $ 1,389 (1 )% (1 )% (6 )% 6 %
(a) In the first quarter of 2023, the Company began reporting the Marsh India
operations in EMEA. Prior year results for India have been reclassified from
Asia Pacific to EMEA for comparative purposes.
* Rounded to whole percentages. Components of revenue may not add due to
rounding.
** Acquisitions, dispositions, and other includes the impact of current and prior
year items excluded from the calculation of non-GAAP underlying revenue for
comparability purposes. Details on these items are provided in the
reconciliation of non-GAAP revenue to GAAP revenue tables included in this
release.
Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Six Months Ended June 30
(Millions) (Unaudited)
The Company conducts business in 130 countries. As a result, foreign exchange
rate movements may impact period-to-period comparisons of revenue. Similarly,
certain other items such as acquisitions and dispositions, including transfers
among businesses, may impact period over period comparisons of revenue.
Non-GAAP underlying revenue measures the change in revenue from one period to
the next by isolating these impacts.
Components of Revenue Change*
Six Months Ended % Change Currency Acquisitions/ Non-GAAP
June 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
Other Impact**
Revenue
2023 2022
Risk and Insurance Services
Marsh $ 5,782 $ 5,324 9 % (2 )% 1 % 9 %
Guy Carpenter 1,647 1,521 8 % (1 )% — 10 %
Subtotal 7,429 6,845 9 % (2 )% 1 % 9 %
Fiduciary interest income 199 17
Total Risk and Insurance Services 7,628 6,862 11 % (2 )% 1 % 12 %
Consulting
Mercer 2,718 2,732 (1 )% (2 )% (5 )% 7 %
Oliver Wyman Group 1,485 1,362 9 % (1 )% 4 % 6 %
Total Consulting 4,203 4,094 3 % (2 )% (2 )% 6 %
Corporate Eliminations (31 ) (28 )
Total Revenue $ 11,800 $ 10,928 8 % (2 )% — 10 %
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
Components of Revenue Change*
Six Months Ended % Change Currency Acquisitions/ Non-GAAP
June 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
Other Impact**
Revenue
2023 2022
Marsh:
EMEA (a) $ 1,790 $ 1,649 9 % (3 )% 1 % 10 %
Asia Pacific (a) 669 641 4 % (5 )% 1 % 8 %
Latin America 252 222 13 % — — 14 %
Total International 2,711 2,512 8 % (3 )% 1 % 10 %
U.S./Canada 3,071 2,812 9 % — 1 % 8 %
Total Marsh $ 5,782 $ 5,324 9 % (2 )% 1 % 9 %
Mercer:
Wealth $ 1,218 $ 1,214 — (3 )% — 3 %
Health 1,063 1,111 (4 )% (1 )% (12 )% 11 %
Career 437 407 7 % (3 )% 1 % 9 %
Total Mercer $ 2,718 $ 2,732 (1 )% (2 )% (5 )% 7 %
(a) In the first quarter of 2023, the Company began reporting the Marsh India
operations in EMEA. Prior year results for India have been reclassified from
Asia Pacific to EMEA for comparative purposes.
* Rounded to whole percentages. Components of revenue may not add due to
rounding.
** Acquisitions, dispositions, and other includes the impact of current and prior
year items excluded from the calculation of non-GAAP underlying revenue for
comparability purposes. Details on these items are provided in the
reconciliation of non-GAAP revenue to GAAP revenue tables included in this
release.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended June 30
(Millions) (Unaudited)
Overview
The Company reports its financial results in accordance with accounting
principles generally accepted in the United States (referred to in this
release as in accordance with "GAAP" or "reported" results). The Company also
refers to and presents certain additional non-GAAP financial measures, within
the meaning of Regulation G and item 10(e) Regulation S-K in accordance with
the Securities Exchange Act of 1934. These measures are: non-GAAP revenue,
adjusted operating income (loss), adjusted operating margin, adjusted income,
net of tax and adjusted earnings per share (EPS). The Company has included
reconciliations of these non-GAAP financial measures to the most directly
comparable financial measure calculated in accordance with GAAP in the
following tables.
The Company believes these non-GAAP financial measures provide useful
supplemental information that enables investors to better compare the
Company’s performance across periods. Management also uses these measures
internally to assess the operating performance of its businesses and to decide
how to allocate resources. However, investors should not consider these
non-GAAP measures in isolation from, or as a substitute for, the financial
information that the Company reports in accordance with GAAP. The Company's
non-GAAP measures include adjustments that reflect how management views its
businesses, and may differ from similarly titled non-GAAP measures presented
by other companies.
Adjusted Operating Income (Loss) and Adjusted Operating Margin
Adjusted operating income (loss) is calculated by excluding the impact of
certain noteworthy items from the Company's GAAP operating income (loss). The
following tables identify these noteworthy items and reconcile adjusted
operating income (loss) to GAAP operating income (loss), on a consolidated and
reportable segment basis, for the three and six months ended June 30, 2023 and
2022. The following tables also present adjusted operating margin. For the
three and six months ended June 30, 2023 and 2022, adjusted operating margin
is calculated by dividing the sum of adjusted operating income and identified
intangible asset amortization by consolidated or segment adjusted revenue. The
Company's adjusted revenue used in the determination of adjusted operating
margin is calculated by excluding the impact of certain noteworthy items from
the Company's GAAP revenue.
Risk & Insurance Consulting Corporate/ Total
Services
Eliminations
Three Months Ended June 30, 2023
Operating income (loss) $ 1,157 $ 388 $ (88 ) $ 1,457
Operating margin 31.1 % 17.9 % N/A 24.8 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 28 7 27 62
Changes in contingent consideration (b) 10 — — 10
JLT integration and restructuring costs (c) 3 — — 3
Acquisition related costs (d) — 10 — 10
Disposal of business — (2 ) — (2 )
Operating income adjustments 41 15 27 83
Adjusted operating income (loss) $ 1,198 $ 403 $ (61 ) $ 1,540
Total identified intangible amortization expense $ 73 $ 14 $ — $ 87
Adjusted operating margin 34.2 % 19.2 % N/A 27.7 %
Three Months Ended June 30, 2022
Operating income (loss) $ 967 $ 475 $ (78 ) $ 1,364
Operating margin 29.2 % 22.8 % N/A 25.4 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 11 4 13 28
Changes in contingent consideration (b) 12 5 — 17
JLT acquisition-related costs (e) 11 — 3 14
JLT legacy legal charges (f) 11 (1 ) — 10
Disposal of business (g) — (112 ) — (112 )
Deconsolidation of Russian businesses and other related charges 2 (2 ) — —
Operating income adjustments 47 (106 ) 16 (43 )
Adjusted operating income (loss) $ 1,014 $ 369 $ (62 ) $ 1,321
Total identified intangible amortization expense $ 71 $ 12 $ — $ 83
Adjusted operating margin 32.8 % 19.3 % N/A 26.7 %
(a) In 2023, costs primarily include severance and lease exit charges for
activities focused on workforce actions, rationalization of technology and
functional resources, and reductions in real estate.
(b) Change in fair value of contingent consideration related to acquisitions and
dispositions measured each quarter.
(c) Reflects adjustments to restructuring liabilities for future rent under
non-cancelable leases for a legacy JLT U.K. location.
(d) Integration costs for the Westpac superannuation fund transaction in
Australia, which closed on April 1, 2023.
(e) Retention costs related to the acquisition of JLT.
(f) Charges and recoveries related to legacy JLT legal matters.
(g) Reflects a gain of $112 million on the sale of the Mercer U.S. affinity
business in the second quarter of 2022. This amount is included in revenue in
the consolidated statements of income and excluded from non-GAAP revenue and
adjusted revenue used in the calculation of adjusted operating margin.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Six Months Ended June 30
(Millions) (Unaudited)
Risk & Insurance Consulting Corporate/ Total
Services
Eliminations
Six Months Ended June 30, 2023
Operating income (loss) $ 2,552 $ 799 $ (168 ) $ 3,183
Operating margin 33.5 % 19.0 % N/A 27.0 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 47 16 39 102
Changes in contingent consideration (b) 16 1 — 17
JLT integration and restructuring costs (c) 16 — — 16
JLT legacy legal charges (d) — (51 ) — (51 )
Disposal of business (e) — 17 — 17
Acquisition related costs (f) — 27 — 27
Operating income adjustments 79 10 39 128
Adjusted operating income (loss) $ 2,631 $ 809 $ (129 ) $ 3,311
Total identified intangible amortization expense $ 147 $ 25 $ — $ 172
Adjusted operating margin 36.4 % 19.8 % N/A 29.5 %
Six Months Ended June 30, 2022
Operating income (loss) $ 2,088 $ 867 $ (146 ) $ 2,809
Operating margin 30.4 % 21.2 % N/A 25.7 %
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a) 20 6 20 46
Changes in contingent consideration (b) 22 5 — 27
JLT integration and restructuring costs (c) 6 5 1 12
JLT legacy legal charges (d) 14 (11 ) — 3
Disposal of business (e) — (112 ) — (112 )
JLT acquisition-related costs (g) 20 1 3 24
Legal claims (h) 30 — — 30
Deconsolidation of Russian businesses and other related charges (i) 42 10 — 52
Operating income adjustments 154 (96 ) 24 82
Adjusted operating income (loss) $ 2,242 $ 771 $ (122 ) $ 2,891
Total identified intangible amortization expense $ 149 $ 25 $ — $ 174
Adjusted operating margin 34.7 % 19.9 % N/A 28.2 %
(a) In 2023, costs primarily include severance and lease exit charges for
activities focused on workforce actions, rationalization of technology and
functional resources, and reductions in real estate.
Costs also reflect charges for Marsh's operational excellence program.
(b) Change in fair value of contingent consideration related to acquisitions and
dispositions measured each quarter.
(c) Reflects adjustments to restructuring liabilities for future rent under
non-cancelable leases for a legacy JLT U.K. location.
(d) Reflects insurance and indemnity recoveries for a legacy JLT E&O matter
relating to suitability of advice provided to individuals for defined benefit
pension transfers in the U.K.
(e) Loss on sale of an individual financial advisory business in Canada. The
second quarter of 2022 reflects a gain of $112 million on the sale of the
Mercer U.S. affinity business. These amounts are included in revenue in the
consolidated statements of income and excluded from non-GAAP revenue and
adjusted revenue used in the calculation of adjusted operating margin.
(f) Integration costs for the Westpac superannuation fund transaction in
Australia, which closed on April 1, 2023.
(g) Retention costs related to the acquisition of JLT.
(h) Settlement charges and legal costs related to strategic recruiting.
(i) Loss on deconsolidation of Russian businesses and other related charges. The
loss on deconsolidation of $39 million is included in revenue in the
consolidated statements of income and excluded from non-GAAP revenue and
adjusted revenue used in the calculation of adjusted operating margin. The
remaining expense charges of $13 million are included in other operating
expenses in the consolidated statements of income.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three and Six Months Ended June 30
(In millions, except per share data)
(Unaudited)
Adjusted income, net of tax is calculated as the Company's GAAP income from
continuing operations, adjusted to reflect the after tax impact of the
operating income adjustments in the preceding tables and the additional items
listed below. Adjusted EPS is calculated by dividing the Company’s adjusted
income, net of tax, by the average number of shares outstanding-diluted for
the relevant period. The following tables reconcile adjusted income, net of
tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for
the three and six months ended June 30, 2023 and 2022.
Three Months Ended Three Months Ended
June 30, 2023
June 30, 2022
Amount Adjusted Amount Adjusted
EPS
EPS
Net income before non-controlling interests, as reported $ 1,047 $ 978
Less: Non-controlling interest, net of tax 12 11
Subtotal $ 1,035 $ 2.07 $ 967 $ 1.91
Operating income adjustments $ 83 $ (43 )
Investments adjustment (1 ) 1
Pension settlement adjustment — 1
Income tax effect of adjustments (a) (17 ) 33
65 0.13 (8 ) (0.02 )
Adjusted income, net of tax $ 1,100 $ 2.20 $ 959 $ 1.89
Six Months Ended Six Months Ended
June 30, 2023
June 30, 2022
Amount Adjusted Amount Adjusted
EPS
EPS
Net income before non-controlling interests, as reported $ 2,299 $ 2,064
Less: Non-controlling interest, net of tax 29 26
Subtotal $ 2,270 $ 4.55 $ 2,038 $ 4.01
Operating income adjustments $ 128 $ 82
Investments adjustment 1 (8 )
Pension settlement adjustment — 1
Income tax effect of adjustments (a) (33 ) 15
96 0.19 90 0.18
Adjusted income, net of tax $ 2,366 $ 4.74 $ 2,128 $ 4.19
(a) For items with an income tax impact, the tax effect was calculated using an
effective tax rate based on the tax jurisdiction for each item.
Marsh & McLennan Companies, Inc.
Supplemental Information
Three and Six Months Ended June 30
(Millions) (Unaudited)
Three Months Ended Six Months Ended
June 30,
June 30,
2023 2022 2023 2022
Consolidated
Compensation and benefits $ 3,337 $ 3,010 $ 6,544 $ 6,110
Other operating expenses 1,082 1,005 2,073 2,009
Total expenses $ 4,419 $ 4,015 $ 8,617 $ 8,119
Depreciation and amortization expense $ 91 $ 85 $ 175 $ 174
Identified intangible amortization expense 87 83 172 174
Total $ 178 $ 168 $ 347 $ 348
Risk and Insurance Services
Compensation and benefits $ 1,923 $ 1,750 $ 3,803 $ 3,551
Other operating expenses 642 596 1,273 1,223
Total expenses $ 2,565 $ 2,346 $ 5,076 $ 4,774
Depreciation and amortization expense $ 49 $ 40 $ 86 $ 83
Identified intangible amortization expense 73 71 147 149
Total $ 122 $ 111 $ 233 $ 232
Consulting
Compensation and benefits $ 1,271 $ 1,145 $ 2,439 $ 2,309
Other operating expenses 513 464 965 918
Total expenses $ 1,784 $ 1,609 $ 3,404 $ 3,227
Depreciation and amortization expense $ 27 $ 27 $ 48 $ 53
Identified intangible amortization expense 14 12 25 25
Total $ 41 $ 39 $ 73 $ 78
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions)
(Unaudited) December 31,
June 30,
2022
2023
ASSETS
Current assets:
Cash and cash equivalents $ 1,171 $ 1,442
Cash and cash equivalents held in a fiduciary capacity (a) 11,564 10,660
Net receivables 6,986 5,852
Other current assets 1,081 1,005
Total current assets 20,802 18,959
Goodwill and intangible assets 19,129 18,788
Fixed assets, net 870 871
Pension related assets 2,331 2,127
Right of use assets 1,569 1,562
Deferred tax assets 365 358
Other assets 1,500 1,449
TOTAL ASSETS $ 46,566 $ 44,114
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 2,375 $ 268
Accounts payable and accrued liabilities 3,137 3,278
Accrued compensation and employee benefits 2,021 3,095
Current lease liabilities 309 310
Accrued income taxes 407 221
Fiduciary liabilities (a) 11,564 10,660
Total current liabilities 19,813 17,832
Long-term debt 10,247 11,227
Pension, post-retirement and post-employment benefits 866 921
Long-term lease liabilities 1,699 1,667
Liabilities for errors and omissions 364 355
Other liabilities 1,438 1,363
Total equity 12,139 10,749
TOTAL LIABILITIES AND EQUITY $ 46,566 $ 44,114
(a) In the second quarter of 2023, the Company changed the presentation of
fiduciary assets and liabilities on the consolidated balance sheets. Cash and
cash equivalents held in a fiduciary capacity was reclassified from an offset
to fiduciary liabilities to current assets, with the corresponding fiduciary
liabilities reclassified to current liabilities. The presentation in the
December 31, 2022 consolidated balance sheet was conformed to the current
presentation.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)
Six Months Ended
June 30,
2023 2022
Operating cash flows:
Net income before non-controlling interests $ 2,299 $ 2,064
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization 347 348
Non-cash lease expense 143 152
Deconsolidation of Russian businesses — 39
Share-based compensation expense 191 194
Net gain on investments, disposition of assets and other (9 ) (130 )
Changes in assets and liabilities:
Accrued compensation and employee benefits (1,101 ) (992 )
Provision for taxes, net of payments and refunds 245 235
Net receivables (1,029 ) (978 )
Other changes to assets and liabilities (98 ) 40
Contributions to pension and other benefit plans in excess of current year (164 ) (226 )
credit
Operating lease liabilities (159 ) (166 )
Net cash provided by operations 665 580
Financing cash flows:
Purchase of treasury shares (600 ) (1,100 )
Borrowings from term-loan and credit facilities 200 —
Net proceeds from issuance of commercial paper 308 944
Proceeds from issuance of debt 589 —
Repayments of debt (8 ) (8 )
Net issuance of common stock from treasury shares (21 ) (115 )
Net distributions of non-controlling interests and deferred/contingent (332 ) (104 )
consideration
Dividends paid (591 ) (547 )
Change in fiduciary liabilities 682 1,428
Net cash provided by financing activities 227 498
Investing cash flows:
Capital expenditures (185 ) (239 )
Net purchases of long term investments and other (23 ) (3 )
Sales of long term investments 16 —
Dispositions (17 ) 135
Acquisitions, net of cash and cash held in a fiduciary capacity acquired (292 ) (151 )
Net cash used for investing activities (501 ) (258 )
Effect of exchange rate changes on cash, cash equivalents, and cash and cash 242 (755 )
equivalents held in a fiduciary capacity
Increase in cash, cash equivalents, and cash and cash equivalents held in a 633 65
fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary 12,102 11,374
capacity at beginning of period
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary $ 12,735 $ 11,439
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
Balance at June 30, 2023 2022
(In millions)
Cash and cash equivalents $ 1,171 $ 909
Cash and cash equivalents held in a fiduciary capacity 11,564 10,530
Total cash, cash equivalents, and cash and cash equivalents held in a $ 12,735 $ 11,439
fiduciary capacity
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended June 30
(Millions) (Unaudited)
Non-GAAP revenue isolates the impact of foreign exchange rate movements and
certain transaction-related items from the current period GAAP revenue. The
non-GAAP revenue measure is presented on a constant currency basis, excluding
the impact of foreign currency fluctuations. The Company isolates the impact
of foreign exchange rate movements period over period, by translating the
current period foreign currency GAAP revenue into U.S. Dollars based on the
difference in the current and corresponding prior period exchange rates.
Similarly, certain other items such as acquisitions and dispositions,
including transfers among businesses, may impact period over period
comparisons of revenue and are consistently excluded from current and prior
period GAAP revenues for comparability purposes. Percentage changes, referred
to as non-GAAP underlying revenue, are calculated by dividing the period over
period change in non-GAAP revenue by the prior period non-GAAP revenue.
The following table provides the reconciliation of GAAP revenue to non-GAAP
revenue:
2023 2022
Three Months Ended June 30, GAAP Currency Acquisitions/ Non-GAAP GAAP Acquisitions/ Non-GAAP
Revenue
Impact
Dispositions/
Revenue
Revenue
Dispositions/
Revenue
Other Impact
Other Impact
Risk and Insurance Services
Marsh $ 3,038 $ 26 $ (24 ) $ 3,040 $ 2,778 $ (5 ) $ 2,773
Guy Carpenter 576 5 (1 ) 580 522 — 522
Subtotal 3,614 31 (25 ) 3,620 3,300 (5 ) 3,295
Fiduciary interest income 108 — — 108 13 — 13
Total Risk and Insurance Services 3,722 31 (25 ) 3,728 3,313 (5 ) 3,308
Consulting
Mercer (a) 1,374 11 (4 ) 1,381 1,389 (86 ) 1,303
Oliver Wyman Group 798 (2 ) (26 ) 770 695 — 695
Total Consulting 2,172 9 (30 ) 2,151 2,084 (86 ) 1,998
Corporate Eliminations (18 ) — — (18 ) (18 ) — (18 )
Total Revenue $ 5,876 $ 40 $ (55 ) $ 5,861 $ 5,379 $ (91 ) $ 5,288
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
2023 2022
Three Months Ended June 30, GAAP Currency Acquisitions/ Non-GAAP GAAP Acquisitions/ Non-GAAP
Revenue
Impact
Dispositions/
Revenue
Revenue
Dispositions/
Revenue
Other Impact
Other Impact
Marsh:
EMEA (b) $ 858 $ 5 $ (1 ) $ 862 $ 780 $ (5 ) $ 775
Asia Pacific (b) 357 14 (2 ) 369 347 — 347
Latin America 137 1 — 138 118 — 118
Total International 1,352 20 (3 ) 1,369 1,245 (5 ) 1,240
U.S./Canada 1,686 6 (21 ) 1,671 1,533 — 1,533
Total Marsh $ 3,038 $ 26 $ (24 ) $ 3,040 $ 2,778 $ (5 ) $ 2,773
Mercer:
Wealth (a) $ 637 $ 7 $ (1 ) $ 643 $ 597 $ 26 $ 623
Health (a) 518 2 — 520 587 (112 ) 475
Career 219 2 (3 ) 218 205 — 205
Total Mercer $ 1,374 $ 11 $ (4 ) $ 1,381 $ 1,389 $ (86 ) $ 1,303
(a) Acquisitions, dispositions, and other in 2022 includes revenue from the
Westpac superannuation fund transaction in Wealth and a gain from the sale of
the Mercer U.S. affinity business of $112 million in Health.
(b) In the first quarter of 2023, the Company began reporting the Marsh India
operations in EMEA. Prior year results for India have been reclassified from
Asia Pacific to EMEA for comparative purposes.
Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Six Months Ended June 30
(Millions) (Unaudited)
The following table provides the reconciliation of GAAP revenue to Non-GAAP
revenue:
2023 2022
Six Months Ended June 30, GAAP Currency Acquisitions/ Non-GAAP GAAP Acquisitions/ Non-GAAP
Revenue
Impact
Dispositions/
Revenue
Revenue
Dispositions/
Revenue
Other Impact
Other Impact
Risk and Insurance Services
Marsh (a) $ 5,782 $ 97 $ (48 ) $ 5,831 $ 5,324 $ 17 $ 5,341
Guy Carpenter 1,647 23 (15 ) 1,655 1,521 (19 ) 1,502
Subtotal 7,429 120 (63 ) 7,486 6,845 (2 ) 6,843
Fiduciary interest income 199 2 — 201 17 — 17
Total Risk and Insurance Services 7,628 122 (63 ) 7,687 6,862 (2 ) 6,860
Consulting
Mercer (b) 2,718 61 15 2,794 2,732 (113 ) 2,619
Oliver Wyman Group (a) 1,485 14 (50 ) 1,449 1,362 11 1,373
Total Consulting 4,203 75 (35 ) 4,243 4,094 (102 ) 3,992
Corporate Eliminations (31 ) — — (31 ) (28 ) — (28 )
Total Revenue $ 11,800 $ 197 $ (98 ) $ 11,899 $ 10,928 $ (104 ) $ 10,824
Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
2023 2022
Six Months Ended June 30, GAAP Currency Acquisitions/ Non-GAAP GAAP Acquisitions/ Non-GAAP
Revenue
Impact
Dispositions/
Revenue
Revenue
Dispositions/
Revenue
Other Impact
Other Impact
Marsh:
EMEA (a) (c) $ 1,790 $ 55 $ (4 ) $ 1,841 $ 1,649 $ 17 $ 1,666
Asia Pacific (c) 669 29 (3 ) 695 641 — 641
Latin America 252 1 — 253 222 — 222
Total International 2,711 85 (7 ) 2,789 2,512 17 2,529
U.S./Canada 3,071 12 (41 ) 3,042 2,812 — 2,812
Total Marsh $ 5,782 $ 97 $ (48 ) $ 5,831 $ 5,324 $ 17 $ 5,341
Mercer:
Wealth (b) $ 1,218 $ 35 $ 20 $ 1,273 $ 1,214 $ 24 $ 1,238
Health (b) 1,063 16 (1 ) 1,078 1,111 (137 ) 974
Career 437 10 (4 ) 443 407 — 407
Total Mercer $ 2,718 $ 61 $ 15 $ 2,794 $ 2,732 $ (113 ) $ 2,619
(a) Acquisitions, dispositions and other in 2022 includes the loss on
deconsolidation of the Company's Russian businesses at Marsh of $27 million
and Oliver Wyman Group of $12 million.
(b) Acquisitions, dispositions, and other in 2022 includes revenue from the
Westpac superannuation fund transaction in Wealth and a gain from the sale of
the Mercer U.S. affinity business of $112 million in Health. Results for 2023
in Wealth include the loss on sale of an individual financial advisory
business in Canada of $17 million.
(c) In the first quarter of 2023, the Company began reporting the Marsh India
operations in EMEA. Prior year results for India have been reclassified from
Asia Pacific to EMEA for comparative purposes.
Media Contact:
Erick R. Gustafson
Marsh McLennan
+1 202 263 7788
erick.gustafson@mmc.com (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/20230719263083/en/
(https://www.businesswire.com/news/home/20230719263083/en/)
Marsh McLennan
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