REG-Marsh McLennan Marsh McLennan Reports Third Quarter 2023 Results
19/10/2023 12:00
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Marsh McLennan Reports Third Quarter 2023 Results
GAAP Revenue Increases 13%; Underlying Revenue Rises 10%
Growth in GAAP Operating Income of 26% and Adjusted Operating Income of 24%
Third Quarter GAAP EPS Rises 36% to $1.47 and Adjusted EPS Increases 33% to
$1.57
Nine Months GAAP EPS Rises 18% to $6.01 and Adjusted EPS Increases 17% to
$6.31
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
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. 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=53636841&newsitemid=20231018447521&lan=en-US&anchor=Marsh&index=3&md5=db187f104724a4115afa2b4d61645ed9)
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
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.mercer.com%2F&esheet=53636841&newsitemid=20231018447521&lan=en-US&anchor=Mercer&index=5&md5=40345922526e2a64a2afd73102a77e9b)
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=53636841&newsitemid=20231018447521&lan=en-US&anchor=Oliver+Wyman&index=6&md5=039279bf7965d7f0208fdae5e4a74133)
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 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 Ended % Change Currency Acquisitions/ Non-GAAP
September 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
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 Ended % Change Currency Acquisitions/ Non-GAAP
September 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
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*
Nine Months Ended % Change Currency Acquisitions/ Non-GAAP
September 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
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 Ended % Change Currency Acquisitions/ Non-GAAP
September 30,
GAAP
Impact
Dispositions/
Underlying
Revenue*
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 Consulting Corporate/ Total
Services
Eliminations
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 Consulting Corporate/ Total
Services
Eliminations
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
Amount Adjusted Amount Adjusted
EPS
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
Amount Adjusted Amount Adjusted
EPS
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) December 31,
September 30,
2022
2023
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 (246 ) (306 )
credit
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 (342 ) (161 )
consideration
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 (120 ) (1,592 )
equivalents held in a fiduciary capacity
Increase in cash, cash equivalents, and cash and cash equivalents held in a 2,627 36
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 $ 14,729 $ 11,410
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 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 $ 14,729 $ 11,410
fiduciary capacity
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 September 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 $ 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 Ended September 30, GAAP Currency Acquisitions/ Non-GAAP GAAP Acquisitions/ Non-GAAP
Revenue
Impact
Dispositions/
Revenue
Revenue
Dispositions/
Revenue
Other Impact
Other Impact
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 September 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) $ 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 Ended September 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) $ 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
(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/20231018447521/en/
(https://www.businesswire.com/news/home/20231018447521/en/)
Marsh & McLennan Companies, Inc.
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