Marsh & McLennan Reports Fourth Quarter and...

Companies

Marsh & Mclennan Cos Inc. (MHM)

UK 100

Latest directors dealings

9 minutes ago ASA International Group
1 hour ago Central Asia Metals
1 hour ago Orosur Mining Inc
1 hour ago Emv Capital
1 hour ago Power Probe PLC

All directors dealings today

Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share figures)
(Unaudited)
	Three Months Ended December 31,						Twelve Months Ended December 31,
	2020			2019			2020			2019
Revenue	$	4,416		$	4,264		$	17,224		$	16,652
Expense:
Compensation and Benefits	2,650			2,478			10,129			9,734
Other Operating Expenses	1,195			1,194			4,029			4,241
Operating Expenses	3,845			3,672			14,158			13,975
Operating Income	571			592			3,066			2,677
Other Net Benefit Credits	70			62			257			265
Interest Income	2			5			7			39
Interest Expense	(128		)	(130		)	(515		)	(524		)
Cost of Extinguishment of Debt	—			—			—			(32		)
Investment Income (Loss)	25			2			(22		)	22
Acquisition Related Derivative Contracts	—			—			—			(8		)
Income Before Income Taxes	540			531			2,793			2,439
Income Tax Expense	161			135			747			666
Net Income Before Non-Controlling Interests	379			396			2,046			1,773
Less: Net Income Attributable to Non-Controlling Interests	5			5			30			31
Net Income Attributable to the Company	$	374		$	391		$	2,016		$	1,742
Net Income Per Share Attributable to the Company
- Basic	$	0.74		$	0.77		$	3.98		$	3.44
- Diluted	$	0.73		$	0.76		$	3.94		$	3.41
Average Number of Shares Outstanding
- Basic	507			504			506			506
- Diluted	513			510			512			511
Shares Outstanding at December 31	508			504			508			504

									Components of Revenue Change*
	Three Months Ended December 31,						% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
	2020			2019			% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
Risk and Insurance Services
Marsh	$	2,364		$	2,219		7	%	1	%	2	%	4	%
Guy Carpenter	162			152			7	%	—		1	%	5	%
Subtotal	2,526			2,371			7	%	1	%	2	%	4	%
Fiduciary Interest Income	6			25
Total Risk and Insurance Services	2,532			2,396			6	%	1	%	2	%	3	%
Consulting
Mercer	1,312			1,326			(1	)%	2	%	—		(3	)%
Oliver Wyman	590			559			6	%	2	%	—		4	%
Total Consulting	1,902			1,885			1	%	2	%	—		(1	)%
Corporate/Eliminations	(18		)	(17		)
Total Revenue	$	4,416		$	4,264		4	%	1	%	1	%	1	%

							Components of Revenue Change*
	Three Months Ended December 31,				% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
	2020		2019		% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
Marsh:
EMEA	$	688	$	661	4	%	3	%	3	%	(2	)%
Asia Pacific	269		255		5	%	4	%	—		1	%
Latin America	141		156		(10	)%	(8	)%	(6	)%	3	%
Total International	1,098		1,072		2	%	2	%	1	%	—
U.S./Canada	1,266		1,147		11	%	—		3	%	7	%
Total Marsh	$	2,364	$	2,219	7	%	1	%	2	%	4	%
Mercer:
Wealth	629		621		2	%	3	%	—		(1	)%
Health	445		455		(2	)%	—		—		(2	)%
Career	238		250		(5	)%	2	%	—		(7	)%
Total Mercer	$	1,312	$	1,326	(1	)%	2	%	—		(3	)%

* Components of revenue change may not add due to rounding.

														Components of Revenue Change Including JLT*
	Twelve Months Ended December 31,						% Change GAAP Revenue		2019 Including JLT			% Change Including JLT in 2019		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
	2020			2019			% Change GAAP Revenue		2019 Including JLT			% Change Including JLT in 2019		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
Risk and Insurance Services
Marsh	$	8,595		$	8,014		7	%	$	8,246		4	%	(1	)%	2	%	3	%
Guy Carpenter	1,696			1,480			15	%	1,598			6	%	—		—		6	%
Subtotal	10,291			9,494			8	%	9,844			5	%	(1	)%	1	%	4	%
Fiduciary Interest Income	46			105					110
Total Risk and Insurance Services	10,337			9,599			8	%	9,954			4	%	(1	)%	1	%	3	%
Consulting
Mercer	4,928			5,021			(2	)%	5,094			(3	)%	—		(2	)%	(1	)%
Oliver Wyman	2,048			2,122			(3	)%	2,122			(3	)%	—		—		(4	)%
Total Consulting	6,976			7,143			(2	)%	7,216			(3	)%	—		(1	)%	(2	)%
Corporate/Eliminations	(89		)	(90		)			(90		)
Total Revenue	$	17,224		$	16,652		3	%	$	17,080		1	%	—		—		1	%

											Components of Revenue Change Including JLT*
	Twelve Months Ended December 31,				% Change GAAP Revenue		2019 Including JLT		% Change Including JLT in 2019		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
	2020		2019		% Change GAAP Revenue		2019 Including JLT		% Change Including JLT in 2019		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Underlying Revenue
Marsh:
EMEA	$	2,575	$	2,482	4	%	$	2,589	(1	)%	—		—		—
Asia Pacific	1,059		953		11	%	1,019		4	%	—		—		4	%
Latin America	424		460		(8	)%	483		(12	)%	(10	)%	(5	)%	3	%
Total International	4,058		3,895		4	%	4,091		(1	)%	(1	)%	(1	)%	1	%
U.S./Canada	4,537		4,119		10	%	4,155		9	%	—		4	%	5	%
Total Marsh	$	8,595	$	8,014	7	%	$	8,246	4	%	(1	)%	2	%	3	%
Mercer:
Wealth	2,348		2,369		(1	)%	2,422		(3	)%	—		(2	)%	(1	)%
Health	1,793		1,796		—		1,815		(1	)%	(1	)%	(2	)%	2	%
Career	787		856		(8	)%	857		(8	)%	—		—		(8	)%
Total Mercer	$	4,928	$	5,021	(2	)%	$	5,094	(3	)%	—		(2	)%	(1	)%

* Components of revenue change may not add due to rounding.

	Risk & Insurance Services			Consulting			Corporate/ Eliminations			Total
Three Months Ended December 31, 2020
Operating income (loss)	$	463		$	179		$	(71	)	$	571
Operating margin	18.3		%	9.4		%	N/A			12.9		%
Add (deduct) impact of Noteworthy Items:
Restructuring, excluding JLT (a)	1			37			8			46
Changes in contingent consideration (b)	3			1			—			4
JLT integration and restructuring costs (c)	46			20			4			70
JLT legacy E&O provision (d)	—			161			—			161
JLT acquisition-related costs (e)	11			1			1			13
Disposal of businesses (f)	1			(11		)	—			(10		)
Other	—			(1		)	1			—
Operating income adjustments	62			208			14			284
Adjusted operating income (loss)	$	525		$	387		$	(57	)	$	855
Total identified intangible amortization expense	$	70		$	16		$	—		$	86
Adjusted operating margin	23.5		%	21.4		%	N/A			21.3		%

As Reported Results
Three Months Ended December 31, 2019
Operating income (loss), as reported	$	365		$	336		$	(109	)	$	592
Operating margin	15.2		%	17.8		%	N/A			13.9		%
Add (deduct) impact of Noteworthy Items:
Restructuring, excluding JLT (a)	28			13			15			56
Changes in contingent consideration (b)	41			1			—			42
JLT integration and restructuring costs (c)	95			8			40			143
JLT acquisition-related costs (e)	16			1			—			17
Disposal of businesses	2			—			—			2
Other	3			—			1			4
Operating income adjustments	185			23			56			264
Adjusted operating income (loss)	$	550		$	359		$	(53	)	$	856
Total identified intangible amortization expense	$	66		$	13		$	—		$	79
Adjusted operating margin	25.7		%	19.7		%	N/A			21.9		%

	Three Months Ended December 31, 2020							Three Months Ended December 31, 2019
	Amount					Adjusted EPS		Amount					Adjusted EPS
Net income before non-controlling interests, as reported				$	379						$	396
Less: Non-controlling interest, net of tax				5							5
Subtotal				$	374	$	0.73				$	391	$	0.76
Operating income adjustments	$	284						$	264
Investments adjustment (a)	(14		)					—
Pension settlement adjustment/charge (b)	3							9
Impact of income taxes on above items	(35		)					(54		)
				238		0.46					219		0.43
Adjusted income, net of tax				$	612	$	1.19				$	610	$	1.19

	Twelve Months Ended December 31, 2020							Twelve Months Ended December 31, 2019
	Amount					Adjusted EPS		Amount					Adjusted EPS
Net income before non-controlling interests, as reported				$	2,046						$	1,773
Less: Non-controlling interest, net of tax				30							31
Subtotal				$	2,016	$	3.94				$	1,742	$	3.41
Operating income adjustments	$	578						$	674
Investments adjustment (a)	28							(10		)
Pension settlement adjustment/charge (b)	3							7
Change in fair value of acquisition related derivative contracts (c)	—							8
Financing costs (d)	—							53
Interest on funds held in escrow (e)	—							(25		)
Early extinguishment of debt	—							32
Impact of income taxes on above items	(85		)					(99		)
				524		1.03					640		1.25
Adjusted income, net of tax				$	2,540	$	4.97				$	2,382	$	4.66

Marsh & McLennan Companies, Inc.
Supplemental Information
Three and Twelve Months Ended December 31
(Millions) (Unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2020		2019		2020		2019
Consolidated
Compensation and Benefits	$	2,650	$	2,478	$	10,129	$	9,734
Other operating expenses	1,195		1,194		4,029		4,241
Total Expenses	$	3,845	$	3,672	$	14,158	$	13,975

Depreciation and amortization expense	$	108	$	88	$	390	$	333
Identified intangible amortization expense	86		79		351		314
Total	$	194	$	167	$	741	$	647

Stock option expense	$	3	$	3	$	28	$	26

Risk and Insurance Services
Compensation and Benefits	$	1,456	$	1,358	$	5,690	$	5,370
Other operating expenses	613		673		2,301		2,396
Total Expenses	$	2,069	$	2,031	$	7,991	$	7,766

Depreciation and amortization expense	$	62	$	42	$	208	$	156
Identified intangible amortization expense	70		66		292		260
Total	$	132	$	108	$	500	$	416

Consulting
Compensation and Benefits	$	1,084	$	1,002	$	3,995	$	3,934
Other operating expenses	639		547		1,987		1,999
Total Expenses	$	1,723	$	1,549	$	5,982	$	5,933

Depreciation and amortization expense	$	29	$	27	$	115	$	102
Identified intangible amortization expense	16		13		59		54
Total	$	45	$	40	$	174	$	156

Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions) (Unaudited)

	December 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	2,089		$	1,155
Net receivables	5,287			5,236
Other current assets	740			677
Total current assets	8,116			7,068

Goodwill and intangible assets	18,216			17,445
Fixed assets, net	856			858
Pension related assets	1,768			1,632
Right of use assets	1,894			1,921
Deferred tax assets	722			676
Other assets	1,458			1,757
TOTAL ASSETS	$	33,030		$	31,357

LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	517		$	1,215
Accounts payable and accrued liabilities	3,050			2,746
Accrued compensation and employee benefits	2,400			2,197
Current lease liabilities	342			342
Accrued income taxes	208			179
Total current liabilities	6,517			6,679

Fiduciary liabilities	8,585			7,344
Less - cash and investments held in a fiduciary capacity	(8,585		)	(7,344		)
	—			—
Long-term debt	10,796			10,741
Pension, post-retirement and post-employment benefits	2,662			2,336
Long-term lease liabilities	1,924			1,926
Liabilities for errors and omissions	366			335
Other liabilities	1,505			1,397

Total equity	9,260			7,943
TOTAL LIABILITIES AND EQUITY	$	33,030		$	31,357

Marsh & McLennan Companies, Inc.
Consolidated Statements of Cash Flows
(Millions) (Unaudited)

	For the Years Ended December 31,
		2020		2019
Operating cash flows:
Net income before non-controlling interests	$	2,046		$	1,773
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		741		647
Non cash lease expense		355		315
Charge for early extinguishment of debt		—		32
Share-based compensation expense		290		252
Change in fair value of acquisition-related derivative contracts and other		64		153

Changes in Assets and Liabilities:
Accrued compensation and employee benefits		207		154
Net receivables		(36	)	(130		)
Other changes to assets and liabilities		390		(24		)
Contributions to pension & other benefit plans in excess of current year expense/credit		(356	)	(369		)
Operating lease liabilities		(342	)	(327		)
Effect of exchange rate changes		23		(115		)
Net cash provided by operations		3,382		2,361
Financing cash flows:
Purchase of treasury shares		—		(485		)
Net borrowings from term-loan and credit facilities		1,000		300
Proceeds from issuance of debt		737		6,459
Repayments of debt		(2,515	)	(1,064		)
Payments for early extinguishment of debt		—		(585		)
Acquisition-related derivative payments		—		(337		)
Net issuance of common stock from treasury shares		—		69
Net distributions from non-controlling interests and deferred/contingent consideration		(159	)	(161		)
Dividends paid		(943	)	(890		)
Net cash (used for) provided by financing activities		(1,880	)	3,306
Investing cash flows:
Capital expenditures		(348	)	(421		)
Net sales of long-term investments and other		104		26
Dispositions		98		229
Acquisitions		(668	)	(5,505		)
Net cash used for investing activities		(814	)	(5,671		)
Effect of exchange rate changes on cash and cash equivalents		246		93
Increase in cash and cash equivalents		934		89
Cash and cash equivalents at beginning of period		1,155		1,066
Cash and cash equivalents at end of period	$	2,089		$	1,155

	Twelve Months Ended December 31, 2019
MMC As Previously Reported
Risk & Insurance Services
Marsh	$	8,014
Guy Carpenter	1,480
Subtotal	9,494
Fiduciary Interest Income	105
Total Risk & Insurance Services	9,599
Consulting
Mercer	5,021
Oliver Wyman	2,122
Total Consulting	7,143
Corporate/Eliminations	(90		)
Total Revenue	$	16,652

JLT 2019
Specialty (Marsh)	$	232
Reinsurance (Guy Carpenter)	118
Employee Benefits (Mercer)	73
Subtotal	423
Fiduciary Interest Income	5
Total Revenue	$	428

2019 Including JLT
Marsh	$	8,246
Guy Carpenter	1,598
Subtotal	9,844
Fiduciary Interest Income	110
Total Risk & Insurance Services	9,954
Consulting
Mercer	5,094
Oliver Wyman	2,122
Total Consulting	7,216
Corporate/Eliminations	(90		)
Total Revenue	$	17,080

Marsh &amp; McLennan Reports Fourth Quarter and...

Companies

UK 100

Latest directors dealings

Marsh & McLennan Reports Fourth Quarter and...