Marsh McLennan Reports First Quarter 2024 Results

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Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)

	Three Months Ended March 31,
	2024			2023
Revenue	$	6,473		$	5,924
Expense:
Compensation and benefits		3,470			3,207
Other operating expenses		1,078			991
Operating expenses		4,548			4,198
Operating income		1,925			1,726
Other net benefit credits		67			58
Interest income		37			14
Interest expense		(159	)		(136	)
Investment income		1			2
Income before income taxes		1,871			1,664
Income tax expense		447			412
Net income before non-controlling interests		1,424			1,252
Less: Net income attributable to non-controlling interests		24			17
Net income attributable to the Company	$	1,400		$	1,235
Net income per share attributable to the Company:
- Basic	$	2.84		$	2.50
- Diluted	$	2.82		$	2.47
Average number of shares outstanding:
- Basic		492			495
- Diluted		497			500
Shares outstanding at March 31		493			495

									Components of Revenue Change*
	Three Months Ended March 31,						% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
	2024			2023			% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
Risk and Insurance Services
Marsh	$	3,003		$	2,744		9	%	—		1	%	8	%
Guy Carpenter		1,148			1,071		7	%	—		(1	)%	8	%
Subtotal		4,151			3,815		9	%	—		1	%	8	%
Fiduciary interest income		122			91
Total Risk and Insurance Services		4,273			3,906		9	%	—		1	%	9	%
Consulting
Mercer (a)		1,425			1,344		6	%	(1	)%	—		6	%
Oliver Wyman Group		789			687		15	%	1	%	1	%	13	%
Total Consulting		2,214			2,031		9	%	—		1	%	9	%
Corporate Eliminations		(14	)		(13	)
Total Revenue	$	6,473		$	5,924		9	%	—		1	%	9	%

							Components of Revenue Change*
	Three Months Ended March 31,				% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
	2024		2023		% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
Marsh:
EMEA	$	1,025	$	932	10	%	1	%	—		9	%
Asia Pacific		336		312	8	%	(4	)%	6	%	6	%
Latin America		125		115	8	%	(3	)%	3	%	8	%
Total International		1,486		1,359	9	%	—		2	%	8	%
U.S./Canada		1,517		1,385	10	%	—		1	%	8	%
Total Marsh	$	3,003	$	2,744	9	%	—		1	%	8	%
Mercer:
Wealth (a)	$	672	$	581	16	%	—		11	%	5	%
Health (a)		538		545	(1	)%	—		(10	)%	10	%
Career		215		218	(1	)%	(2	)%	(1	)%	1	%
Total Mercer	$	1,425	$	1,344	6	%	(1	)%	—		6	%

(a)		Acquisitions, dispositions and other in 2024 includes a net gain of $21 million from the sale of the U.K. pension administration and U.S. health and benefits administration businesses, that comprised of a $66 million gain in Wealth, offset by a $45 million loss in Health.

*		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.

	Risk & Insurance Services			Consulting			Corporate/ Eliminations			Total
Three Months Ended March 31, 2024
Operating income (loss)	$	1,565		$	432		$	(72	)	$	1,925
Operating margin		36.6	%		19.5	%		N/A			29.7	%
Add (deduct) impact of noteworthy items:
Restructuring (a)		22			11			9			42
Changes in fair value of contingent consideration		5			1			—			6
Acquisition and disposition related costs (b)		1			21			—			22
Disposal of businesses (c)		—			(21	)		—			(21	)
Operating income adjustments		28			12			9			49
Adjusted operating income (loss)	$	1,593		$	444		$	(63	)	$	1,974
Total identified intangible amortization expense	$	79		$	11		$	—		$	90
Adjusted operating margin		39.1	%		20.7	%		N/A			32.0	%

Three Months Ended March 31, 2023
Operating income (loss)	$	1,395		$	411		$	(80	)	$	1,726
Operating margin		35.7	%		20.2	%		N/A			29.1	%
Add (deduct) impact of noteworthy items:
Restructuring (a)		32			9			12			53
Changes in fair value of contingent consideration		6			1			—			7
Acquisition related costs (b)		—			17			—			17
Disposal of businesses (c)		—			19			—			19
JLT legacy legal charges (d)		—			(51	)		—			(51	)
Operating income adjustments		38			(5	)		12			45
Adjusted operating income (loss)	$	1,433		$	406		$	(68	)	$	1,771
Total identified intangible amortization expense	$	74		$	11		$	—		$	85
Adjusted operating margin		38.6	%		20.3	%		N/A			31.2	%

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(a)		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)		Primarily reflects exit costs for the disposition of the Mercer U.K. pension administration and U.S. health and benefits administration businesses in 2024. Prior year reflects integration costs related to the Westpac superannuation fund transaction.
(c)		Net gain on sale of the Mercer U.K. pension administration and U.S. health and benefits administration businesses. In 2023, the amount reflects a loss on sale of a small individual financial advisory business in Canada. 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.
(d)		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.

	Three Months Ended March 31, 2024							Three Months Ended March 31, 2023
	Amount					Adjusted EPS		Amount					Adjusted EPS
Net income before non-controlling interests, as reported				$	1,424						$	1,252
Less: Non-controlling interest, net of tax					24							17
Subtotal				$	1,400	$	2.82				$	1,235	$	2.47
Operating income adjustments	$	49						$	45
Investments adjustment		(1	)						2
Pension settlement		1							—
Income tax effect of adjustments (a)		(11	)						(16	)
					38		0.07					31		0.06
Adjusted income, net of tax				$	1,438	$	2.89				$	1,266	$	2.53

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

	Three Months Ended March 31,
		2024		2023
Consolidated
Compensation and benefits	$	3,470	$	3,207
Other operating expenses		1,078		991
Total expenses	$	4,548	$	4,198

Depreciation and amortization expense	$	99	$	84
Identified intangible amortization expense		90		85
Total	$	189	$	169

Risk and Insurance Services
Compensation and benefits (a)	$	2,118	$	1,931
Other operating expenses (a)		590		580
Total expenses	$	2,708	$	2,511

Depreciation and amortization expense	$	46	$	37
Identified intangible amortization expense		79		74
Total	$	125	$	111

Consulting
Compensation and benefits (a)	$	1,314	$	1,235
Other operating expenses (a)		468		385
Total expenses	$	1,782	$	1,620

Depreciation and amortization expense	$	37	$	21
Identified intangible amortization expense		11		11
Total	$	48	$	32

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

	(Unaudited) March 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,452	$	3,358
Cash and cash equivalents held in a fiduciary capacity		11,458		10,794
Net receivables		7,216		6,418
Other current assets		1,173		1,178
Total current assets		21,299		21,748

Goodwill and intangible assets		19,945		19,861
Fixed assets, net		877		882
Pension related assets		2,114		2,051
Right of use assets		1,494		1,541
Deferred tax assets		276		357
Other assets		1,567		1,590
TOTAL ASSETS	$	47,572	$	48,030

LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	1,169	$	1,619
Accounts payable and accrued liabilities		3,379		3,403
Accrued compensation and employee benefits		1,539		3,346
Current lease liabilities		310		312
Accrued income taxes		456		321
Dividends payable		349		—
Fiduciary liabilities		11,458		10,794
Total current liabilities		18,660		19,795

Long-term debt		12,300		11,844
Pension, post-retirement and post-employment benefits		747		779
Long-term lease liabilities		1,600		1,661
Liabilities for errors and omissions		324		314
Other liabilities		1,319		1,267

Total equity		12,622		12,370
TOTAL LIABILITIES AND EQUITY	$	47,572	$	48,030

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

	Three Months Ended March 31,
	2024			2023
Operating cash flows:
Net income before non-controlling interests	$	1,424		$	1,252
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		189			169
Non-cash lease expense		67			73
Share-based compensation expense		103			99
Net (gain) loss on investments, disposition of assets and other		(28	)		27

Changes in assets and liabilities:
Accrued compensation and employee benefits		(1,779	)		(1,670	)
Provision for taxes, net of payments and refunds		209			189
Net receivables		(742	)		(775	)
Other changes to assets and liabilities		(59	)		(29	)
Contributions to pension and other benefit plans in excess of current year credit		(88	)		(75	)
Operating lease liabilities		(77	)		(79	)
Net cash used by operations		(781	)		(819	)
Financing cash flows:
Purchase of treasury shares		(300	)		(300	)
Borrowings from term-loan and credit facilities		—			250
Net proceeds from issuance of commercial paper		50			594
Proceeds from issuance of debt		989			589
Repayments of debt		(1,004	)		(4	)
Net issuance of common stock from treasury shares		(56	)		(94	)
Net distributions of non-controlling interests and deferred/contingent consideration		(19	)		(14	)
Dividends paid		(354	)		(296	)
Change in fiduciary liabilities		829			48
Net cash provided by financing activities		135			773
Investing cash flows:
Capital expenditures		(87	)		(84	)
Purchases of long term investments and other		(10	)		(1	)
Sales of long term investments		4			—
Dispositions		26			(20	)
Acquisitions, net of cash and cash held in a fiduciary capacity acquired		(301	)		(263	)
Net cash used for investing activities		(368	)		(368	)
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity		(228	)		152
Decrease in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity		(1,242	)		(262	)
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period		14,152			12,102
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period	$	12,910		$	11,840

Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets
Balance at March 31,		2024		2023
(In millions)
Cash and cash equivalents	$	1,452	$	1,006
Cash and cash equivalents held in a fiduciary capacity		11,458		10,834
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	$	12,910	$	11,840

	2024												2023
Three Months Ended March 31,	GAAP Revenue			Currency Impact			Acquisitions/ Dispositions/ Other Impact			Non-GAAP Revenue			GAAP Revenue			Acquisitions/ Dispositions/ Other Impact			Non-GAAP Revenue
Risk and Insurance Services
Marsh	$	3,003		$	6		$	(39	)	$	2,970		$	2,744		$	—		$	2,744
Guy Carpenter		1,148			(2	)		(3	)		1,143			1,071			(12	)		1,059
Subtotal		4,151			4			(42	)		4,113			3,815			(12	)		3,803
Fiduciary interest income		122			—			(1	)		121			91			—			91
Total Risk and Insurance Services		4,273			4			(43	)		4,234			3,906			(12	)		3,894
Consulting
Mercer (a)		1,425			8			(28	)		1,405			1,344			(24	)		1,320
Oliver Wyman Group		789			(4	)		(10	)		775			687			(1	)		686
Total Consulting		2,214			4			(38	)		2,180			2,031			(25	)		2,006
Corporate Eliminations		(14	)		—			—			(14	)		(13	)		—			(13	)
Total Revenue	$	6,473		$	8		$	(81	)	$	6,400		$	5,924		$	(37	)	$	5,887