Marsh McLennan Reports Fourth Quarter and Full-year 2023 Results

Companies

Marsh & Mclennan Cos Inc. (MHM)

UK 100

Latest directors dealings

26 minutes ago Central Asia Metals
56 minutes ago Orosur Mining Inc
56 minutes ago Emv Capital
56 minutes ago Power Probe PLC
56 minutes ago Victoria

All directors dealings today


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

	Three Months Ended December 31,						Twelve Months Ended December 31,
		2023			2022			2023			2022
Revenue	$	5,554		$	5,022		$	22,736		$	20,720
Expense:
Compensation and benefits		3,268			3,038			13,099			12,071
Other operating expenses		1,183			1,304			4,355			4,369
Operating expenses		4,451			4,342			17,454			16,440
Operating income		1,103			680			5,282			4,280
Other net benefit credits		59			57			239			235
Interest income		38			9			78			15
Interest expense		(151	)		(127	)		(578	)		(469	)
Investment (loss) income		(1	)		(6	)		5			21
Income before income taxes		1,048			613			5,026			4,082
Income tax expense		283			142			1,224			995
Net income before non-controlling interests		765			471			3,802			3,087
Less: Net income attributable to non-controlling interests		9			5			46			37
Net income attributable to the Company	$	756		$	466		$	3,756		$	3,050
Net income per share attributable to the Company:
- Basic	$	1.53		$	0.94		$	7.60		$	6.11
- Diluted	$	1.52		$	0.93		$	7.53		$	6.04
Average number of shares outstanding:
- Basic		493			496			494			499
- Diluted		498			501			499			505
Shares outstanding at December 31		492			495			492			495

									Components of Revenue Change*
	Three Months Ended December 31,						% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
		2023			2022		% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
Risk and Insurance Services
Marsh	$	2,896		$	2,711		7	%	—		1	%	6	%
Guy Carpenter (a)		252			171		48	%	2	%	36	%	9	%
Subtotal		3,148			2,882		9	%	1	%	3	%	6	%
Fiduciary Interest Income		123			63
Total Risk and Insurance Services		3,271			2,945		11	%	1	%	3	%	8	%
Consulting
Mercer		1,444			1,329		9	%	2	%	2	%	5	%
Oliver Wyman Group		856			765		12	%	2	%	1	%	9	%
Total Consulting		2,300			2,094		10	%	2	%	2	%	7	%
Corporate Eliminations		(17	)		(17	)
Total Revenue	$	5,554		$	5,022		11	%	1	%	2	%	7	%

							Components of Revenue Change*
	Three Months Ended December 31,				% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
		2023		2022	% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
Marsh:
EMEA (b)	$	780	$	733	6	%	3	%	(1	)%	5	%
Asia Pacific (b)		315		288	9	%	(1	)%	—		10	%
Latin America		173		162	7	%	(4	)%	—		11	%
Total International		1,268		1,183	7	%	1	%	(1	)%	7	%
U.S./Canada		1,628		1,528	7	%	—		2	%	5	%
Total Marsh	$	2,896	$	2,711	7	%	—		1	%	6	%
Mercer:
Wealth	$	654	$	591	10	%	2	%	4	%	4	%
Health		502		455	10	%	1	%	—		9	%
Career		288		283	2	%	1	%	—		1	%
Total Mercer	$	1,444	$	1,329	9	%	2	%	2	%	5	%

(a)		Acquisitions, dispositions and other in 2023 includes a gain from a legal settlement with a competitor, excluding legal fees.
(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.

*		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.

									Components of Revenue Change*
	Twelve Months Ended December 31,						% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
		2023			2022		% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
Risk and Insurance Services
Marsh	$	11,378		$	10,505		8	%	(1	)%	1	%	8	%
Guy Carpenter (a)		2,258			2,020		12	%	(1	)%	3	%	10	%
Subtotal		13,636			12,525		9	%	(1	)%	1	%	8	%
Fiduciary Interest Income		453			120
Total Risk and Insurance Services		14,089			12,645		11	%	(1	)%	1	%	11	%
Consulting
Mercer		5,587			5,345		5	%	—		(1	)%	7	%
Oliver Wyman Group		3,122			2,794		12	%	1	%	3	%	8	%
Total Consulting		8,709			8,139		7	%	—		—		7	%
Corporate Eliminations		(62	)		(64	)
Total Revenue	$	22,736		$	20,720		10	%	—		1	%	9	%

							Components of Revenue Change*
	Twelve Months Ended December 31,				% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
		2023		2022	% Change GAAP Revenue*		Currency Impact		Acquisitions/ Dispositions/ Other Impact**		Non-GAAP Underlying Revenue
Marsh:
EMEA (b)	$	3,262	$	2,997	9	%	—		—		9	%
Asia Pacific (b)		1,295		1,215	7	%	(3	)%	—		9	%
Latin America		559		502	11	%	(1	)%	—		13	%
Total International		5,116		4,714	9	%	(1	)%	—		9	%
U.S./Canada		6,262		5,791	8	%	—		2	%	7	%
Total Marsh	$	11,378	$	10,505	8	%	(1	)%	1	%	8	%
Mercer:
Wealth	$	2,507	$	2,366	6	%	—		2	%	4	%
Health		2,061		2,017	2	%	—		(7	)%	10	%
Career		1,019		962	6	%	(1	)%	1	%	6	%
Total Mercer	$	5,587	$	5,345	5	%	—		(1	)%	7	%

	Risk & Insurance Services			Consulting			Corporate/ Eliminations			Total
Three Months Ended December 31, 2023
Operating income (loss)	$	753		$	443		$	(93	)	$	1,103
Operating margin		23.0	%		19.2	%		N/A			19.9	%
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a)		79			29			14			122
Changes in fair value of contingent consideration		7			1			—			8
JLT integration and restructuring costs (b)		9			—			—			9
Legal settlement (c)		(58	)		—			—			(58	)
Westpac acquisition and integration related costs		—			7			—			7
Other		1			—			1			2
Operating income adjustments		38			37			15			90
Adjusted operating income (loss)	$	791		$	480		$	(78	)	$	1,193
Total identified intangible amortization expense	$	76		$	10		$	—		$	86
Adjusted operating margin		27.0	%		21.3	%		N/A			23.3	%

Three Months Ended December 31, 2022
Operating income (loss)	$	472		$	336		$	(128	)	$	680
Operating margin		16.0	%		16.0	%		N/A			13.5	%
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a)		119			54			60			233
Changes in fair value of contingent consideration		11			—			—			11
JLT integration and restructuring costs (b)		91			6			—			97
Westpac acquisition and integration related costs		—			13			—			13
JLT legacy legal charges		—			(2	)		—			(2	)
Disposal of businesses		(8	)		—			—			(8	)
Operating income adjustments		213			71			60			344
Adjusted operating income (loss)	$	685		$	407		$	(68	)	$	1,024
Total identified intangible amortization expense	$	68		$	12		$	—		$	80
Adjusted operating margin		25.6	%		20.0	%		N/A			22.0	%

(a)		Costs primarily includes severance and lease exit charges for activities focused on workforce actions, rationalization of technology and functional resources, and reductions in real estate.
(b)		Reflects adjustments to restructuring liabilities for lease exit charges for a legacy JLT U.K. location.
(c)		Reflects a legal settlement with a competitor, excluding legal fees. The 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 Twelve Months Ended December 31 (Millions) (Unaudited)

	Risk & Insurance Services			Consulting			Corporate/ Eliminations			Total
Twelve Months Ended December 31, 2023
Operating income (loss)	$	3,945		$	1,666		$	(329	)	$	5,282
Operating margin		28.0	%		19.1	%		N/A			23.2	%
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a)		146			62			62			270
Changes in fair value of contingent consideration		27			2			—			29
JLT integration and restructuring costs (b)		31			—			—			31
JLT legacy legal charges (c)		—			(51	)		—			(51	)
Disposal of businesses (d)		—			17			—			17
Legal settlement (e)		(58	)		—			—			(58	)
Westpac acquisition and integration related costs		—			39			—			39
Other		2			1			1			4
Operating income adjustments		148			70			63			281
Adjusted operating income (loss)	$	4,093		$	1,736		$	(266	)	$	5,563
Total identified intangible amortization expense	$	297		$	46		$	—		$	343
Adjusted operating margin		31.3	%		20.4	%		N/A			26.0	%

Twelve Months Ended December 31, 2022
Operating income (loss)	$	3,089		$	1,553		$	(362	)	$	4,280
Operating margin		24.4	%		19.1	%		N/A			20.7	%
Add (deduct) impact of noteworthy items:
Restructuring, excluding JLT (a)		157			61			94			312
Changes in fair value of contingent consideration		44			5			—			49
JLT integration and restructuring costs (b)		97			16			2			115
JLT legacy legal charges (c)		14			(13	)		—			1
JLT acquisition related costs		24			1			3			28
Disposal of businesses (d)		(8	)		(114	)		—			(122	)
Legal claims (f)		30			—			—			30
Westpac acquisition and integration related costs		—			21			—			21
Deconsolidation of Russian businesses and other related charges (g)		42			10			—			52
Operating income adjustments		400			(13	)		99			486
Adjusted operating income (loss)	$	3,489		$	1,540		$	(263	)	$	4,766
Total identified intangible amortization expense	$	291		$	47		$	—		$	338
Adjusted operating margin		29.8	%		19.7	%		N/A			24.7	%

(a)		Costs primarily includes severance and lease exit charges for activities focused on workforce actions, rationalization of technology and functional resources, and reductions in real estate. Costs also reflect charges for Marsh's operational excellence program.
(b)		Reflects adjustments to restructuring liabilities for lease exit charges for a legacy JLT U.K. location.
(c)		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.
(d)		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.
(e)		Reflects a legal settlement with a competitor, excluding legal fees. The 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.
(f)		Settlement charges and legal costs related to strategic recruiting.
(g)		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.

	Three Months Ended December 31, 2023							Three Months Ended December 31, 2022
	Amount					Adjusted EPS		Amount					Adjusted EPS
Net income before non-controlling interests, as reported				$	765						$	471
Less: Non-controlling interest, net of tax					9							5
Subtotal				$	756	$	1.52				$	466	$	0.93
Operating income adjustments	$	90						$	344
Investments adjustment		—							1
Pension settlement adjustment		—							1
Income tax effect of adjustments (a)		(8	)						(77	)
					82		0.16					269		0.54
Adjusted income, net of tax				$	838	$	1.68				$	735	$	1.47

	Twelve Months Ended December 31, 2023							Twelve Months Ended December 31, 2022
	Amount					Adjusted EPS		Amount					Adjusted EPS
Net income before non-controlling interests, as reported				$	3,802						$	3,087
Less: Non-controlling interest, net of tax					46							37
Subtotal				$	3,756	$	7.53				$	3,050	$	6.04
Operating income adjustments	$	281						$	486
Investments adjustment		2							(3	)
Pension settlement adjustment		—							2
Income tax effect of adjustments (a)		(53	)						(78	)
					230		0.46					407		0.81
Adjusted income, net of tax				$	3,986	$	7.99				$	3,457	$	6.85


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,
		2023		2022		2023		2022
Consolidated
Compensation and benefits	$	3,268	$	3,038	$	13,099	$	12,071
Other operating expenses		1,183		1,304		4,355		4,369
Total expenses	$	4,451	$	4,342	$	17,454	$	16,440

Depreciation and amortization expense	$	100	$	122	$	370	$	381
Identified intangible amortization expense		86		80		343		338
Total	$	186	$	202	$	713	$	719

Risk and Insurance Services
Compensation and benefits (a)	$	1,868	$	1,742	$	7,702	$	7,101
Other operating expenses (a)		650		731		2,442		2,455
Total expenses	$	2,518	$	2,473	$	10,144	$	9,556

Depreciation and amortization expense	$	55	$	55	$	190	$	178
Identified intangible amortization expense		76		68		297		291
Total	$	131	$	123	$	487	$	469

Consulting
Compensation and benefits (a)	$	1,362	$	1,261	$	5,249	$	4,827
Other operating expenses (a)		495		497		1,794		1,759
Total expenses	$	1,857	$	1,758	$	7,043	$	6,586

Depreciation and amortization expense	$	28	$	32	$	106	$	111
Identified intangible amortization expense		10		12		46		47
Total	$	38	$	44	$	152	$	158


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

	December 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	3,358	$	1,442
Cash and cash equivalents held in a fiduciary capacity (a)		10,794		10,660
Net receivables		6,418		5,852
Other current assets		1,178		1,005
Total current assets		21,748		18,959

Goodwill and intangible assets		19,861		18,788
Fixed assets, net		882		871
Pension related assets		2,051		2,127
Right of use assets		1,541		1,562
Deferred tax assets		357		358
Other assets		1,590		1,449
TOTAL ASSETS	$	48,030	$	44,114

LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	1,619	$	268
Accounts payable and accrued liabilities		3,403		3,278
Accrued compensation and employee benefits		3,346		3,095
Current lease liabilities		312		310
Accrued income taxes		321		221
Fiduciary liabilities (a)		10,794		10,660
Total current liabilities		19,795		17,832

Long-term debt		11,844		11,227
Pension, post-retirement and post-employment benefits		779		921
Long-term lease liabilities		1,661		1,667
Liabilities for errors and omissions		314		355
Other liabilities		1,267		1,363

Total equity		12,370		10,749
TOTAL LIABILITIES AND EQUITY	$	48,030	$	44,114


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

	For the Years Ended December 31,
		2023			2022
Operating cash flows:
Net income before non-controlling interests	$	3,802		$	3,087
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		713			719
Non-cash lease expense		288			404
Deconsolidation of Russian businesses		—			39
Gain on consolidation of entity		—			(2	)
Share-based compensation expense		363			367
Dispositions, changes to contingent consideration and net gain on investments		—			(137	)

Changes in assets and liabilities:
Accrued compensation and employee benefits		195			171
Provision for taxes, net of payments and refunds		105			(54	)
Net receivables		(467	)		(492	)
Other changes to assets and liabilities		(90	)		71
Contributions to pension and other benefit plans in excess of current year credit		(335	)		(385	)
Operating lease liabilities		(316	)		(323	)
Net cash provided by operations		4,258			3,465
Financing cash flows:
Purchase of treasury shares		(1,150	)		(1,950	)
Proceeds from issuance of debt		2,169			984
Repayments of debt		(266	)		(365	)
Net issuance of common stock from treasury shares		51			(72	)
Net distributions from non-controlling interests and deferred/contingent consideration		(370	)		(189	)
Dividends paid		(1,298	)		(1,138	)
Change in fiduciary liabilities		(255	)		1,684
Net cash used for financing activities		(1,119	)		(1,046	)
Investing cash flows:
Capital expenditures		(416	)		(470	)
Net purchases of long term investments and other		(46	)		(13	)
Sales of long term investments		38			86
Dispositions		(17	)		119
Acquisitions, net of cash and cash held in a fiduciary capacity acquired		(976	)		(572	)
Net cash used for investing activities		(1,417	)		(850	)
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity		328			(841	)
Increase in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity		2,050			728
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of year		12,102			11,374
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of year	$	14,152		$	12,102

Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets
Balance at December 31,		2023		2022
(In millions)
Cash and cash equivalents	$	3,358	$	1,442
Cash and cash equivalents held in a fiduciary capacity		10,794		10,660
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	$	14,152	$	12,102

	2023												2022
Three Months Ended December 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	$	2,896		$	(12	)	$	(30	)	$	2,854		$	2,711		$	(10	)	$	2,701
Guy Carpenter (a)		252			(4	)		(62	)		186			171			—			171
Subtotal		3,148			(16	)		(92	)		3,040			2,882			(10	)		2,872
Fiduciary Interest Income		123			(1	)		—			122			63			—			63
Total Risk and Insurance Services		3,271			(17	)		(92	)		3,162			2,945			(10	)		2,935
Consulting
Mercer (b)		1,444			(21	)		—			1,423			1,329			24			1,353
Oliver Wyman Group		856			(14	)		(8	)		834			765			—			765
Total Consulting		2,300			(35	)		(8	)		2,257			2,094			24			2,118
Corporate Eliminations		(17	)		—			—			(17	)		(17	)		—			(17	)
Total Revenue	$	5,554		$	(52	)	$	(100	)	$	5,402		$	5,022		$	14		$	5,036

	2023												2022
Twelve Months Ended December 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 (a)	$	11,378		$	70		$	(109	)	$	11,339		$	10,505		$	5		$	10,510
Guy Carpenter (b)		2,258			16			(80	)		2,194			2,020			(19	)		2,001
Subtotal		13,636			86			(189	)		13,533			12,525			(14	)		12,511
Fiduciary Interest Income		453			1			—			454			120			—			120
Total Risk and Insurance Services		14,089			87			(189	)		13,987			12,645			(14	)		12,631
Consulting
Mercer (c)		5,587			23			11			5,621			5,345			(68	)		5,277
Oliver Wyman Group (a)		3,122			(15	)		(79	)		3,028			2,794			11			2,805
Total Consulting		8,709			8			(68	)		8,649			8,139			(57	)		8,082
Corporate Eliminations		(62	)		—			—			(62	)		(64	)		—			(64	)
Total Revenue	$	22,736		$	95		$	(257	)	$	22,574		$	20,720		$	(71	)	$	20,649