Marsh McLennan Reports Second Quarter 2023 Results

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

	Three Months Ended June 30,						Six Months Ended 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

									Components of Revenue Change*
	Three Months Ended June 30,						% 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	$	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	%

							Components of Revenue Change*
	Three Months Ended June 30,				% 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 (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.

									Components of Revenue Change*
	Six Months Ended June 30,						% 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	$	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	%

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	Risk & Insurance Services			Consulting			Corporate/ Eliminations			Total
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.

	Three Months Ended June 30, 2023							Three Months Ended June 30, 2022
	Amount					Adjusted EPS		Amount						Adjusted 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 June 30, 2023							Six Months Ended June 30, 2022
	Amount					Adjusted EPS		Amount						Adjusted 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. Consolidated Balance Sheets (Millions)

	(Unaudited) June 30, 2023		December 31, 2022
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.

	2023												2022
Three Months Ended June 30,	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	$	3,038		$	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

	2023											2022
Six Months Ended June 30,	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)	$	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

(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.