Marsh McLennan Reports Third 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 September 30,				Nine Months Ended 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

									Components of Revenue Change*
	Three Months Ended September 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	$	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	%

							Components of Revenue Change*
	Three Months Ended September 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)	$	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.

									Components of Revenue Change*
	Nine Months Ended September 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	$	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	%

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	Risk & Insurance Services			Consulting			Corporate/ Eliminations			Total
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 Services			Consulting			Corporate/ Eliminations			Total
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	%

	Three Months Ended September 30, 2023							Three Months Ended September 30, 2022
	Amount					Adjusted EPS		Amount					Adjusted 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 September 30, 2023							Nine Months Ended September 30, 2022
	Amount					Adjusted EPS		Amount					Adjusted 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 September 30,				Nine Months Ended 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) September 30, 2023		December 31, 2022
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.

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 fiduciary capacity	$	14,729	$	11,410

	2023												2022
Three Months Ended September 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	$	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

	2023												2022
Nine Months Ended September 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)	$	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

(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.