Marsh McLennan Reports Fourth Quarter and Full-year 2023 Results

Rhea-AI Summary

Marsh McLennan (NYSE: MMC) reported full-year revenue growth of 10% with underlying revenue growth of 9%. Full-year GAAP operating income increased by 23%, with adjusted operating income rising by 17%. Additionally, full-year GAAP EPS was $7.53, while adjusted EPS increased by 17% to $7.99. The company's consolidated revenue in the fourth quarter of 2023 was $5.6 billion, representing an 11% increase compared to the same period in 2022. Operating income was $1.1 billion, and adjusted operating income rose by 16% to $1.2 billion. For the full year 2023, revenue reached $22.7 billion, a 10% increase compared with 2022, or 9% on an underlying basis. Risk & Insurance Services revenue was $3.3 billion in the fourth quarter of 2023, an 11% increase, and Consulting revenue was $2.3 billion, a 10% increase. The company also repurchased 1.3 million shares of stock for $250 million in the fourth quarter and repaid $250 million of senior notes that matured in October 2023.

Positive

• Full-year revenue growth of 10%
• Underlying revenue growth of 9%
• Full-year GAAP operating income increases 23%
• Adjusted operating income increases 17%
• Full-year GAAP EPS of $7.53
• Adjusted EPS increases 17% to $7.99
• Consolidated revenue in Q4 2023 was $5.6 billion, an 11% increase
• Risk & Insurance Services revenue was $3.3 billion in Q4 2023, an 11% increase
• Consulting revenue was $2.3 billion in Q4 2023, a 10% increase
• Repurchased 1.3 million shares of stock for $250 million in Q4 2023
• Repaid $250 million of senior notes that matured in October 2023

Negative

• None.

Insights

Financial Analyst

The reported full-year revenue growth of 10% and adjusted EPS growth of 17% for Marsh McLennan are strong indicators of the company's financial health and efficiency in operations. The consistent margin expansion for the 16th consecutive year suggests a robust business model capable of delivering shareholder value. The 130 basis points of margin expansion imply effective cost management and potentially increased pricing power within the firm's service segments.

Investors should note the substantial investments in both organic and inorganic growth, including significant acquisition activity, which could be indicative of a strategic expansion and diversification of services. The repurchase of 6.4 million shares for $1.15 billion signals confidence in the company's valuation and a shareholder-friendly capital allocation policy. However, this also means that the company is choosing to return capital to shareholders rather than reinvesting it entirely back into the business or holding it in reserve.

It's important to consider the context of these results against broader economic conditions, including inflationary pressures and the potential for economic slowdown, which could affect client spending on professional services in the future.

Market Research Analyst

The reported figures highlight Marsh McLennan's competitive positioning within the professional services industry, particularly in risk, strategy and people. The underlying revenue growth suggests that the company is growing faster than the industry average, which could be a result of gaining market share or entering new markets. The acquisition of Honan Insurance Group expands the company's footprint in Australia and New Zealand, which could open up new revenue streams and client bases.

From a market perspective, the 48% increase in Guy Carpenter's fourth quarter revenue and the strong performance in Latin America and Asia Pacific regions reflect a strategic focus on high-growth markets. This geographic diversification is crucial for mitigating risks associated with economic downturns in specific regions.

Additionally, the growth in Mercer’s health revenue aligns with global trends toward increased health spending and the firm's ability to capitalize on such trends is a positive sign for its consulting segment.

Economist

Marsh McLennan's financial results must be contextualized within the macroeconomic environment. The company's performance, particularly the growth in international operations, suggests resilience in the face of potential global economic headwinds such as trade tensions and currency fluctuations. The firm's ability to maintain and expand margins in such an environment speaks to strong operational efficiency and pricing strategies.

The investment in acquisitions and share repurchases should be evaluated against the backdrop of the current interest rate environment. The repayment of $250 million of senior notes indicates a manageable level of debt, which is particularly important as interest rates rise and refinancing costs potentially increase. The company's strategic decisions in capital allocation will continue to be a key area to watch, especially as they balance growth investments with shareholder returns.

Full-Year Revenue Growth of 10%; Underlying Revenue Growth of 9%

Full-Year GAAP Operating Income Increases 23%; Adjusted Operating Income Increases 17%

Full-Year GAAP EPS of $7.53; Adjusted EPS Increases 17% to $7.99

Fourth Quarter GAAP EPS of $1.52; Adjusted EPS Increases 14% to $1.68

NEW YORK--(BUSINESS WIRE)-- Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, today reported financial results for the fourth quarter and year ended December 31, 2023.

John Doyle, President and CEO, said: "Our fourth quarter results highlight a strong finish to another outstanding year for Marsh McLennan. For the full year, we generated 9% underlying revenue growth, 17% adjusted EPS growth and 130 basis points of margin expansion, marking our 16th consecutive year of reported margin expansion. In addition, we continued to make substantial organic and inorganic investments in our business with significant acquisition activity in 2023."

"Our results and investments have us well positioned for 2024 as we remain focused on supporting our clients and helping them thrive."

Consolidated Results

Consolidated revenue in the fourth quarter of 2023 was $5.6 billion, an increase of 11% compared with the fourth quarter of 2022, or an increase of 7% on an underlying basis. Operating income was $1.1 billion. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 16% to $1.2 billion. Net income attributable to the Company was $756 million. Earnings per share increased 63% to $1.52. Adjusted earnings per share increased 14% to $1.68.

For the full year 2023, revenue was $22.7 billion, an increase of 10% compared with 2022, or 9% on an underlying basis. Operating income was $5.3 billion, and adjusted operating income rose 17% to $5.6 billion. Net income attributable to the Company was $3.8 billion. Earnings per share increased 25% to $7.53. Adjusted earnings per share increased 17% to $7.99.

Risk & Insurance Services

Risk & Insurance Services revenue was $3.3 billion in the fourth quarter of 2023, an increase of 11%, or 8% on an underlying basis. Operating income was $753 million, compared with $472 million in the fourth quarter of 2022. Adjusted operating income increased 15% to $791 million. For the year 2023, revenue was $14.1 billion, an increase of 11% on both a GAAP and an underlying basis. Operating income was $3.9 billion. Adjusted operating income rose 17% to $4.1 billion.

Marsh's revenue in the fourth quarter of 2023 was $2.9 billion, an increase of 7%, or 6% on an underlying basis. In U.S./Canada, underlying revenue rose 5%. International operations produced underlying revenue growth of 7%, reflecting 11% in Latin America, 10% in Asia Pacific, and 5% in EMEA. For the year 2023, Marsh’s revenue growth was 8% on both a GAAP and underlying basis.

Guy Carpenter's fourth quarter revenue was $252 million, an increase of 48%, or 9% on an underlying basis. For the year 2023, Guy Carpenter’s revenue grew 12% compared to a year ago, or 10% on an underlying basis.

Consulting

Consulting revenue was $2.3 billion in the fourth quarter of 2023, an increase of 10%, or 7% on an underlying basis. Operating income increased 32% to $443 million, compared with $336 million in the fourth quarter of 2022. Adjusted operating income was $480 million, an increase of 18% compared with $407 million in the fourth quarter of 2022. For the year 2023, revenue was $8.7 billion, an increase of 7% on both a GAAP and underlying basis. Operating income was $1.7 billion. Adjusted operating income increased 13% to $1.7 billion.

Mercer’s revenue was $1.4 billion in the fourth quarter of 2023, an increase of 9%, or 5% on an underlying basis. Wealth revenue of $654 million increased 4% on an underlying basis. Health revenue of $502 million increased 9% on an underlying basis. Career revenue of $288 million increased 1% on an underlying basis. For the year 2023, Mercer’s revenue increased 5%, or 7% on an underlying basis.

Oliver Wyman’s revenue was $856 million in the fourth quarter of 2023, an increase of 9% on an underlying basis. For the year 2023, Oliver Wyman’s revenue was $3.1 billion, an increase of 8% on an underlying basis.

Other Items

The Company repurchased 1.3 million shares of stock for $250 million in the fourth quarter. For the year 2023, the Company repurchased 6.4 million shares for $1.15 billion.

On October 16, 2023, the Company repaid $250 million of senior notes that matured.

In November, Marsh completed the acquisition of Honan Insurance Group, a leading insurance broker in Australia and New Zealand.

Conference Call

A conference call to discuss fourth quarter 2023 results will be held today at 8:30 a.m. Eastern time. The live audio webcast may be accessed at marshmclennan.com. A replay of the webcast will be available approximately two hours after the event. The webcast is listen-only. Those interested in participating in the question-and-answer session may register here to receive the dial-in numbers and unique PIN to access the call.

About Marsh McLennan

Marsh McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s more than 85,000 colleagues advise clients in over 130 countries. With annual revenue of $23 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, reshape retirement and investment outcomes, and unlock health and well being for a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit marshmclennan.com, or follow us on LinkedIn and X.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would".

Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:

• the impact of geopolitical or macroeconomic conditions on us, our clients and the countries and industries in which we operate, including from multiple major wars, escalating conflict throughout the Middle East and rising tension in the South China Sea, slower GDP growth or recession, lower interest rates, capital markets volatility and inflation;
• the impact from lawsuits or investigations arising from errors and omissions, breaches of fiduciary duty or other claims against us in our capacity as a broker or investment advisor, including claims related to our investment business’ ability to execute timely trades;
• the increasing prevalence of ransomware, supply chain and other forms of cyber attacks, and their potential to disrupt our operations, or the operations of our third party vendors, and result in the disclosure of confidential client or company information;
• the financial and operational impact of complying with laws and regulations, including domestic and international sanctions regimes, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti Bribery Act and cybersecurity, data privacy and artificial intelligence regulations;
• our ability to attract, retain and develop industry leading talent;
• our ability to compete effectively and adapt to competitive pressures in each of our businesses, including from disintermediation as well as technological change, digital disruption and other types of innovation such as artificial intelligence;
• our ability to manage potential conflicts of interest, including where our services to a client conflict, or are perceived to conflict, with the interests of another client or our own interests;
• the impact of changes in tax laws, guidance and interpretations, such as the implementation of the Organization for Economic Cooperation and Development international tax framework, or the increasing number of disagreements with and challenges by tax authorities in the current global tax environment; and
• the regulatory, contractual and reputational risks that arise based on insurance placement activities and insurer revenue streams.

The factors identified above are not exhaustive. Marsh McLennan and its subsidiaries (collectively, the "Company") operate in a dynamic business environment in which new risks emerge frequently. Accordingly, we caution readers not to place undue reliance on any forward-looking statements, which are based only on information currently available to us and speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made.

Further information concerning Marsh McLennan and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the Company's filings with the Securities and Exchange Commission, including the "Risk Factors" section and the "Management’s Discussion and Analysis of Financial Condition and Results of Operations" section of our most recently filed Annual Report on Form 10-K.

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

Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended December 31
(Millions) (Unaudited)

The Company advises clients in over 130 countries. As a result, foreign exchange rate movements may impact period over period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period over period comparisons of revenue. Non-GAAP underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

													Components of Revenue Change*
		Three Months Ended December 31,								% Change GAAP Revenue*			Currency Impact			Acquisitions/ Dispositions/ Other Impact**			Non-GAAP Underlying Revenue
			2023				2022
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	%

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

											Components of Revenue Change*
		Three Months Ended December 31,						% Change GAAP Revenue*			Currency Impact			Acquisitions/ Dispositions/ Other Impact**			Non-GAAP Underlying Revenue
			2023			2022
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.

Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Twelve Months Ended December 31
(Millions) (Unaudited)

The Company advises clients in over 130 countries. As a result, foreign exchange rate movements may impact period over period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period over period comparisons of revenue. Non-GAAP underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

													Components of Revenue Change*
		Twelve Months Ended December 31,								% Change GAAP Revenue*			Currency Impact			Acquisitions/ Dispositions/ Other Impact**			Non-GAAP Underlying Revenue
			2023				2022
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	%

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

											Components of Revenue Change*
		Twelve Months Ended December 31,						% Change GAAP Revenue*			Currency Impact			Acquisitions/ Dispositions/ Other Impact**			Non-GAAP Underlying Revenue
			2023			2022
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	%

(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.

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended December 31
(Millions) (Unaudited)

Overview

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as in accordance with "GAAP" or "reported" results). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G and item 10(e) Regulation S-K in accordance with the Securities Exchange Act of 1934. These measures are: non-GAAP revenue, adjusted operating income (loss), adjusted operating margin, adjusted income, net of tax and adjusted earnings per share (EPS). The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables.

The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company’s performance across periods. Management also uses these measures internally to assess the operating performance of its businesses and to decide how to allocate resources. However, investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company's non-GAAP measures include adjustments that reflect how management views its businesses, and may differ from similarly titled non-GAAP measures presented by other companies.

Adjusted Operating Income (Loss) and Adjusted Operating Margin

Adjusted operating income (loss) is calculated by excluding the impact of certain noteworthy items from the Company's GAAP operating income (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income (loss), on a consolidated and reportable segment basis, for the three and twelve months ended December 31, 2023 and 2022. The following tables also present adjusted operating margin. For the three and twelve months ended December 31, 2023 and 2022, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue. The Company's adjusted revenue used in the determination of adjusted operating margin is calculated by excluding the impact of certain noteworthy items from the Company's GAAP revenue.

		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.

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three and Twelve Months Ended December 31
(In millions, except per share data)
(Unaudited)

Adjusted income, net of tax is calculated as the Company's GAAP income from continuing operations, adjusted to reflect the after tax impact of the operating income adjustments in the preceding tables and the additional items listed below. Adjusted EPS is calculated by dividing the Company’s adjusted income, net of tax, by the average number of shares outstanding-diluted for the relevant period. The following tables reconcile adjusted income, net of tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for the three and twelve months ended December 31, 2023 and 2022.

		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

(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 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

(a)

In the fourth quarter of 2023, the Company reclassified certain amounts between Compensation and benefits and Other operating expenses for each reporting segment. The reclassification had no impact on consolidated or reporting segment total expenses. Prior period amounts were reclassified for comparability purposes.

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

(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.

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

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended December 31
(Millions) (Unaudited)

Non-GAAP revenue isolates the impact of foreign exchange rate movements and certain transaction-related items from the current period GAAP revenue. The non-GAAP revenue measure is presented on a constant currency basis, excluding the impact of foreign currency fluctuations. The Company isolates the impact of foreign exchange rate movements period over period, by translating the current period foreign currency GAAP revenue into U.S. Dollars based on the difference in the current and corresponding prior period exchange rates. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period over period comparisons of revenue and are consistently excluded from current and prior period GAAP revenues for comparability purposes. Percentage changes, referred to as non-GAAP underlying revenue, are calculated by dividing the period over period change in non-GAAP revenue by the prior period non-GAAP revenue.

The following table provides the reconciliation of GAAP revenue to non-GAAP revenue:

		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

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

		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
Marsh:
EMEA (c)		$	780		$	(20	)		$	—			$	760		$	733		$	(8	)		$	725
Asia Pacific (c)			315			2				(1	)			316			288			—				288
Latin America			173			6				—				179			162			—				162
Total International			1,268			(12	)			(1	)			1,255			1,183			(8	)			1,175
U.S./Canada			1,628			—				(29	)			1,599			1,528			(2	)			1,526
Total Marsh		$	2,896		$	(12	)		$	(30	)		$	2,854		$	2,711		$	(10	)		$	2,701
Mercer:
Wealth (b)		$	654		$	(13	)		$	—			$	641		$	591		$	24			$	615
Health			502			(6	)			(1	)			495			455			—				455
Career			288			(2	)			1				287			283			—				283
Total Mercer		$	1,444		$	(21	)		$	—			$	1,423		$	1,329		$	24			$	1,353

(a)		Acquisitions, dispositions, and other in 2023 includes a gain from a legal settlement with a competitor of $58 million, excluding legal fees.
(b)		Acquisitions, dispositions, and other in 2022 includes revenue from the Westpac superannuation fund transaction in Wealth.
(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.

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Twelve Months Ended December 31
(Millions) (Unaudited)

The following table provides the reconciliation of GAAP revenue to Non-GAAP revenue:

		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

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

		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
Marsh:
EMEA (a) (d)		$	3,262		$	12		$	(6	)		$	3,268		$	2,997		$	8			$	3,005
Asia Pacific (d)			1,295			37			(5	)			1,327			1,215			—				1,215
Latin America			559			6			1				566			502			—				502
Total International			5,116			55			(10	)			5,161			4,714			8				4,722
U.S./Canada			6,262			15			(99	)			6,178			5,791			(3	)			5,788
Total Marsh		$	11,378		$	70		$	(109	)		$	11,339		$	10,505		$	5			$	10,510
Mercer:
Wealth (c)		$	2,507		$	11		$	19			$	2,537		$	2,366		$	69			$	2,435
Health (c)			2,061			4			(2	)			2,063			2,017			(137	)			1,880
Career			1,019			8			(6	)			1,021			962			—				962
Total Mercer		$	5,587		$	23		$	11			$	5,621		$	5,345		$	(68	)		$	5,277

(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 2023 includes a gain from a legal settlement with a competitor of $58 million, excluding legal fees.
(c)		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.
(d)		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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240124544980/en/

Media Contact:

Erick R. Gustafson

Marsh McLennan

+1 202 263 7788

erick.gustafson@mmc.com

Investor Contact:

Sarah DeWitt

Marsh McLennan

+1 212 345 6750

sarah.dewitt@mmc.com

Source: Marsh McLennan

FAQ

What was Marsh McLennan's full-year revenue growth in 2023?

Marsh McLennan's full-year revenue growth in 2023 was 10%.

What was the increase in adjusted operating income for Marsh McLennan in Q4 2023?

The adjusted operating income for Marsh McLennan in Q4 2023 rose by 16% to $1.2 billion.

How many shares did Marsh McLennan repurchase in Q4 2023?

Marsh McLennan repurchased 1.3 million shares of stock for $250 million in Q4 2023.

What was the increase in Consulting revenue for Marsh McLennan in Q4 2023?

Consulting revenue for Marsh McLennan increased by 10% in Q4 2023, reaching $2.3 billion.

What was the total revenue for Marsh McLennan in Q4 2023?

Marsh McLennan's total revenue in Q4 2023 was $5.6 billion, representing an 11% increase compared to the same period in 2022.