Marsh McLennan reported excellent second quarter results with 11% underlying revenue growth and 17% adjusted operating income growth. John Doyle, President and CEO, was joined by the CEOs of the businesses and Sarah DeWitt, Head of Investor Relations, on the call. The company noted that remarks made during the call may include forward-looking statements, and non-GAAP financial measures were discussed.

Marsh McLennan reported strong financial results in the second quarter of 2022 with an adjusted operating margin increase of 100 basis points and adjusted EPS growth of 16%. The company also raised its quarterly dividend by 20% and completed $300 million of share repurchases. Despite the uncertain macroeconomic and geopolitical environment, Marsh McLennan is confident in its ability to perform across economic cycles and is actively investing in market-facing talent and sales operations to further fuel growth. The company is also leading efforts to aid Ukraine's economic recovery by mobilizing its expertise to support the future reconstruction and recovery of the country.

Marsh McLennan is proposing the creation of a war risk insurance pool and data platform to enable effective and targeted risk modeling and provide commercial insurance. They are partnering with the Ukrainian government and insurers to create a post-war transformation strategy and have appointed new leaders to drive client impact. They are also taking actions to realign their workforce, skill sets, technology, and reduce their real estate footprint.

In the second quarter, Marsh & McLennan Companies (MMC) saw primary insurance rate increases, with property rates increasing 10%, casualty pricing increasing in the low single-digit range, and workers' compensation decreasing in the low single-digits. Reinsurers were disciplined and rate increases were significant. MMC generated an adjusted EPS of $2.20, up 16% from a year ago, with underlying revenue growth of 11%. Operating income grew 17%, and the adjusted operating margin expanded by 100 basis points.

In the second quarter of 2023, the company saw strong growth in revenue, operating income, and adjusted operating income, with underlying revenue growth of 11% and adjusted operating income growth of 17%. Additionally, the adjusted operating margin increased 100 basis points to 27.7%. Adjusted EPS was $2.20, a 16% increase from the previous year. For the first six months of 2023, underlying revenue growth was 10%, adjusted operating income grew 15%, and adjusted EPS was $4.74, a 13% increase from the previous year. The company is well-positioned for a strong year in 2023 and expects full-year underlying revenue growth to be in the high single-digits.

Marsh & McLennan reported strong second quarter results, with revenue increasing 9-12% compared to the same period last year. Operating income increased 20% and adjusted operating income increased 18%. In particular, Risk & Insurance Services, Marsh, and Guy Carpenter all had underlying growth of 8-11%, while Consulting had 8% underlying growth. Adjusted operating margin expanded 140-170 basis points and adjusted EPS increased 13%.

The second quarter of 2023 saw Consulting revenue increase 6% to $4.2 billion, Mercer's revenue increase 6% to $1.4 billion, Wealth grow 3%, Investment management deliver modest growth, Health underlying growth increase 10%, Career revenue increase 6%, Oliver Wyman's revenue increase 11%, and Foreign exchange have a $0.02 headwind. Additionally, $65 million of restructuring costs were reported, including severance, lease exits, and streamlining technology.

The company expects to incur total charges of $375 million to $400 million, with $300 million already incurred and the remaining costs expected in 2023. The other net benefit credit was $60 million in the quarter and is expected to be $240 million for the full year 2023. Investment income was $3 million on a GAAP basis and $2 million on an adjusted basis. Interest expense in the second quarter was $146 million and is expected to be $142 million in the third quarter and $567 million for the full year. The effective adjusted tax rate was 24.2%, with a reasonable expectation of a tax rate between 25% and 26% for 2023. Total debt was $12.6 billion, with the next scheduled debt maturity in October 2023. The company plans to deploy approximately $4 billion of capital in 2023 across dividends, acquisitions and share repurchases.

The company has seen strong earnings growth over the past couple of years, leading to a 20% dividend increase, their largest in 25 years. This quarter, they used $1 billion in cash, including $295 million for dividends, $421 million for acquisitions and $300 million for share repurchases. For the first six months, they used $1.9 billion, including $591 million for dividends, $701 million for acquisitions and $600 million for share repurchases. With this strong start, they expect high-single-digit underlying revenue growth and margin expansion for the full year, though there is uncertainty in the environment.

John Q. Doyle is pleased with the company's growth year-to-date, despite the volatile macro environment. He has been shifting their mix of business to better growth markets, investing in talent, sales operations, and client engagement, and selling some non-core businesses. He has updated the guidance to high-single-digits and expects a good second half of growth. He is also pleased with the margin improvement of 100 bps in the second quarter and 130 bps year-to-date. Mark will discuss the restructuring program and the higher expense savings of $200 million this year.

John Q. Doyle discusses the company's expectations for growth in revenue and earnings, as well as their restructuring program. He also mentions that the company has seen solid margin expansion for the 16th year. Mark McGivney adds that the outlook for the year has been increased to $200 million, and that the savings from the restructuring program have been achieved faster than expected. Lastly, John Q. Doyle mentions that the company has seen a benefit from the hiring activity they have done over the past couple of years, and that this tailwind is reflected in their results.

John Q. Doyle discusses the growth of the company and the hiring they have done, noting that they have been thoughtful about who they brought into the organization and that they have been pleased with the financial and cultural outcomes. He then mentions that macro and geopolitical factors are tailwinds rather than headwinds, but notes that inflation remains persistent. He concludes by saying that the economy has been quite resilient.

John Q. Doyle states that it is difficult to determine the exact proportions of market share taking and overall market conditions that contributed to the strong organic growth in the RIS segment, but he notes that inflation has been decreasing in the United States, which may have had an impact.

John Q. Doyle and Mark McGivney discussed the outlook for free cash flow growth, noting that it can be volatile and that it is usually lower in the beginning of the year. They also mentioned that GDP growth has slowed and P&C pricing has moderated, but tight labor markets remain a positive factor. They cautioned that geopolitical risks remain, and that the company is working to shift its mix and improve its growth profile.

John Q. Doyle and Martin South discussed the strong growth of Marsh's business, both domestically and internationally, in the second quarter of 2022. They reported a 10% organic growth, with Latin America at 17%, EMEA at 11%, APAC at 6%, and U.S. and Canada at 9%. They also noted strong growth in credit specialties, construction, aviation, energy and power, and their advisory business. MMB and renewal growth were also strong.

John Q. Doyle and Nick Studer of Oliver Wyman discuss the company's growth in the second quarter, which was better than expected. They attribute this growth to the public sector, banking, transportation, services, telco, economic research, consulting, brand consulting, and digital practices. They are optimistic in the near term but acknowledge that economic outcomes in the longer term are still widely ranged.

John Q. Doyle and Martine Ferland respond to a question from David Motemaden about the increased outlook for the year. They state that it is a result of good execution and hard work from the team, as well as being mindful of the geopolitical and macroeconomic environment. Regarding Mercer Career, Ferland states that the 6% growth in Q2 was impacted by the delay of certain projects, but the fundamentals remain strong with 9% growth year-to-date.

Mercer's sales, pipeline, and client sentiments are strong, giving them good visibility into the third quarter and beyond. Guy Carpenter's global specialty team has seen strong growth across all regions, particularly internationally, despite capital challenges in the retrocession capital market. Despite market conditions, their team has continued to grow and perform well, with new business accelerating due to the talent they have hired.

Dean and Martin from Guy Carpenter Securities discuss the strong demand for their analytics platform and solutions in the current market environment. They have seen growth in specialty areas such as credit, construction, aviation, energy and power, and advisory services. They are helping clients manage their costs and drive growth during the energy transition.

John Q. Doyle and Nick Studer discuss the importance of risk consulting in a difficult market, and how Marsh and Victor have created new solutions to address it. They also discuss the counter-cyclical products and capabilities Oliver Wyman has been developing, such as the acquisition of Avascent, which specializes in aerospace and defense, and the performance transformation and restructuring practices.

Nick Studer discussed the growth of Oliver Wyman's banking practice, which accounted for 35-40% of their growth. He noted that, at the start of the pandemic, they expected some pauses in decision-making that could slow down the pipeline. However, in the second quarter, they saw some work coming through from the banking turmoil.

Guy Carpenter has seen good growth in FAC placements over the last couple of years, due to customer demand and Oliver Wyman and Guy Carpenter work together to capture that opportunity and bring available capital to their clients to help them navigate the difficult marketplace.

John Q. Doyle discussed the M&A environment and his company's active pipeline. He mentioned that strategic buyers are still quite active and the demand for higher quality businesses is strong, even though the cost of capital has increased. He also noted that their company has built a strong reputation as a buyer, and he discussed the divestitures they have made and their importance to margin improvements.

John Q. Doyle and Martin South discussed the growth in the Asia Pacific business. They noted that while the quarter had 6% growth, the year-to-date growth was 8%, indicating that this is more indicative of the growth over a longer period of time. They also noted that there is potential for growth in this region, and they recently visited Australia to explore these possibilities.

John Q. Doyle and Martine Ferland discussed the growth of their OCIO business, which has been impacted by capital markets. Robert Cox asked if the headwinds were more or less in this quarter than the first quarter, to which Martine responded that their OCIO business has grown rapidly in recent years, but has been affected by capital markets.

Martine and Rob discussed the benefits of OCIO services, which have been driven by volatility in the capital markets. Despite some small drag in Q2, the value seen at the end of the quarter bodes well for the rest of the year with small accretive growth from capital markets. The volatility in the equipment market has decreased and the bond market is still elevated, leading to lower need for advice regarding the volatility. John Q. Doyle concluded the call by thanking their colleagues for their hard work and dedication and their clients for their continued support.

This summary was generated with AI and may contain some inaccuracies.