The Marsh McLennan Earnings Conference Call discusses the company's first quarter financial results and supplemental information, which can be found on their website. The call may also include forward-looking statements and non-GAAP financial measures. The CEO and CFO, along with the CEOs of the company's businesses, discuss the strong start to the year with 9% underlying revenue growth and all businesses experiencing growth.

In the first quarter of 2023, the company saw growth in adjusted operating income, margin, and EPS, as well as completing share repurchases and making strategic acquisitions. They also highlight the development of a new supply chain risk solution and the expansion of the Unity facility to support Ukraine's economy during times of conflict.

Marsh and Mercer are using their expertise in risk assessment and health and human capital to help clients in the healthcare sector evaluate talent retention, patient safety, and the cost of malpractice insurance. They have also released an Annual ESG Report, highlighting their efforts in sustainability and community impact. Examples include collaborating with the Center for NYC Neighborhoods to launch a catastrophe insurance program and supporting Dubai's commitment to clean energy. They are also working on improving sustainability in their own operations.

Despite the uncertain geopolitical and economic environment, we see opportunities for growth in our business. Insurance and reinsurance rates have increased, with property and casualty rates rising by 3%. Workers' compensation rates decreased, while financial and professional liability and cyber rates also decreased. Reinsurance market conditions remain stable, with flat rates for US property cat and challenging but in-line rates for US casualty. Overall, property cat rates were slightly down in the April renewal period.

The article discusses the early signs of improved market conditions for Florida cat risk renewals on June 1, with increased reinsurance appetite to meet higher demand. The company's first quarter financial performance was strong, with 14% growth in adjusted EPS and 9% underlying revenue growth. The company expects another good year in 2024 with mid-single-digit or better underlying revenue growth, margin expansion, and strong EPS growth. The first quarter results were outstanding, with 9% underlying growth in consolidated revenue and 11% growth in adjusted operating income.

In the first quarter, the company's adjusted operating margin increased by 80 basis points to 32%, with the expectation of further expansion in the second half. Revenue for Risk and Insurance Services was $4.3 billion, showing 9% growth compared to the previous year. Marsh saw a 9% increase in revenue, with solid growth in the US and Canada, and strong growth in international regions. Guy Carpenter's revenue was $1.1 billion, up 7% or 8% on an underlying basis. The Consulting segment saw a 9% increase in revenue, with Mercer's revenue up 6% on an underlying basis. Overall, the company has seen consistent growth in the past 12 quarters, with the best stretch of growth in two decades.

In the first quarter, the company saw strong growth in health and wealth sectors, with a 10% increase in health and 5% increase in wealth. Assets under management grew by 17% sequentially and 38% year-over-year. Career revenue increased 1%, while Oliver Wyman's revenue increased by 13%. Foreign exchange had minimal impact on earnings, and noteworthy items amounted to $49 million. Interest expense increased due to higher debt and interest rates, and the adjusted effective tax rate decreased to 23.9%.

The speaker, John Doyle, is responding to a question about Marsh's growth. He mentions that the global pricing index has decreased from 2% to 1% in the previous quarter.

John Doyle, CEO of Marsh, discusses the company's growth and pricing trends in the first quarter. While Marsh's organic growth accelerated to 8%, pricing has decelerated. However, Doyle explains that pricing is only a small factor in Marsh's revenue and the company is not heavily reliant on it. He attributes the growth to strong macroeconomic factors, such as solid GDP growth, rising healthcare costs, and increased demand for risk management services. Marsh is also investing in its business and improving its mix of services. Doyle is pleased with the company's performance and the execution of its colleagues.

The company has been working on improving their client engagement model and investing in sales operations. They have the best talent in the markets they operate in and are resilient to macroeconomic factors. The US and Canada saw a nice acceleration in the quarter, with balanced growth across the business and strong performance in the mid-market and MGA businesses. The drivers of growth in the US were renewal and new business, with strong performance in construction and the MMB business.

The speaker addresses the strong performance of their advisory business in the US and attributes it to their focus on client relationships, specialization, and industry focus. They also mention a pick-up in M&A activity in their transaction risk business. The speaker then discusses the reinsurance market, stating that it has stabilized and is good for clients, with increased demand in both insurance and reinsurance.

In recent years, there has been higher premium growth in the captives managed by Marsh compared to the traditional market. However, this trend may change as markets stabilize and clients adjust to the current market conditions. While pricing in the middle-market continues to increase, insurers and reinsurers are cautious about the rising cost of risk. The reinsurance market is experiencing stable conditions, but there is a strong demand for additional property cat limit and increased competition at the top end of programs. Reinsurers have seen strong returns and there is an inflow of capital and capacity. Overall, this has been beneficial for both buyers and sellers in the marketplace.

The market was generally flat to slightly down for clients without cat losses, but those with cat losses saw rate increases of 10% to 20%. However, when factoring in inflation and exposure growth, premiums on cat programs are still increasing. US casualty was challenging at the April 1 renewal, with pressure on pricing and terms and conditions from reinsurers. There was adequate capacity, but reinsurers are concerned about increasing loss costs. The Japanese market at the April 1 cat date was orderly, with no structural changes and a 5% decrease in rates on average. Overall, income was flat compared to the previous quarter and lower than the third quarter.

The speaker discusses the company's expectations for margin expansion in the back half of the year, citing potential headwinds in the first half due to higher costs and investments. They emphasize that margin is not a primary objective and that the company will continue to make investments for long-term growth.

The company is working on improving efficiency through workflow and automation efforts at Marsh, Mercer, and Guy Carpenter. They expect the second half of the year to be better than the first. The launch of Victor Access was driven by the desire to bring the best solutions to clients and access the E&S market directly. They will still use wholesalers for niche expertise, but want to manage client outcomes as directly as possible.

The operator introduces Greg Peters from Raymond James, who asks about the performance of the Consulting business. John Doyle responds, mentioning a slow start in 2023 but overall growth for Oliver Wyman. Nick Studer adds that they are pleased with a 13% growth in the first quarter and caution about taking a two-year view. He also mentions potential timing benefits and the difficulty of forecasting due to a short backlog. He notes the business should have mid-to-high single-digit growth and the need to be nimble for clients.

The company experienced strong growth in all four regions of their management consulting business and their economic research business. The communications media and technology, healthcare, banking, and insurance sectors all saw growth. The company is confident in their position and expects mid-to-high single-digit growth in the future. The first quarter results for Mercer were also positive, with 6% underlying growth and 12 consecutive quarters of 5% or more growth. The health practice had particularly strong growth, with almost all regions seeing double-digit growth. The new CEO of Mercer, Pat Tomlinson, is pleased with the company's performance and is focused on continuing this growth.

The company has made investments in hiring new talent, thought leadership, and digital tools to meet the healthcare needs of clients. They have seen strong retention and renewal growth, as well as significant demand for digital solutions. In the wealth division, there was a 5% growth, driven by DB&A and IMS. The company has also seen growth in their investment solutions business, particularly in OCIO. However, there was muted growth in the career division, specifically in the US, due to softness in rewards and transformation projects. This is following a period of strong growth in previous years.

The speaker discusses the company's strong financial performance over the past eight quarters, driven by inflation and employee attrition. They also mention the impact of the pandemic on labor shortages and the demand for projects from clients. The speaker, who recently became CEO, expresses their excitement and gratitude for the opportunity and outlines their priorities, including accelerating momentum and leveraging new technologies for positive impact. They also mention the company's recent reshaping of their portfolio through divestitures.

The company has been divesting administrative practices and focusing on building capabilities and reach in the OCIO sector. They have also been accelerating acquisitions to create more value for clients at scale and are optimistic about their future. In terms of M&A, the company remains active in the market and has a strong pipeline, but valuations have remained high. They are looking for well-led businesses with strong growth potential that align with their culture. They expect to continue deploying capital in the market.

The speaker, Mark McGivney, responds to a question from Michael Zaremski about the company's margins and expenses. He explains that the company has been investing in talent and being disciplined with expenses, resulting in margin expansion. He also mentions that there will be leverage in these investments in the future. In response to a follow-up question, McGivney provides more context about the company's primary insurance pricing power, stating that the Marsh Index declined by 1%, which is considered a soft market number.

John Doyle, CEO of Marsh, explains that the recent deceleration in pricing power in the insurance market is not due to a soft market, but rather to better data and technology allowing for more stability in cycles. He also notes that insurer and reinsurer underwriting results have improved, but there is still uncertainty surrounding casualty loss costs. The Marsh index, which takes into account various factors such as limit, exposure, and attachment point, also includes new business.

John Doyle, CEO of Marsh, discusses the current market environment and factors that affect indices and premium growth. He notes that some indices do not adjust for all factors and that the number does not necessarily correlate with premium growth. He also mentions that clients are adjusting to the new market pricing and there is a higher demand for coverage. In response to a question about casualty rates, Doyle says it is difficult to project loss costs due to troubling data points, such as increased frequency and larger events. However, he believes the underwriting community is better equipped with data and technology.

The paragraph discusses the impact of rising costs in the insurance market, particularly in commercial auto and liability claims. The Francis Scott Key Bridge is used as an example of a potential loss in the market. Marsh's organic growth and strong results in the US and Canada are mentioned, but there was a slight decrease in growth in Asia Pacific, which is attributed to strong previous years. The company remains optimistic about their operations in Asia.

The speaker, John Doyle, responds to a question about the competitive environment in RIS. He discusses the potential for market share gains in a rising rate environment and how Marsh's resources can help clients manage higher insurance costs. He also mentions the importance of bringing scale benefits to their colleagues, clients, and investors. Doyle notes that clients are becoming more risk aware and that Marsh offers different types of solutions, such as their captive business, to help manage risk in a rising rate environment.

John Doyle, CEO of Marsh & McLennan, discusses the importance of scale in the market and how it affects both buyers and sellers. He explains that the company is looking for well-led businesses with solid growth fundamentals that they can improve upon. When asked about competition in concentrated markets such as reinsurance and Fortune 100 accounts, Doyle states that it is highly competitive and that collaboration is key. The last question is about rising healthcare costs, which were mentioned in the company's prepared remarks.

John Doyle and Pat Tomlinson discuss the growth and impact of healthcare-related cost inflation on their business. They mention that medical inflation is a major pressure point for clients globally and has been a big driver of growth for their company. They also talk about the collaboration between Marsh and Mercer to address cost pressures in the healthcare marketplace. Tomlinson notes that the impact of healthcare inflation varies depending on the region, but it drives demand for project work in both fee-based and brokerage-based markets.

The company is not affected by healthcare inflation because they help clients reduce the impact of rising costs through plan redesign. They also have solid growth in both their investment management and defined benefits businesses.

John Doyle, President and CEO of Marsh & McLennan, thanks everyone for joining the call and expresses gratitude to colleagues and clients. He looks forward to speaking again next quarter. The operator then concludes the call.

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