The paragraph is a transcript of Marsh McLennan's Earnings Conference Call for the first quarter of 2025. It begins with an operator's introduction, noting the call is recorded and referencing the availability of financial results and supplemental information on the company's website. It warns that forward-looking statements have inherent risks and encourages listeners to refer to the company's SEC filings for a detailed discussion of these risks. John Doyle, President and CEO of Marsh McLennan, then speaks, accompanied by the CFO and business CEOs, highlighting that the company had a solid start to 2025. Despite headwinds in Q1, they saw a 9% revenue growth due to underlying growth and acquisitions from 2024.

The paragraph discusses how the company's underlying revenue grew by 4% despite challenges, while adjusted operating income increased by 8%. However, there was a slight decline in the adjusted operating margin. The global economic outlook has become more uncertain, impacted by trade negotiations, reduced confidence, market volatility, and unpredictable factors like GDP growth and interest rates. In the insurance industry, potential tariffs may increase risk costs, compounded by rising natural disasters and social inflation. The company supports clients by leveraging its expertise, advising on global supply chain risks, and providing insights through platforms like its AI-powered supply chain tool, [Centrisk]. It emphasizes the value of its unique capabilities in helping clients navigate these challenges.

The paragraph discusses the importance of resilience and preparedness for natural disasters, citing recent events like the Myanmar and Thailand earthquake, California wildfires, and US flooding as reminders of the significant human and economic toll of these catastrophes. The author emphasizes the necessity of risk mitigation planning and strengthening infrastructure in disaster-prone areas to minimize future impacts. According to a U.S. Chamber of Commerce report, investing in resilience yields significant savings. The reliance on state-sponsored insurers in high-risk areas often leads to pricing that doesn't reflect true risk costs, and the author suggests that governments and regulators should prioritize resilience and implement economic incentives to improve insurance markets and reduce losses.

The paragraph discusses the insurance market conditions in the first quarter, highlighting a general decrease in rates despite an elevated risk environment. Global property rates fell 6% year-over-year, while global casualty rates rose by 4%, with significant increases in U.S. excess casualty rates. Financial, professional liability, and cyber rates decreased by 6%, and workers' compensation saw mid-single digit declines. In reinsurance, capacity remains sufficient despite California wildfire losses, aided by strong reinsurer profitability and increased capital. There was a record quarter for catastrophe bond issuance, and U.S. property catastrophe reinsurance rates remained competitive. In Japan, April 1st property cat rates decreased 10% to 15% on a risk-adjusted basis, with diverse outcomes in U.S. casualty reinsurance tied to loss experience.

The paragraph discusses the company's market conditions and acquisition progress. The June 1 Florida cat risk renewals show stable market conditions similar to January and April, with an increase in demand being met by sufficient supply. The integration of McGriff, acquired last November, is on track, leveraging combined strengths for market success. Financially, the company saw a 4% rise in revenue in the first quarter, with various divisions, including Marsh and Guy Carpenter, showing growth. Adjusted operating income grew by 8%, and EPS increased by 5%. The company repurchased $300 million in stock. Looking ahead to 2025, the company anticipates mid-single-digit revenue growth, margin expansion, and strong EPS growth, though acknowledges potential risks from trade negotiations affecting economic conditions. Overall, the company is performing well and has a positive outlook for the year.

In the first quarter, the company reported a solid performance, with a 9% increase in consolidated revenue to $7.1 billion and a 4% underlying growth. Operating income was $2 billion, while adjusted operating income rose by 8% to $2.2 billion. The adjusted operating margin was 31.8%, and adjusted EPS increased by 5% to $3.06. The risk and insurance services segment saw an 11% revenue increase to $4.8 billion, with a strong adjusted margin of 38.2%. Marsh reported a 15% revenue increase to $3.5 billion, and Guy Carpenter's revenue rose by 5% to $1.2 billion. The consulting segment's revenue increased by 5% to $2.3 billion, with an adjusted operating margin of 21.2%. Mercer's revenue was up 5% to $1.5 billion. The company highlighted its resilience and ability to deliver across cycles.

In the first quarter, Health saw a 7% growth, driven by strong performance in all regions, while Wealth grew by 3% due to investment management. Assets under management totaled $613 billion, down 1% sequentially but up 25% from the previous year, aided by the acquisition of Cardano and positive market conditions. Career decreased by 1% due to weaker U.S. demand, despite international growth. Oliver Wyman's revenue increased by 4%, benefited by strong U.S. performance. Fiduciary income fell to $103 million, with a forecast of $100 million in the second quarter. Foreign exchange posed a minor challenge, but it is expected to have an insignificant impact moving forward. The McGriff integration is progressing well, with adjustments in revenue expectations, leading to anticipated accretion in EPS by 2025.

The paragraph discusses financial details related to the McGriff transaction, including expected costs of $450-$500 million through 2027 and the exclusion of McGriff from growth calculations. The text notes a $69 million McGriff-related cost out of a total $91 million in noteworthy items for the quarter. Interest expenses rose to $245 million in the first quarter due to increased debt from the McGriff transaction. The company forecasts $250 million in interest expenses for the second quarter. The adjusted effective tax rate was 23.1%, benefiting from favorable discrete items, with an expected range of 25%-26% for 2025. Additionally, the company ended the quarter with $20.5 billion in total debt, having repaid $500 million of senior notes in March 2025.

The paragraph discusses the company's financial activities and outlook. It mentions that the next debt maturity is in the first quarter of 2026, with $600 million in senior notes. By the end of the first quarter, the company had $1.6 billion in cash, and it used $800 million in the quarter for dividends, acquisitions, and share repurchases. The company plans to deploy around $4.5 billion in 2025 for similar uses. Additionally, it anticipates mid-single digit growth, margin expansion, and strong EPS growth for the year, although this is dependent on current economic conditions which could change, particularly with global trade uncertainties. During a Q&A session, John Doyle addressed a question on trade issues, stating it's difficult to predict impacts on a country-specific basis and there’s no direct effect on their business yet.

The paragraph discusses the potential indirect impacts on global GDP and business confidence, predicting market volatility and inflationary pressures on costs, particularly in relation to drug costs and employee health benefits in the US. A quicker resolution to negotiations is deemed critical for bolstering business and consumer confidence. Despite macroeconomic pressures, the consulting business anticipates mid-single digit revenue growth and margin expansion. Gregory Peters asks about antitrust risks in acquisitions, referencing issues faced by a competitor. John Doyle responds by emphasizing their prudence and effectiveness in managing antitrust concerns while acknowledging uncertainty in the current administration's stance on mergers and acquisitions.

The paragraph discusses the company's successful track record in creating value through market activities and acquisitions. The speaker highlights recent deals, including acquiring top agencies like McGriff, Fisher Brown Bottrell, Horton, Cardano, and Vanguard US OCIO business. The company remains active in the market with a strong pipeline and a good reputation as a partner. Their strategy, described as a "string of pearls," focuses on growth through meaningful acquisitions that enhance the company's quality rather than just increasing size. The speaker acknowledges their ability to take on larger projects but emphasizes the priority on improvement alongside growth. Overall, they express confidence and excitement about the company's future prospects. Transitioning to the next topic, a question is posed about the company's approach to managing revenue growth amid macroeconomic uncertainties, noting historical success in managing expenses to minimize profitability impacts and efforts to make certain business areas less sensitive to economic changes.

In this paragraph, John Doyle addresses a question about managing expenses amid uncertainty. He explains that the company had a strong start to the year, in line with their expectations, despite anticipating slower GDP growth and pressure on fiduciary income due to lower interest rates. They also expected softer pricing in the P&C market and faced macroeconomic headwinds. However, overall growth was solid, boosted by previous acquisitions. Doyle emphasizes that the company models both upside and downside revenue scenarios to manage capital allocation and expenses thoughtfully, using a consistent management playbook with levers to pull in downside scenarios.

The paragraph discusses strategies a company might adopt in response to a slower revenue growth environment, such as reducing discretionary spending, slowing hiring, and leveraging voluntary turnover. The speaker emphasizes not wanting to harm the business in the medium to long term and highlights confidence in their ability to manage economic cycles. The conversation then shifts to a question from Mike Zaremski about global property pricing trends, noting that property rates continue to soften despite previous acceleration, and he seeks further insight on this trend. John Doyle acknowledges the question and plans to have Martin and Dean provide additional market insights.

The paragraph discusses the insurance market trends over the recent quarter, highlighting a modest decline in prices, as expected, which provides relief to clients after years of rising rates. The global rate index dropped by 3% in Q1, marking the third consecutive decrease, although the composite rate index has grown 1.5 times since 2012. Casualty rates increased globally by 4%, with the U.S. seeing an 8% rise and a 16% increase in umbrella and excess casualty. Conversely, property rates fell by 6%, with significant decreases in the US, Pacific, and UK regions. Other areas like FinPro and Cyber also saw rate declines. The company's focus remains on achieving the best client outcomes, especially in the less cyclical middle market, by prioritizing minimal coverage costs and optimal value.

In this paragraph, Dean Klisura discusses the April 1 reinsurance market, particularly focusing on property catastrophe (cat) insurance. There was a continuation of the competitive market conditions observed on January 1, with modest increases in client demand driven by personal lines and E&S riders. The property market demonstrated ample capacity, with strong reinsurer returns of 16% and increased appetite for property cat insurance. Interestingly, the California wildfires had minimal impact on pricing terms and conditions. In the US, non-loss impacted property cat accounts saw 5% to 15% rate decreases, while in Japan, a stable demand and oversubscribed cat programs led to 10% to 15% rate decreases, with no impact from the California wildfires. Overall, the reinsurance market showed abundant capital, increasing deployment by reinsurers, and a strong Insurance-Linked Securities (ILS) market, highlighted by record cat bond issuance.

The paragraph discusses the impact of current market conditions on the property catastrophe (cat) insurance market and consulting firm Oliver Wyman. Insured cat losses are projected to exceed $100 billion, with potential future impacts hinging on the cat season's actual outcomes. Meanwhile, Oliver Wyman has experienced 4% growth despite economic uncertainties, following significant growth in the previous year. Since consulting services involve discretionary spending, there is some concern about companies pulling back on budgets due to geopolitical and economic uncertainties. Nick Studer notes that Oliver Wyman's business typically grows mid to high single digits across cycles, even though demand has recently been more unpredictable.

The paragraph discusses a company's performance and market trends. Although the company is not a major supplier to the US government, resulting in some oversupply, the market is still growing. The company experienced strong growth in the US, Canada, insurance, asset management, technology, and various industrial sectors, while some areas experienced less growth. The company has short visibility on market changes, but remains busy and confident in its ability to assist clients through transformative periods. John then asks Dean about expectations for media renewals, to which Dean responds that they anticipate similar market conditions to those experienced on January 1 and April 1, with stability in the Florida market despite last fall’s hurricanes.

The paragraph discusses expectations for cat pricing in the Florida market, noting that capital supply is adequate, and the active cat bond market has improved capacity. Clients are purchasing more property cat limit at the June 1 renewal, and Florida legal reforms are reducing frequency and severity in the market. John Doyle answers questions about Marsh's exposure to government consulting or contracts, indicating it's significant in Oliver Wyman and Mercer but overall not material to the company. Additionally, when asked about underlying revenue growth slowdown in Marsh within the US and Canada, Doyle suggests it may be due to tougher comparisons rather than pricing slowdown or overlap with McGriff and Marsh.

In the paragraph, John Doyle and Martin South discuss financial performance and growth in various regions and sectors. They emphasize that McGriff is not included in their underlying revenue calculations but express satisfaction with its progress. They report a solid start to the year with a 5% overall growth, including 4% growth in the US. Despite challenges in construction and declining property rates, they experienced strong growth in specialty performance areas like FinPro. They highlight significant growth in Latin America, EMEA, and APAC, particularly in the benefits business. Following this discussion, the operator introduces a question from Alex Scott of Barclays.

The paragraph presents a discussion between John Doyle and Alex Scott about the pricing trends in the middle market versus the large account market in the insurance industry. John Doyle explains that middle market pricing is more consistent year-to-year, with a slight increase observed recently. He highlights the distinction between what insurers report as rate changes and how new and renewed business is priced, noting that new business often has slightly more favorable pricing. Alex Scott then inquires about property pricing and its potential seasonality, particularly related to the second quarter. John Doyle mentions that predicting future market conditions is difficult, referencing the reinsurance market's seasonality.

The paragraph discusses the current state and trends in the reinsurance market, particularly in the United States. The speaker notes that the beginning of the year is crucial for reinsurance activities due to the competitive nature of the market, driven by strong underwriting results and the desire for growth among insurers and reinsurers. At Marsh, they focus on account-specific factors influenced by market forces and clients' loss experiences. The paragraph highlights the increasing frequency and severity of natural catastrophes (NatCats) and ongoing inflation as challenges that drive up costs. The speaker emphasizes the importance of community investment in resilience rather than seeking cheap insurance, given the growing exposure to catastrophe-prone areas and the inevitable rise in risk costs over time. The discussion concludes with the expectation of more competitive pricing throughout the year.

The paragraph discusses the impact of reinsurance pricing on Guy Carpenter's organic growth. John Doyle explains that while reinsurance pricing increases have previously boosted revenue, current market forces have lessened that trend, though they've accounted for it in their guidance. Guy Carpenter's revenue is mainly commission-based but involves negotiated outcomes with insurance clients. Despite changing market dynamics, their work remains vital for helping clients manage economic and catastrophic complexities. Additionally, Meyer Shields inquires about the impact of foreign exchange on earnings; Mark McGivney clarifies that foreign exchange did not significantly affect margins or earnings across segments in the quarter.

In the paragraph, John Doyle and Dean Klisura discuss Guy Carpenter's performance, specifically noting a 5% organic growth in the quarter. Doyle attributes the growth slowdown from last year's 8% to current pricing impacts but expresses satisfaction with the overall demand and start of the year. Klisura adds that while property catastrophe (cat) insurance poses a growth challenge, they have experienced balanced growth globally, particularly in Latin America and the Middle East. Additionally, the company achieved strong new business, highlighted by a record issuance of cat bonds. Elyse Greenspan from Wells Fargo initiated the questions regarding growth and underlying business trends.

In the highlighted paragraph, it is noted that Guy Carpenter experienced a strong quarter, placing eight distinct cat bonds totaling $1.8 billion, and is seeing favorable conditions for growth in its capital and advisory practice. The company has initiated a small boutique banking practice to assist clients with capital raising, mergers and acquisitions, and designing financial structures, which is progressing well. John Doyle, during a discussion with Elyse Greenspan, chose not to disclose specific revenue growth figures for McGriff, a part of the company, but expressed satisfaction with its performance and highlighted its role in extending the company's reach into the middle market. McGriff's capabilities enhance MMA, positioning it as a significant $5 billion annual business, with opportunities to leverage scale for middle market clients.

The paragraph discusses the seasonality of McGriff's revenue, noting that Q1 is typically the weakest quarter, while Q2 and Q4 are the strongest, with a moderate lull in Q3. Despite seasonal fluctuations, growth remains steady. The conversation shifts to M&A, where John Doyle expresses confidence that increased uncertainty won't significantly impact their M&A outlook. They remain active in the market, focusing on cultural fit and growth potential of acquisitions. With a 154-year history as a consolidator, the company sees M&A as a long-term growth strategy benefiting shareholders.

In the paragraph, the discussion centers on the impact of tort reform on the property catastrophe (cat) reinsurance market, particularly in Florida. John Doyle acknowledges early positive signs from Florida's reforms, which focus on property cat issues, and mentions similar liability-focused reforms in Georgia. He highlights the challenges posed by the U.S. litigation environment, often referred to as "social inflation" or "legal system abuse," and emphasizes the importance of supporting sensible legal reforms on both state and federal levels. Doyle suggests keeping an eye on developments in Georgia and notes the variability in legislative actions across different states.

The paragraph discusses the company's efforts to address issues related to the costly litigation environment in the U.S. It concludes a call by expressing gratitude towards colleagues for their hard work and clients for their ongoing support, and looks forward to the next quarterly meeting.

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