FORM |
Date of report (Date of earliest event reported) | October 19, 2023 |
(Exact Name of Registrant as Specified in its Charter) |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol(s) | Name of exchange on which registered | ||||||||||||
London Stock Exchange |
Emerging growth company | ||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
MARSH & McLENNAN COMPANIES, INC. | ||||||||
By: | /s/ Connor Kuratek | |||||||
Name: | Connor Kuratek | |||||||
Title: | Deputy General Counsel & Corporate Secretary | |||||||
![]() | Marsh McLennan 1166 Avenue of the Americas New York, New York 10036-2774 212 345 5000 www.marshmclennan.com |
NEWS RELEASE | Exhibit 99.1 | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Revenue | $ | 5,382 | $ | 4,770 | $ | 17,182 | $ | 15,698 | ||||||||||||||||||
Expense: | ||||||||||||||||||||||||||
Compensation and benefits | 3,287 | 2,923 | 9,831 | 9,033 | ||||||||||||||||||||||
Other operating expenses | 1,099 | 1,056 | 3,172 | 3,065 | ||||||||||||||||||||||
Operating expenses | 4,386 | 3,979 | 13,003 | 12,098 | ||||||||||||||||||||||
Operating income | 996 | 791 | 4,179 | 3,600 | ||||||||||||||||||||||
Other net benefit credits | 62 | 57 | 180 | 178 | ||||||||||||||||||||||
Interest income | 16 | 4 | 40 | 6 | ||||||||||||||||||||||
Interest expense | (145) | (118) | (427) | (342) | ||||||||||||||||||||||
Investment income (loss) | 1 | (1) | 6 | 27 | ||||||||||||||||||||||
Income before income taxes | 930 | 733 | 3,978 | 3,469 | ||||||||||||||||||||||
Income tax expense | 192 | 181 | 941 | 853 | ||||||||||||||||||||||
Net income before non-controlling interests | 738 | 552 | 3,037 | 2,616 | ||||||||||||||||||||||
Less: Net income attributable to non-controlling interests | 8 | 6 | 37 | 32 | ||||||||||||||||||||||
Net income attributable to the Company | $ | 730 | $ | 546 | $ | 3,000 | $ | 2,584 | ||||||||||||||||||
Net income per share attributable to the Company: | ||||||||||||||||||||||||||
- Basic | $ | 1.48 | $ | 1.10 | $ | 6.07 | $ | 5.16 | ||||||||||||||||||
- Diluted | $ | 1.47 | $ | 1.08 | $ | 6.01 | $ | 5.11 | ||||||||||||||||||
Average number of shares outstanding: | ||||||||||||||||||||||||||
- Basic | 494 | 498 | 494 | 501 | ||||||||||||||||||||||
- Diluted | 499 | 503 | 499 | 506 | ||||||||||||||||||||||
Shares outstanding at September 30 | 493 | 497 | 493 | 497 |
Components of Revenue Change* | ||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | % Change GAAP Revenue* | Currency Impact | Acquisitions/ Dispositions/ Other Impact** | Non-GAAP Underlying Revenue | ||||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||
Risk and Insurance Services | ||||||||||||||||||||||||||||||||||||||
Marsh | $ | 2,700 | $ | 2,470 | 9 | % | 1 | % | 1 | % | 8 | % | ||||||||||||||||||||||||||
Guy Carpenter | 359 | 328 | 9 | % | 1 | % | 1 | % | 8 | % | ||||||||||||||||||||||||||||
Subtotal | 3,059 | 2,798 | 9 | % | 1 | % | 1 | % | 8 | % | ||||||||||||||||||||||||||||
Fiduciary interest income | 131 | 40 | ||||||||||||||||||||||||||||||||||||
Total Risk and Insurance Services | 3,190 | 2,838 | 12 | % | 1 | % | 1 | % | 11 | % | ||||||||||||||||||||||||||||
Consulting | ||||||||||||||||||||||||||||||||||||||
Mercer | 1,425 | 1,284 | 11 | % | 1 | % | 2 | % | 8 | % | ||||||||||||||||||||||||||||
Oliver Wyman Group | 781 | 667 | 17 | % | 2 | % | 3 | % | 12 | % | ||||||||||||||||||||||||||||
Total Consulting | 2,206 | 1,951 | 13 | % | 2 | % | 2 | % | 9 | % | ||||||||||||||||||||||||||||
Corporate Eliminations | (14) | (19) | ||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 5,382 | $ | 4,770 | 13 | % | 1 | % | 2 | % | 10 | % | ||||||||||||||||||||||||||
Components of Revenue Change* | ||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | % Change GAAP Revenue* | Currency Impact | Acquisitions/ Dispositions/ Other Impact** | Non-GAAP Underlying Revenue | ||||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||
Marsh: | ||||||||||||||||||||||||||||||||||||||
EMEA (a) | $ | 692 | $ | 615 | 13 | % | 4 | % | — | 9 | % | |||||||||||||||||||||||||||
Asia Pacific (a) | 311 | 286 | 9 | % | (2) | % | — | 10 | % | |||||||||||||||||||||||||||||
Latin America | 134 | 118 | 14 | % | 1 | % | (1) | % | 14 | % | ||||||||||||||||||||||||||||
Total International | 1,137 | 1,019 | 12 | % | 2 | % | — | 10 | % | |||||||||||||||||||||||||||||
U.S./Canada | 1,563 | 1,451 | 8 | % | — | 2 | % | 6 | % | |||||||||||||||||||||||||||||
Total Marsh | $ | 2,700 | $ | 2,470 | 9 | % | 1 | % | 1 | % | 8 | % | ||||||||||||||||||||||||||
Mercer: | ||||||||||||||||||||||||||||||||||||||
Wealth | $ | 635 | $ | 561 | 13 | % | 2 | % | 4 | % | 7 | % | ||||||||||||||||||||||||||
Health | 496 | 451 | 10 | % | 1 | % | — | 8 | % | |||||||||||||||||||||||||||||
Career | 294 | 272 | 8 | % | — | 1 | % | 7 | % | |||||||||||||||||||||||||||||
Total Mercer | $ | 1,425 | $ | 1,284 | 11 | % | 1 | % | 2 | % | 8 | % |
(a)In the first quarter of 2023, the Company began reporting the Marsh India operations in EMEA. Prior year results for India have been reclassified from Asia Pacific to EMEA for comparative purposes. | ||
* Rounded to whole percentages. Components of revenue may not add due to rounding. ** Acquisitions, dispositions, and other includes the impact of current and prior year items excluded from the calculation of non-GAAP underlying revenue for comparability purposes. Details on these items are provided in the reconciliation of non-GAAP revenue to GAAP revenue tables included in this release. |
Components of Revenue Change* | ||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | % Change GAAP Revenue* | Currency Impact | Acquisitions/ Dispositions/ Other Impact** | Non-GAAP Underlying Revenue | ||||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||
Risk and Insurance Services | ||||||||||||||||||||||||||||||||||||||
Marsh | $ | 8,482 | $ | 7,794 | 9 | % | (1) | % | 1 | % | 9 | % | ||||||||||||||||||||||||||
Guy Carpenter | 2,006 | 1,849 | 8 | % | (1) | % | — | 10 | % | |||||||||||||||||||||||||||||
Subtotal | 10,488 | 9,643 | 9 | % | (1) | % | 1 | % | 9 | % | ||||||||||||||||||||||||||||
Fiduciary interest income | 330 | 57 | ||||||||||||||||||||||||||||||||||||
Total Risk and Insurance Services | 10,818 | 9,700 | 12 | % | (1) | % | 1 | % | 12 | % | ||||||||||||||||||||||||||||
Consulting | ||||||||||||||||||||||||||||||||||||||
Mercer | 4,143 | 4,016 | 3 | % | (1) | % | (3) | % | 7 | % | ||||||||||||||||||||||||||||
Oliver Wyman Group | 2,266 | 2,029 | 12 | % | — | 4 | % | 8 | % | |||||||||||||||||||||||||||||
Total Consulting | 6,409 | 6,045 | 6 | % | (1) | % | — | 7 | % | |||||||||||||||||||||||||||||
Corporate Eliminations | (45) | (47) | ||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 17,182 | $ | 15,698 | 9 | % | (1) | % | — | 10 | % |
Components of Revenue Change* | ||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | % Change GAAP Revenue* | Currency Impact | Acquisitions/ Dispositions/ Other Impact** | Non-GAAP Underlying Revenue | ||||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||
Marsh: | ||||||||||||||||||||||||||||||||||||||
EMEA (a) | $ | 2,482 | $ | 2,264 | 10 | % | (1) | % | 1 | % | 10 | % | ||||||||||||||||||||||||||
Asia Pacific (a) | 980 | 927 | 6 | % | (4) | % | — | 9 | % | |||||||||||||||||||||||||||||
Latin America | 386 | 340 | 13 | % | — | — | 14 | % | ||||||||||||||||||||||||||||||
Total International | 3,848 | 3,531 | 9 | % | (2) | % | 1 | % | 10 | % | ||||||||||||||||||||||||||||
U.S./Canada | 4,634 | 4,263 | 9 | % | — | 2 | % | 7 | % | |||||||||||||||||||||||||||||
Total Marsh | $ | 8,482 | $ | 7,794 | 9 | % | (1) | % | 1 | % | 9 | % | ||||||||||||||||||||||||||
Mercer: | ||||||||||||||||||||||||||||||||||||||
Wealth | $ | 1,853 | $ | 1,775 | 4 | % | (1) | % | 1 | % | 4 | % | ||||||||||||||||||||||||||
Health | 1,559 | 1,562 | — | (1) | % | (9) | % | 10 | % | |||||||||||||||||||||||||||||
Career | 731 | 679 | 8 | % | (1) | % | 1 | % | 8 | % | ||||||||||||||||||||||||||||
Total Mercer | $ | 4,143 | $ | 4,016 | 3 | % | (1) | % | (3) | % | 7 | % |
(a)In the first quarter of 2023, the Company began reporting the Marsh India operations in EMEA. Prior year results for India have been reclassified from Asia Pacific to EMEA for comparative purposes. | ||
* Rounded to whole percentages. Components of revenue may not add due to rounding. ** Acquisitions, dispositions, and other includes the impact of current and prior year items excluded from the calculation of non-GAAP underlying revenue for comparability purposes. Details on these items are provided in the reconciliation of non-GAAP revenue to GAAP revenue tables included in this release. |
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 nine months ended September 30, 2023 and 2022. The following tables also present adjusted operating margin. For the three and nine months ended September 30, 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 September 30, 2023 | ||||||||||||||||||||||||||
Operating income (loss) | $ | 640 | $ | 424 | $ | (68) | $ | 996 | ||||||||||||||||||
Operating margin | 20.0 | % | 19.2 | % | N/A | 18.5 | % | |||||||||||||||||||
Add (deduct) impact of noteworthy items: | ||||||||||||||||||||||||||
Restructuring, excluding JLT (a) | 20 | 17 | 9 | 46 | ||||||||||||||||||||||
Changes in contingent consideration (b) | 4 | — | — | 4 | ||||||||||||||||||||||
JLT integration and restructuring costs (c) | 6 | — | — | 6 | ||||||||||||||||||||||
Westpac acquisition related costs | — | 5 | — | 5 | ||||||||||||||||||||||
Other | 1 | 1 | — | 2 | ||||||||||||||||||||||
Operating income adjustments | 31 | 23 | 9 | 63 | ||||||||||||||||||||||
Adjusted operating income (loss) | $ | 671 | $ | 447 | $ | (59) | $ | 1,059 | ||||||||||||||||||
Total identified intangible amortization expense | $ | 74 | $ | 11 | $ | — | $ | 85 | ||||||||||||||||||
Adjusted operating margin | 23.4 | % | 20.8 | % | N/A | 21.3 | % | |||||||||||||||||||
Three Months Ended September 30, 2022 | ||||||||||||||||||||||||||
Operating income (loss) | $ | 529 | $ | 350 | $ | (88) | $ | 791 | ||||||||||||||||||
Operating margin | 18.7 | % | 17.9 | % | N/A | 16.6 | % | |||||||||||||||||||
Add (deduct) impact of noteworthy items: | ||||||||||||||||||||||||||
Restructuring, excluding JLT (a) | 18 | — | 14 | 32 | ||||||||||||||||||||||
Changes in contingent consideration (b) | 11 | — | — | 11 | ||||||||||||||||||||||
JLT integration and restructuring costs (c) | — | 5 | 1 | 6 | ||||||||||||||||||||||
JLT acquisition related retention costs | 4 | — | — | 4 | ||||||||||||||||||||||
Other | — | 7 | — | 7 | ||||||||||||||||||||||
Operating income adjustments | 33 | 12 | 15 | 60 | ||||||||||||||||||||||
Adjusted operating income (loss) | $ | 562 | $ | 362 | $ | (73) | $ | 851 | ||||||||||||||||||
Total identified intangible amortization expense | $ | 74 | $ | 10 | $ | — | $ | 84 | ||||||||||||||||||
Adjusted operating margin | 22.4 | % | 19.1 | % | N/A | 19.6 | % | |||||||||||||||||||
(a)In 2023, costs primarily include severance and lease exit charges for activities focused on workforce actions, rationalization of technology and functional resources, and reductions in real estate. (b)Change in fair value of contingent consideration related to acquisitions and dispositions measured each quarter. (c)In 2023, reflects adjustments to restructuring liabilities for lease exit charges for a legacy JLT U.K. location. | ||||||||||||||||||||||||||
Risk & Insurance Services | Consulting | Corporate/ Eliminations | Total | |||||||||||||||||||||||
Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||
Operating income (loss) | $ | 3,192 | $ | 1,223 | $ | (236) | $ | 4,179 | ||||||||||||||||||
Operating margin | 29.5 | % | 19.1 | % | N/A | 24.3 | % | |||||||||||||||||||
Add (deduct) impact of noteworthy items: | ||||||||||||||||||||||||||
Restructuring, excluding JLT (a) | 67 | 33 | 48 | 148 | ||||||||||||||||||||||
Changes in contingent consideration (b) | 20 | 1 | — | 21 | ||||||||||||||||||||||
JLT integration and restructuring costs (c) | 22 | — | — | 22 | ||||||||||||||||||||||
JLT legacy legal charges (d) | — | (51) | — | (51) | ||||||||||||||||||||||
Disposal of business (e) | — | 17 | — | 17 | ||||||||||||||||||||||
Westpac acquisition related costs | — | 32 | — | 32 | ||||||||||||||||||||||
Other | 1 | 1 | — | 2 | ||||||||||||||||||||||
Operating income adjustments | 110 | 33 | 48 | 191 | ||||||||||||||||||||||
Adjusted operating income (loss) | $ | 3,302 | $ | 1,256 | $ | (188) | $ | 4,370 | ||||||||||||||||||
Total identified intangible amortization expense | $ | 221 | $ | 36 | $ | — | $ | 257 | ||||||||||||||||||
Adjusted operating margin | 32.6 | % | 20.1 | % | N/A | 26.9 | % | |||||||||||||||||||
Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||
Operating income (loss) | $ | 2,617 | $ | 1,217 | $ | (234) | $ | 3,600 | ||||||||||||||||||
Operating margin | 27.0 | % | 20.1 | % | N/A | 22.9 | % | |||||||||||||||||||
Add (deduct) impact of noteworthy items: | ||||||||||||||||||||||||||
Restructuring, excluding JLT (a) | 38 | 6 | 34 | 78 | ||||||||||||||||||||||
Changes in contingent consideration (b) | 33 | 5 | — | 38 | ||||||||||||||||||||||
JLT integration and restructuring costs (c) | 6 | 10 | 2 | 18 | ||||||||||||||||||||||
JLT legacy legal charges (d) | 14 | (11) | — | 3 | ||||||||||||||||||||||
Disposal of business (e) | — | (114) | — | (114) | ||||||||||||||||||||||
JLT acquisition related retention costs | 24 | 1 | 3 | 28 | ||||||||||||||||||||||
Legal claims and other (f) | 30 | 9 | — | 39 | ||||||||||||||||||||||
Deconsolidation of Russian businesses and other related charges (g) | 42 | 10 | — | 52 | ||||||||||||||||||||||
Operating income adjustments | 187 | (84) | 39 | 142 | ||||||||||||||||||||||
Adjusted operating income (loss) | $ | 2,804 | $ | 1,133 | $ | (195) | $ | 3,742 | ||||||||||||||||||
Total identified intangible amortization expense | $ | 223 | $ | 35 | $ | — | $ | 258 | ||||||||||||||||||
Adjusted operating margin | 31.1 | % | 19.6 | % | N/A | 25.6 | % | |||||||||||||||||||
(a)In 2023, costs primarily include severance and lease exit charges for activities focused on workforce actions, rationalization of technology and functional resources, and reductions in real estate. Costs also reflect charges for Marsh's operational excellence program. (b)Change in fair value of contingent consideration related to acquisitions and dispositions measured each quarter. (c)In 2023, reflects adjustments to restructuring liabilities for lease exit charges for a legacy JLT U.K. location. (d)Reflects 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. (e)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. (f)Primarily reflects settlement charges and legal costs related to strategic recruiting. (g)Loss on deconsolidation of Russian businesses and other related charges. The 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. |
Three Months Ended September 30, 2023 | Three Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||
Amount | Adjusted EPS | Amount | Adjusted EPS | ||||||||||||||||||||||||||||||||
Net income before non-controlling interests, as reported | $ | 738 | $ | 552 | |||||||||||||||||||||||||||||||
Less: Non-controlling interest, net of tax | 8 | 6 | |||||||||||||||||||||||||||||||||
Subtotal | $ | 730 | $ | 1.47 | $ | 546 | $ | 1.08 | |||||||||||||||||||||||||||
Operating income adjustments | $ | 63 | $ | 60 | |||||||||||||||||||||||||||||||
Investments adjustment | 1 | 4 | |||||||||||||||||||||||||||||||||
Income tax effect of adjustments (a) | (12) | (16) | |||||||||||||||||||||||||||||||||
52 | 0.10 | 48 | 0.10 | ||||||||||||||||||||||||||||||||
Adjusted income, net of tax | $ | 782 | $ | 1.57 | $ | 594 | $ | 1.18 | |||||||||||||||||||||||||||
Nine Months Ended September 30, 2023 | Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||
Amount | Adjusted EPS | Amount | Adjusted EPS | ||||||||||||||||||||||||||||||||
Net income before non-controlling interests, as reported | $ | 3,037 | $ | 2,616 | |||||||||||||||||||||||||||||||
Less: Non-controlling interest, net of tax | 37 | 32 | |||||||||||||||||||||||||||||||||
Subtotal | $ | 3,000 | $ | 6.01 | $ | 2,584 | $ | 5.11 | |||||||||||||||||||||||||||
Operating income adjustments | $ | 191 | $ | 142 | |||||||||||||||||||||||||||||||
Investments adjustment | 2 | (4) | |||||||||||||||||||||||||||||||||
Pension settlement adjustment | — | 1 | |||||||||||||||||||||||||||||||||
Income tax effect of adjustments (a) | (45) | (1) | |||||||||||||||||||||||||||||||||
148 | 0.30 | 138 | 0.27 | ||||||||||||||||||||||||||||||||
Adjusted income, net of tax | $ | 3,148 | $ | 6.31 | $ | 2,722 | $ | 5.38 | |||||||||||||||||||||||||||
(a)For items with an income tax impact, the tax effect was calculated using an effective tax rate based on the tax jurisdiction for each item. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||||
Compensation and benefits | $ | 3,287 | $ | 2,923 | $ | 9,831 | $ | 9,033 | ||||||||||||||||||
Other operating expenses | 1,099 | 1,056 | 3,172 | 3,065 | ||||||||||||||||||||||
Total expenses | $ | 4,386 | $ | 3,979 | $ | 13,003 | $ | 12,098 | ||||||||||||||||||
Depreciation and amortization expense | $ | 95 | $ | 85 | $ | 270 | $ | 259 | ||||||||||||||||||
Identified intangible amortization expense | 85 | 84 | 257 | 258 | ||||||||||||||||||||||
Total | $ | 180 | $ | 169 | $ | 527 | $ | 517 | ||||||||||||||||||
Risk and Insurance Services | ||||||||||||||||||||||||||
Compensation and benefits | $ | 1,900 | $ | 1,688 | $ | 5,703 | $ | 5,239 | ||||||||||||||||||
Other operating expenses | 650 | 621 | 1,923 | 1,844 | ||||||||||||||||||||||
Total expenses | $ | 2,550 | $ | 2,309 | $ | 7,626 | $ | 7,083 | ||||||||||||||||||
Depreciation and amortization expense | $ | 49 | $ | 40 | $ | 135 | $ | 123 | ||||||||||||||||||
Identified intangible amortization expense | 74 | 74 | 221 | 223 | ||||||||||||||||||||||
Total | $ | 123 | $ | 114 | $ | 356 | $ | 346 | ||||||||||||||||||
Consulting | ||||||||||||||||||||||||||
Compensation and benefits | $ | 1,251 | $ | 1,107 | $ | 3,690 | $ | 3,416 | ||||||||||||||||||
Other operating expenses | 531 | 494 | 1,496 | 1,412 | ||||||||||||||||||||||
Total expenses | $ | 1,782 | $ | 1,601 | $ | 5,186 | $ | 4,828 | ||||||||||||||||||
Depreciation and amortization expense | $ | 30 | $ | 26 | $ | 78 | $ | 79 | ||||||||||||||||||
Identified intangible amortization expense | 11 | 10 | 36 | 35 | ||||||||||||||||||||||
Total | $ | 41 | $ | 36 | $ | 114 | $ | 114 | ||||||||||||||||||
(Unaudited) September 30, 2023 | December 31, 2022 | |||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 2,901 | $ | 1,442 | ||||||||||
Cash and cash equivalents held in a fiduciary capacity (a) | 11,828 | 10,660 | ||||||||||||
Net receivables | 6,520 | 5,852 | ||||||||||||
Other current assets | 1,030 | 1,005 | ||||||||||||
Total current assets | 22,279 | 18,959 | ||||||||||||
Goodwill and intangible assets | 19,153 | 18,788 | ||||||||||||
Fixed assets, net | 859 | 871 | ||||||||||||
Pension related assets | 2,310 | 2,127 | ||||||||||||
Right of use assets | 1,519 | 1,562 | ||||||||||||
Deferred tax assets | 348 | 358 | ||||||||||||
Other assets | 1,532 | 1,449 | ||||||||||||
TOTAL ASSETS | $ | 48,000 | $ | 44,114 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Short-term debt | $ | 1,868 | $ | 268 | ||||||||||
Accounts payable and accrued liabilities | 3,143 | 3,278 | ||||||||||||
Accrued compensation and employee benefits | 2,632 | 3,095 | ||||||||||||
Current lease liabilities | 303 | 310 | ||||||||||||
Accrued income taxes | 480 | 221 | ||||||||||||
Dividends payable | 351 | — | ||||||||||||
Fiduciary liabilities (a) | 11,828 | 10,660 | ||||||||||||
Total current liabilities | 20,605 | 17,832 | ||||||||||||
Long-term debt | 11,781 | 11,227 | ||||||||||||
Pension, post-retirement and post-employment benefits | 840 | 921 | ||||||||||||
Long-term lease liabilities | 1,643 | 1,667 | ||||||||||||
Liabilities for errors and omissions | 319 | 355 | ||||||||||||
Other liabilities | 1,226 | 1,363 | ||||||||||||
Total equity | 11,586 | 10,749 | ||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 48,000 | $ | 44,114 |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Operating cash flows: | ||||||||||||||
Net income before non-controlling interests | $ | 3,037 | $ | 2,616 | ||||||||||
Adjustments to reconcile net income to cash provided by operations: | ||||||||||||||
Depreciation and amortization | 527 | 517 | ||||||||||||
Non-cash lease expense | 215 | 223 | ||||||||||||
Deconsolidation of Russian businesses | — | 39 | ||||||||||||
Share-based compensation expense | 273 | 283 | ||||||||||||
Net gain on investments, disposition of assets and other | (7) | (139) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||
Accrued compensation and employee benefits | (458) | (451) | ||||||||||||
Provision for taxes, net of payments and refunds | 242 | 156 | ||||||||||||
Net receivables | (670) | (745) | ||||||||||||
Other changes to assets and liabilities | (201) | 14 | ||||||||||||
Contributions to pension and other benefit plans in excess of current year credit | (246) | (306) | ||||||||||||
Operating lease liabilities | (237) | (244) | ||||||||||||
Net cash provided by operations | 2,475 | 1,963 | ||||||||||||
Financing cash flows: | ||||||||||||||
Purchase of treasury shares | (900) | (1,600) | ||||||||||||
Net proceeds from issuance of commercial paper | — | 600 | ||||||||||||
Proceeds from issuance of debt | 2,170 | — | ||||||||||||
Repayments of debt | (12) | (14) | ||||||||||||
Net issuance of common stock from treasury shares | 20 | (105) | ||||||||||||
Net distributions of non-controlling interests and deferred/contingent consideration | (342) | (161) | ||||||||||||
Dividends paid | (944) | (840) | ||||||||||||
Change in fiduciary liabilities | 1,223 | 2,148 | ||||||||||||
Net cash provided by financing activities | 1,215 | 28 | ||||||||||||
Investing cash flows: | ||||||||||||||
Capital expenditures | (296) | (367) | ||||||||||||
Net purchases of long term investments and other | (28) | (5) | ||||||||||||
Sales of long term investments | 18 | 84 | ||||||||||||
Dispositions | (18) | 138 | ||||||||||||
Acquisitions, net of cash and cash held in a fiduciary capacity acquired | (619) | (213) | ||||||||||||
Net cash used for investing activities | (943) | (363) | ||||||||||||
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity | (120) | (1,592) | ||||||||||||
Increase in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity | 2,627 | 36 | ||||||||||||
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period | 12,102 | 11,374 | ||||||||||||
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period | $ | 14,729 | $ | 11,410 | ||||||||||
Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets | ||||||||||||||
Balance at September 30, | 2023 | 2022 | ||||||||||||
(In millions) | ||||||||||||||
Cash and cash equivalents | $ | 2,901 | $ | 802 | ||||||||||
Cash and cash equivalents held in a fiduciary capacity | 11,828 | 10,608 | ||||||||||||
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity | $ | 14,729 | $ | 11,410 |
2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | GAAP Revenue | Currency Impact | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | GAAP Revenue | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | |||||||||||||||||||||||||||||||||||||
Risk and Insurance Services | ||||||||||||||||||||||||||||||||||||||||||||
Marsh | $ | 2,700 | $ | (15) | $ | (31) | $ | 2,654 | $ | 2,470 | $ | (2) | $ | 2,468 | ||||||||||||||||||||||||||||||
Guy Carpenter | 359 | (3) | (3) | 353 | 328 | — | 328 | |||||||||||||||||||||||||||||||||||||
Subtotal | 3,059 | (18) | (34) | 3,007 | 2,798 | (2) | 2,796 | |||||||||||||||||||||||||||||||||||||
Fiduciary interest income | 131 | — | — | 131 | 40 | — | 40 | |||||||||||||||||||||||||||||||||||||
Total Risk and Insurance Services | 3,190 | (18) | (34) | 3,138 | 2,838 | (2) | 2,836 | |||||||||||||||||||||||||||||||||||||
Consulting | ||||||||||||||||||||||||||||||||||||||||||||
Mercer (a) | 1,425 | (17) | (4) | 1,404 | 1,284 | 21 | 1,305 | |||||||||||||||||||||||||||||||||||||
Oliver Wyman Group | 781 | (15) | (21) | 745 | 667 | — | 667 | |||||||||||||||||||||||||||||||||||||
Total Consulting | 2,206 | (32) | (25) | 2,149 | 1,951 | 21 | 1,972 | |||||||||||||||||||||||||||||||||||||
Corporate Eliminations | (14) | — | — | (14) | (19) | — | (19) | |||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 5,382 | $ | (50) | $ | (59) | $ | 5,273 | $ | 4,770 | $ | 19 | $ | 4,789 | ||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | GAAP Revenue | Currency Impact | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | GAAP Revenue | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | |||||||||||||||||||||||||||||||||||||
Marsh: | ||||||||||||||||||||||||||||||||||||||||||||
EMEA (b) | $ | 692 | $ | (23) | $ | (2) | $ | 667 | $ | 615 | $ | (1) | $ | 614 | ||||||||||||||||||||||||||||||
Asia Pacific (b) | 311 | 6 | (1) | 316 | 286 | — | 286 | |||||||||||||||||||||||||||||||||||||
Latin America | 134 | (1) | 1 | 134 | 118 | — | 118 | |||||||||||||||||||||||||||||||||||||
Total International | 1,137 | (18) | (2) | 1,117 | 1,019 | (1) | 1,018 | |||||||||||||||||||||||||||||||||||||
U.S./Canada | 1,563 | 3 | (29) | 1,537 | 1,451 | (1) | 1,450 | |||||||||||||||||||||||||||||||||||||
Total Marsh | $ | 2,700 | $ | (15) | $ | (31) | $ | 2,654 | $ | 2,470 | $ | (2) | $ | 2,468 | ||||||||||||||||||||||||||||||
Mercer: | ||||||||||||||||||||||||||||||||||||||||||||
Wealth (a) | $ | 635 | $ | (11) | $ | (1) | $ | 623 | $ | 561 | $ | 21 | $ | 582 | ||||||||||||||||||||||||||||||
Health | 496 | (6) | — | 490 | 451 | — | 451 | |||||||||||||||||||||||||||||||||||||
Career | 294 | — | (3) | 291 | 272 | — | 272 | |||||||||||||||||||||||||||||||||||||
Total Mercer | $ | 1,425 | $ | (17) | $ | (4) | $ | 1,404 | $ | 1,284 | $ | 21 | $ | 1,305 | ||||||||||||||||||||||||||||||
(a)Acquisitions, dispositions, and other in 2022 includes revenue from the Westpac superannuation fund transaction in Wealth. (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. |
2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | GAAP Revenue | Currency Impact | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | GAAP Revenue | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | |||||||||||||||||||||||||||||||||||||
Risk and Insurance Services | ||||||||||||||||||||||||||||||||||||||||||||
Marsh (a) | $ | 8,482 | $ | 82 | $ | (79) | $ | 8,485 | $ | 7,794 | $ | 15 | $ | 7,809 | ||||||||||||||||||||||||||||||
Guy Carpenter | 2,006 | 20 | (18) | 2,008 | 1,849 | (19) | 1,830 | |||||||||||||||||||||||||||||||||||||
Subtotal | 10,488 | 102 | (97) | 10,493 | 9,643 | (4) | 9,639 | |||||||||||||||||||||||||||||||||||||
Fiduciary interest income | 330 | 2 | — | 332 | 57 | — | 57 | |||||||||||||||||||||||||||||||||||||
Total Risk and Insurance Services | 10,818 | 104 | (97) | 10,825 | 9,700 | (4) | 9,696 | |||||||||||||||||||||||||||||||||||||
Consulting | ||||||||||||||||||||||||||||||||||||||||||||
Mercer (b) | 4,143 | 44 | 11 | 4,198 | 4,016 | (92) | 3,924 | |||||||||||||||||||||||||||||||||||||
Oliver Wyman Group (a) | 2,266 | (1) | (71) | 2,194 | 2,029 | 11 | 2,040 | |||||||||||||||||||||||||||||||||||||
Total Consulting | 6,409 | 43 | (60) | 6,392 | 6,045 | (81) | 5,964 | |||||||||||||||||||||||||||||||||||||
Corporate Eliminations | (45) | — | — | (45) | (47) | — | (47) | |||||||||||||||||||||||||||||||||||||
Total Revenue | $ | 17,182 | $ | 147 | $ | (157) | $ | 17,172 | $ | 15,698 | $ | (85) | $ | 15,613 |
2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | GAAP Revenue | Currency Impact | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | GAAP Revenue | Acquisitions/ Dispositions/ Other Impact | Non-GAAP Revenue | |||||||||||||||||||||||||||||||||||||
Marsh: | ||||||||||||||||||||||||||||||||||||||||||||
EMEA (a) (c) | $ | 2,482 | $ | 32 | $ | (6) | $ | 2,508 | $ | 2,264 | $ | 16 | $ | 2,280 | ||||||||||||||||||||||||||||||
Asia Pacific (c) | 980 | 35 | (4) | 1,011 | 927 | — | 927 | |||||||||||||||||||||||||||||||||||||
Latin America | 386 | — | 1 | 387 | 340 | — | 340 | |||||||||||||||||||||||||||||||||||||
Total International | 3,848 | 67 | (9) | 3,906 | 3,531 | 16 | 3,547 | |||||||||||||||||||||||||||||||||||||
U.S./Canada | 4,634 | 15 | (70) | 4,579 | 4,263 | (1) | 4,262 | |||||||||||||||||||||||||||||||||||||
Total Marsh | $ | 8,482 | $ | 82 | $ | (79) | $ | 8,485 | $ | 7,794 | $ | 15 | $ | 7,809 | ||||||||||||||||||||||||||||||
Mercer: | ||||||||||||||||||||||||||||||||||||||||||||
Wealth (b) | $ | 1,853 | $ | 24 | $ | 19 | $ | 1,896 | $ | 1,775 | $ | 45 | $ | 1,820 | ||||||||||||||||||||||||||||||
Health (b) | 1,559 | 10 | (1) | 1,568 | 1,562 | (137) | 1,425 | |||||||||||||||||||||||||||||||||||||
Career | 731 | 10 | (7) | 734 | 679 | — | 679 | |||||||||||||||||||||||||||||||||||||
Total Mercer | $ | 4,143 | $ | 44 | $ | 11 | $ | 4,198 | $ | 4,016 | $ | (92) | $ | 3,924 | ||||||||||||||||||||||||||||||
(a)Acquisitions, dispositions and other in 2022 includes the loss on deconsolidation of the Company's Russian businesses at Marsh of $27 million and Oliver Wyman Group of $12 million. (b)Acquisitions, dispositions, and other in 2022 includes revenue from the Westpac superannuation fund transaction in Wealth and a gain from the sale of the Mercer U.S. affinity business of $112 million in Health. Results for 2023 in Wealth include the loss on sale of an individual financial advisory business in Canada of $17 million. (c)In the first quarter of 2023, the Company began reporting the Marsh India operations in EMEA. Prior year results for India have been reclassified from Asia Pacific to EMEA for comparative purposes. |
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