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Marsh & McLennan Companies, Inc. (MMC - Free Report) delivered second-quarter 2019 adjusted earnings per share of $1.18, surpassing the Zacks Consensus Estimate by 4.4% on the back of higher revenues. Also, the bottom line improved 7.3% year over year.
Moreover, Marsh & McLennan’s consolidated revenues were $4.3 billion, up 16% on an underlying basis. This upside is majorly attributable to the Risk and Insurances Services plus Consulting Segments. Further, the top line slightly beat the Zacks Consensus Estimate by 0.3%.
Meanwhile, total operating expenses of $3.7 billion in the second quarter were up 20.6% year over year due to high compensation and benefits plus other operating expenses.
Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise
Revenues at the Risk and Insurance Services segment were $2.6 billion, up 3% on an underlying basis. Adjusted operating income was up 21% to $641 million from the prior-year quarter’s level.
Marsh, a unit within this segment, generated revenues of $2.2 billion, up 4% on an underlying basis. In U.S./Canada, underlying revenues rose 5%. Underlying revenue growth from international operations includes 7% of the metric in Asia Pacific, flat in EMEA and 4% in Latin America.
Another unit under this segment — Guy Carpenter — displayed 3% revenue decline on an underlying basis to $392 million in the quarter under review.
Consulting
The Consulting segment's revenues rose 5% on an underlying basis. Also, adjusted operating income increased 14% year over year to $305 million.
A unit within this segment — Mercer — reported revenues of $1.3 billion, up 2% on an underlying basis. Wealth’s revenues were flat on an underlying basis.
Another unit, Oliver Wyman Group, registered revenues of $540 million, up 13% on an underlying basis.
Financial Update
Marsh & McLennan exited the quarter with cash and cash equivalents of nearly $1.3 billion, up 21.4% from the figure at 2018 end.
As of Jun 30, 2019, Marsh & McLennan’s total assets were $32.1 billion, up 49% from the tally at year-end 2018.
Total equity was $8.3 billion, up 10% from the level at year-end 2018.
Business Update
The company completed the pending buyout of Jardine Lloyd Thompson Group (JLT) in April 2019.
Share Repurchase and Dividend Update
The company bought back shares worth $100 million in the second quarter. In May, its board of directors also announced a 10% quarterly dividend hike effective the third quarter.
Of the insurance industry players that have already reported second-quarter results, the bottom-line figures of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate. However, The Travelers Companies, Inc.’s (TRV - Free Report) earnings missed the consensus mark.
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Marsh & McLennan (MMC) Q2 Earnings & Revenues Beat Estimates
Marsh & McLennan Companies, Inc. (MMC - Free Report) delivered second-quarter 2019 adjusted earnings per share of $1.18, surpassing the Zacks Consensus Estimate by 4.4% on the back of higher revenues. Also, the bottom line improved 7.3% year over year.
Moreover, Marsh & McLennan’s consolidated revenues were $4.3 billion, up 16% on an underlying basis. This upside is majorly attributable to the Risk and Insurances Services plus Consulting Segments. Further, the top line slightly beat the Zacks Consensus Estimate by 0.3%.
Meanwhile, total operating expenses of $3.7 billion in the second quarter were up 20.6% year over year due to high compensation and benefits plus other operating expenses.
Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise
Marsh & McLennan Companies, Inc. price-consensus-eps-surprise-chart | Marsh & McLennan Companies, Inc. Quote
Quarterly Segmental Results
Risk and Insurance Services
Revenues at the Risk and Insurance Services segment were $2.6 billion, up 3% on an underlying basis. Adjusted operating income was up 21% to $641 million from the prior-year quarter’s level.
Marsh, a unit within this segment, generated revenues of $2.2 billion, up 4% on an underlying basis. In U.S./Canada, underlying revenues rose 5%. Underlying revenue growth from international operations includes 7% of the metric in Asia Pacific, flat in EMEA and 4% in Latin America.
Another unit under this segment — Guy Carpenter — displayed 3% revenue decline on an underlying basis to $392 million in the quarter under review.
Consulting
The Consulting segment's revenues rose 5% on an underlying basis. Also, adjusted operating income increased 14% year over year to $305 million.
A unit within this segment — Mercer — reported revenues of $1.3 billion, up 2% on an underlying basis. Wealth’s revenues were flat on an underlying basis.
Another unit, Oliver Wyman Group, registered revenues of $540 million, up 13% on an underlying basis.
Financial Update
Marsh & McLennan exited the quarter with cash and cash equivalents of nearly $1.3 billion, up 21.4% from the figure at 2018 end.
As of Jun 30, 2019, Marsh & McLennan’s total assets were $32.1 billion, up 49% from the tally at year-end 2018.
Total equity was $8.3 billion, up 10% from the level at year-end 2018.
Business Update
The company completed the pending buyout of Jardine Lloyd Thompson Group (JLT) in April 2019.
Share Repurchase and Dividend Update
The company bought back shares worth $100 million in the second quarter. In May, its board of directors also announced a 10% quarterly dividend hike effective the third quarter.
Zacks Rank
Marsh & McLennan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have already reported second-quarter results, the bottom-line figures of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate. However, The Travelers Companies, Inc.’s (TRV - Free Report) earnings missed the consensus mark.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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