Marsh & McLennan Companies, Inc. ( MMC Quick Quote MMC - Free Report) reported second-quarter 2022 adjusted earnings per share of $1.89, which beat the Zacks Consensus Estimate by 1.6%. The bottom line improved 8% year over year.
Consolidated revenues of MMC rose 7% year over year to $5.4 billion in the quarter under review. The top line outpaced the consensus mark by 0.8%.
The solid quarterly results were driven by strong contributions from its Risk and Insurance Services as well as Consulting segments. The Marsh sub-unit within the Risk and Insurance Services segment benefited from strong international operations across Latin America, Asia Pacific and EMEA. However, the bottom-line growth of Marsh & McLennan was partly offset by escalating operating expenses and a foreign exchange headwind of 3 cents per share.
Total operating expenses of $4 billion increased nearly 6% year over year in the second quarter due to a rise in compensation and benefits and other operating expenses. Total expenses at the Risk and Insurance Services segment witnessed a 7.1% year-over-year increase in the quarter under review, while the same at the Consulting segment increased 3.9% year over year.
Consolidated adjusted operating income grew 8% year over year to $1.3 billion.
Segmental Results Risk and Insurance Services
The segment reported revenues of $3.3 billion, which improved 9% on an underlying basis in the second quarter. Adjusted operating income rose 9% year over year to $1 billion.
Revenues of Marsh, a unit within the segment, grew 9% on an underlying basis to $2.8 billion in the quarter under review. In the United States/Canada, underlying revenues improved 10% year over year. Strong international operations led to 9% revenue growth on an underlying basis, with Latin America registering the highest growth of 14%, followed by increases of 11% and 7% in the Asia Pacific and EMEA, respectively.
Guy Carpenter, another unit under the Risk and Insurance Services segment, generated revenues of $522 million. The figure increased 9% on an underlying basis.
Revenues at the segment climbed 10% year over year to $2.1 billion in the second quarter. Adjusted operating income of $369 million grew 4% year over year.
A unit within this segment, Mercer, reported revenues of $1.4 billion, which rose 7% on an underlying basis. Career and Health revenues climbed 17% and 10%, respectively, on an underlying basis. The same at Wealth inched up 1% on an underlying basis.
Revenues of Oliver Wyman, another unit under the Consulting segment, improved 16% on an underlying basis to $695 million in the quarter under review.
Financial Update (as of Jun 30, 2022)
Marsh & McLennan exited the second quarter with cash and cash equivalents of $909 million, which slumped 48.1% from the 2021-end level. Total assets of $33.4 billion decreased 2.8% from the level as of Dec 31, 2021.
Long-term debt amounted to $10.5 billion, which slipped 4.1% from the figure at the 2021 end. Meanwhile, short-term debt of $1.3 billion increased more than 77-fold from the 2021-end level.
Total equity of $10.9 billion slid 2.7% from the 2021-end figure.
During the six months ended Jun 30, 2022, MMC generated cash from operations of $580 million, down 22.7% from the prior-year comparable period.
Capital Deployment Update
In the second quarter, Marsh & McLennan bought back 3.8 million shares worth $600 million.
In July 2022, its board of directors approved a 10% hike in the quarterly dividend, following which MMC will pay out a dividend of 59 cents per share. The increased dividend will be paid on Aug 15, 2022, to shareholders of record as of Jul 28.
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 Some Other Insurers
Of the insurance industry players that have reported second-quarter results so far, the bottom lines of
The Travelers Companies, Inc. ( TRV Quick Quote TRV - Free Report) and RLI Corp. ( RLI Quick Quote RLI - Free Report) beat the Zacks Consensus Estimate, while that of The Progressive Corporation ( PGR Quick Quote PGR - Free Report) matched the consensus mark.
Travelers reported second-quarter 2022 core income of $2.57 per share, which beat the Zacks Consensus Estimate by 28.5%. The bottom line decreased 26% year over year. Travelers’ total revenues increased 7% from the year-ago quarter to $9.2 billion, primarily due to higher premiums. The top-line figure beat the Zacks Consensus Estimate by 1.8%. Net written premiums of TRV increased 11% year over year to $9 billion.
RLI’s second-quarter 2022 operating earnings of $1.49 per share outpaced the Zacks Consensus Estimate by 6.1%. The bottom line improved 36.7% from the prior-year quarter. Operating revenues of RLI for the reported quarter were $301.3 million, up 16.9% year over year, driven by 17.3% higher net premiums earned and 10.5% higher net investment income. The top line beat the Zacks Consensus Estimate of $276 million by 0.9%. RLI’s underwriting income of $56 million increased 53% year over year.
Progressive reported second-quarter 2022 earnings per share of 95 cents, in line with the Zacks Consensus Estimate. The bottom line declined 37.1% year over year. Net premiums written of Progressive were $12.4 billion in the quarter, up 8% from $11.7 billion a year ago. PGR’s combined ratio — the percentage of premiums paid out as claims and expenses — improved 90 basis points (bps) from the prior-year quarter’s level to 95.6.