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Marsh & McLennan (MMC) Q4 Earnings Beat on Solid US Business
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Marsh & McLennan Companies, Inc. (MMC - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.68, which beat the Zacks Consensus Estimate by 5%. The bottom line rose 14% year over year.
Consolidated revenues improved 11% year over year to $5.6 billion in the quarter under review. The figure increased 7% on an underlying basis. Also, the top line outpaced the consensus mark by a whisker.
The quarterly results have benefited from strong contributions from the Risk and Insurance Services, and Consulting segments. While strong international operations aided the Marsh business, growing Wealth and Health revenues benefited the Consulting unit’s performance. However, the upside was partly offset by an increase in compensation and benefits expenses.
Total operating expenses of $4.5 billion increased 2.5% year over year in the fourth quarter and beat our estimate of $4.3 billion. The year-over-year increase was due to higher compensation and benefits costs. Total expenses in the Risk and Insurance Services segment witnessed a 1.8% year-over-year increase, whereas the Consulting segment’s expenses grew 5.6% year over year.
MMC hasreported an adjusted operating income of $1.2 billion in the quarter under review, which climbed 16% year over year. The adjusted operating margin of 23.3% improved 130 basis points (bps) year over year.
Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise
The segment’s revenues amounted to $3.3 billion in the fourth quarter, which climbed 11% year over year, or 8% on an underlying basis. The reported figure almost touched the Zacks Consensus Estimate and beat our estimate of $3.2 billion. Adjusted operating income improved 15% year over year to $791 million but lagged the consensus mark of $822 million and our estimate of $873 million.
Revenues of Marsh, a unit within the segment, grew 7% year over year or 6% on an underlying basis to $2.9 billion. The figure beat our estimate of $2.87 billion. In the United States/Canada, underlying revenues advanced 5% year over year. International operations witnessed underlying revenue growth of 7%. Among the international operations, Latin America witnessed the highest underlying revenue growth of 11%, followed by an increase of 10% and 5% in the Asia Pacific and EMEA, respectively.
Guy Carpenter’s (another unit within the Risk and Insurance Services segment) revenues of $252 million surged 48% year over year, or 9% on an underlying basis.
Consulting
The unit generated revenues of $2.3 billion, which improved 10% year over year, or 7% on an underlying basis. The reported figure surpassed the Zacks Consensus Estimate of $2.26 billion and our estimate of $2.27 billion. Adjusted operating income rose 18% year over year to $480 million in the fourth quarter, higher than our estimate of $414.1 million.
A unit within this segment, Mercer’s revenues of $1.4 billion advanced 9% year over year, or 5% on an underlying basis. The figure almost touched our estimate. Wealth and Health revenues grew 4% and 9%, respectively, on an underlying basis in the quarter under review. Career revenues inched up 1% on an underlying basis.
Oliver Wyman, another unit within the Consulting segment, recorded revenues of $856 million. The figure improved 12% year over year, or 9% on an underlying basis and surpassed the Zacks Consensus Estimate of $845 million. The figure lagged our estimate of $856.8 million.
Financial Update (as of Dec 31, 2023)
Marsh & McLennan exited the fourth quarter with cash and cash equivalents of $3.4 billion, which more than doubled from the 2022-end level. Total assets of $48 billion grew 8.9% from the 2022-end level.
Long-term debt amounted to $11.8 billion, which increased 5.5% from the figure as of Dec 31, 2022. Short-term debt increased more than six-fold from the 2022-end figure to $1.6 billion.
Total equity of $12.4 billion advanced 15.1% from the 2022-end level.
MMC generated cash flows from operations of $4.3 billion in 2023, which climbed 22.9% from the prior-year comparable period.
Capital Deployment Update
Marsh & McLennan bought back 6.4 million shares worth $1.2 billion for 2023.
Management announced a quarterly dividend of 71 cents per share, which will be paid out on Feb 15, 2024, to shareholders of record as of Jan 25, 2024.
Full-Year Update
Adjusted earnings per share of Marsh & McLennan came in at $7.99 for 2023, which climbed 17% from the 2022 figure. Consolidated revenues of $22.7 billion grew 10% year over year, or 9% on an underlying basis.
Consolidated adjusted operating income improved 17% year over year to $5.6 billion. The adjusted operating margin of 26% improved 130 bps year over year.
Revenues at the Risk and Insurance Services segment rose 11% year over year and the Consulting segment’s revenues increased 7% year over year in 2023.
Of the insurance industry players that have reported fourth-quarter 2023 results so far, the bottom-line results of Brown & Brown, Inc. (BRO - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and W. R. Berkley Corporation (WRB - Free Report) beat the Zacks Consensus Estimate.
Brown & Brown’s fourth-quarter 2023 adjusted earnings of 58 cents per share beat the Zacks Consensus Estimate by 9.4%. The bottom line increased 16% year over year. Total revenues of $1.03 billion beat the Zacks Consensus Estimate by 4.6%. The top line improved 13.8% year over year. The upside can be primarily attributed to commission and fees, which grew 12.4% year over year to $1 billion. Organic revenues improved 7.7% to $922.9 million in the quarter under review. Investment income of BRO increased year over year to $18.5 million from $4.7 million in the year-ago quarter. Adjusted EBITDAC was $317.7 million, up 11.7% year over year. EBITDAC margin, however, contracted 40 bps year over year to 31%.
Travelers’ fourth-quarter 2023 core income of $7.01 per share beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year. Total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%. Net written premiums of TRV increased 13% year over year to about $10 billion. Net investment income increased 24% year over year to $778 million. It witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
W.R. Berkley Corporation reported fourth-quarter 2023 operating income of $1.45 per share, which beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Net premiums written were $2.7 billion, up 12% year over year. Operating revenues of WRB came in at $3.2 billion, up 9.3% year over year The top line beat the consensus estimate by 1.3%. Net investment income surged 35.5% to a record $313.3 million, driven by a 52.9% increase in the core portfolio. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year to 88.4. Net premiums written at the Insurance segment increased 12.2% year over year to $2.4 billion in the quarter.
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Marsh & McLennan (MMC) Q4 Earnings Beat on Solid US Business
Marsh & McLennan Companies, Inc. (MMC - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.68, which beat the Zacks Consensus Estimate by 5%. The bottom line rose 14% year over year.
Consolidated revenues improved 11% year over year to $5.6 billion in the quarter under review. The figure increased 7% on an underlying basis. Also, the top line outpaced the consensus mark by a whisker.
The quarterly results have benefited from strong contributions from the Risk and Insurance Services, and Consulting segments. While strong international operations aided the Marsh business, growing Wealth and Health revenues benefited the Consulting unit’s performance. However, the upside was partly offset by an increase in compensation and benefits expenses.
Total operating expenses of $4.5 billion increased 2.5% year over year in the fourth quarter and beat our estimate of $4.3 billion. The year-over-year increase was due to higher compensation and benefits costs. Total expenses in the Risk and Insurance Services segment witnessed a 1.8% year-over-year increase, whereas the Consulting segment’s expenses grew 5.6% year over year.
MMC hasreported an adjusted operating income of $1.2 billion in the quarter under review, which climbed 16% year over year. The adjusted operating margin of 23.3% improved 130 basis points (bps) year over year.
Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise
Marsh & McLennan Companies, Inc. price-consensus-eps-surprise-chart | Marsh & McLennan Companies, Inc. Quote
Segmental Update
Risk and Insurance Services
The segment’s revenues amounted to $3.3 billion in the fourth quarter, which climbed 11% year over year, or 8% on an underlying basis. The reported figure almost touched the Zacks Consensus Estimate and beat our estimate of $3.2 billion. Adjusted operating income improved 15% year over year to $791 million but lagged the consensus mark of $822 million and our estimate of $873 million.
Revenues of Marsh, a unit within the segment, grew 7% year over year or 6% on an underlying basis to $2.9 billion. The figure beat our estimate of $2.87 billion. In the United States/Canada, underlying revenues advanced 5% year over year. International operations witnessed underlying revenue growth of 7%. Among the international operations, Latin America witnessed the highest underlying revenue growth of 11%, followed by an increase of 10% and 5% in the Asia Pacific and EMEA, respectively.
Guy Carpenter’s (another unit within the Risk and Insurance Services segment) revenues of $252 million surged 48% year over year, or 9% on an underlying basis.
Consulting
The unit generated revenues of $2.3 billion, which improved 10% year over year, or 7% on an underlying basis. The reported figure surpassed the Zacks Consensus Estimate of $2.26 billion and our estimate of $2.27 billion. Adjusted operating income rose 18% year over year to $480 million in the fourth quarter, higher than our estimate of $414.1 million.
A unit within this segment, Mercer’s revenues of $1.4 billion advanced 9% year over year, or 5% on an underlying basis. The figure almost touched our estimate. Wealth and Health revenues grew 4% and 9%, respectively, on an underlying basis in the quarter under review. Career revenues inched up 1% on an underlying basis.
Oliver Wyman, another unit within the Consulting segment, recorded revenues of $856 million. The figure improved 12% year over year, or 9% on an underlying basis and surpassed the Zacks Consensus Estimate of $845 million. The figure lagged our estimate of $856.8 million.
Financial Update (as of Dec 31, 2023)
Marsh & McLennan exited the fourth quarter with cash and cash equivalents of $3.4 billion, which more than doubled from the 2022-end level. Total assets of $48 billion grew 8.9% from the 2022-end level.
Long-term debt amounted to $11.8 billion, which increased 5.5% from the figure as of Dec 31, 2022. Short-term debt increased more than six-fold from the 2022-end figure to $1.6 billion.
Total equity of $12.4 billion advanced 15.1% from the 2022-end level.
MMC generated cash flows from operations of $4.3 billion in 2023, which climbed 22.9% from the prior-year comparable period.
Capital Deployment Update
Marsh & McLennan bought back 6.4 million shares worth $1.2 billion for 2023.
Management announced a quarterly dividend of 71 cents per share, which will be paid out on Feb 15, 2024, to shareholders of record as of Jan 25, 2024.
Full-Year Update
Adjusted earnings per share of Marsh & McLennan came in at $7.99 for 2023, which climbed 17% from the 2022 figure. Consolidated revenues of $22.7 billion grew 10% year over year, or 9% on an underlying basis.
Consolidated adjusted operating income improved 17% year over year to $5.6 billion. The adjusted operating margin of 26% improved 130 bps year over year.
Revenues at the Risk and Insurance Services segment rose 11% year over year and the Consulting segment’s revenues increased 7% year over year in 2023.
Zacks Rank
Marsh & McLennan currently 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 reported fourth-quarter 2023 results so far, the bottom-line results of Brown & Brown, Inc. (BRO - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and W. R. Berkley Corporation (WRB - Free Report) beat the Zacks Consensus Estimate.
Brown & Brown’s fourth-quarter 2023 adjusted earnings of 58 cents per share beat the Zacks Consensus Estimate by 9.4%. The bottom line increased 16% year over year. Total revenues of $1.03 billion beat the Zacks Consensus Estimate by 4.6%. The top line improved 13.8% year over year. The upside can be primarily attributed to commission and fees, which grew 12.4% year over year to $1 billion. Organic revenues improved 7.7% to $922.9 million in the quarter under review. Investment income of BRO increased year over year to $18.5 million from $4.7 million in the year-ago quarter. Adjusted EBITDAC was $317.7 million, up 11.7% year over year. EBITDAC margin, however, contracted 40 bps year over year to 31%.
Travelers’ fourth-quarter 2023 core income of $7.01 per share beat the Zacks Consensus Estimate of $5.04. The bottom line more than doubled year over year. Total revenues increased 13.5% from the year-ago quarter to $10.9 billion, primarily driven by higher premiums. The top-line figure beat the Zacks Consensus Estimate by 0.2%. Net written premiums of TRV increased 13% year over year to about $10 billion. Net investment income increased 24% year over year to $778 million. It witnessed an underwriting gain of $1.4 billion, up more than three-fold year over year. The combined ratio improved 870 bps year over year to 85.8, driven by a lower underlying combined ratio and lower catastrophe losses.
W.R. Berkley Corporation reported fourth-quarter 2023 operating income of $1.45 per share, which beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. Net premiums written were $2.7 billion, up 12% year over year. Operating revenues of WRB came in at $3.2 billion, up 9.3% year over year The top line beat the consensus estimate by 1.3%. Net investment income surged 35.5% to a record $313.3 million, driven by a 52.9% increase in the core portfolio. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio remained flat year over year to 88.4. Net premiums written at the Insurance segment increased 12.2% year over year to $2.4 billion in the quarter.