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Marsh & McLennan's (MMC) Q3 Earnings Surpass, Decline Y/Y

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Marsh & McLennan Companies, Inc. (MMC - Free Report) delivered third-quarter 2019 adjusted earnings per share of 77 cents, surpassing the Zacks Consensus Estimate by 11.6% on the back of solid revenues. However, the same dipped 1.3% year over year.

Marsh & McLennan’s consolidated revenues of $4 billion were up 5% on an underlying basis. This upside is majorly attributable to the Risk and Insurances Services plus Consulting Segments. However, the top line missed the Zacks Consensus Estimate by 0.8%.

Total operating expenses of $3.5 billion in the third quarter were up 18.2% year over year due to higher compensation and benefits as well as other operating expenses.

Quarterly Segmental Results

Risk and Insurance Services

Revenues at the Risk and Insurance Services segment were $2.2 billion, up 6% on an underlying basis. Adjusted operating income increased 11% to $313 million from the prior-year quarter’s level.

Marsh, a unit within this segment generated revenues of $1.9 billion, up 5% on an underlying basis. In U.S./Canada, underlying revenues rose 6%.

Underlying revenue growth from international operations of 3% includes 7% increase of the metric in Asia Pacific, 2% rise in the EMEA and a 1% dip in Latin America.

Another unit under this segment, which is Guy Carpenter, displayed 11% revenue growth on an underlying basis.


The Consulting segment's revenues improved 4% on an underlying basis to $1.8 billion. Also, adjusted operating income increased 9% year over year to $320 million.

A unit within this segment, Mercer, reported revenues of $1.3 billion, up 3% on an underlying basis. Wealth’s revenues were flat on an underlying basis.

Another unit Oliver Wyman Group registered revenues of $505 million, up 7% on an underlying basis.

Share Repurchase Update

The company bought back shares worth $200 million in the quarter under review.

In the third quarter, the company repaid $300 million of senior notes.

Financial Update

Marsh & McLennan exited the third quarter with cash and cash equivalents of nearly $1.2 billion, up 13.8% from the figure at 2018 end.

Cash flow from operations for the first nine months of 2019 totaled $1.3 billion, down 2.1% year over year.

As of Sep 30, 2019, Marsh & McLennan’s total assets were $31.1 billion, up 44.1% from the figure as of Dec 31, 2018.

Total equity was $7.8 billion, up 2.8% from the level at 2018 end.

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

Among other players from the insurance industry having reported third-quarter earnings so far, the bottom-line results of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) outpaced the respective Zacks Consensus Estimate.   

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