10-KPeriod: FY2019

MARSH & MCLENNAN COMPANIES, INC. Annual Report, Year Ended Dec 31, 2019

Filed February 20, 2020For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. (MMC) reported strong performance in its 2019 10-K filing, driven by the significant acquisition of Jardine Lloyd Thompson Group plc (JLT) on April 1, 2019. This acquisition, valued at approximately $5.6 billion, expanded MMC's global reach and service offerings, particularly in insurance and reinsurance broking. Consolidated revenue increased by 11% to $16.7 billion, with underlying revenue growth of 4%. The company's two primary segments, Risk and Insurance Services and Consulting, both contributed to this growth. Risk and Insurance Services, including Marsh and Guy Carpenter, saw revenue increase by 17% (4% underlying), while the Consulting segment, encompassing Mercer and Oliver Wyman Group, reported a 5% revenue increase (3% underlying). Despite integration and restructuring costs related to the JLT acquisition, which impacted operating income, the company demonstrated resilient underlying operational performance. Management highlighted strategic investments in technology and data analytics as key to future growth and client service enhancement.

Financial Highlights

51 data points
Beta

Revenue

$16.65B

Net Income

$1.74B

10.5% Net Margin

EPS (Diluted)

$3.41

Total Assets

$31.36B

Cash & Equivalents

$1.16B

Free Cash Flow

$1.94B

Financial Statements
Beta
Revenue$16.65B
Operating Expenses$13.97B
Operating Income$2.68B
Interest Expense$524.00M
Net Income$1.74B
EPS (Basic)$3.44
EPS (Diluted)$3.41
Shares Outstanding (Basic)506.00M
Shares Outstanding (Diluted)511.00M

Key Highlights

  • 1Acquisition of Jardine Lloyd Thompson Group (JLT) for $5.6 billion significantly expanded global presence and service capabilities.
  • 2Consolidated revenue grew 11% to $16.7 billion, with underlying revenue growth of 4% reported.
  • 3Risk and Insurance Services segment revenue increased 17% (4% underlying), driven by Marsh and Guy Carpenter.
  • 4Consulting segment revenue grew 5% (3% underlying), reflecting contributions from Mercer and Oliver Wyman Group.
  • 5The company incurred significant integration and restructuring costs related to the JLT acquisition, impacting reported operating income.
  • 6Shareholder returns were supported by $485 million in share repurchases and dividend payments of $890 million during the year.
  • 7The company maintained strong financial footing with total assets of $31.4 billion and total equity of $7.9 billion.

Frequently Asked Questions

The acquisition of JLT on April 1, 2019, for approximately $5.6 billion, significantly boosted consolidated revenue by 17% in the Risk and Insurance Services segment and contributed to overall company revenue growth. However, it also resulted in substantial integration and restructuring costs of $335 million for the year, which impacted operating income.

The Risk and Insurance Services segment, comprising Marsh and Guy Carpenter, saw a 17% revenue increase (4% underlying), while the Consulting segment, including Mercer and Oliver Wyman Group, reported a 5% revenue increase (3% underlying). Both segments demonstrated positive underlying growth.

Marsh & McLennan highlighted strategic initiatives involving investments in technology companies and systems to support its growth strategy. The company is actively responding to the threat of digital disruption and technological change by leveraging advancements like artificial intelligence, digital platforms, and data analytics to improve client experience and operational efficiencies.

Key risks identified include technology and cybersecurity threats, data protection failures, potential liability from errors and omissions, regulatory investigations and changes in legislation, competitive pressures including disintermediation, and risks associated with acquisitions and integration. Macroeconomic conditions and foreign exchange rate fluctuations were also cited as financial risks.