01—Abstract
Summary
Summary of the 10-K filed February 20, 2020. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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%b (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.
02—Key points
Key Highlights
- Acquisition of Jardine Lloyd Thompson Group (JLT) for $5.6 billion significantly expanded global presence and service capabilities.
- Consolidated revenue grew 11% to $16.7 billion, with underlying revenue growth of 4% reported.
- Risk and Insurance Services segment revenue increased 17% (4% underlying), driven by Marsh and Guy Carpenter.
- Consulting segment revenue grew 5% (3% underlying), reflecting contributions from Mercer and Oliver Wyman Group.
- The company incurred significant integration and restructuring costs related to the JLT acquisition, impacting reported operating income.
- Shareholder returns were supported by $485 million in share repurchases and dividend payments of $890 million during the year.
- The company maintained strong financial footing with total assets of $31.4 billion and total equity of $7.9 billion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 20, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $16.65B$14.95B | +11.4% |
| Operating Expenses | $13.97B$12.19B | +14.7% |
| Operating Income | $2.68B$2.76B | −3.0% |
| Interest Expense | $524.00M$290.00M | +80.7% |
| Net Income | $1.74B$1.65B | +5.6% |
| EPS (Basic) | $3.44$3.26 | +5.5% |
| EPS (Diluted) | $3.41$3.23 | +5.6% |
| Shares Outstanding (Basic) | 506.00M506.00M | 0.0% |
| Shares Outstanding (Diluted) | 511.00M511.00M | 0.0% |
05—Questions
Frequently Asked Questions
What was the financial impact of the JLT acquisition on Marsh & McLennan in 2019?
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.
How did the company's two main segments perform?
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.
What is the company's outlook regarding technology and innovation?
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.
What were the key risk factors mentioned in the filing?
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.
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