10-QPeriod: Q3 FY2017

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2017

Filed October 27, 2017For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. (MRSH) reported solid financial results for the nine months ended September 30, 2017. Revenue grew 5% to $10.3 billion, driven by underlying growth of 3% across both its Risk and Insurance Services and Consulting segments. Net income attributable to the Company increased by 10% to $1.46 billion, leading to a diluted EPS of $2.81, an 11% increase year-over-year. This growth was supported by strategic acquisitions and disciplined expense management, although operating expenses also increased due to acquisitions and higher salaries. Key financial strengths include a robust operating income of $2.17 billion and healthy cash flow generation from operations of $1.14 billion for the nine-month period. The company continued to return capital to shareholders through share repurchases ($600 million year-to-date) and dividends ($545 million year-to-date). The company is navigating ongoing regulatory investigations in the aviation and motor insurance sectors in Europe, which it is cooperating with. Marsh & McLennan's balance sheet remains strong, with total assets of $19.69 billion and total equity of $7.13 billion. The company's liquidity is sufficient, with $1.08 billion in cash and cash equivalents. Management is focused on strategic acquisitions and organic growth initiatives while managing operational costs and regulatory complexities.

Financial Highlights

51 data points
Beta

Revenue

$3.34B

Net Income

$393.00M

11.8% Net Margin

EPS (Diluted)

$0.76

Total Assets

$19.69B

Cash & Equivalents

$1.08B

Free Cash Flow

$721.00M

Financial Statements
Beta
Revenue$3.34B
Operating Expenses$2.81B
Operating Income$535.00M
Interest Expense$60.00M
Net Income$393.00M
EPS (Basic)$0.77
EPS (Diluted)$0.76
Shares Outstanding (Basic)512.00M
Shares Outstanding (Diluted)519.00M

Key Highlights

  • 1Consolidated revenue increased 5% to $10.3 billion for the first nine months of 2017, with underlying revenue growth of 3% in both the Risk & Insurance Services and Consulting segments.
  • 2Net income attributable to the Company rose 10% to $1.46 billion for the first nine months of 2017.
  • 3Diluted Earnings Per Share (EPS) increased 11% to $2.81 for the first nine months of 2017.
  • 4Operating income for the nine-month period grew 7% to $2.17 billion.
  • 5Cash flow from operations remained strong at $1.14 billion for the first nine months of 2017.
  • 6The company repurchased approximately $600 million of its common stock and paid $545 million in dividends during the first nine months of 2017.
  • 7Marsh & McLennan is cooperating with ongoing investigations by the European Commission and the UK's Financial Conduct Authority related to the aviation and motor insurance sectors.

Frequently Asked Questions

For the nine months ended September 30, 2017, Marsh & McLennan Companies reported a 5% increase in consolidated revenue to $10.3 billion, with underlying revenue growth of 3% in both its Risk and Insurance Services and Consulting segments. Net income attributable to the Company grew 10% to $1.46 billion, resulting in diluted EPS of $2.81, an 11% increase year-over-year. Operating income also saw a healthy increase of 7% to $2.17 billion.

Marsh & McLennan continues to actively manage its capital. For the first nine months of 2017, the company repurchased approximately $600 million of its common stock and paid $545 million in dividends. A significant share repurchase authorization of up to $2.5 billion remains in place, with approximately $1.8 billion available as of September 30, 2017.

The company is subject to regulatory scrutiny, with ongoing investigations in Europe concerning anti-competitive practices in the aviation and motor insurance broking sectors. While the company is cooperating with these investigations, the outcomes could materially impact financial results. Additionally, the company faces risks related to competition, macroeconomic conditions, foreign exchange fluctuations, and cybersecurity threats, as detailed in its risk factor disclosures.

Both the Risk and Insurance Services segment and the Consulting segment demonstrated solid performance. Risk and Insurance Services revenue grew 6% to $5.67 billion (3% underlying), while Consulting revenue increased 4% to $4.71 billion (3% underlying). Growth is being driven by a combination of strategic acquisitions and underlying business improvements across both segments.