10-QPeriod: Q2 FY2021

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 22, 2021For Securities:MRSHMMC

Summary

Marsh & McLennan Companies, Inc. (MRSH) reported strong financial performance for the second quarter and first half of 2021, with significant revenue growth driven by a robust economic recovery and strong performance in both its Risk and Insurance Services (RIS) and Consulting segments. Revenue increased by 20% year-over-year for Q2 2021 and 14% for the first six months. Operating income saw a substantial rise of 39% in Q2 and 32% for the year-to-date period. This growth was underpinned by solid new business generation, client retention, and favorable market pricing within RIS, while the Consulting segment benefited from increased demand for project-based services and higher investment management fees. Diluted EPS also showed significant improvement. The company continues to manage integration costs from the JLT acquisition, which are declining, and is actively engaged in share repurchases.

Financial Highlights

50 data points
Beta

Revenue

$5.02B

Net Income

$820.00M

16.3% Net Margin

EPS (Diluted)

$1.60

Total Assets

$32.95B

Cash & Equivalents

$888.00M

Free Cash Flow

$1.08B

Financial Statements
Beta
Revenue$5.02B
Operating Expenses$3.79B
Operating Income$1.23B
Interest Expense$110.00M
Net Income$820.00M
EPS (Basic)$1.61
EPS (Diluted)$1.60
Shares Outstanding (Basic)508.00M
Shares Outstanding (Diluted)513.00M

Key Highlights

  • 1Total revenue for Q2 2021 was $5.017 billion, a 20% increase over Q2 2020.
  • 2Operating income for Q2 2021 rose by 39% to $1.228 billion compared to Q2 2020.
  • 3Risk and Insurance Services (RIS) segment revenue grew 21% to $3.141 billion in Q2 2021.
  • 4Consulting segment revenue increased by 17% to $1.892 billion in Q2 2021.
  • 5Diluted earnings per share increased to $1.60 in Q2 2021 from $1.12 in Q2 2020.
  • 6JLT integration and restructuring costs decreased significantly, indicating progress towards full integration.
  • 7The company repurchased approximately $434 million of its common stock in the first six months of 2021.

Frequently Asked Questions

Revenue growth was primarily driven by a 13% increase in underlying revenue across both the Risk and Insurance Services and Consulting segments. This was supported by a strong recovery in the U.S. and global economies, robust new business generation and client retention in RIS, and increased demand for project-based services and higher investment management fees in the Consulting segment. Foreign currency translation and acquisitions also contributed to the overall GAAP revenue increase.

JLT integration and restructuring costs have significantly decreased, with $19 million incurred in Q2 2021 compared to $57 million in Q2 2020. This reduction reflects the company's progress in integrating the JLT business. The company expects these costs to largely conclude by the end of 2021, with remaining integration costs projected at $97 million. This decrease positively impacted operating expenses, allowing for greater profitability.

Marsh & McLennan Companies actively manages its capital through a combination of share repurchases and dividend payments. In the first six months of 2021, the company repurchased approximately $434 million of its common stock and paid $478 million in dividends. The company also has an active share repurchase program authorized up to approximately $2 billion as of June 30, 2021.

The company is involved in various legal proceedings and contingent matters, primarily related to alleged errors and omissions in professional services. While the company establishes liabilities when losses are probable and reasonably estimable, the ultimate impact of certain ongoing matters, such as the FCA review of pension transfer advice (JLT), cannot be predicted. Adverse outcomes in these matters could potentially have a material impact on financial results in future periods.