Today's Viewpoint: A MarshBerry Publication

MMC ANNOUNCES 1Q2022 EARNINGS

Marsh & McLennan Companies, Inc. (MMC) reported 1Q22 results today with adjusted Earnings Per Share (EPS) of $2.30. Consolidated revenue rose to $5.5 billion which is up 9% compared to 1Q21. This compares to consensus analyst estimates of adjusted EPS of $2.14  and $5.5 billion revenue.

Below are notable takeaways from the quarter:

  • MMC reported organic revenue growth of 10% during 1Q22, in-line with the 10% organic growth rate achieved in 4Q21. This was its fourth consecutive quarter of double-digit growth and the highest first quarter underlying growth in over two decades with each of their businesses showing strength.
  • MMC’s global proprietary pricing index showed price increases within the Property & Casualty (P&C) insurance market of 11% year-over-year vs. increases of 13% in 4Q21, the 18th consecutive quarter of rate increases.
  • By line, the MMC market pricing index showed global property insurance was up 7% while global casualty rates were up mid-single digits. Again, as in the prior quarter, cyber rates more than doubled in some geographies. Global casualty rates were up approximately mid-single digits.
  • Organic growth in its Risk & Insurance Services (RIS) division in the first quarter was 11%, vs. an increase of 9% in the fourth quarter of 2021.
  • The Guy Carpenter Consulting division, consisting of primarily project-based revenue, saw organic growth up 11% year-over year, compared to 5% year-over-year in the fourth quarter of 2021. The division saw strong new business and retention.
  • MMC ended the quarter with $11.7 billion of total debt. The next scheduled debt maturity is in March 2023. In the first quarter, the company repurchased 3.2 million shares of stock for $500 million, reflecting a “strong financial position and outlook for cash generation.”
  • The company continues to expect to deploy approximately $4 billion of capital in 2022 across dividends, acquisitions and share repurchases, as noted in the prior quarterly report. “We favor attractive acquisitions over share repurchases as we view high-quality acquisitions as the better value creator for shareholders and the company over the long term,” noted CFO Mark McGivney.
  • Management reiterated its 2022 projection for underlying revenue growth of mid-single-digits or better, margin expansion, and solid growth in adjusted EPS for the year.

The company is optimistic about growth in 2022, as it sees demand for its solutions increasing given rising levels of complexity, volatility and uncertainty. The company expects to see growth from demand for its services arising from cyber concerns, commodity dislocations and the future of work, and its recent organic investments. However, the company noted increased uncertainty around the outlook given the Russia (where they have exited its business) and Ukraine conflict, as well as macro challenges like inflation and supply chain disruptions.

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This earnings summary has been prepared by Marsh, Berry & Co., LLC. and is not intended to provide investment recommendations on any company. It is not a research report, as such term is defined by applicable laws and regulations, and it does not contain sufficient information upon which to make an investment decision. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities, financial instruments or to participate in any particular trading strategy. These materials are based solely on information contained in publicly available documents and Marsh, Berry & Co., LLC has not independently attempted to investigate or to verify such information.

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