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Marsh & McLennan's (MMC) Earnings Beat in Q2, Improve Y/Y

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC delivered second-quarter 2020 adjusted earnings per share of $1.32, surpassing the Zacks Consensus Estimate by 15.8% on reduced expenses and a solid contribution from its Risk and Insurance Services segment. Moreover, the bottom line increased 11.9% year over year.

Marsh & McLennan’s consolidated revenues of $4.2 billion dipped 2% on an underlying basis. However, the top line beat the Zacks Consensus Estimate by 0.5% on the back of its strong Risk and Insurance Services segment.

Total operating expenses of $3.3 billion in the second quarter were down 10% year over year owing to lower compensation and benefits as well as other operating expenses.

Marsh McLennan Companies, Inc. Price, Consensus and EPS Surprise

Marsh McLennan Companies, Inc. Price, Consensus and EPS Surprise
Marsh McLennan Companies, Inc. Price, Consensus and EPS Surprise

Marsh McLennan Companies, Inc. price-consensus-eps-surprise-chart | Marsh McLennan Companies, Inc. Quote

Quarterly Segmental Results

Risk and Insurance Services

Revenues at the Risk and Insurance Services segment were $2.6 billion, up 2% on an underlying basis. Adjusted operating income rose 19% to $762 million from the prior-year quarter’s level.

Marsh, a unit within this segment, generated revenues of $2.2 billion, up 1% on an underlying basis. In U.S./Canada, underlying revenues rose 3% year over year.

Underlying revenue growth from international operations was flat year over year, which includes 4% increase of the underlying metric in the Asia Pacific, a 4% rise in Latin America and a 3% drop in EMEA.

Another unit under this segment, Guy Carpenter, displayed 9% revenue growth on an underlying basis in the quarter under review.

Consulting

The Consulting segment's revenues were down 6% on an underlying basis to $1.6 billion. Also, adjusted operating income fell 13% to $265 million.

A unit within this segment, Mercer, generated revenues of $1.1 billion, down 3% on an underlying basis. Wealth’s revenues were down 2% on an underlying basis. Health and Career’s revenues were up 1% and down 16% year over year on an underlying basis.

Another unit Oliver Wyman Group registered revenues of $467 million, down 13% year over year on an underlying basis.

Business Update

The company issued $750 million of 10-year senior unsecured notes in the second quarter.

Dividend Update

The company hiked its quarterly dividend to 46.5 cents per share, effective with the third-quarter dividend, payable Aug 14, 2020.

Financial Update

Marsh & McLennan exited the second quarter with cash and cash equivalents of $1.7 billion, up 48.1% from the level at 2019 end.

Net cash provided by operating activities totaled $578 million, up 139.8% year over year.

As of Jun 30, 2020, Marsh & McLennan’s total assets were $32.2 billion, up 2.6% from the figure as of Dec 31, 2019.

Total equity was $8.3 billion, up 5.7% from the level at 2019 end.

Zacks Rank and Performance of Other Players

Marsh & McLennan carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the insurance industry players, which have reported second-quarter results so far, earnings of Cincinnati Financial Corporation CINF, First American Financial Corporation FAF and RLI Corp. RLI beat the respective Zacks Consensus Estimate.

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