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Marsh & McLennan's (MMC) Q3 Earnings Surpass, Decline Y/Y

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC delivered third-quarter 2019 adjusted earnings per share of 77 cents, surpassing the Zacks Consensus Estimate by 11.6% on the back of solid revenues. However, the same dipped 1.3% year over year.

Marsh & McLennan’s consolidated revenues of $4 billion were up 5% on an underlying basis. This upside is majorly attributable to the Risk and Insurances Services plus Consulting Segments. However, the top line missed the Zacks Consensus Estimate by 0.8%.

Total operating expenses of $3.5 billion in the third quarter were up 18.2% year over year due to higher 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-eps-surprise-chart | Marsh & McLennan Companies, Inc. Quote

Quarterly Segmental Results

Risk and Insurance Services


Revenues at the Risk and Insurance Services segment were $2.2 billion, up 6% on an underlying basis. Adjusted operating income increased 11% to $313 million from the prior-year quarter’s level.

Marsh, a unit within this segment generated revenues of $1.9 billion, up 5% on an underlying basis. In U.S./Canada, underlying revenues rose 6%.

Underlying revenue growth from international operations of 3% includes 7% increase of the metric in Asia Pacific, 2% rise in the EMEA and a 1% dip in Latin America.

Another unit under this segment, which is Guy Carpenter, displayed 11% revenue growth on an underlying basis.

Consulting

The Consulting segment's revenues improved 4% on an underlying basis to $1.8 billion. Also, adjusted operating income increased 9% year over year to $320 million.

A unit within this segment, Mercer, reported revenues of $1.3 billion, up 3% on an underlying basis. Wealth’s revenues were flat on an underlying basis.

Another unit Oliver Wyman Group registered revenues of $505 million, up 7% on an underlying basis.

Share Repurchase Update

The company bought back shares worth $200 million in the quarter under review.

In the third quarter, the company repaid $300 million of senior notes.

Financial Update

Marsh & McLennan exited the third quarter with cash and cash equivalents of nearly $1.2 billion, up 13.8% from the figure at 2018 end.

Cash flow from operations for the first nine months of 2019 totaled $1.3 billion, down 2.1% year over year.

As of Sep 30, 2019, Marsh & McLennan’s total assets were $31.1 billion, up 44.1% from the figure as of Dec 31, 2018.

Total equity was $7.8 billion, up 2.8% from the level at 2018 end.

Zacks Rank

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

Performance of Other Insurers

Among other players from the insurance industry having reported third-quarter earnings so far, the bottom-line results of The Progressive Corporation PGR, MGIC Investment Corporation MTG and RLI Corp. RLI outpaced the respective Zacks Consensus Estimate.   

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