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Marsh & McLennan's (MMC) Q4 Earnings Beat Estimates, Up Y/Y

Zacks Equity Research

Marsh & McLennan Companies, Inc. MMC delivered fourth-quarter 2018 adjusted earnings per share of $1.09, surpassing the Zacks Consensus Estimate by 5.8%. Also, the bottom line improved 3.8% year over year.

 Marsh & McLennan’s consolidated revenues were $3.7 billion, up 3% on an underlying basis. This upside is majorly attributable to the Risk and Insurances Services plus Consulting Segments. Meanwhile, the top line slightly missed the Zacks Consensus Estimate by 0.2%.

Total operating expenses of $3.1 billion in the fourth quarter were up 2.5% year over year due to high compensation and benefits and other operating expenses.

Full-Year Highlights

For the full year, the company generated revenues of $15 billion, up 4% on an underlying basis. Adjusted earnings per share rose to $4.35, up 11% year over year.

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

Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise | Marsh & McLennan Companies, Inc. Quote

Quarterly Segment Results

Risk and Insurance Services


Revenues at the Risk and Insurance Services segment were $1.9 billion, up 6% on an underlying basis. Adjusted operating income dipped 1% to $418 million from the prior-year quarter’s level. However, excluding the impact of ASC 606, adjusted operating income improved 16% year over year.

Marsh, a unit within this segment, generated revenues of $1.8 billion, up 6% on an underlying basis. In U.S./Canada, underlying revenues rose 7%. Underlying revenue growth from international operations includes 8% of the metric in Asia Pacific, 3% in EMEA and 8% in Latin America.

Another unit under this segment — Guy Carpenter — displayed 5% revenue growth on an underlying basis to $102 million in the quarter under review.

Consulting

The Consulting segment's revenues inched up 3% on an underlying basis to $1.8 billion. Also, adjusted operating income increased 16% year over year to $359 million. Excluding the impact of ASC 606, adjusted operating income improved 9%.

A unit within this segment — Mercer — reported revenues of $1.2 billion, up 2% on an underlying basis. Wealth’s revenues dipped 1% on an underlying basis.

Another unit, Oliver Wyman Group, registered revenues of $577 million, up 7% on an underlying basis.

Financial Update

Marsh & McLennan exited the quarter with cash and cash equivalents of nearly $1.1 billion, down 11.5% from the figure at 2017 end.

As of Dec 31, 2018, Marsh & McLennan’s total assets were $21.6 billion, up 5.6% from the tally at year-end 2017.

Total equity was $7.6 billion, up 1.9% from the level at year-end 2017.

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 the insurance industry players that have reported fourth-quarter earnings so far, The Travelers Companies, Inc. TRV and RLI Corp.’s RLI earnings beat the respective Zacks Consensus Estimate while The Progressive Corporation’s PGR metric missed the same.

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