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Marsh & McLennan's (MMC) Q4 Earnings Top Estimates, Rise Y/Y

Zacks Equity Research
·4 mins read

Marsh & McLennan Companies, Inc. MMC delivered fourth-quarter 2019 adjusted earnings per share of $1.19, surpassing the Zacks Consensus Estimate by 0.8% on the back of solid revenues. Moreover, the same increased 9.2% year over year.

Marsh & McLennan’s consolidated revenues of $4.3 billion were up 3% 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 1.8%.

Total operating expenses of $3.7 billion in the fourth quarter were up 18.8% 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 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 $2.4 billion, up 3% on an underlying basis. Adjusted operating income surged 31% to $550 million from the prior-year quarter’s level.

Marsh, a unit within this segment generated revenues of $2.2 billion, up 3% on an underlying basis. In U.S./Canada, underlying revenues rose 4%.

Underlying revenue growth from international operations of 1% includes 7% increase of the metric in the Asia Pacific and a 2% rise in Latin America. However, the same was partially offset by a 1% dip in EMEA.

Another unit under this segment, Guy Carpenter, displayed 10% revenue growth on an underlying basis in the quarter under review.

Consulting

The Consulting segment's revenues inched up 2% on an underlying basis to $1.9 billion. Also, adjusted operating income was flat at $359 million.

A unit within this segment, Mercer, generated revenues of $1.3 billion, up 4% on an underlying basis. Wealth’s revenues were up 2% on an underlying basis. Health and Career’s revenues were each up 6% and 4% year over year on an underlying basis.

Another unit Oliver Wyman Group registered revenues of $559 million, down 2% on an underlying basis.

Share Repurchase Update

The company bought back shares worth $185 million in the quarter under review.

Financial Update

Marsh & McLennan exited the fourth quarter of 2019 with cash and cash equivalents of nearly $1.2 billion, up 8.3% from the figure at 2018 end.

Cash flow from operations for 2019 totaled $2.3 billion, sliding 2.8% year over year.

As of Dec 31, 2019, Marsh & McLennan’s total assets were $31.3 billion, up 45.1% from the figure as of Dec 31, 2018.

Total equity was $7.9 billion, up 4.7% from the level at 2018 end.

Full-Year Update

For 2019, the company’s revenues of $16.7 billion were up 4% year over year on an underlying basis. Adjusted earnings per share rose 7% year over year to $4.66.

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 fourth-quarter earnings so far, the bottom-line results of Brown & Brown, Inc. BRO and RLI Corp. RLI beat estimates while that of Principal Financial PFG matched the Zacks Consensus Estimate.

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