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Marsh & McLennan (MMC) Q2 Earnings Beat on Solid Marsh Unit
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Marsh & McLennan Companies, Inc. (MMC - Free Report) reported second-quarter 2024 adjusted earnings per share of $2.41, which beat the Zacks Consensus Estimate by 0.8%. The bottom line advanced 10% year over year.
Consolidated revenues rose 6% year over year to $6.2 billion. The figure also improved 6% on an underlying basis. The top line, however, fell short of the consensus mark by 1%.
The quarterly results were aided by strength in Marsh and Guy Carpenter units within the Risk and Insurance Services segment. Additionally, the company's strong Health business contributed to the positive results. The upside was partly offset by an overall elevated compensation and benefits expense level.
Total operating expenses of $4.58 billion increased 3.6% year over year but were lower than our estimate of $4.62 billion. The year-over-year increase was due to higher compensation and benefits costs. Expenses of the Risk and Insurance Services segment escalated 6.2% year over year while the Consulting segment’s expenses inched up 1.2% year over year.
MMC’s adjusted operating income was $1.72 billion in the second quarter, which grew 11% year over year and beat our estimate of $1.68 billion. Adjusted operating margin improved 130 basis points (bps) year over year to 29%.
Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise
Revenues in the segment were $4.02 billion, which advanced 8% year over year and 7% on an underlying basis. The reported figure outpaced the Zacks Consensus Estimate of $4 billion and our estimate of $3.98 billion. Adjusted operating income advanced 12% year over year to $1.34 billion, higher than the consensus mark of $1.28 billion and our estimate of $1.22 billion.
Revenues of Marsh, a unit within the segment, improved 8% year over year and 7% on an underlying basis to $3.27 billion. The reported figure outpaced the Zacks Consensus Estimate of $3.26 billion and our estimate of $3.24 billion. In the United States/Canada, underlying revenues grew 6% year over year. International operations also witnessed underlying revenue growth of 7%. Among the international operations, Latin America saw the highest underlying revenue growth of 8%, followed by an increase of 7% each in EMEA and Asia Pacific.
Revenues of Guy Carpenter, another unit within the segment, rose 10% year over year and 11% on an underlying basis to $632 million. The figure was higher than the consensus mark of $615.9 million and our estimate of $616.3 million.
Consulting
The unit recorded revenues of $2.2 billion, which increased 2% year over year and 4% on an underlying basis. However, the reported figure lagged the Zacks Consensus Estimate and our estimate of $2.3 billion. Adjusted operating income advanced 6% year over year to $426 million but missed our estimate of $555.6 million.
Revenues of Mercer, a unit within this segment, remained flat year over year and grew 5% on an underlying basis to $1.38 billion. Yet, the figure fell short of the consensus mark and our estimate of $1.45 billion. Health revenues climbed 9% on an underlying basis while Wealth and Career revenues witnessed underlying increases of 3% and 2%, respectively.
Oliver Wyman, another unit within the segment, recorded revenues of $837 million, which advanced 3% on an underlying basis. The metric lagged the Zacks Consensus Estimate of $857.6 million and our estimate of $861.8 million.
Financial Update (as of Jun 30, 2024)
Marsh & McLennan exited the second quarter with cash and cash equivalents of $1.7 billion, which declined more than two-fold from the 2023-end figure. Total assets of $48.6 billion inched up 1.2% from the figure at 2023-end.
Long-term debt amounted to $12.3 billion, which increased 3.7% from the figure as of the end of Dec 31, 2023. Short-term debt amounted to $1.3 billion.
Total equity of $13.6 billion rose 9.7% from the 2023-end level.
MMC generated operating cash flows of $434 million in the first half of 2024, which dropped 34.7% from the prior-year comparable period.
Capital Deployment Update
Marsh & McLennan bought back 1.5 million shares worth $300 million in the second quarter.
Recently, management approved a hike of 15% in the quarterly dividend. The increased dividend, amounting to 81.5 cents per share, will be paid out on Aug 15, to shareholders of record as of Jul 25, 2024.
Zacks Rank
Marsh & McLennan currently carries a Zacks Rank #3 (Hold).
Performance of Another Insurer
Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line result of The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.
Progressive reported second-quarter earnings per share of $2.65, which beat the Zacks Consensus Estimate of $1.99. The bottom line improved more than five times year over year. Operating revenues of $18.3 billion beat the consensus estimate by 1.4% and increased 18.9% year over year. Net premiums written were $17.9 billion, up 22% from $14.7 billion a year ago. Net premiums earned grew 19% to $17.2 billion.
PGR’s combined ratio — the percentage of premiums paid out as claims and expenses — improved 850 bps from the prior-year quarter’s level to 91.9. Special Lines improved 8% to 6.3 million. In the Personal Auto segment, Direct Auto increased 12% year over year to 12.6 million while Agency Auto increased 6% to 9 million.
Upcoming Earnings Releases
Here are two other companies from the insurance space that are set to report their respective quarterly earnings soon.
The Zacks Consensus Estimate for RGA’s second-quarter earnings is pinned at $4.94 per share, implying a 12.3% rise from the year-ago quarter’s reported figure.
Reinsurance Group’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.48%.
Arthur J. Gallagher & Co. (AJG - Free Report) currently has an Earnings ESP of +0.16% and a Zacks Rank of 3. The Zacks Consensus Estimate for AJG’s second-quarter earnings is pegged at $2.24 per share, indicating a 17.9% rise from the year-ago quarter’s reported number.
Arthur J. Gallagher’s earnings beat estimates in each of the trailing four quarters, the average surprise being 2.25%.
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Marsh & McLennan (MMC) Q2 Earnings Beat on Solid Marsh Unit
Marsh & McLennan Companies, Inc. (MMC - Free Report) reported second-quarter 2024 adjusted earnings per share of $2.41, which beat the Zacks Consensus Estimate by 0.8%. The bottom line advanced 10% year over year.
Consolidated revenues rose 6% year over year to $6.2 billion. The figure also improved 6% on an underlying basis. The top line, however, fell short of the consensus mark by 1%.
The quarterly results were aided by strength in Marsh and Guy Carpenter units within the Risk and Insurance Services segment. Additionally, the company's strong Health business contributed to the positive results. The upside was partly offset by an overall elevated compensation and benefits expense level.
Total operating expenses of $4.58 billion increased 3.6% year over year but were lower than our estimate of $4.62 billion. The year-over-year increase was due to higher compensation and benefits costs. Expenses of the Risk and Insurance Services segment escalated 6.2% year over year while the Consulting segment’s expenses inched up 1.2% year over year.
MMC’s adjusted operating income was $1.72 billion in the second quarter, which grew 11% year over year and beat our estimate of $1.68 billion. Adjusted operating margin improved 130 basis points (bps) year over year to 29%.
Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise
Marsh & McLennan Companies, Inc. price-consensus-eps-surprise-chart | Marsh & McLennan Companies, Inc. Quote
Segmental Update
Risk and Insurance Services
Revenues in the segment were $4.02 billion, which advanced 8% year over year and 7% on an underlying basis. The reported figure outpaced the Zacks Consensus Estimate of $4 billion and our estimate of $3.98 billion. Adjusted operating income advanced 12% year over year to $1.34 billion, higher than the consensus mark of $1.28 billion and our estimate of $1.22 billion.
Revenues of Marsh, a unit within the segment, improved 8% year over year and 7% on an underlying basis to $3.27 billion. The reported figure outpaced the Zacks Consensus Estimate of $3.26 billion and our estimate of $3.24 billion. In the United States/Canada, underlying revenues grew 6% year over year. International operations also witnessed underlying revenue growth of 7%. Among the international operations, Latin America saw the highest underlying revenue growth of 8%, followed by an increase of 7% each in EMEA and Asia Pacific.
Revenues of Guy Carpenter, another unit within the segment, rose 10% year over year and 11% on an underlying basis to $632 million. The figure was higher than the consensus mark of $615.9 million and our estimate of $616.3 million.
Consulting
The unit recorded revenues of $2.2 billion, which increased 2% year over year and 4% on an underlying basis. However, the reported figure lagged the Zacks Consensus Estimate and our estimate of $2.3 billion. Adjusted operating income advanced 6% year over year to $426 million but missed our estimate of $555.6 million.
Revenues of Mercer, a unit within this segment, remained flat year over year and grew 5% on an underlying basis to $1.38 billion. Yet, the figure fell short of the consensus mark and our estimate of $1.45 billion. Health revenues climbed 9% on an underlying basis while Wealth and Career revenues witnessed underlying increases of 3% and 2%, respectively.
Oliver Wyman, another unit within the segment, recorded revenues of $837 million, which advanced 3% on an underlying basis. The metric lagged the Zacks Consensus Estimate of $857.6 million and our estimate of $861.8 million.
Financial Update (as of Jun 30, 2024)
Marsh & McLennan exited the second quarter with cash and cash equivalents of $1.7 billion, which declined more than two-fold from the 2023-end figure. Total assets of $48.6 billion inched up 1.2% from the figure at 2023-end.
Long-term debt amounted to $12.3 billion, which increased 3.7% from the figure as of the end of Dec 31, 2023. Short-term debt amounted to $1.3 billion.
Total equity of $13.6 billion rose 9.7% from the 2023-end level.
MMC generated operating cash flows of $434 million in the first half of 2024, which dropped 34.7% from the prior-year comparable period.
Capital Deployment Update
Marsh & McLennan bought back 1.5 million shares worth $300 million in the second quarter.
Recently, management approved a hike of 15% in the quarterly dividend. The increased dividend, amounting to 81.5 cents per share, will be paid out on Aug 15, to shareholders of record as of Jul 25, 2024.
Zacks Rank
Marsh & McLennan currently carries a Zacks Rank #3 (Hold).
Performance of Another Insurer
Of the insurance industry players that have reported second-quarter 2024 results so far, the bottom-line result of The Progressive Corporation (PGR - Free Report) beat the respective Zacks Consensus Estimate.
Progressive reported second-quarter earnings per share of $2.65, which beat the Zacks Consensus Estimate of $1.99. The bottom line improved more than five times year over year. Operating revenues of $18.3 billion beat the consensus estimate by 1.4% and increased 18.9% year over year. Net premiums written were $17.9 billion, up 22% from $14.7 billion a year ago. Net premiums earned grew 19% to $17.2 billion.
PGR’s combined ratio — the percentage of premiums paid out as claims and expenses — improved 850 bps from the prior-year quarter’s level to 91.9. Special Lines improved 8% to 6.3 million. In the Personal Auto segment, Direct Auto increased 12% year over year to 12.6 million while Agency Auto increased 6% to 9 million.
Upcoming Earnings Releases
Here are two other companies from the insurance space that are set to report their respective quarterly earnings soon.
Reinsurance Group of America, Incorporated (RGA - Free Report) has an Earnings ESP of +2.81% and a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for RGA’s second-quarter earnings is pinned at $4.94 per share, implying a 12.3% rise from the year-ago quarter’s reported figure.
Reinsurance Group’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.48%.
Arthur J. Gallagher & Co. (AJG - Free Report) currently has an Earnings ESP of +0.16% and a Zacks Rank of 3. The Zacks Consensus Estimate for AJG’s second-quarter earnings is pegged at $2.24 per share, indicating a 17.9% rise from the year-ago quarter’s reported number.
Arthur J. Gallagher’s earnings beat estimates in each of the trailing four quarters, the average surprise being 2.25%.