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Marsh & McLennan (MMC) Q1 Earnings Beat on Strong EMEA Unit

Marsh & McLennan Companies, Inc. MMC reported first-quarter 2024 adjusted earnings per share of $2.89, which surpassed the Zacks Consensus Estimate by 3.6%. The bottom line improved 14% year over year. Its shares gained 2.7% in the pre-market trading session to reflect the outperformance.

Consolidated revenues of $6.5 billion advanced 9% year over year in the quarter under review. The figure also rose 9% on an underlying basis. Also, the top line beat the consensus mark by 1.5%.

The quarterly results were aided by strong performances of the Risk and Insurance Services, and Consulting segments. While an expanding international business aided the Risk and Insurance Services unit, an increase in Wealth and Health revenues benefited the Consulting unit’s performance. However, the upside was partly offset by elevated operating costs.

Total operating expenses escalated 8.3% year over year to $4.5 billion in the first quarter, which matched our estimate. The year-over-year increase was due to higher compensation and benefits costs. The Risk and Insurance Services segment’s expenses rose 7.8% year over year, whereas the Consulting segment witnessed a 10% year-over-year increase.

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MMC’s adjusted operating income grew 11% year over year to $2 billion, higher than our estimate of $1.9 billion. Adjusted operating margin of 32% improved 80 basis points (bps) 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. 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

The segment recorded quarterly revenues of $4.3 billion, which improved 9% year over year. The reported figure surpassed the Zacks Consensus Estimate and our estimate of $4.2 billion. Adjusted operating income of $1.59 billion advanced 11% year over year and beat the consensus mark of $1.55 billion.

Revenues of Marsh, a unit within the segment, amounted to $3 billion in the quarter under review. The figure rose 9% year over year, or 8% on an underlying basis, and surpassed the Zacks Consensus Estimate of $2.93 billion as well as our estimate of $2.89 billion. In the United States/Canada, underlying revenues increased 8% year over year. International operations also saw underlying revenue growth of 8%. Among the international operations, EMEA witnessed the highest underlying revenue growth of 9%, followed by an increase of 8% and 6% in Latin America and Asia Pacific, respectively.

Guy Carpenter’s (another unit within the Risk and Insurance Services segment) revenues advanced 7% year over year, or 8% on an underlying basis to $1.15 billion, lower than our estimate of $1.17 billion.

Consulting

The unit’s revenues rose 9% year over year to $2.2 billion in the first quarter. The reported figure outpaced the Zacks Consensus Estimate of $2.18 billion and our estimate of $2.14 billion. Adjusted operating income of $444 million grew 9% year over year but fell short of our estimate of $609.4 million.

A unit within this segment, Mercer recorded revenues of $1.4 billion, which improved 6% year over year. The figure almost touched the consensus mark. Health revenues climbed 10% on an underlying basis, while Wealth and Career revenues witnessed underlying increases of 5% and 1%, respectively.

Another unit within the Consulting segment, Oliver Wyman’s revenues of $789 million rose 13% on an underlying basis and surpassed the Zacks Consensus Estimate of $743.6 million and our estimate of $728.2 million.

Financial Update (as of Mar 31, 2024)

Marsh & McLennan exited the first quarter with cash and cash equivalents of $1.5 billion, down more than twice the 2023-end figure. Total assets of $47.6 billion dipped 1% from the figure at 2023 end.

Long-term debt amounted to $12.3 billion, up 3.9% from the figure as of Dec 31, 2023. Short-term debt dropped 27.8% from the 2023-end level.

Total equity of $12.6 billion grew 2% from the 2023-end level.

Net cash used by operations amounted to $781 million during the first quarter for MMC while the metric was $819 million in the year-ago quarter.

Capital Deployment Update

Marsh & McLennan bought back 1.5 million shares worth $300 million in the first quarter.

Management announced a quarterly dividend of 71 cents per share, which will be paid out on May 15, 2024, to shareholders of record as of Apr 4, 2024.

Zacks Rank

Marsh & McLennan currently carries a Zacks Rank #3 (Hold).

Performance of An Insurer

Of the insurance industry players that have reported first-quarter 2024 results so far, the bottom-line result of The Progressive Corporation PGR beat the respective Zacks Consensus Estimate.

Progressive reported first-quarter 2024 earnings per share of $3.83, which beat the Zacks Consensus Estimate of $3.20. The bottom line improved nearly eight times year over year. Net premiums written were $19 billion in the quarter, up 18% from $16.1 billion a year ago. Net premiums earned grew 19% to $16 billion and beat our estimate of $14.4 billion.

PGR’s operating revenues of $17.1 billion beat the Zacks Consensus Estimate by 2.4% and increased 20.1% year over year. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 1290 bps from the year-ago quarter’s level to 86.1. Policies in force were soft in the Personal Auto segment, increasing 7% from the year-ago month’s figure to 20.4 million. Special Lines improved 8% to 6.1 million.

Upcoming Earnings Releases

Here are two other companies from the insurance space that are set to report their respective quarterly earnings soon.

Cincinnati Financial Corporation CINF has an Earnings ESP of +5.06% 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 CINF’s first-quarter 2024 earnings is pinned at $1.58 per share, implying 77.5% surge from the year-ago quarter’s reported figure.

Cincinnati Financial’s earnings beat estimates in each of the trailing four quarters, the average surprise being 43.05%.

Willis Towers Watson Public Limited Company WTW currently has an Earnings ESP of +1.03% and a Zacks Rank of 3. The Zacks Consensus Estimate for WTW’s first-quarter 2024 earnings is pegged at $3.21 per share, suggesting a 13% rise from the year-ago quarter’s reported number.

Willis Towers Watson’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 0.27%.

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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report

The Progressive Corporation (PGR) : Free Stock Analysis Report

Willis Towers Watson Public Limited Company (WTW) : Free Stock Analysis Report

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