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

Published 01/29/2020, 11:08 PM
Updated 07/09/2023, 06:31 AM

Marsh & McLennan Companies, Inc. (NYSE: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.

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. (NYSE:BRO) and RLI Corp. (NYSE:RLI) beat estimates while that of Principal Financial (NASDAQ:PFG) matched the Zacks Consensus Estimate.

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

Brown & Brown, Inc. (BRO): Free Stock Analysis Report

Principal Financial Group, Inc. (PFG): Free Stock Analysis Report

RLI Corp. (RLI): Free Stock Analysis Report

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