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MARSH & MCLENNAN COMPANIES, INC. (MMC)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered 9% GAAP revenue growth to $7.061B (+4% underlying), with adjusted EPS of $3.06 (+5% YoY) and adjusted operating income up 8%; GAAP EPS was $2.79 amid higher interest expense tied to McGriff .
  • Consolidated adjusted operating margin was 31.8% (vs. 32.0% in Q1 2024); RIS margins reflected McGriff seasonality, while Consulting margins expanded 50 bps YoY .
  • Versus consensus, adjusted EPS modestly beat and revenue was essentially in line; EPS benefited from $0.10 discrete tax items and faced a $0.05 FX headwind, while fiduciary income declined YoY (and is guided to ~$100M in Q2) .
  • Management maintained FY 2025 outlook for mid-single-digit underlying revenue growth, margin expansion, and solid adjusted EPS growth; catalysts include tariff/macro commentary, Guy Carpenter cat-bond activity, and McGriff integration progress .

What Went Well and What Went Wrong

  • What Went Well

    • Broad-based growth: Marsh +15% GAAP (+5% underlying) and Guy Carpenter +5% (GAAP/underlying); Mercer +5% GAAP (+4% underlying) and Oliver Wyman +4% (GAAP/underlying) .
    • Adjusted earnings quality: adjusted operating income +8% to $2.235B; consolidated adjusted margin 31.8%; EPS supported by discrete tax items despite FX headwind .
    • Strategic momentum: McGriff integration “on track” with anticipated 2025 accretion and record cat-bond issuance placed by Guy Carpenter ($1.8B of limit in Q1) .
    • Quote: “We had a solid start to the year with 9% revenue growth... 8% growth in adjusted operating income, and 5% growth in adjusted EPS.” — John Doyle, CEO .

  • What Went Wrong

    • Margin compression: consolidated adjusted margin down ~20 bps YoY; RIS margin impacted by McGriff seasonality and noteworthy charges ($69M) .
    • Lower fiduciary income: $103M (down vs prior year and sequential), pressured by lower rates; guided to ~$100M in Q2 .
    • Macro uncertainty: management highlighted tariff/trade risks, potential GDP slowing, and volatility; property pricing continued to soften while U.S. excess casualty remained stressed .

Financial Results

MetricQ4 2024Q1 2025
Revenue ($USD Billions)$6.067 $7.061
GAAP EPS ($)$1.59 $2.79
Adjusted EPS ($)$1.87 $3.06
Operating Income ($USD Billions)$1.10 $2.005
GAAP Operating Margin %23.3% 28.4%
Adjusted Operating Margin %23.3% 31.8%
Segment Revenue ($USD Billions)Q1 2024Q1 2025
Risk & Insurance Services (RIS)$4.273 $4.762
Marsh$3.003 $3.453
Guy Carpenter$1.148 $1.206
Consulting$2.214 $2.314
Mercer$1.425 $1.496
Oliver Wyman$0.789 $0.818
Fiduciary Interest Income$0.122 $0.103
KPIsQ4 2024Q1 2025
Fiduciary Income ($USD Millions)$112 $103
Share Repurchases ($USD Millions)$300 $300
Senior Notes Repaid ($USD Millions)—$500
Dividends Paid ($USD Millions)$354 $405
Mercer AUM ($USD Billions)$617 $613
FX EPS Headwind ($)$0.02 $0.05
Discrete Tax Benefit to EPS ($)$0.05 $0.10
Actual vs. S&P Global ConsensusQ4 2024Q1 2025
Revenue Consensus Mean ($USD Billions)5.957*7.076*
Revenue Actual ($USD Billions)6.067 7.061
Primary EPS Consensus Mean ($)1.7637*2.9978*
Adjusted EPS Actual ($)1.87 3.06

Values with an asterisk (*) retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Underlying Revenue GrowthFY 2025Mid-single-digit (Q4 call) Mid-single-digit (reiterated) Maintained
Adjusted Operating MarginFY 2025Expansion expected (Q4 call) Expansion expected Maintained
Adjusted EPSFY 2025Solid growth (Q4 call) Solid growth Maintained
Fiduciary IncomeQ1 2025 vs Q2 2025~$100M in Q1 (Q4 guide) ~$100M in Q2 Timing update
Interest ExpenseQ2 2025—~$250M New
Adjusted Effective Tax RateFY 202525–26% (Q4 call) 25–26% Maintained
FX ImpactFY 2025Headwind early 2025 (Q4 call) Immaterial for Q2 and rest of year Updated
Capital DeploymentFY 2025~$4.5B (Q4 call) ~$4.5B across dividends, M&A, buybacks Maintained
McGriff EPS AccretionFY 2025/FY 2026Modestly accretive in 2025; more in 2026+ (Q4 call) Reiterated Maintained
McGriff Noteworthy ChargesThrough 2027$450–$500M total (Q4 call) Reiterated Maintained

Earnings Call Themes & Trends

TopicQ3 2024 (Oct)Q4 2024 (Jan)Q1 2025 (Apr)Trend
AI/Tech initiativesOngoing innovation; macro risks Blue Eye, Len AI; data tools emphasis SenTrisk AI-powered supply chain risk platform; advising clients at scale Continues; deeper use cases
Supply chain risk——Elevated focus due to trade negotiations; SenTrisk highlighted Rising importance
Tariffs/MacroSupportive backdrop but risks; cat events Macro supportive; fiduciary headwinds Greater uncertainty tied to tariffs/trade; potential GDP impact More cautious
Property vs Casualty pricingProperty down 2%; U.S. excess casualty +~20% Property down 3%; U.S. excess casualty +~15% Property down 6%; U.S. excess casualty +~16% Property softens; casualty stressed
Reinsurance capacity/ILSAdequate capacity; cat bonds elevated Fiduciary outlook; property cat renewal dynamics Record cat-bond quarter ($1.8B) placed; ample capacity; April 1 pricing down for non-loss Elevated ILS; favorable capacity
Regulatory/legalExpect pricing impact post hurricanes —Florida reforms showing benefits; Georgia reforms noted Early progress
Mercer AUM/Investment Mgmt$548B (Q3) $617B (Q4) $613B (Q1) Slight sequential dip
FX/TaxMinimal FX in Q3 FX headwind Q1/Q24; tax rate guide FX $0.05 headwind; discrete tax benefits FX easing ahead

Management Commentary

  • “We had a solid start to the year with 9% revenue growth... and 5% growth in adjusted EPS.” — John Doyle, CEO .
  • “Our adjusted operating income was $2.2 billion, up 8%... GAAP EPS was $2.79 and adjusted EPS was $3.06.” — Mark McGivney, CFO .
  • “Our integration [of McGriff] continues to go well... modestly accretive to adjusted EPS for full year 2025, becoming more meaningfully accretive in 2026 and beyond.” — CFO .
  • “According to the Marsh Global Insurance Market Index, rates decreased 3% in the first quarter... Global Property down 6%, U.S. excess casualty up ~16%.” — CEO .
  • “Fiduciary income was $103 million... we expect fiduciary income will be approximately $100 million [in Q2].” — CFO .

Q&A Highlights

  • Tariffs/trade: Management sees indirect impacts through lower confidence and potential inflationary loss costs but no direct business impact yet; consulting demand often benefits from change .
  • Pricing dynamics: Middle market pricing more stable and modestly up; large-account composite down 3% with property declines and casualty stress (umbrella/excess +16%) .
  • Guy Carpenter growth drivers: Strong new business and record cat-bond issuance; property cat rates down for non-loss programs; adequate capacity across regions .
  • McGriff: Seasonally light Q1 with expected moderation of dilution; Q2 and Q4 larger revenue quarters; retention strong and integration progressing .
  • Capital and guidance: ~$4.5B 2025 capital deployment; Q2 interest expense ~$250M; adjusted tax rate 25–26%; FX impact seen as immaterial for the rest of the year .

Estimates Context

  • Q1 2025: Adjusted EPS $3.06 vs. consensus $2.9978* (beat), revenue $7.061B vs. $7.0765B* (essentially in line). Q4 2024: Adjusted EPS $1.87 vs. $1.7637* (beat), revenue $6.067B vs. $5.957B* (beat). Values with an asterisk (*) retrieved from S&P Global.
  • Potential estimate revisions: Resilient adjusted EPS with discrete tax benefit and FX headwind; lower fiduciary income trajectory and McGriff seasonality could temper near-term margin assumptions, while Consulting margin expansion and ILS/cat-bond strength support out-year profitability .

Key Takeaways for Investors

  • Quality of earnings intact: Adjusted EPS beat with disciplined cost control and Consulting margin expansion despite FX headwinds and fiduciary pressure .
  • Pricing cycle bifurcation: Property easing benefits clients; casualty (especially U.S. excess) remains tight—supportive of advisory breadth but mixed for commission-sensitive lines .
  • Reinsurance/ILS momentum: Adequate capacity and record cat-bond issuance underpin Guy Carpenter growth resilience even with rate moderation .
  • McGriff integration: Short-term seasonal dilution, but accretion expected in 2025/2026; noteworthy charges funded via purchase price adjustments reduce economic drag .
  • 2025 outlook steady: Mid-single-digit underlying growth, margin expansion, solid EPS growth reiterated; FX impact seen as immaterial for the rest of the year .
  • Watch fiduciary income and interest expense: Q2 fiduciary guide ~$100M and interest expense ~$250M frame near-term EPS cadence .
  • Tactical catalysts: Tariff/macro commentary, casualty pricing developments, and capital deployment/M&A pipeline updates can drive narrative and stock reaction near term .