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MARSH & MCLENNAN COMPANIES, INC. (MMC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered modest beats: revenue $6.97B (+12% YoY; +4% underlying) and adjusted EPS $2.72 (+11% YoY), both slightly above S&P Global consensus; adjusted operating margin expanded 50 bps to 29.5% .
  • Risk & Insurance Services led results (GAAP revenue +15%; underlying +4%), with Marsh up 18% GAAP and +5% underlying; International momentum (EMEA +8% underlying) offset softer U.S. large-account project demand and property rate declines .
  • Management maintained FY 2025 outlook for mid-single-digit underlying revenue growth, margin expansion, and solid adjusted EPS growth; near-term headwinds include lower fiduciary interest income and higher interest expense from McGriff financing .
  • Capital return remains supportive: dividend raised 10% to $0.900 per share and $300M of Q2 buybacks (2.7M shares, $600M YTD), adding a positive stock narrative alongside steady guidance .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EPS and margin expansion: adjusted EPS rose 11% to $2.72 and adjusted operating margin expanded 50 bps to 29.5%; CEO: “We had another solid quarter… continued momentum across our business and the contribution from acquisitions” .
  • Marsh International strength: Marsh underlying growth +5% overall, with International +7% (EMEA +8%, APAC +4%, LatAm +3%), sustaining growth despite softer property rates .
  • Reinsurance and capital markets activity: Guy Carpenter grew +7% GAAP (+5% underlying) and highlighted record cat bond activity; GC participated in 14 cat bond issuances in the quarter, 23 YTD, tapping ~$17B of market limit H1’25 .

What Went Wrong

  • Rate and interest headwinds: commercial property rates fell (~7% YoY globally) and fiduciary interest income declined to $99M (−$26M YoY), pressuring revenue mix and EPS .
  • Litigation-driven U.S. casualty pressure: management highlighted nuclear verdicts and rising severity driving excess casualty rates (+18% U.S. excess), elevating client cost of risk and potentially constraining demand .
  • Consulting project softness: Mercer Career −5% underlying; Oliver Wyman faced timing/idiosyncratic dampeners and U.S. client caution on discretionary projects (e.g., HR tech, transformations) .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$6,221 $6,067 $7,061 $6,974
GAAP Diluted EPS ($)$2.27 $1.59 $2.79 $2.45
Adjusted EPS ($)$2.44 $1.87 $3.06 $2.72
Operating Income ($USD Millions)$1,642 $1,142 $2,005 $1,829
Operating Margin (%)26.4% 18.8% 28.4% 26.2%
Adjusted Operating Income ($USD Millions)$1,804 $1,296 $2,235 $2,057
Adjusted Operating Margin (%)29.0% 23.3% 31.8% 29.5%

Estimates vs. Actuals (Q2 2025):

MetricConsensusActualSurprise
Revenue ($USD)$6,952,382,000*$6,974,000,000 +$21.6M (~+0.3%)*
Adjusted EPS ($)$2.66388*$2.72 +$0.056 (~+2.1%)*

Values with asterisks retrieved from S&P Global.

Segment and Geography (Revenue, Q2 2025; comps and underlying growth):

SegmentQ2 2024 ($MM)Q1 2025 ($MM)Q2 2025 ($MM)Underlying Growth (Q2 2025)
Risk & Insurance Services$4,022 $4,762 $4,625 +4%
Marsh (Total)$3,265 $3,453 $3,849 +5%
- U.S./Canada$1,825 $1,935 $2,302 +4%
- International$1,440 $1,518 $1,547 +7%
— EMEA$912 $1,059 $1,006 +8%
— APAC$391 $335 $409 +4%
— LatAm$137 $124 $132 +3%
Guy Carpenter$632 $1,206 $677 +5%
Fiduciary Interest Income$125 $103 $99 N/A
Consulting (Total)$2,216 $2,314 $2,371 +3%
Mercer$1,379 $1,496 $1,498 +3%
— Wealth$612 $670 $685 +2%
— Health$547 $608 $594 +7%
— Career$220 $218 $219 −5%
Oliver Wyman$837 $818 $873 +3%

KPIs and Balance Sheet Highlights:

KPIQ4 2024Q1 2025Q2 2025
Share Repurchases ($)$900M FY’24 $300M $300M; 1.4M shares; YTD $600M
Quarterly Dividend ($/sh)$0.815 (prior) —$0.900 (+10%)
Mercer AUM——$670B
Fiduciary Interest Income ($)$112M $103M $99M
Total Debt (approx)LT: $19.43B LT: $18.86B; ST: $1.67B CFO: ~$19.7B total; LT: $18.96B; ST: $0.77B
Cash & Equivalents$2.398B $1.604B $1.677B
Adjusted Effective Tax Rate (FY)——25–26% (ex-discrete)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Underlying Revenue GrowthFY 2025Mid-single-digit (maintained narrative) Mid-single-digit Maintained
Adjusted Operating MarginFY 2025Expansion expected (maintained) Expansion expected; Q2 adjusted margin +50 bps Maintained
Adjusted EPS GrowthFY 2025Solid growth expected (maintained) Solid growth expected Maintained
Fiduciary Interest IncomeQ3 2025N/A~$105M New
Interest ExpenseQ3 2025N/A~$240M New
Adjusted Effective Tax RateFY 202525–26% (ex-discrete) 25–26% (ex-discrete) Maintained
Capital DeploymentFY 2025N/A~$4.5B across dividends, M&A, buybacks New/Quantified
DividendOngoing$0.815/sh $0.900/sh (+10%) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024; Q-1: Q1 2025)Current Period (Q2 2025)Trend
AI/Technology initiativesLimited in PRs; focus on acquisitions/margins Expanded usage in analytics and client offerings; agentic AI interfaces; unique data moats (Blue[i] suite); 25–30% of OW work rests on advanced analytics/AI Rising emphasis; capability build accelerating
Supply chain / TariffsNot highlighted in PRs Clients facing geopolitics/trade risks; Marsh Centrist portal for deep supply chain analytics Elevated risk management focus
Macro rates/pricingQ4: strong FY set-up; Q1: resilient cycle performance Property rates −7% YoY; casualty +4% globally; U.S. excess casualty +18% Continued property softness; casualty pressure
Product/Segment performanceQ4: RIS +8% underlying; OW +7% underlying Marsh +5% underlying; GC +5%; Mercer Health +7%; Career −5% Balanced; health strong, career soft
Regional trendsQ4: Marsh International +9% underlying Marsh Int’l +7% underlying; EMEA +8%, APAC +4%, LatAm +3% Sustained int’l outperformance
Regulatory/legal (litigation)Not a central PR theme CEO underscores U.S. tort environment; nuclear verdicts +400% over decade; rising liability costs Growing concern; policy advocacy
Healthcare cost inflationNot highlighted in PRs Medical inflation pressure; majority of U.S. health work fee-based; demand for cost-control projects Cost pressure persists; service demand supportive
McGriff integrationQ4: acquisition closed; financing raised Integration on track; modestly accretive FY25; meaningfully accretive FY26+; $450–$500M charges through 2027 Progressing; EPS accretion path reiterated

Management Commentary

  • John Doyle (CEO): “Overall, we grew revenue 12%… Underlying revenue increased 4%… adjusted operating income increased 14%… adjusted EPS grew 11%.” He emphasized complex operating conditions (geopolitics, trade, AI) and the opportunity to support clients through resilience and growth strategies .
  • Mark McGivney (CFO): “Adjusted operating margin increased 50 basis points to 29.5%… Fiduciary interest income was $99M… We continue to expect an adjusted effective tax rate of between 25–26% in 2025” .
  • CEO on U.S. litigation: “Excessive litigation… causing a surge in U.S. liability insurance costs… nuclear verdicts… have grown 400% over the past decade” .
  • GC leadership: “Guy Carpenter participated in 14 cat bond issuances in the quarter and 23 to date… sold an additional $5B of property cat limit through mid-year renewals” .

Q&A Highlights

  • Rate trajectory: Property rates down mid-single digits; casualty up (+4% globally; U.S. excess +18%); management expects continued casualty rate pressure and rising cost of risk in the U.S. .
  • Mercer Wealth vs AUM: AUM up 36% YoY (organic + inorganic); Wealth organic growth +2% due to mix (only OCIO is AUM-comped) and slower DB project demand in U.S./UK; DC solutions growth continues .
  • Career softness: U.S. project demand weaker on macro uncertainty and lower voluntary turnover; international growth offset; seasonality remains around late Q3/Q4 comp-cycle work .
  • RIS growth drivers: Nominal GDP primary corollary; pricing secondary; U.S. large-account project work deferred (construction, M&A, IPOs); execution remains solid despite headwinds .
  • International durability: Marsh International broadly strong with capabilities in benefits, cyber, FinPro, credit specialties; growth in Japan, India, UAE, Brazil, Italy, Spain, China .

Estimates Context

  • Q2 2025 modest beats: adjusted EPS actual $2.72 vs S&P Global consensus $2.66388*; revenue actual $6.974B vs $6.952B*; expect limited estimate revisions (slight upward bias), with management maintaining FY outlook .
  • Forward modeling sensitivities: incorporate lower fiduciary interest income run-rate, property rate headwinds, and higher interest expense from McGriff financing (Q3 guide: ~$240M) .

Values marked with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat with margin expansion: Adjusted EPS and margin exceeded expectations, underpinned by RIS scale and disciplined cost control; narrative supportive of FY margin expansion .
  • International resilience offsets U.S. project softness: Marsh International continues to outgrow, while U.S. large-account discretionary work remains subdued; balanced mix mitigates cyclical pressures .
  • Litigation environment is a structural U.S. headwind: Expect continued excess casualty pricing pressure and client cost-of-risk elevation; MMC well positioned to advise and place coverage .
  • McGriff integration tracking: Modest FY25 EPS accretion with larger impact in FY26+; model $450–$500M noteworthy charges through 2027 and elevated interest expense in near term .
  • Capital return remains attractive: 10% dividend increase to $0.900 and ongoing buybacks ($300M Q2; $600M YTD) provide downside support to equity story .
  • Watch near-term inputs: Q3 fiduciary interest income (~$105M) and FX minimal-to-modest impact guideposts; factor property rate trends, casualty pricing, and tax rate (25–26%) into models .
  • Medium-term thesis: Scale, data/analytics (including AI-enabled solutions), and diversified exposure position MMC to compound through cycles with recurring margin expansion and steady capital deployment .