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MARSH & MCLENNAN COMPANIES, INC. (MMC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue was $6.07B (+9% YoY; +7% underlying), adjusted operating income was $1.30B (+9%), adjusted margin was 23.3%, and adjusted EPS was $1.87 (+11% YoY). GAAP EPS was $1.59 (+5% YoY) .
  • Risk & Insurance Services (RIS) grew revenue 11% to $3.65B (+8% underlying); Marsh delivered broad-based strength (+8% underlying), while Mercer’s underlying growth was +5% and Oliver Wyman’s was +7% underlying .
  • 2025 outlook: management guides to mid-single-digit underlying revenue growth, continued margin expansion, and solid adjusted EPS growth; Q1 2025 headwinds include fiduciary income ($100M), FX ($0.04 headwind), and interest expense ($246M) .
  • McGriff integration: modestly dilutive to adjusted EPS in Q1 2025; accretive for full-year 2025; noteworthy charges of $450–$500M over three years; MMC will change adjusted EPS methodology starting Q1 2025 to exclude intangible amortization and other net benefit credits .
  • Dividend declared at $0.815 per share (payable Feb 14, 2025); capital deployment outlook for 2025 is ~$4.5B across dividends, acquisitions, and repurchases, contingent on M&A pipeline .

What Went Well and What Went Wrong

What Went Well

  • Underlying revenue growth of 7% in Q4; adjusted EPS rose 11% to $1.87; adjusted operating income increased 9% to $1.30B .
  • Marsh regional strength: LatAm +13%, EMEA +9%, APAC +6% underlying in Q4; Marsh marked its 16th consecutive quarter of ≥6% underlying growth .
  • Full-year adjusted operating margin expanded 80 bps to 26.8%, marking the 17th consecutive year of reported margin expansion; CEO: “Our fourth quarter results capped a terrific year…largest year of acquisitions in our history” .

What Went Wrong

  • Fiduciary interest income fell to $112M in Q4 (from $138M in Q3) and is expected to be ~ $100M in Q1 2025 due to lower short-term rates and seasonal balances .
  • Interest expense rose to $231M in Q4 (vs $151M in Q4’23), reflecting higher debt levels and bridge financing costs tied to McGriff .
  • Consulting adjusted margin slipped to 20.7% (vs 21.3% a year ago) on seasonality and acquisition/disposition impacts; Mercer Health underlying growth decelerated to +5% in Q4 (lowest since 2021), prompting analyst scrutiny .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$6.221 $5.697 $6.067
GAAP EPS ($)$2.27 $1.51 $1.59
Adjusted EPS ($)$2.41 $1.63 $1.87
Adjusted Operating Income ($USD Billions)$1.715 $1.186 $1.296
Adjusted Operating Margin (%)29.0% 22.4% 23.3%
SegmentQ2 2024 Revenue ($MM)Q3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q2 2024 Adj Op Inc ($MM)Q3 2024 Adj Op Inc ($MM)Q4 2024 Adj Op Inc ($MM)Q2 2024 Adj Margin (%)Q3 2024 Adj Margin (%)Q4 2024 Adj Margin (%)
Risk & Insurance Services4,022 3,453 3,647 1,344 775 893 35.3% 24.7% 27.0%
Consulting2,216 2,262 2,441 426 478 484 19.8% 21.7% 20.7%
KPIQ2 2024Q3 2024Q4 2024
Fiduciary Interest Income ($MM)125 138 112
Interest Expense ($MM)156 154 231
Mercer AUM ($USD Billions)N/A$548 $617

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Underlying Revenue GrowthFY 2024 vs. FY 2025“Mid-single-digit or better” (FY 2024 outlook) “Mid-single-digit” (FY 2025) Maintained; language tightened
Adjusted Operating MarginFY 2024 vs. FY 2025“Another year of margin expansion” “Margin expansion” Maintained
Adjusted EPS GrowthFY 2024 vs. FY 2025“Strong growth” “Solid adjusted EPS growth” Maintained
Fiduciary IncomeQ4 2024 to Q1 2025Q4 expected ~$30M decline vs Q3 Q1 2025 ≈ $100M Lowered
FX HeadwindQ4 2024 vs. FY 2025Minimal FX in Q4 Headwind: $0.04 (Q1), $0.09 (FY 2025) Headwind increased
Adjusted Effective Tax RateFY 2024 vs. FY 2025~26.5% FY 2024 25%–26% FY 2025 Slightly lower
Interest ExpenseQ4 2024 vs. Q1 2025Q4 2024 forecast ~$151M excl. McGriff Q1 2025 ≈ $246M Higher
Adjusted EPS MethodologyFrom Q1 2025Prior method included intangible amortization and other net benefit credits Exclude intangible amortization and other net benefit credits Methodology change
DividendQ3 2024 to Q4 seasonIncreased to $0.815 (July) Declared $0.815 for Feb 14, 2025 Maintained
McGriff EPS ImpactFY 2025Modestly accretive in year 1 excluding amortization (Q3 view) Modestly dilutive Q1; accretive for FY 2025; larger accretion beyond Near-term dilutive; full-year accretive

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Pricing/Macro insurance ratesMarsh Global Insurance Market Index down 1% in Q3; property down 2%, casualty up 6% Index down 2% in Q4; property -3%, casualty +4%; cyber -7% Slight further softening in property; casualty remains firm
Fiduciary incomeQ3 noted ~$30M decline expected into Q4 from $138M $112M in Q4; Q1’25 ≈ $100M expected Headwind intensifying near-term
McGriff integrationAnnounced deal, year 1 accretive excl amortization (Q3) Q1 modestly dilutive; FY25 accretive; $450–$500M noteworthy charges over 3 years Near-term EPS dilution; medium-term accretion
AI/digital toolsOngoing investment in tech/data (company-level) Named innovations: SenTrisk, Blue Eye, Len AI; investing in data/insights Execution advancing
Health cost inflationGlobal medical costs rising; Mercer Health strong in Q2/Q3 2025 medical cost +11% global; U.S. employer cost +5.8% post mitigation; Mercer Health +5% underlying Q4 Persistent inflation; growth stable but slower in Q4
Cat events impactQ3 hurricanes (Helene/Milton) implications discussed California wildfires >$30B insured losses; resilience focus; limited direct financial impact Elevated risk landscape persists

Management Commentary

  • “Our fourth quarter results capped a terrific year…we delivered on our strategic objectives, generated excellent financial performance, and had the largest year of acquisitions in our history.” – John Doyle, CEO .
  • “We currently expect mid-single-digit underlying revenue growth…along with continued margin expansion and solid adjusted EPS growth.” – John Doyle .
  • “We expect noteworthy charges associated with McGriff of approximately $450 million to $500 million in total over the next 3 years…a significant portion…was funded by the seller through a purchase price adjustment.” – Mark McGivney, CFO .
  • “Beginning in the first quarter of 2025, we will exclude the impact of acquisition-related intangible amortization and the other net benefit credit from adjusted EPS.” – Mark McGivney .

Q&A Highlights

  • Margins: Management emphasized full-year expansion (+80 bps) and noted Q4 margin dynamics (FX, M&A/divestitures); expects the 18th consecutive year of expansion in 2025 .
  • Free cash flow: +4% in 2024 after +28% in 2023; management reiterated long-run FCF tracking earnings growth despite period volatility .
  • Organic growth language: Shift to “mid-single-digit” for 2025 reflects fiduciary income headwinds rather than core demand weakness; broad-based Q4 strength across segments .
  • McGriff: Near-term modest EPS dilution in Q1; accretive for FY25; integration proceeding well; noteworthy charges primarily retention-related and seller-funded via purchase price adjustment .
  • 2025 headwinds: Q1 FX ($0.04) and fiduciary income (~$100M) expected; interest expense ~$246M; tax rate 25–26% .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (EPS and Revenue) could not be retrieved due to API daily request limits. As a result, explicit beat/miss vs. Wall Street estimates cannot be assessed here. Values retrieved from S&P Global were unavailable at the time of this analysis.
MetricQ4 2024 ConsensusActual Q4 2024
EPS ($)Unavailable (SPGI limit)$1.59 GAAP; $1.87 Adjusted
Revenue ($USD Billions)Unavailable (SPGI limit)$6.067

Key Takeaways for Investors

  • Near-term setup: Expect softer Q1 2025 given fiduciary income ($100M), FX ($0.04 headwind), and higher interest expense ($246M); positioning improves through the year as McGriff turns accretive .
  • Core growth intact: Mid-single-digit underlying revenue growth guide with continued margin expansion and solid adjusted EPS growth signals durable fundamentals despite rate-related headwinds .
  • Integration narrative: McGriff integration is on track; noteworthy charges ($450–$500M over 3 years) are largely retention-related and seller-funded, supporting medium-term EPS accretion (more meaningful in 2026+) .
  • Segment resilience: Marsh continues to deliver broad-based underlying growth; Consulting shows stable top-line with some margin variability due to mix; RIS adjusted margins remain robust .
  • Pricing environment: Property softening and firm casualty rates suggest mixed tailwinds; large-account pricing skews may be offset by fee-based revenues and middle-market stability .
  • Capital allocation: Dividend maintained at $0.815; ~$4.5B of 2025 capital deployment targeted, with buybacks flexed to the M&A pipeline .
  • Methodology change: Adjusted EPS to exclude intangible amortization and other net benefit credits starting Q1 2025, improving comparability of core earnings power .