MMC reports strong Q2 revenue growth, higher earnings

Marsh & McLennan Cos. Inc. Thursday reported double-digit underlying revenue growth in the second quarter and upped its outlook for the full year to high single digits.

Primary insurance rate increases continued in the quarter, with the Marsh Global Insurance Market Index up 3% overall, versus 4% in the first quarter, John Doyle, Marsh McLennan’s president and CEO, said on a conference call with analysts to discuss the results.

Net income for the second quarter rose 7% year over year to $1.04 billion.

Marsh McLennan reported $65 million in restructuring costs in the quarter, about $50 million of which related to the program it announced in January.

Marsh McLennan reported second-quarter revenue of $5.88 billion, up 9% overall and 11% on an underlying basis over the same period in 2022.

Despite significant uncertainty given persistent inflation, continued central bank tightening and geopolitical instability, Marsh McLennan continues to perform well, Mr. Doyle said.

“We made meaningful investments in market-facing talent and improving sales operations and client engagement, which are contributing to our growth. And we continue to deliberately shift our business mix to faster growth areas,” Mr. Doyle said.

Revenue at Marsh LLC, its main brokerage arm, rose 9% to $3.04 billion, up 10% on an underlying basis.

Marsh’s business in the U.S. and Canada reported $1.69 billion in revenue, up 10% overall and 9% on an underlying basis.

Its Europe, Middle East and Africa business reported $858 million in revenue, a 10% increase overall and 11% on an underlying basis. Asia-Pacific revenue was $357 million, up 3% overall and 6% on an underlying basis and Latin America revenue totaled $137 million, a 15% increase overall and 17% on an underlying basis.

Reinsurance brokerage arm Guy Carpenter & Co. LLC reported $576 million in second-quarter revenue, a 10% increase over the prior-year period and up 11% on an underlying basis.

Results across the risk and insurance services segment were boosted by an eightfold jump in fiduciary interest income.

Marsh McLennan’s consulting operations, Mercer LLC and Oliver Wyman LLC, reported a combined $2.17 billion in revenue, up 4% overall and 8% on an underlying basis.

Property rates increased 10%, unchanged from the first quarter, while casualty pricing was up in the low-single-digit range, Mr. Doyle said.

Workers compensation was down low single digits, and financial and professional liability rates were down high single digits.

“Cyber insurance purchasing stabilized after several years of increases,” Mr. Doyle said.

In reinsurance, challenging market conditions persisted at mid-year renewals, and “rate increases remained significant, although the market showed more interest in deploying capacity than at Jan. 1,” Mr. Doyle said.

Global property catastrophe reinsurance rates increased about 30% on average, with loss-impacted clients seeing higher pricing, he said. “The impact of rate increases on ceded premiums was mitigated by higher retentions,” he said.

On the casualty side, pricing pressure continued across most lines driven by prior-year loss development and concerns about social and economic inflation, Mr. Doyle said.