Marsh & McLennan Companies Q4 2024 Earnings Call Transcript

AlphaStreet
Provided by AlphaStreet
January 30, 2025
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Operator

Welcome to Marsh McLennan's Earnings Conference call. Today's call is being recorded. 4th-quarter 2024 financial results and supplemental information were issued earlier this morning. They are available on the company's website at. Please note that remarks made today may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the Marsh McLennan website.

During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release. If you have a question please press star 11 on your touchtone phone. If you wish to be removed from the queue, please press star 11 again. If you're using a speaker phone you may need to pick-up the handset before pressing the numbers. Once again, if you have a question, please press star 1-1 on your touchstone phone. I'll now turn this over to John Doyle, President and CEO of Marsh McLennan.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Good morning, and thank you for joining us to discuss our 4th-quarter and full-year results reported earlier today. I'm John Doyle, President and CEO of Marsh. On the -- on the call with me is Mark McGibney, our CFO; and our CEOs of our businesses; Martin South of Marsh; Dean of Guy Carpenter, Pat Tomlinson of Mercer; and Nick Stuter of Oliver Wyman. Also with us this morning is Jay Gelb, who recently joined Marsh McLennan as our new Head of Investor Relations. Many of you know Jay from his time as an equity analyst covering the insurance industry.

Before I discuss our results, I want to take a moment to comment on the California wildfires. These events represent a profound human tragedy. Lives have been lost and tens of thousands of people have been left homeless and hurting. Among those affected are Marsh McLennan colleagues and clients in the Los Angeles area, and our company is committed to doing everything we can to support them during this challenging time. With regard to the wildfires impact on the insurance industry, insured losses are expected to be to exceed $30 billion. This means the LA wildfires will be among the top-10 largest natural disasters in history in terms of insured losses. The increasing frequency and severity of natural disasters, along with rising property values and continued development in catastrophe-prone areas underscore the need for greater resilience and risk mitigation planning. Marsh McClenan will continue to bring together stakeholders, including individuals, businesses, the insurance industry and governments to build the resilience to mitigate the devastating impact from these catastrophic events and to accelerate recovery.

Turning to our results, 2024 was a milestone year for Marsh McLennan. We executed against our strategic objectives, generated excellent financial performance and had the largest year of acquisitions in our history. Total revenue grew 8% to $24.5 billion. We generated 7% underlying revenue growth, continuing our best stretch of growth in more than two decades with both risk and insurance services and consulting delivering strong results. Our adjusted operating income grew 11% to $6.2 billion. This is on-top of 17% growth in 2023. Our adjusted operating margin increased 80 basis-points, marking the 17th consecutive year of reported margin expansion and adjusted EPS grew 10%.

In another year of excellent financial performance, we continued to execute on our key priorities. We had a record year of M&A by investing $9.4 billion in acquisitions, including our $7.75 billion acquisition of McGriff. We also delivered significant capital return to shareholders, raising our dividend by 15% and completing $900 million of share repurchases. And we successfully completed our restructuring program, achieving the goals we set two years ago, accelerating client impact, reinvesting in our capabilities, boosting efficiency and increasing collaboration across the firm.

Let me touch briefly on our acquisition of McGriff, which closed on November 15. McGriff has great momentum and I couldn't be more excited to have them join Marsh McLennan Agency. Our integration is proceeding according to plan, and although it's early days, our fundamental outlook remains the same. As I said when we announced the transaction, it's a business with excellent leadership, outstanding talent and a record of strong growth. The addition of McGriff also extends our presence and capabilities in the growing middle-market. It's worth noting that MMA would be the 5th-largest broker in the United States on a standalone basis. In addition to McGriff, we completed several other notable acquisitions, including two top 100 agencies in MMA, as well as Vanguard's OCIO business and Cardano in Mercer.

As we start the new year, I want to take a moment to give you an update on our strategy. First and foremost, we are a growth company that is well-positioned globally in market-leading businesses with significant opportunities. We strive for outstanding near-term results while also investing to sustain our strong performance over the long-term. We consistently reinvest a significant portion of our cash-flow into organic investments, particularly in talent, technology and capabilities. Innovations like Centrisk, Blue Eye, Len AI and other digital tools are examples of how we are delivering value for our colleagues and clients. Investing in data and insights enables us to work smarter on behalf of our clients, helping them gain the perspective needed to pursue their ambitions. We also maintain a balanced approach to capital management. We look to maintain financial flexibility as we manage the efficiency of our capital structure.

We have a bias to reinvest the capital we generate into high-quality acquisitions. However, we also recognize that returning capital to shareholders delivers meaningful value over-time. And each year, we target raising our dividend and repurchasing enough stock to reduce our share count. A focus on high-quality acquisitions is also an important part of our growth strategy.

Over the past decade, we've invested approximately $24 billion in M&A across more than 200 transactions that have accelerated our growth at attractive returns. These acquisitions extend our reach, enhance our capabilities and boost our scale. The growth plans of our businesses remain at the core of our strategy. At the same time, we're working together better than ever to capture opportunities at the intersections of our businesses. And we constantly challenge ourselves to operate more efficiently. We've expanded our operating margin by over 900 basis-points in the past decade, and we've improved our margin by nearly 500 basis-points in the last five years alone. This has been achieved primarily through increasing efficiencies in other operating expenses while continuing to grow our talent base. Despite these gains, we still see opportunities for further improvement. While the core tenets of growth, discipline and balanced investment will continue to underpin our strategy, we are constantly evolving to deliver greater value to our clients and all of our stakeholders.

Turning to insurance market conditions, the global insurance and reinsurance market remains dynamic. At nearly $130 billion, 2024 was the fifth consecutive year of more than $100 billion of insured natural catastrophe losses. Despite an elevated risk landscape, the Marsh Global Insurance Market Index decreased by 2% in the 4th-quarter compared to a 1% decline in the 3rd-quarter. As a reminder, our index skews to large account business. Overall, rates in the US were flat. Latin-America was up low-single digits. Europe, UK and Asia were down low-to mid-single digits and Pacific was down high-single-digits. Global property rates declined 3% compared to down 2% in the 3rd-quarter. Global casualty rates increased 4% with US excess casualty up approximately 15% in the quarter. Workers' compensation decreased mid-single digits, global financial and professional liability rates were down 6%, while cyber decreased 7%. In reinsurance, underwriting discipline persisted, particularly on program retentions.

Capacity increased at a more significant pace than client demand. In global property cat reinsurance, accounts not impacted by loss saw risk-adjusted rates down 5% to 15%, while risk-adjusted rates for loss impacted accounts were flat-to-up 30%. Casualty renewals were completed with varying outcomes. Excess-of-loss placements continue to face pressure on treaty terms. Quota shares were more stable with sufficient capacity, while ceding commissions were flat to slightly down.

Turning to health trends, our surveys indicate medical costs are expected to increase 11% on a global basis in 2025. This would be the fifth consecutive year of at least a 10% increase. On a regional basis, the pace of anticipated increase is 8% in North-America, 9% in the Pacific region, 10% in both Europe and Latin-America, 11% in the Middle-East and Africa and 13% in Asia. For employee-sponsored health plans in the US, the total health benefit cost per employee is expected to rise 5.8% on average in 2025 after accounting for planned cost-reduction measures. This will be the third consecutive year of cost growth around 5% percent. As always, our focus is on helping our clients navigate these dynamic market conditions.

Now let me turn to our 4th-quarter financial performance, which Mark will cover in more detail. We are pleased with our 4th-quarter performance, where growth remained strong and solid earnings capped another terrific year. Revenue grew 7% on an underlying basis with 8% growth in RIS and 6% in consulting. We had adjusted operating income of 9% and we generated adjusted EPS in the quarter of $1.87, which is up 11% from a year-ago.

Turning to our outlook for 2025, we are well-positioned for another strong year. We currently expect mid-single-digit underlying revenue growth, including an anticipated headwind from fiduciary income, along with continued margin expansion and solid adjusted EPS growth. Our outlook assumes current macro conditions persist. However, the environment remains uncertain and the economic backdrop could be materially different than our assumptions. In summary, we are pleased with our performance in 2024. We executed against our strategic objectives and continued our track-record of delivering strong results. With that, let me turn it over to Mark for a more detailed review of our results.

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

Thank you, John, and good morning. Our solid 4th-quarter results reflected continued momentum and capped an excellent year with strong underlying revenue growth and double-digit growth in adjusted EPS. Our consolidated revenue increased 9% in the 4th-quarter to $6.1 billion with underlying growth of 7%. Operating income was $1.1 billion and adjusted operating income was $1.3 billion, up 9%.

Our adjusted operating margin was 23.3%. GAAP EPS was $1.59, adjusted EPS increased 11% to $1.87 and included a $0.05 benefit from favorable discrete tax items and a $0.02 headwind from foreign-exchange. For the full-year, underlying revenue growth was 7%. Adjusted operating income grew 11% to $6.2 billion. Adjusted EPS grew 10% to $8.80 and our adjusted operating margin expanded 80 basis-points to 26.8%, marking our 17th consecutive year of reported margin expansion. 2024 was also a record year for capital deployment.

We invested $9.4 billion in acquisitions, the largest year in our history. We also raised our quarterly dividend 15% and bought back $900 million of our stock. Looking at Risk and Insurance services, 4th-quarter revenue was $3.6 billion, up 11% or 8% on an underlying basis. Operating income in RIS increased 2% to $770 million. Adjusted operating income increased 13% to $893 million and our adjusted operate adjusted margin was 27%. For the full-year, revenue in RIS was $15.4 billion with underlying growth of 8%. Adjusted operating income increased 13% to $4.6 billion and our adjusted operating margin increased 70 basis-points to 32% 2%. At Marsh, revenue in the quarter was $3.3 billion, up 15% from a year-ago or 8% on an underlying basis, reflecting continued growth across our regions as well as a rebound in transaction risk products and claims activity in our Torrent flood business. This result marks the 16th consecutive quarter of 6% or higher underlying growth at March. In US and Canada, underlying growth was 8% for the quarter.

In international, underlying growth was 9%, with Latin-America up 13%, EMEA up 9% and Asia-Pacific up 6%. For the full-year, Marsh's, Marsh's revenue was $12.5 billion with underlying growth of 7%. US and Canada was up 7% and international grew 8%. Sky Carpenter's revenue in the quarter was $201 million, up 7% on an underlying basis, driven by growth across our regions and Global Specialties. For the year, revenue was $2.4 billion, representing 8% underlying growth, Guy Carpenter's fourth consecutive year of 8% or higher underlying growth.

In the Consulting segment, 4th-quarter revenue was $2.4 billion, up 6% on both a GAAP and underlying basis. Consulting operating income was $466 million and adjusted operating income was $484 million, up 1%. Our adjusted operating margin in Consulting was 20.7% compared to 21.3% a year-ago, reflecting seasonality in the impact of acquisitions and dispositions. For the full-year, consulting revenue was $9.1 billion with underlying growth of 6%. Adjusted operating income increased 6% to $1.8 billion and our adjusted operating margin increased 30 basis-points to 20.7%. Mercer's revenue was $1.5 billion in the quarter, up 5% on an underlying basis. This was Mercer's 15th consecutive quarter of 5% or higher underlying growth and continues the best run of growth in over 15 years. Health underlying growth was 5% in the quarter, reflecting growth across all regions.

Wealth was up 4%, led by growth in Investment Management. First, our assets under management were $617 billion at the end-of-the 4th-quarter, up 13% sequentially and up 47% compared to the 4th-quarter of last year. Year-over-year growth was driven by our transactions with Cardano and Vanguard, positive net flows and the impact of capital markets. Career increased 7%, driven by growth in talent and rewards surveys and products. For the year, revenue at Mercer was $5.7 billion, an increase of 5% on an underlying basis, the fourth straight year of 5% or higher underlying growth. Oliver Wyman's revenue in the 4th-quarter was $954 million, an increase of 7% on an underlying basis. This reflects growth across all regions and businesses and was achieved despite a tough comparison to 9% growth in the 4th-quarter of last year. For the full-year, Oliver Wyman's revenue was $3.4 billion, reflecting underlying growth of 6%. Fiduciary income was $112 million in the quarter, a decline of $26 million from the 3rd-quarter, reflecting lower interest rates.

Looking ahead to the first-quarter of 2025, we expect fiduciary income will be approximately $100 million. Foreign-exchange was a $0.2 headwind in the 4th-quarter and a $0.05 headwind for the full-year. Assuming exchange rates remain at current levels, we expect FX will be a headwind of $0.04 in the first-quarter and $0.09 for all of 2025. Turning on of our McGriff transaction. We closed the deal in mid-November and as John mentioned, the integration is going well. McGriff is a terrific business and we are excited about what they bring to MMA. In November, we issued $7.25 billion of senior notes to fund the transaction., the first-quarter is MacGriff's seasonally smallest from a revenue perspective. So for Q1, we expect McGriff will be modestly dilutive to adjusted EPS. However, I want to emphasize that we continue to expect McGriff will be modestly accretive to adjusted EPS for full-year 2025, becoming more meaningfully accretive in 2026 and beyond. We expect noteworthy charges associated with McGriff of approximately $450 million to $500 million in total over the next three years. With the vast majority of these costs associated with retention incentives, a significant portion of which was put in-place by the seller. These costs flow-through our financial statements, but were funded by the seller through a purchase price adjustment. Also note that we will exclude Magriff from our underlying growth calculations for the first year as-is our convention.

Total noteworthy items in the quarter were $154 million, including $136 million of restructuring costs, primarily related to the program we began in the 4th-quarter of 2022. Interest expense in the 4th-quarter was $231 million, up from $151 million in the 4th-quarter of 2023. This increase reflects higher levels of debt as well as $26 million of bridge financing fees associated with the McGriff transaction. First based on our current forecast, we expect interest expense in the first-quarter of 2025 of approximately $246 million. Our adjusted effective tax-rate in the 4th-quarter was 21.1% compares with 25.5% in the 4th-quarter of last year.

For the full-year 2024, our adjusted effective tax-rate was 24.5% compared with 24% in 2023. Excluding discrete items, our adjusted effective tax-rate in 2024 was 25.8% compared with 25% in 2023. When we give forward guidance around our tax-rate, we do not project discrete items, which can be positive or negative. Based on the current environment, we expect an adjusted effective tax-rate of between 25% and 26% in 2025.

Turning to capital management and our balance sheet, we ended the year with total debt of $19.9 billion. Our next scheduled debt maturity is in the first-quarter of 2025 when $500 million of senior notes mature. Our cash position at the end-of-the 4th-quarter was $2.4 billion. Uses of cash-in the quarter totaled $8.5 billion and included $403 million for dividends and $8.1 billion for acquisitions, including the. For the year, uses of cash totaled $11.8 billion, included $1.5 billion for dividends, $9.4 billion for acquisitions and $900 million for share repurchase. Looking to 2025, based on our outlook today, we expect to deploy approximately $4.5 billion of capital across dividends, acquisitions and share repurchases. The ultimate level of share repurchase will depend on how the M&A pipeline develops.

As we discussed last quarter, 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. We've provided tables in our 4th-quarter earnings release that recast adjusted operating income and adjusted EPS for the past eight quarters on this basis.

Turning to 2025, as John noted, we remain positive in our outlook for growth. For 2025, we currently expect mid-single-digit underlying revenue growth, margin expansion and solid growth in adjusted EPS. This outlook contemplates anticipated headwinds from short-term interest-rate declines, foreign-exchange and favorable discrete tax items in 2024.

We expect these headwinds will have a more significant impact in the first-quarter, which will also reflect a difficult revenue growth comparison versus a year-ago. Overall, we are pleased with our performance in 2024. We have momentum across our business and are well-positioned for another strong year in 2025. With that, I'm happy to turn it back to John.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thank you, Mark. Andrew, we are ready to begin Q&A.

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Operator

Certainly. We will now begin the question-and-answer session. If you have a question, please press star 11 on your touchtone phone. If you wish to be removed from the queue, please press star 11 again. If you're using a speaker phone, you may need to pick-up the handset before pressing the numbers. Once again, if you have a question, please press star 11 on your touchtone phone. And in the interest of addressing questions from as many participants as possible, we ask that participants limit themselves to one question and one follow-up. One moment please. And our first question comes from the line of Elyse Greenspan with Wells Fargo.

Elyse Greenspan
Analyst at Wells Fargo.

Hi, thanks. Good morning. My first question is on margin. So the margin on was flat overall, right, in the 4th-quarter. But earlier in the year, you guys had pointed to second-half margin improvement being greater than the first-half, which didn't transpire. So I'm just trying to get a sense of what went on with the margins in the second-half on relative to prior expectations and also specifically in the 4th-quarter.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah, good morning, Elyse. I was pleased with our margin expansion for the year, 80 bps of margin expansion, our 17th consecutive year. As we've talked about in the past from quarter-to-quarter, it will be different outcomes and really 17 consecutive years just says it's a reflection of our disciplined approach to the way we -- the way we run our business. And it's not a primary objective, margins are an outcome of the way we run the business. And we're going to continue to make attractive investments and they're going to drive medium to longer-term growth in the company as well.

The 4th-quarter was impacted by FX. It was also impacted by acquisitions and divestitures, but it wasn't a disappointment. It was a good strong year of margin expansion. And as we guided to for 2025, we expect it to be our 18th consecutive year of margin expansion. And we've got opportunities to continue to focus on the shared infrastructure across the company. We have some opportunities in operations. We've got important workflow optimization efforts happening at Marsh Mercer and Guy Carpenter. And of course, automation is an important lever for us too. And as we learn and continue to test and experiment around AI, and we see possibilities there as well. So we're quite optimistic about the possibilities looking-forward, and we're pleased with the outcome in 2024. Do you have a follow-up?

Elyse Greenspan
Analyst at Wells Fargo.

Yeah. My second question is on free-cash flow. I know you guys typically haven't provided annual guidance, but the growth there was 4% in '24. I think when I look at the CAGR, right, over the past three years, it was around 7%. So both below double-digits. So I'm not sure if there was anything in '24 that was impacted by McGriff, but anything you could provide just in terms of what impacted free-cash flow-in '24 and how we should think about growth headwinds and tailwinds on in free-cash flow-in 2025?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah. I don't have a three-year CAGR in front of me, but I know we had north of 20% free-cash flow growth in '23 and 4%, I believe in 2024, it's obviously not going to track you know as a straight-line, whereas consistently with earnings growth, but over-time, it will. Mark, do you have anything to add there?

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

Yeah, Lee, free-cash flow, we were really pleased with 4%. As John mentioned, we were up 28% last year. So kind of holding that and growing a little bit is not bad. And if you look over the last five years, we've doubled free-cash flow since 2019. So that has been a very good story for us. Given the nature of our business as we've talked about, you would expect free-cash flow would track our earnings growth over-time and it certainly has over a long stretch. We've had double-digit growth in free-cash flow. And as you pointed out, we don't typically give guidance because it can be volatile period-to-period, year-to-year, but over-time, it will track and should track in-line with our earnings growth. And as our guidance suggests, we have an outlook for earnings growth into the future.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thank you. Thank you, Elyse. Andrew, next question please.

Operator

Certainly. Our next question comes from the line of Jimmy Bhullar with J.P. Morgan.

Jimmy Bhullar
Analyst at J.P. Morgan

Hey, good morning. First is a question for Mark. I think you mentioned you expect organic growth of mid-single digits in 2025. I think previously, you'd been saying mid to-high -- or mid-single digits or better. So I'm not sure if I'm reading too much into your comments or is there a change that you're seeing in any aspect of your business that's making it adjust the language slightly.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Hey, Jimmy, it's John. Let me jump-in front of Mark. First of all, I just want to talk about our strong finish to the year, 7% in the 4th-quarter, underlying revenue growth, terrific full-year revenue growth as well. And the strength was really broad-based in the quarter, March 8%, Guy Carpenter is a seasonally small quarter, but a really good finish to what was an excellent year at Guy Carpenter, above 5% underlying growth again and a better finishing career where, as you know, growth has been a bit soft over the course of the last year or so. I mean, Oliver Wyman had a strong finish too, where we're starting to see some demand pick-up.

The macros remain largely supportive of growth. Fiduciary income, as we mentioned, is the one real exception to it. But economic growth in most major markets remains resilient and strong labor markets in most of the economies that we're exposed to. And of course, there are a lot of risks out there, big geopolitical risks, uncertainty around tariffs and potential trade wars. And as I talked about, the frequency of extreme weather impacts economies around the world as well and then risks around technology and other areas. But those are areas that we help our clients and give them advice so that they can invest with a level of confidence. And so we're optimistic about growth for 2025. I wouldn't read much into it. We feel like we're well-positioned. We continue to invest and shape the mix of our business, McGriff coming in and then admin businesses at Mercer going out in 2024 would be a good example of our focus there. And so our team is highly engaged and we're executing well. So we're -- we feel-good entering 2025.

Jimmy Bhullar
Analyst at J.P. Morgan

And just on McGriff, should we assume that it actually is a positive for your organic growth beyond '25, just given their market focus and the fact that they'll be part of a larger platform. So maybe they could do a little bit better than they might have done in the past or should we not expect much of an impact on their or your growth as a result?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah. We're excited about McGriff. As Mark noted, from an earnings point-of-view, it will be slightly dilutive to us or modestly dilutive to us early in the year, but accretive over the full-year and more so in '26 and beyond. You know, I talked about it so-far so good in terms of the integration and culturally, things seem to be going well. Well. A business that we've admired for a long-time as a competitor. We knew there were going to be a few big assets in the market in 2024 and McGriff was the business that we wanted. And it doesn't just make us bigger, they make us better. They've got terrific talent and leadership, as I talked about. They've got some real specialty capabilities and it extends our reach into the middle-market where we're quite focused on bringing scale benefits to that segment of the market. And so we're excited about McGriff.

Jimmy Bhullar
Analyst at J.P. Morgan

Thank you.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thank you. Thank you, Jimmy. Andrew, next question, please.

Operator

Our next question comes from the line of Alex Scott with Barclays.

Alex Scott
Analyst at Barclays

Hey, good morning. First one I have for you is on March. I just want to see if you could help us unpack the strong organic growth. I mean, just with rates in the US being more flattish. I'm guessing most of that came from growth in the book and was just interested if you had any comments on new business versus retention? The maybe just helping us understand the underlying dynamics where you're winning?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Sure, Alex. Again, really strong finish. I'll ask Martin to comment in a second here. We're really well-positioned. In terms of rates, you know, I would say we're most exposed to pricing through commission in the middle-market. So it's a subset of our business overall. So it's an impact. It does have an impact. Of course, pricing does, but -- but we have a lot of fee-based business as well. Mark commented on the notable pickup in M&A activity in the quarter. And that certainly, you know, helped with growth in the quarter and we see a more positive environment there going-forward as well. But Martin, maybe you could share a little bit more color on the broad-based growth we had at March in the quarter.

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

Of course, John to year yeah. So we had a great year in that 24%, 7% on-top of 8% in '23, good balance of growth throughout the globe with international at 8% in the US and Canada at 7%. Looking at Q4, revenue was 8%, which is a reacceleration from Q3 and this signifies the 16th consecutive quarter of 6% or better underlying growth. US and Canada had a very good year with growth of 7% consistent with the full-year underlying growth of '22 and '23 and for the 4th-quarter 8%, which was supported by improvement in retention and loss as well as a better balance of recurring business. The US business also beginning to see some green shoots from deal activity from capital markets. However, we continue to see rate pressure on financial lines and to offset that.

International had a terrific year, underlying growth of 8% -- 4% in the in the quarter and consistently strong growth for EMEA and Latin-America for both the full-year and the quarter. APAC continues to show some signs of moderation with solid growth at 5% and we've got great talent in all the markets. We've been investing well, extremely well-positioned for the future. So we feel very good about that. So yes, terrific.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thank you. It was a strong finish. Alex, do you have a follow-up?

Alex Scott
Analyst at Barclays

Yeah, I do. The other question I wanted to ask you all is on the potential for M&A, IPOs, etc to or have the environment improve more activity. And as I think across your businesses, can you help us think through the different ways that benefits you? And is there any way you can help us frame the kind of impact that would have on organic growth if we do have a return of that kind of activity.

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

Yeah. We're not going to report out separately around M&A or IPO activity, but we have important capabilities across the firm, you know at Marsh Mercer and Oliver Wyman in particular, of course, Guy Carpenter is almost entirely focused on the insurance industry, but we help with different levels of due-diligence. We have a suite of products that can help facilitate transactions when there might be some terms that need to be settled between buyer and seller. So it's an important -- it's an important capability set that we bring to our clients. And it's obviously an important moment when a company selling itself or divesting of a business and then of course, on the buy-side, a meaningful investment. And so those are important moments where we can really distinguish ourselves and show the overall strength of our company. So it's an important capability. As we noted, we saw a pickup in M&A activity in the 4th-quarter. We'll see what 2025 brings. I know a couple of IPOs have been out in the market. I'm not sure ready to declare some giant IPO year in 2025, but you know, but we'll see and it's an important capability and we distribute through a range of investors. We stay close to our corporate clients, of course, and spent a lot of time with law firms as well again to support our clients' efforts to invest.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thank you, Alex. Andrew. Next question please.

Operator

Our next question comes from the line of David with Evercore ISI.

David Motemaden
Analyst at Evercore ISI

Hey, thanks. Good morning. I had just a question more prospectively just on the market and obviously the wildfire is still very early days. But I'm wondering if you guys are seeing any impact on both the primary and reinsurance property markets and what your outlook is there given an over $30 billion insured loss.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah. Thanks, David. Maybe I'll make a couple of comments and then I'll ask Dean and Martin to talk about what they're seeing in the market, which I think highlight is not a lot in terms of market impact at this point. But as I noted in my prepared remarks, it's just absolutely devastating events in Southern California and our focus is on helping our colleagues and our clients recover. It's going to be a long road back and we're going to support them along the way. We're helping with relocation of families, beginning to think about claims prep and filing claims with insurers and then the rebuilding effort. And I would say that our exposure as a business is primarily as an adviser to-high net-worth homeowners. So it's a limited view in that perspective and not overall that impactful to Marsh McLennan from a financial perspective. But as a major risk advisor, we certainly have something to say about the future and efforts to build back with greater resilience. And I would say I'm reading lots of comments about of how to how to support the fair plan or how to create subsidies for insurance. Candidly, it's the wrong conversation. The conversation we should be having really is about building greater resilience into these communities rather than trying to find ways to subsidize insurance. That will lead to happier homeowners and residents of Southern California and other cat prone areas over-time. And of course, that conversation isn't limited to Southern California. So important steps need to be taken so that we're not in this same place in this sad and devastating place again sometime soon. But with that, Dean, maybe you could talk about what you're seeing so-far in the reinsurance market and then we'll have Martin comment on the insurance market.

Dean Klisura
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah, thanks, John. And David, from a reinsurance perspective, as John noted, we're first and foremost committed to supporting our clients as they navigate the complexity of this loss. Guy Carpenter has formed a dedicated wildfire task force comprised of our best meteorologists, cap modelers, analytics, claims, colleagues, brokers, we're fully engaging with our clients to give them insights so they can better assess the magnitude of the loss. It's clear that many of our reinsurance clients will have losses resulting in claims to the reinsurance programs. But as John noted, we've seen industry estimates expect the loss to exceed $30 billion, although we saw bigger numbers than that in the market yesterday being reported. And the impact on the reinsurance market is uncertain at this time and will certainly depend on the ultimate magnitude of the reinsurance loss. But I would say, David, at this stage, the risk-adjusted rate reductions that we witnessed at January 1 could certainly be tempered moving forward as we go into the April 1 renewal season. Thanks, any thoughts?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah. The overall rates came down 2% in the 4th-quarter and you have to put that in context, it's focused on our large account segment and it's gone up 1.5 times since 2012. We did see some rate decreases in property book in the last quarter and slowdown across the world. It's really too early to say what this impact is going to have. It's not a big commercial event for our clients. I think we're going to have to wait-and-see. And our focus is really on making sure that our colleagues, our clients are there and we're providing the right advice for our high-net worth clients as they think about resilience and building forward. So not market hysteria, that's for sure. David, as you know, the California market was on -- homeowners market was under real stress before these events. And so again, it just underscores the -- Just the critical need to build better resilience into these communities. So do you have a follow-up?

David Motemaden
Analyst at Evercore ISI

I do, yeah. And thanks for that answer. And so just switching gears on to consulting and the health business within Mercer. Could you help me think through the underlying growth deceleration? I know the comp got a little bit more difficult, but I was surprised to see the 5% growth. I think it's the lowest it's been since 2021. And I know, John, you mentioned health costs still increasing, I think it was 11% was the expectation in '25. So could you help me think through the deceleration there and how you guys are thinking about growth as we go into '25?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Sure, David. I'll ask Pat to comment in a second. I would say, you know, I'm not necessarily exposed directly to those cost increases that I that I spoke about in my prepared remarks, I was mostly I'm raising those issues just around the critical nature of the advice that we provide to employers where employer-sponsored care or maybe supplemental care in other markets around the world outside of the United States. So obviously, inflation and broader cost increases are a real source of stress for employers around the world, and for economies as well. And so again, it just underscores the critical nature of the advice we provide. So, Pat, maybe you could talk about the results in '24 and a little bit of our outlook and health.

Pat Tomlinson
President at Marsh & McLennan Companies

Sure. And thanks for the question. Listen, overall for, just want to start that we're pleased with our Q4 underlying growth of 5%. It's our 15th consecutive quarter with 5% or more growth and also really pleased that all the practices are contributing to that growth. Full-year results of 5%, I think highlights the resilience and the consistency of our business during uncertain and volatile times and really underscores the continued relevance that we have in our solutions in helping our clients. Now specifically on the health, health grew 5% in the 4th-quarter, as you highlight, 8% for the full-year. I would say the performance was broad-based across regions and it comes from a few different things. Our continued hiring and new talent, our focus on thought leadership, John highlighted a few of the pieces during his opening around our national survey of employer-sponsored health plans, our 2025 health trends report, our PeopleRisk Survey. We've also been expanding the digital tools. We're now in 102 countries with those digital tools. And we've got a real focus on client segmentation to go-ahead and make sure that we can match client healthcare needs with the innovative and tailored solutions we have based on large market, mid-market global multinationals. I do think we continue to see some tailwinds from continued high employment rates, regulatory changes and then obviously medical cost inflation, all of which drives our client focus on affordability and access to quality healthcare for the. And I think collaboration, as we've talked about before across the firm continues to support our growth momentum. Now from the quarter, I would say we can have some variability in any given quarter, including one-offs and timing, but we believe our full-year growth is much more reflective of our performance, right, right, which was the 8% that I talked about. I think we maintain a positive outlook and anticipate our growth momentum will continue to due to the strong value proposition we offer clients and that we have the thought leadership, the strong ongoing demand.

John mentioned the various different pieces of our business and is tee up just now, absolutely higher medical inflation drives up health and benefits costs for employers, right? So absolutely. Employers are facing elevated prices combined with structural industry obstacles like labor shortages, like health system consolidation, and we definitely see continued demand for health expertise. So but globally, our health revenue does have a balance of fixed-fee and commission work. So I would say, generally speaking, we don't -- we don't directly see the full impact of inflation and that medical inflation that John was talking about on our revenue, right, either when it's in periods of high like it's been in the last couple of years or in periods of low. But at the same point, while not necessarily directly through higher commissions, higher medical costs and higher medical inflation absolutely drives client demand as we think about how we have to do fee-based plan design work and projects to try and help clients mitigate that cost escalation and the impact on their clients and on their colleagues.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thanks, Pat. And I would note that Oliver Wyman does a lot of important work-in the industry as well. So thank you, David, for the questions. Andrew, next question please.

Operator

Our next question comes from the line of Greg Peters with Raymond James.

Greg Peters
Analyst at Raymond James.

Good morning, everyone. Can I go back to the comments on McGriff? I think you mentioned $450 million to $500 million in total retention incentives that are going to be somehow flowing through or recaptured. I guess the reason why this is -- I'm triggered by this is I look at your income statement, I see the $60 million of acquisition retention-related costs that go into the adjustments. So just trying to map out what I should think about in terms of the adjustments as I think about '25.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah, sure, Greg. I'll ask Mark to jump-in for a second. But of course, retention is a critical part of any acquisitions we do and we had a meaningful seller-funded retention plan that was put in-place to help our transaction work here. But Mark, maybe you could talk on the comp.

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

Yes. So as I said, we expect $450 million to $500 million of noteworthy charges in total over the next three years. And even though retention isn't -- that it's not solely retention, that will be the biggest chunk of it. What you're seeing come through in the 4th-quarter is actually that you might have heard me mention $26 million of just bridge financing costs and then the beginnings of starting to amortize that those retentions. And it is important to recognize that a healthy amount of that retention was put in-place by the seller and it was funded through a purchase price adjustment. But it has to be amortized and flow-through our financial statements. That's why we'll consider it noteworthy.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thanks, Mark. Greg, do you have a follow-up?

Greg Peters
Analyst at Raymond James.

I do. Just keeping in the adjustment category. For the full-year, I think you recorded $148 million of restructuring charges. Oh, I was just risk and insurance totaled $276 million. How -- is the restructuring charges that we think about for '25, is it going to be it exclusive or independent of what's going on in McGriff? And what kind of -- what are you expecting in terms of restructuring charges in '25?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Sure. Yeah, '24 was -- as Mark noted, we wrapped up our restructuring program. I talked about it a bit as well, but Mark, maybe you could then share that outlook in '25.

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

So as we said, we're really happy with the execution of the restructuring program we started back-in 2022 and it's a big driver of the margin expansion that we've seen and definitely contributor to our earnings growth. But it is -- that program is exceptionally closed at this point. So the remaining charges were in the 4th-quarter. So as you look-forward, the largest -- our expectation at this point is the largest piece of noteworthy items coming through will be related to McGriff. I mean, from time-to-time, we'll have things like true-ups to earn-outs and some other stuff that will go through there. But in terms of major programs, it's really McGriff at this point.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thank you. Thanks, Greg. Appreciate the questions. Andrew, we're ready for our next question, please.

Operator

Our next question comes from the line of Michael Zaremski with BMO Capital Markets.

Michael Zaremski
Analyst at BMO Capital Markets.

Hey, good morning. Going back to the organic or just mid-single-digit growth commentary that you made, John, in the prepared remarks. I know I heard your answer to Jimmy don't read into it, but I guess we're -- as analysts, we're going to try to read into it still. The last few years at least, you said mid-single digit or greater. So is it -- is there -- did something maybe change in the planning process for '25 that we'll see in the proxy? Or I guess just also like you told us the Marsh index, pricing index is down too, and so I'm assuming there's some right sensitivity to your revenues from it being kind of a soft-ish market for a while in the large account marketplace. So maybe that's kind of playing into the -- into your prepared remarks?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah. No, thanks, Mike. I appreciate the question. Look, I think where we're most exposed to P&C pricing is in the middle-market and middle-market pricing tends to be more stable. So I certainly -- your attempt to read into that, I would -- I don't think that's a major factor. The primary issue is fit, right? And so it's an uncertain outlook. Mark shared some insights on what we thought the first-quarter headwinds would be like. You know, we'll see from here, obviously, you know, inflation has remained, you know, stickier than most central banks would like, certainly here in the United States, but you know, I think there's some volatility with potential Volatility from some of the steps that the new administration is taking around trade and tariffs and we'll see what that means, right? And so but bid really is the -- is the primary driver.

Michael Zaremski
Analyst at BMO Capital Markets.

Got it. And then a quick follow-up. Also on -- probably for Mark on capital. So the $4.5 billion of deployed guide for '25 and no change year-over-year. I'm assuming most of that is just due to charges to integrate or are there other material moving pieces we should be thinking about?

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

So the outlook for capital deployment, I think is what you're asking about at $4.5 billion, we're really happy with that outlook. If you think back to last year, we spent close to $12 billion and we had built-up a significant amount of flexibility. I mean that was certainly a lot more than we had planned coming into the year. But to be looking at a year, having done all of that and be looking at a year in 2025, that's a normal year of capital deployment and have still a lot of flexibility to do M&A to pay dividends and buy-back stock is just a great position to be in. So we feel really good about where -- where we are.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Largest deal in our history in McGriff, two top 100 agencies, Cardano, Vanguard's OCIO business and we've got $4.5 billion to deploy, so yeah, I mean it speaks to the cash-flow generation of the company and the strength of our franchise. I would -- I would add that we are -- we're quite active in the market too, the M&A market, I mean and we have a great brand and reputation in that market and that's important in people businesses. Of course, we do have the ability to do bigger deals if the right deal presents itself. I think we're more likely to continue our string appearls strategy that's served us so well and we're likely to bring our leverage back-down. But as Mark and I both talked about, we want to retain the flexibility to strike when it makes sense.

Michael Zaremski
Analyst at BMO Capital Markets.

Thank you, Mike.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Andrew. Our next question, please.

Operator

Question comes from the line of Mayer Shields with KBW.

Meyer Shields
Analyst at KBW

Great. Thanks and good morning. John, I want to follow up on the point that you just made. Does the effort required to integrate McGris impede the ability to do big deals in the United States either overall or within MMA?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

I'm not sure I understand impede for what reason? What do you mean?

Meyer Shields
Analyst at KBW

Just management effort in the world?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Look, I mean, these, these are people businesses, right? So there's no question, social issues are important. Yeah, that's why I highlighted our reputation of really doing what we say we're going to do when we're getting to know businesses and talking about what the possibilities are when we come together as an organization. So there's always going to be a capacity -- some level of capacity constraint around management time and attention. And of course, we want to make any big mistakes either. We've been very, very successful and have been a consolidator for much of our 150-year plus history. And so but again, I again we're more likely to continue our string or pearl strategy there, but -- but we do have the ability to do something bigger. There's no question. And at MMA, you know, Dave and his team have obviously a lot of experience in doing this and I would also note, we're not meeting these target firms for the first time when we're welcoming them -- welcoming them to the family. So we work on many of these deals for many, many years.

Meyer Shields
Analyst at KBW

Yeah, just a quick one. Mark mentioned that there was a difficult organic growth comp coming up. And I just wanted to dig in a little bit. I know other brokers have talked about that as well. Was there something in last year's first-quarter revenues that are less recurring than the typical book?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

No, no, not at all. We just -- we have some unusual headwinds in the first-quarter. FX, tax, we've got some of the seasonality that Mark mentioned around McGriff's revenue in the in the first-quarter being a bit seasonally light. We do have some bid headwinds as well, but we're planning on that to persist throughout the full-year. So anyway, no, nothing, nothing unusual about prior year's first-quarter. All those things and a bit of a tougher comp in the first-quarter.

Meyer Shields
Analyst at KBW

Thank you. Okay, perfect.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Thank you,. Andrew, another question please?

Operator

Certainly. Our next question comes from the line of Rob Cox with Goldman Sachs.

Robert Cox
Analyst at The Goldman Sachs Group

Hey, thanks. Good morning. My first question was a bit of a bigger-picture question for you, John. A large insurer recently highlighted a secular shift in the small and middle-market where more premiums are flowing to a smaller number of middle-market insurers kind of based on their scale and data and analytics advantages. I'm curious if you agree with that trend and if you could talk about what that trend means for Marsh growth opportunities?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

I'm not sure I'm familiar with those comments. So I want to be careful. I want to be careful about commenting on you know what somebody else might say about the middle-market. Do I think scale matters? Yes, I think scale matters in our business. I think it matters to intermediaries and I think it matters to underwriters. There's no question data matters, the ability to develop broader insights and then of course, you know, having a diversification of risk-on both the asset and liability side of the balance sheet, all of those things matter. So we do -- we are -- through Martian, I guess if your comment question was about the middle-market, maybe in the United States, we originate more risk than just about anybody. Certainly on a global basis, and as we talked about in the middle-market, MMA will be on a standalone basis, the 5th-largest broker out there. Our ability to trade with some of the larger insurers there, yeah, I mean we have terrific relationships and they bring innovative solutions to the middle-market. And I commented really in the context of McGriff, I think one of the things that we find so attractive about the middle-market is our ability to bring scale benefits to that segment of the market and that matters to that customer-base. And so to the extent an insurer can bring similar scale benefits? Yeah. It matters.

Mark Christopher McGivney
Chief Financial Officer at Marsh & McLennan Companies

Yeah. And just for clarification, I mean, I think the comments were meant to imply that more market-share is going to larger insurers. And I would think that, that might be a benefit for Marsh as you have relationships with those larger insurers.

Robert Cox
Analyst at The Goldman Sachs Group

Got it. Got it. Thank you.

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Do you have a follow-up, Rob?

Robert Cox
Analyst at The Goldman Sachs Group

Yeah. The follow-up, I appreciate no specific guidance on McGriff margins, but I was hoping you could give us some rough insight into whether you expect the acquisition to be directionally additive or dilutive to margins in 2025. And if you think there is an above-average opportunity to expand those McGriff margins over-time?

John Quinlan Doyle
President and Chief Executive Officer at Marsh & McLennan Companies

Yeah. I think we mentioned this on last quarter. McGriff really was a carve-out of a carve-out. So the possibilities around MacGriff are not built around meaningful expense synergies, just to be clear. But as I mentioned earlier, scale -- scale matters not just to our -- to our clients, it matters for our colleagues because we can give them tools and data and insights and technology that others can't. And it matters to our shareholders as well. So we expect to bring scale benefits to all three and we're excited about what McGriff will mean to adjusted EPS later in '25 and into '26 and '27. So thank you, Rob. With that, Andrew, we've got to wrap-up. We're past the bottom of the hour. Thank you. I want to thank everyone for joining us on the call this morning. And I also want to thank our colleagues for their hard work and their dedication. I also want to thank all of our clients for their continued support and confidence in Marsh McLennan. Thanks again to everyone, and we look-forward to speaking with you all again next quarter. Thank you, Andrew.

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