Marsh & McLennan Companies Q4 2024 Earnings Report

Marsh & McLennan Companies EPS Results

• Actual EPS: $1.87
• Consensus EPS: $1.75
• Beat/Miss: Beat by +$0.12
• One Year Ago EPS: N/A

Marsh & McLennan Companies Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $5.95 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Marsh & McLennan Companies Announcement Details

• Quarter: Q4 2024
• Date: 1/30/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, January 30, 2025
• Conference Call Time: 8:30AM ET

Marsh & McLennan Cos., Inc. is a professional services firm, which engages in offering clients advice and solutions in risk, strategy, and people. It operates through the Risk and Insurance Services, and Consulting segments. The Risk and Insurance Services segment is involved in risk management activities, as well as insurance and reinsurance broking and services. The Consulting segment offers health, wealth, and career solutions and products, and specialized management, strategic, economic, and brand consulting services. The company was founded by Henry W. Marsh and Donald R. McLennan in 1871 and is headquartered in New York, NY.

Marsh & McLennan Companies Q4 2024 Earnings Call Transcript

Presentation

[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 marshmclennan.com. Please note that remarks made today may include forward looking statements.

[Operator]

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 ks, 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.

[Operator]

You.

[Operator]

I'll now turn this over to John Doyle, President and CEO of Marsh McLennan.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Good morning, and thank you for joining us to discuss our Q4 and full year results reported earlier today. I'm John Doyle, President and CEO of Marsh McLennan. On the call with me is Mark McGivney, our CFO and the CEOs of our businesses, Martin South of Marsh Dean Klasseur of Guy Carpenter Hat Tomlinson of Mercer and Nick Studer 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 exceed $30,000,000,000 This means the LA wildfires will be among the top 10 largest natural disasters in history in terms of insured losses.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 McLennan 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Total revenue grew 8% to $24,500,000,000 We generated 7% underlying revenue growth, continuing our best stretch of growth in more than 2 decades with both risk and insurance services and consulting delivering strong results. Our adjusted operating income grew 11% to $6,200,000,000 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 addition to another year of excellent financial performance, we continue to execute on our key priorities. We had a record year of M and A by investing $9,400,000,000 in acquisitions, including our $7,750,000,000 acquisition of McGriff.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

We also delivered significant capital return to shareholders, raising our dividend by 15% and completing $900,000,000 of share repurchases. And we successfully completed our restructuring program, achieving the goals we set 2 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 2 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

1st 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 the significant portion of our cash flow into organic investments, particularly in talent, technology and capabilities. Innovations like Centrisq, BlueEye, 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

A focus on high quality acquisitions is also an important part of our growth strategy. Over the past decade, we've invested approximately $24,000,000,000 in M and 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 5 years alone. This has been achieved primarily through increasing efficiencies and 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

At nearly $130,000,000,000 2024 was the 5th consecutive year of more than $100,000,000,000 of insured natural catastrophe losses. Despite an elevated risk landscape, we year of more than $100,000,000,000 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 U.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

S. 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Global casualty rates increased 4% with U. S. 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%.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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. Excessive loss placements continue to face pressure on treaty terms.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 5th 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

For employee sponsored health plans in the U. S, 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 would be the 3rd consecutive year of cost growth around 5%. As always, our focus is on helping our clients navigate these dynamic market conditions. Now let me turn to our Q4 financial performance, which Mark will cover in more detail.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

We are pleased with our Q4 performance, where growth remains 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 McGivney, CFO 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, double digit growth in adjusted EPS. Our consolidated revenue increased 9% in the 4th quarter to $6,100,000,000 with underlying growth of 7%. Operating income was $1,100,000,000 and adjusted operating income was $1,300,000,000 up 9%. Our adjusted operating margin was 23.3%.

[Mark McGivney, CFO at Marsh & McLennan Companies]

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 6,200,000,000 dollars adjusted EPS grew 10% to $8.80 and our adjusted operating margin expanded 80 basis points to 26.8 percent marking our 17th consecutive year of reported margin expansion. 2024 was also a record year for capital deployment. We invested $9,400,000,000 in acquisitions, the largest year in our history. We also raised our quarterly dividend 15% and bought back $900,000,000 of our stock.

[Mark McGivney, CFO at Marsh & McLennan Companies]

Looking at risk and insurance services, 4th quarter revenue was $3,600,000,000 up 11% or 8% on an underlying basis. Operating income in RIS increased 2% to 770,000,000 dollars Adjusted operating income increased 13% to $893,000,000 and our adjusted margin was 27%. For the full year, revenue in RIS was $15,400,000,000 with underlying growth of 8%. Adjusted operating income increased 13% to $4,600,000,000 and our adjusted operating margin increased 70 basis points to 32%. At Marsh, revenue in the quarter was $3,300,000,000 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.

[Mark McGivney, CFO at Marsh & McLennan Companies]

This result marks the 16th consecutive quarter of 6% or higher underlying growth at March. In U. S. 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%.

[Mark McGivney, CFO at Marsh & McLennan Companies]

For the full year, Marsh's revenue was $12,500,000,000 with underlying growth of 7%. U. S. And Canada was up 7% and international grew 8%. Sky Carpenter's revenue in the quarter was $201,000,000 up 7% on an underlying basis driven by growth across our regions and Global Specialties.

[Mark McGivney, CFO at Marsh & McLennan Companies]

For the year, revenue was $2,400,000,000 representing 8% underlying growth, Guy Carpenter's 4th consecutive year of 8% or higher underlying growth. In the Consulting segment, 4th quarter revenue was $2,400,000,000 up 6% on both a GAAP and underlying basis. Consulting operating income was $466,000,000 dollars and adjusted operating income was $484,000,000 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 $9,100,000,000 with underlying growth of 6%.

[Mark McGivney, CFO at Marsh & McLennan Companies]

Adjusted operating income increased 6% to $1,800,000,000 and our adjusted operating margin increased 30 basis points to 20.7%. Mercer's revenue was $1,500,000,000 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.

[Mark McGivney, CFO at Marsh & McLennan Companies]

Our assets under management $617,000,000,000 at the end of the 4th quarter, up 13% sequentially and up 47% compared to the Q4 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 $5,700,000,000 an increase of 5% on an underlying basis, 4th straight year of 5% or higher underlying growth. Oliver Wyman's revenue in the 4th quarter was 954,000,000 dollars an increase of 7% on an underlying basis.

[Mark McGivney, CFO at Marsh & McLennan Companies]

This reflects growth across all regions and businesses and was achieved despite a tough comparison to 9% growth in the Q4 of last year. For the full year, Oliver Wyman's revenue was $3,400,000,000 reflecting underlying growth of 6%. Fiduciary income was $112,000,000 in the quarter, a decline of $26,000,000 from the 3rd quarter reflecting lower interest rates. Looking ahead to the Q1 of 2025, we expect fiduciary income will be approximately 100,000,000 dollars Foreign exchange was a $0.02 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 1st quarter and $0.09 for all of 2025.

[Mark McGivney, CFO at Marsh & McLennan Companies]

Turning to 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're excited about what they bring to MMA. In November, we issued $7,250,000,000 of senior notes to fund the transaction. The Q1 is McGriff's seasonally smallest from a revenue perspective. So for Q1, we expect McGriff will be modestly dilutive to adjusted EPS.

[Mark McGivney, CFO at Marsh & McLennan Companies]

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 $450,000,000 to $500,000,000 in total over the next 3 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 Magritte from our underlying growth calculations for the 1st year as is our convention. Total noteworthy items in the quarter were 154,000,000 dollars including $136,000,000 of restructuring costs, primarily related to the program we began in the Q4 of 2022.

[Mark McGivney, CFO at Marsh & McLennan Companies]

Interest expense in the Q4 was $231,000,000 up from and $51,000,000 in the Q4 of 2023. This increase reflects higher levels of debt as well as $26,000,000 of bridge financing fees associated with the McGriff transaction. Based on our current forecast, we expect interest expense in the Q1 of 2025 of approximately $246,000,000 Our adjusted effective tax rate in the 4th quarter was 21.1% compared with 25.5% in the Q4 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.

[Mark McGivney, CFO at Marsh & McLennan Companies]

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% 26% in 2025. Turning to capital management and our balance sheet. We ended the year with total debt of $19,900,000,000 Our next scheduled debt maturity is in the Q1 of 2025 when $500,000,000 of senior notes mature. Our cash position at the end of the 4th quarter was $2,400,000,000 Uses of cash in the quarter totaled $8,500,000,000 and included $403,000,000 for dividends and $8,100,000,000 for acquisitions including the BRIF.

[Mark McGivney, CFO at Marsh & McLennan Companies]

For the year, uses of cash totaled $11,800,000,000 included $1,500,000,000 for dividends, dollars 9,400,000,000 for acquisitions and $900,000,000 for share repurchase. Looking to 2025, based on our outlook today, we expect to deploy approximately $4,500,000,000 of capital across dividends, acquisitions and share repurchases. The ultimate level of share repurchase will depend on how the M and A pipeline develops. As we discussed last quarter, beginning in the Q1 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 Q4 earnings release that recast adjusted operating income and adjusted EPS for the past 8 quarters on this basis.

[Mark McGivney, CFO at Marsh & McLennan Companies]

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.

[Mark McGivney, CFO at Marsh & McLennan Companies]

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 Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Thank you, Mark. Andrew, we're ready to begin Q and A.

[Operator]

Certainly.

[Operator]

We will now begin the question and answer session. And our first question comes from the line of Elyse Greenspan with Wells Fargo.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Hi, thanks. Good morning. My first question is on margin. So the margin was flat overall right in the Q4. But earlier in the year, you guys had pointed to second half margin improvement being greater than the first half, which didn't transpire.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

So I'm just trying to get a sense of what went on with the margins in the second half relative to prior expectations and also specifically the Q4?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Yes. 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 run our business.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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. They're going to drive medium to longer term growth in the company as well. The Q4 was impacted by FX.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 with some opportunities in operations. We've got important workflow optimization efforts happening at Marsh, Mercer and Guy Carpenter.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

And of course, automation is an important lever for us too. And as we learn and continue to test and experiment around AI, 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, Managing Director at Wells Fargo Securities]

Yes. 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 2024. I think when I look at the CAGR right over the past 3 years, it was around 7%. So both below double digits.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

So I'm not sure if there was anything in 2024 that was impacted by McGriff's. But anything you could provide just in terms of what impacted free cash flow in 2024? And how we should think about growth headwinds and tailwinds in free cash flow in 2025?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Yes. I don't have a 3 year CAGR in front of me, but I know we had north of 20% free cash flow growth in 2023 and 4%, I believe, in 2024. It's obviously not going to track as a straight line whereas consistently with earnings growth, but over time it will. Mark, do you have anything to add there?

[Mark McGivney, CFO at Marsh & McLennan Companies]

Yes, Elyse. 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 5 years, we've doubled free cash flow since 2019.

[Mark McGivney, CFO at Marsh & McLennan Companies]

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.

[Mark McGivney, CFO at Marsh & McLennan Companies]

It should track in line with our earnings growth. And as our guidance suggests, we have an outlook for earnings growth into the future.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Thank you, Elyse. Andrew, next question please.

[Operator]

Certainly. Our next question comes from the line of Jimmy Bhullar with JPMorgan.

[Jimmy Bhullar, Equity Research Analyst at JP 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 are 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 you adjust the language slightly?

[John Q. Doyle, President and CEO, Marsh 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. Marsh, 8%, Guy Carpenter is a seasonally small quarter, but a really good finish to what was an excellent year at Guy Carpenter, bursar 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

And 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, 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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. So we're optimistic about growth for 2025. I wouldn't read much into it. We feel like we're well positioned.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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, Equity Research Analyst at JP Morgan]

And just on McGriff, should we assume that it actually is a positive for your organic growth beyond 2025, 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 Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 2026 and beyond. I talked about it so far so good in terms of the integration. Culturally, things seem to be going well. McGriff's a business that we've admired for a long time as a competitor.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

And so we're excited about McGriff.

[Operator]

Thank you.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Thank you, Jimmy. Andrew, next question please.

[Operator]

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

[Alex Scott, Insurance Research 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 U. S.

[Alex Scott, Insurance Research Analyst at Barclays]

Being more flattish, I'm guessing most of that came from growth in the book.

[Alex Scott, Insurance Research Analyst at Barclays]

And I was just interested if

[Alex Scott, Insurance Research Analyst at Barclays]

you had any comments on new business versus retention, maybe just helping us understand the underlying dynamics where you're running?

[John Q. Doyle, President and CEO, Marsh 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, I would say we're most exposed to pricing through commission in the middle market.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

So it's a subset of our business overall. So it's an impact. It does have an impact, of course, pricing does, but we have a lot of fee based business as well. Mark commented on the notable pickup in M and A activity in the quarter that certainly helped with growth in the quarter. And we see a more positive environment there going forward as well.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

But Martin, maybe you could share a little bit more color on the broad based growth that we had at Marsh in the quarter.

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

Of course, John De Laschase, yes. So we had a great year in 24%, 7% on top of 8% in 23%. Good balance of growth throughout the globe with international at 8%, and U. S. And Canada at 7%.

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

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. U. S. And Canada had a very good year with growth of 7% consistent with the full year underlying growth of 2022 and 2023 and for the Q4 8% which is supported by improvement in retention and lost as well as a better balance of recurring business.

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

The U. S. Business also beginning to see some green shoots from deal activity from capital markets. However, we continue to see rate pressure on financial lines to offset that. International had a terrific year underlying growth of 8%, 4% in the quarter and consistently strong growth for EMEA, Latin America for both the full year and the quarter.

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

APAC continues to show some signs of moderation with solid growth of 5%. We've got great talent in all of the markets. We've been investing well, extremely well positioned for the future. So we feel very good about that. So yes.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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

[Alex Scott, Insurance Research Analyst at Barclays]

Yes, I do. The other question I wanted to ask you all is on the potential for M and A, IPOs, etcetera, to have the environment improve more activity. 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?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Yes. We're not going to report out separately around M and A or IPO activity, but we have important capabilities across the firm at Marsh, Mercer and Oliver Wyman in particular, of course, Guy Carpenter's 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 capability set that we bring to our clients. And it's obviously an important moment when a company is selling itself or divesting of a business and then of course, on the buy side, a meaningful investment.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

And so those are important moments where we can really distinguish ourselves and show the overall strength of our company. So it's important capability. As we noted, we saw a pickup in M and A activity in the Q4. We'll see what 2025 brings. I know a couple of IPOs have been out in the market.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

I'm not sure ready to declare some giant IPO year in 2025, but we'll see. It's an important capability. We distribute through a range of investors. We stay close to our corporate clients, of course, and spend a lot of time with law firms as well, again to support our clients' efforts to invest. Thank you, Alex.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Andrew, next question please.

[Operator]

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

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services 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 $30,000,000,000 insured loss?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Yes. 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

We're helping with relocation of families, beginning to think about claims prep and filing claims with insurers and then the rebuilding effort. I would say that our exposure as a business is primarily as an advisor 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 reading lots of comments about how to support the fair plan or how to create subsidies for insurance, candidly, it's the wrong conversation.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 the same place, 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, Chief Executive Officer, Guy Carpenter at Marsh & McLennan Companies]

Thanks, John. And David, from a reinsurance perspective, as John noted, we're 1st 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.

[Dean Klisura, Chief Executive Officer, Guy Carpenter at Marsh & McLennan Companies]

As John noted, we've seen industry estimates expect the loss to exceed $30,000,000,000 although we saw bigger numbers than that in the market yesterday being reported. 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 in January 1 could certainly be tempered moving forward as we go into the April 1 renewal season.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Thanks, Steve. Martin, any thoughts?

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

Yes. The overall rates came down 2% in the 4th quarter. You have to put that in context. It's focused on a 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 slow down across the world.

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

It's really too early to say what this impact is going to have. It's not a big commercial event for our clients.

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

I think we're going to

[Martin South, Chief Executive Officer, Marsh at Marsh & McLennan Companies]

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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

I do, yes. And thanks for that answer. So just switching gears 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.

[David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI]

And I know, John, you mentioned health costs still increasing. I think it was 11% was the expectation in 2025. So could you help me think through the deceleration there and how you guys are thinking about growth as we go into 2025?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Sure, David. I'll ask Pat to comment in a second. I would say we're not necessarily exposed directly to those cost increases that I spoke about in my prepared remarks.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

I was

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

mostly raising those issues just around the critical nature of the advice that we provide to employers where you have 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 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 2024 and a little bit of our outlook can help.

[Pat Tomlinson, President & CEO, Mercer at Marsh & McLennan Companies]

Sure. And thanks for the question. Listen, overall for Mercer, I 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 of 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.

[Pat Tomlinson, President & CEO, Mercer at Marsh & McLennan Companies]

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 is broad based across regions and it comes from a few different things. 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 people risk survey. We've also been expanding the digital tools.

[Pat Tomlinson, President & CEO, Mercer at Marsh & McLennan Companies]

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 intelligence solutions we have based on large market, mid market, global multinationals. I do think we see continue to see some tailwinds from continued high employment rates, regulatory changes, and then obviously medical cost inflation, all of which drives clients focus on affordability and access to quality healthcare for the full affairs. 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, which was the 8% that I talked about.

[Pat Tomlinson, President & CEO, Mercer at Marsh & McLennan Companies]

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 his 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.

[Pat Tomlinson, President & CEO, Mercer at Marsh & McLennan Companies]

And we definitely see continued demand for health expertise. But globally, our health revenue does have a balance of fixed fee and commission work. So I would say generally speaking, 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.

[Pat Tomlinson, President & CEO, Mercer at Marsh & McLennan Companies]

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 Q. Doyle, President and CEO, Marsh 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.

[Gregory Peters, Managing Director - Equity Research at Raymond James Financial]

Good morning, everyone. Can I go back to the comments on McGriff? I think you mentioned $450,000,000 to $500,000,000 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 $60,000,000 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 Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Yes, 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

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

the comp.

[Mark McGivney, CFO at Marsh & McLennan Companies]

Yes. So as

[Mark McGivney, CFO at Marsh & McLennan Companies]

I said, we expect $450,000,000 to $500,000,000 of noteworthy charges in total over the next 3 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 Q4 is actually that you might have heard me mention $26,000,000 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.

[Mark McGivney, CFO at Marsh & McLennan Companies]

That's why we'll consider it noteworthy.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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

[Gregory Peters, Managing Director - Equity Research at Raymond James Financial]

I do. Just keeping in the adjustment category, for the full year, I think you recorded $148,000,000 of restructuring charges. I was just that's risk and insurance totaled $276,000,000 How is the restructuring charges that we think about for 20 25, is it going to be exclusive or independent of what's going on in McGriff?

[Gregory Peters, Managing Director - Equity Research at Raymond James Financial]

And what kind of what are you expecting in terms of restructuring charges in 20 25?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Sure. Yes. In 2024 was, as Mark noted, we wrapped up our restructuring program. I talked about it a bit as well, but Mark, maybe you could share the outlook in 2025.

[Mark McGivney, CFO 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 contributed to our earnings growth. But it is that program is a sectionally closed at this point. So the remaining charges were the Q4. 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.

[Mark McGivney, CFO at Marsh & McLennan Companies]

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 Q. Doyle, President and CEO, Marsh 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, Research 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 was don't read into it, but I guess if analysts were going to try to read into it still. The last few years

[Michael Zaremski, Research Analyst at BMO Capital Markets]

at least

[Michael Zaremski, Research Analyst at BMO Capital Markets]

you said mid single digit or greater. So is it is there did something maybe change in the planning process for 2025 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 softish market for a while in the large account marketplace. So maybe that's kind of playing into your prepared remarks?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Yes. No, thanks Mike. I appreciate the question. Look, I think where we're most exposed to P and 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

The primary issue is fit, right? And so it's an uncertain outlook. Mark shared some insights on what we thought the Q1 headwinds would be like. We'll see from here. Obviously, inflation has remained stickier than most central banks would like certainly here in the United States.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

But 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 primary driver.

[Michael Zaremski, Research Analyst at BMO Capital Markets]

Got it. And then quick follow-up also on probably for Mark on capital. So the $4,500,000,000 of deploy guide for 2025 and no change year over year. I'm assuming most of that is just due to charges to integrate McGrath or are there other material moving pieces we should be thinking about?

[Mark McGivney, CFO at Marsh & McLennan Companies]

So the outlook for capital deployment, I think is what you're asking about that $4,500,000,000 We're really happy with that outlook. If you think back to last year, we spent close to $12,000,000,000 and we had built up a significant amount of flexibility. And 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 and A, pay dividends and buy back stock is just a great position to be in. So we feel really good about where we are.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Largest deal in our history in McGriff, 2 top 100 agencies, Cardano, Vanguard's OCIO business and we've got $4,500,000,000 to deploy. So yes, I mean, it speaks to the cash flow generation of the company and the strength of our franchise. I would add that we are quite active in the market too, the M and 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

I think we're more likely to continue our string of pearls 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. Thank you, Mike. Andrew, next question please.

[Operator]

Our next

[Operator]

question comes from the line of Meyer Shields with KBW.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (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 McGriff impede the ability to do big deals in the United States either overall or within MMA?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Just management effort in the

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Oh, look, again, these are people businesses, right? So there's no question social issues are important. Yes, it'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 don't want to make any big mistakes either.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

We've been very, very successful and have been a consolidator for much of our 150 year plus history. And so but again, we're more likely to continue our string of pearls strategy, Maher, but we do have the ability to do something bigger. There's no question. And at MMA, 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 to the family.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

So we work on many of these deals for many, many years.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Do you have a follow-up, Amir?

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Yes. 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.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

I know other brokers have talked about that as well. Was there something in last year's Q1 revenues that are less recurring than the typical book?

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

No, no, not at all. We just we have some unusual headwinds in the Q1. FX, tax, we've got some of the seasonality that Mark mentioned around McGriff's revenue in the Q1 being a bit seasonally late. We do have some bit headwinds as well, but we're planning on that to persist throughout the full year. So anyway, no, nothing unusual about prior year's Q1.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

All those things in a bit of a tougher comp in the Q1.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay, perfect. Thank you.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Thank you, Meyer. Andrew, another question, please.

[Operator]

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

[Robert Cox, Vice President - Equity Research at Goldman Sachs]

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 Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

I'm not sure I'm familiar with those comments. So I want to be careful about commenting on 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

There's no question data matters, the ability to develop broader insights, and then, of course, having diversification of risk on both the asset and liability side of a balance sheet, all of those things matter. So we do we are through Marsh and 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, yes, I mean we have terrific relationships and they bring innovative solutions to the middle market. And I commented really in the context of McGriff.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 in similar scale benefits, yes, it matters.

[Robert Cox, Vice President - Equity Research at Goldman Sachs]

Yes. 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Got it. Got it. Thank you. Do you have a follow-up?

[Robert Cox, Vice President - Equity Research at Goldman Sachs]

Yes. The follow-up, 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's an above average opportunity to expand those McGriff margins over time.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Yes. I think we mentioned this on in last quarter. McGriff really was a carve out of a carve out. So the possibilities around McGriff are not built around meaningful expense synergies, just to be clear. But as I mentioned earlier, scale matters not just to our clients, it matters for our colleagues because we can give them tools and data and insights and technology that others can't.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

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 2025 and into 2026 and 2027. So thank you, Rob. With that, Andrew, we've got to wrap up. We're past the bottom of the hour.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Thank you. I want to thank everyone for joining us on the call this morning. 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.

[John Q. Doyle, President and CEO, Marsh at Marsh & McLennan Companies]

Thank you, Andrew.

Participants

Executives

• John Q. Doyle, President and CEO, Marsh
• Mark McGivney, CFO
• Martin South, Chief Executive Officer, Marsh
• Dean Klisura, Chief Executive Officer, Guy Carpenter
• Pat Tomlinson, President & CEO, Mercer

Analysts

• Elyse Greenspan, Managing Director at Wells Fargo Securities
• Jimmy Bhullar, Equity Research Analyst at JP Morgan
• Alex Scott, Insurance Research Analyst at Barclays
• David Motemaden, Managing Director & Sr. Equity Research Analyst - Insurance & Business Services at Evercore ISI
• Gregory Peters, Managing Director - Equity Research at Raymond James Financial
• Michael Zaremski, Research Analyst at BMO Capital Markets
• Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)
• Robert Cox, Vice President - Equity Research at Goldman Sachs