Marsh McLennan Reports ‘Strong Start’ to Year With Restructuring Program on Track

Marsh McLennan Companies Inc. reports “a strong start” to 2023, generating 9% underlying revenue growth in the first quarter on top of 10% growth in the first quarter of last year, according to John Doyle, president and chief executive officer.

“I’m pleased with our performance, especially when viewed in the context of the volatile macroeconomic environment,” he said during an analysts’ call to discuss Q1 result. “The global economy has been contending with high inflation, aggressive tightening of monetary policy by central banks, some recent bank failures and the effects of geopolitical instability.”

Q1 operating income was $1.7 billion, an increase of 19% from $1.5 billion reported in Q1 2023. Net income attributable to the company was $1.2 billion, or $2.47 per diluted share, compared with $1.1 billion, or $2.10 per diluted share in the first quarter of 2022.

Marsh McLennan’s Risk and Insurance Services (RIS) segment (Marsh and Guy Carpenter) reported a 24% rise in Q1 operating income to $1.4 billion, and adjusted operating income of $1.4 billion, an increase of 17% versus a year ago. RIS’ revenue was $3.9 billion in the first quarter of 2023, an increase of 10%, or 11% on an underlying basis.

Breaking down the results of the two RIS units, Marsh’s Q1 revenue was $2.7 billion, an increase of 9% on an underlying basis. In U.S./ Canada, underlying revenue rose 7%. International operations produced underlying revenue growth of 10%, reflecting 11% growth in Asia Pacific, 10% growth in EMEA, and 10% growth in Latin America. Guy Carpenter’s revenue in the first quarter was $1.1 billion, an increase of 10% on an underlying basis.

Doyle said Marsh McLennan is continuing its restructuring program which includes actions to align workforce and skillsets with evolving needs, rationalizing technology, and reducing its real estate footprint. “We now expect roughly $300 million of savings by 2024 with total cost to achieve these savings of $375 million to $400 million,” he said.

During the Q1 2022 analysts’ call, Chief Financial Officer Mark McGivney explained the costs of the program include severance associated with headcount reductions and provisions related to real estate actions.