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1. Company Snapshot

1.a. Company Description

Marsh & McLennan Companies, Inc., a professional services company, provides advice and solutions to clients in the areas of risk, strategy, and people worldwide.It operates in two segments, Risk and Insurance Services, and Consulting.The Risk and Insurance Services segment offers risk management services, such as risk advice, risk transfer, and risk control and mitigation solutions, as well as insurance and reinsurance broking, catastrophe and financial modeling, and related advisory services; and insurance program management services.


This segment serves businesses, public entities, insurance companies, associations, professional services organizations, and private clients.The Consulting segment provides health, wealth, and career consulting services and products; and specialized management, as well as economic and brand consulting services.Marsh & McLennan Companies, Inc.


was founded in 1871 and is headquartered in New York, New York.

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1.b. Last Insights on MMC

Marsh & McLennan's recent performance was negatively impacted by valuation concerns, with a 'HOLD' rating from Quant and Wall Street, reflecting caution amid macroeconomic conditions and revised earnings forecasts. Despite solid Q3 growth, including 11% revenue growth and 13% adjusted operating income growth, higher expenses may weigh on earnings momentum. Analysts have slashed their forecasts following Q3 earnings, and the company's high valuation has consistently been a concern, leading to a cautious stance.

1.c. Company Highlights

2. Marsh & McLennan Companies' Solid Q3 Earnings Beat Expectations

Marsh & McLennan Companies reported a robust third quarter with revenue growth of 11% to $6.4 billion and underlying growth of 4%. The company's adjusted operating income increased 13% to $1.4 billion, driven by strong performances across its segments. Adjusted EPS grew 11% to $1.85, beating analyst estimates of $1.78. The Risk and Insurance Services (RIS) segment reported revenue of $3.9 billion, up 13% from a year ago, or 3% on an underlying basis. The company's margins are expected to expand due to the Thrive program, which aims to deliver $400 million in savings over three years.

Publication Date: Oct -17

📋 Highlights
  • Revenue Growth:: Q3 revenue rose 11% to $6.4 billion, driven by 13% growth in Risk & Insurance Services and 16% in Marsh segment revenue ($3.4 billion).
  • Adjusted Operating Income:: Increased 13% to $1.4 billion, with adjusted EPS up 11% to $1.85, reflecting strong underlying performance despite economic pressures.
  • Thrive Program Impact:: Aims to deliver $400 million in savings by 2026 (at $500 million cost), with 70% of savings flowing to the bottom line and 30% reinvested in AI and talent.
  • Capital Deployment:: Deployed $900 million in Q3 ($350 million in acquisitions, $550 million in dividends), with $4.5 billion expected in 2025 for strategic investments.
  • International Growth:: 5% global growth, led by Asia-Pacific (6%) and EMEA (5.7%), offset by a 11% Pacific decline; middle market growth (5% YTD) and pricing resilience highlighted.

Segment Performance

The RIS segment's revenue growth was driven by Marsh's revenue, which was $3.4 billion, up 16% from a year ago or 4% on an underlying basis. Mercer reported revenue of $1.6 billion, up 9% or 3% on an underlying basis. Oliver Wyman's revenue was $886 million, up 9% or 8% on an underlying basis. The company's international growth rate was 5%, with Asia Pacific growing 6%, EMEA 5.7%, and Latin America 3%.

Thrive Program and Margin Expansion

The Thrive program is expected to support margin expansion, with the company having an 18-year track record of margin expansion. The program combines with the current environment to potentially allow for above-average margin expansion. The company expects to incur around $500 million in charges to achieve the Thrive savings, with the majority of savings flowing through to the bottom line.

Valuation and Growth Prospects

With a P/E Ratio of 22.49 and an EV/EBITDA of 15.42, the company's valuation appears reasonable. The company's guidance for mid-single-digit underlying revenue growth for 2026 is in line with analyst estimates. The company's ROE of 28.2% indicates strong profitability. Analysts estimate next year's revenue growth at 5.5%, indicating a stable growth outlook. The company's "string of pearls" approach to M&A and its active presence in the market are expected to drive growth.

Risk Factors and Challenges

The company operates in a challenging environment with increasing healthcare costs and pressure points. However, its services are in demand, and it is well-positioned to navigate the market. The reinsurance market conditions are likely to be similar to those entering 2025, and the company is optimistic about its growth prospects. The economic backdrop could be materially different than its assumptions, but the company's diversified business model and strong track record of margin expansion provide a solid foundation for growth.

3. NewsRoom

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4 Stocks to Watch From the Thriving Insurance Brokerage Industry

Dec -04

Source: zacks.com

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Marsh & McLennan Companies, Inc. (NYSE:MMC) Given Consensus Rating of “Hold” by Analysts

Dec -04

Source: defenseworld.net

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New report from Oliver Wyman and Association of Equipment Manufacturers finds rising uncertainty is reshaping equipment manufacturing

Dec -03

Source: businesswire.com

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Marsh & McLennan Unit Expands in Hawai'i With Three Brokerage Buys

Dec -02

Source: zacks.com

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Brentview Investment Management LLC Sells 293 Shares of Marsh & McLennan Companies, Inc. $MMC

Dec -01

Source: defenseworld.net

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16,400 Shares in Marsh & McLennan Companies, Inc. $MMC Purchased by BLI Banque de Luxembourg Investments

Dec -01

Source: defenseworld.net

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Clarkston Capital Partners LLC Buys 500 Shares of Marsh & McLennan Companies, Inc. $MMC

Nov -28

Source: defenseworld.net

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Aviso Financial Inc. Has $5.81 Million Holdings in Marsh & McLennan Companies, Inc. $MMC

Nov -25

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.88%)

6. Segments

Risk and Insurance Services

Expected Growth: 6.5%

Marsh & McLennan's Risk and Insurance Services growth of 6.5% is driven by increased demand for risk management and insurance solutions, expanding global presence, and strategic acquisitions. Strong performance in commercial P&C and cyber insurance, alongside investments in digital capabilities, also contribute to growth.

Consulting

Expected Growth: 7.5%

Marsh & McLennan's consulting growth of 7.5% is driven by increasing demand for risk management and strategic advice. The company's expertise in areas like cyber risk, climate change, and digital transformation is fueling growth. Additionally, its global reach and strong client relationships are enabling cross-selling and upselling opportunities, contributing to the segment's growth.

Corporate/Eliminations

Expected Growth: 5.0%

The 5.0% growth in Corporate/Eliminations for Marsh & McLennan Companies, Inc. is driven by increased investment income, improved operational efficiency, and strategic investments in digital transformation, partially offset by higher expenses. This segment's growth is also influenced by intersegment eliminations and allocations, impacting overall financial performance.

7. Detailed Products

Risk Advisory Services

Marsh & McLennan's risk advisory services help clients identify, assess, and mitigate risks to their business operations.

Insurance Broking

Marsh & McLennan's insurance broking services connect clients with insurance providers, helping them find the right coverage for their business needs.

Reinsurance Services

Marsh & McLennan's reinsurance services help insurance companies manage their risk and increase their capacity to underwrite policies.

Human Capital Consulting

Marsh & McLennan's human capital consulting services help organizations design and implement effective HR strategies and benefits programs.

Mercer Investments

Mercer Investments, a Marsh & McLennan company, provides investment consulting and management services to institutional investors.

Oliver Wyman Consulting

Oliver Wyman, a Marsh & McLennan company, provides strategic consulting services to the financial services industry.

8. Marsh & McLennan Companies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Marsh & McLennan Companies, Inc. operates in a highly competitive industry, but the threat of substitutes is moderate due to the complexity of the services offered.

Bargaining Power Of Customers

Marsh & McLennan Companies, Inc. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Marsh & McLennan Companies, Inc. has a strong bargaining position with its suppliers due to its large size and scale of operations.

Threat Of New Entrants

The insurance brokerage industry has high barriers to entry, making it difficult for new entrants to compete with established players like Marsh & McLennan Companies, Inc.

Intensity Of Rivalry

The insurance brokerage industry is highly competitive, with many established players competing for market share, which increases the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 55.87%
Debt Cost 4.95%
Equity Weight 44.13%
Equity Cost 8.41%
WACC 6.48%
Leverage 126.62%

11. Quality Control: Marsh & McLennan Companies, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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M&T Bank

A-Score: 6.6/10

Value: 6.6

Growth: 5.6

Quality: 6.8

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

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Truist

A-Score: 5.8/10

Value: 4.8

Growth: 2.8

Quality: 5.5

Yield: 8.0

Momentum: 6.0

Volatility: 8.0

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Arthur J Gallagher

A-Score: 5.5/10

Value: 2.1

Growth: 6.7

Quality: 7.1

Yield: 2.0

Momentum: 6.0

Volatility: 9.3

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Prudential Financial

A-Score: 5.5/10

Value: 5.7

Growth: 3.4

Quality: 4.9

Yield: 8.0

Momentum: 2.0

Volatility: 9.0

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Brown & Brown

A-Score: 5.3/10

Value: 3.4

Growth: 7.4

Quality: 8.1

Yield: 1.0

Momentum: 3.0

Volatility: 9.0

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Marsh McLennan

A-Score: 5.1/10

Value: 2.7

Growth: 6.6

Quality: 5.9

Yield: 3.0

Momentum: 3.0

Volatility: 9.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

181.82$

Current Price

181.82$

Potential

-0.00%

Expected Cash-Flows