MMC Financial Analysis

Analysis Date: 1/31/2025

Business Model

Marsh McLennan generates revenue through four market-leading businesses providing professional services in risk, strategy and people

Revenue Sources

• Risk & Insurance Services (62% of revenue): Insurance broking and risk advisory through Marsh, and reinsurance services through Guy Carpenter
• Consulting (38% of revenue): Health, wealth and career consulting through Mercer, and management consulting through Oliver Wyman Group

Revenue Distribution by Channel

• Risk & Insurance Services: $15.4B (62% of total revenue)
• Consulting: $9.1B (38% of total revenue)

Income Statement Analysis

• Revenue grew 9.2% YoY driven by 7% underlying growth and 3% from acquisitions
• Operating margin remained flat at 23.3% adjusted despite higher expenses
• Adjusted EPS grew 11% to $1.87 including $0.05 benefit from discrete tax items

Balance Sheet Analysis

• Total assets increased 17.6% primarily due to McGriff acquisition
• Long-term debt increased by $7.6B to fund McGriff acquisition

Cash Flow Analysis

• Operating cash flow grew 1% to $4.3B in 2024
• Investing cash outflow of $8.8B primarily for McGriff acquisition
• Financing cash inflow of $4.5B driven by debt issuance for McGriff acquisition

Capital Allocation

The company maintains a balanced capital allocation approach, prioritizing organic investment and M&A while returning capital to shareholders through dividends and share repurchases. In 2024, deployed $9.4B for acquisitions including McGriff, paid $1.5B in dividends, and repurchased $900M in shares. Expects to deploy approximately $4.5B in capital in 2025 across dividends, acquisitions and share repurchases.

Management Commentary

2024 was a milestone year with excellent financial performance and largest year of acquisitions in company history

McGriff integration proceeding according to plan with strong cultural alignment

Expect mid-single digit underlying revenue growth and margin expansion in 2025

Anticipate headwinds from interest rates, FX and tough Q1 comparisons in 2025

Overall Sentiment: Positive and confident about growth prospects while acknowledging near-term headwinds

Recommendation

Rating: Buy

Reason for Rating: Strong market positions, consistent execution and attractive growth prospects warrant a buy rating

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 8:00:36 AM