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Third Quarter Revenue Growth of 13%; Underlying Revenue Growth of 5%

Third Quarter GAAP EPS of $0.59; Adjusted EPS of $0.77

Nine Months Revenue Growth of 10%; Underlying Revenue Growth of 4%

Nine Months GAAP Operating Income Declines 3%; Adjusted Operating Income Grows 13%

NEW YORK–(BUSINESS WIRE)–Marsh & McLennan Companies, Inc. (NYSE:MMC), the world’s leading professional services firm in the areas of risk, strategy and people, today reported financial results for the third quarter ended September 30, 2019.

Dan Glaser, President and CEO, said: “We are pleased with our third quarter results, which reflect excellent performance across the Company. In the quarter, we produced 13% revenue growth, 5% underlying revenue growth including growth across both segments, and 10% adjusted operating income growth. For the nine months of 2019, we achieved 4% underlying revenue growth, adjusted operating income grew 13%, and the adjusted operating margin increased 110 basis points to 22.0%.”

“Our year-to-date results position us well for a solid year,” concluded Mr. Glaser.

Consolidated Results

Consolidated revenue in the third quarter of 2019 was $4.0 billion, an increase of 13% compared with the third quarter of 2018. Underlying revenue grew 5% compared to a year ago. Underlying revenue growth is calculated as if Marsh & McLennan and Jardine Lloyd Thompson were a combined company a year ago, but excludes the impact of currency and other acquisitions, dispositions, and transfers among businesses. Operating income was $467 million compared with $541 million in the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 10% to $585 million. Net income attributable to the Company was $303 million, or $0.59 per diluted share, compared with $0.54 in the third quarter of 2018. Adjusted earnings per share decreased 1% to $0.77 compared with $0.78 for the prior year period.

For the nine months ended September 30, 2019, consolidated revenue was $12.4 billion, an increase of 10%, or 4% on an underlying basis. Operating income was $2.1 billion, while adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 13% to $2.5 billion. Net income attributable to the Company was $1.4 billion. Fully diluted earnings per share was $2.64 compared with $2.93 in the first nine months of 2018. Adjusted earnings per share increased 6% to $3.47 compared with $3.26 for the comparable period in 2018.

Risk & Insurance Services

Risk & Insurance Services revenue was $2.2 billion in the third quarter of 2019, an increase of 18%, or 6% on an underlying basis. Operating income was $218 million compared to $293 million in the third quarter of 2018. Adjusted operating income was $313 million, an increase of 11% compared with $283 million in the prior year period. For the nine months ended September 30, 2019, revenue was $7.2 billion, an increase of 14%, or 4% on an underlying basis. Operating income declined 1% to $1.5 billion, and adjusted operating income rose 12% to $1.7 billion.

Marsh’s revenue in the third quarter was $1.9 billion, an increase of 5% on an underlying basis. In U.S./Canada, underlying revenue rose 6%. International operations produced underlying revenue growth of 3%, reflecting 7% underlying revenue growth in Asia Pacific, 2% in EMEA and a decline of 1% in Latin America. For the nine months ended September 30, 2019, Marsh’s underlying revenue growth was 4%.

Guy Carpenter’s revenue in the third quarter was $273 million, an increase of 11% on an underlying basis. For the nine months ended September 30, 2019, Guy Carpenter’s underlying revenue growth was 4%.

Consulting

Consulting revenue in the third quarter was $1.8 billion, an increase of 8%, or 4% on an underlying basis. Operating income increased 9% to $317 million, and adjusted operating income increased 9% to $320 million. For the first nine months of 2019, revenue was $5.3 billion, an increase of 6%, or 4% on an underlying basis. Operating income of $874 million increased 9%, and adjusted operating income increased 13% to $916 million.

Mercer’s revenue was $1.3 billion in the third quarter, an increase of 3% on an underlying basis. Health, with revenue of $441 million, was up 7% on an underlying basis. Career revenue of $247 million increased 5% on an underlying basis, and Wealth revenue of $592 million was flat on an underlying basis. For the nine months ended September 30, 2019, Mercer’s revenue was $3.7 billion, an increase of 2% on an underlying basis.

Oliver Wyman’s revenue was $505 million in the third quarter, an increase of 7% on an underlying basis. For the first nine months ended September 30, 2019, Oliver Wyman’s revenue was $1.6 billion, up 9% on an underlying basis.

Other Items

The Company repurchased 2.1 million shares of its common stock for $200 million in the third quarter. Through nine months, the Company has repurchased 3.1 million shares for $300 million.

During the third quarter, the Company repaid $300 million of senior notes.

Conference Call

A conference call to discuss third quarter 2019 results will be held today at 8:30 a.m. Eastern time. To participate in the teleconference, please dial +1 888 204 4368. Callers from outside the United States should dial +1 323 794 2423. The access code for both numbers is 3870718. The live audio webcast will be accessible at mmc.com, and a replay will be available approximately two hours after the event.

About Marsh & McLennan Companies

Marsh & McLennan (NYSE:MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s 75,000 colleagues advise clients in over 130 countries. With annualized revenue approaching $17 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh advises individual and commercial clients of all sizes on insurance broking and innovative risk management solutions. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit mmc.com, follow us on LinkedIn and Twitter @mmc_global or subscribe to BRINK.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future events or results, use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “intend,” “plan,” “project” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:

  • our ability to successfully integrate or achieve the intended benefits of the acquisition of JLT;
  • the impact of any investigations, reviews, or other activity by regulatory or law enforcement authorities, including the ongoing investigation by the European Commission competition authority;
  • our organization’s ability to maintain adequate safeguards to protect the security of our information systems and confidential, personal or proprietary information, particularly given the large volume of our vendor network and the need to identify and patch software vulnerabilities, including those in the existing JLT information systems;
  • our ability to maintain our credit ratings and repay our outstanding long-term debt in a timely manner and on favorable terms, including approximately $6.8 billion issued in connection with the acquisition of JLT;
  • the impact from lawsuits, other contingent liabilities and loss contingencies arising from errors and omissions, breach of fiduciary duty or other claims against us;
  • our ability to compete effectively and adapt to changes in the competitive environment, including to respond to disintermediation, digital disruption and other types of innovation;
  • the impact of macroeconomic, political, regulatory or market conditions on us, our clients and the industries in which we operate, including the impact and uncertainty around Brexit or the inability to collect on our receivables;
  • the financial and operational impact of complying with laws and regulations where we operate and the risks of noncompliance with such laws, including cybersecurity and data privacy regulations such as the E.U.’s General Data Protection Regulation, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and trade sanctions regimes;
  • the regulatory, contractual and reputational risks that arise based on insurance placement activities and various broker revenue streams;
  • our ability to manage risks associated with our investment management and related services business, including potential conflicts of interest between investment consulting and fiduciary management services;
  • our ability to successfully recover if we experience a business continuity problem due to cyberattack, natural disaster or otherwise; and
  • the impact of changes in tax laws, guidance and interpretations, including certain provisions of the U.S. Tax Cuts and Jobs Act, or disagreements with tax authorities.

The factors identified above are not exhaustive. Marsh & McLennan Companies and its subsidiaries operate in a dynamic business environment in which new risks emerge frequently. Accordingly, we caution readers not to place undue reliance on any forward-looking statements, which are based only on information currently available to us and speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made.

Further information concerning Marsh & McLennan Companies and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” section and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our most recently filed Annual Report on Form 10-K.

Marsh & McLennan Companies, Inc.

Consolidated Statements of Income

(In millions, except per share figures)

(Unaudited)

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2019

 

2018

 

2019

 

2018

Revenue

 

$

3,968

 

 

$

3,504

 

 

$

12,388

 

 

$

11,238

 

 

 

 

 

 

 

 

 

 

Expense:

 

 

 

 

 

 

 

 

Compensation and Benefits

 

2,437

 

 

2,083

 

 

7,256

 

 

6,442

 

Other Operating Expenses

 

1,064

 

 

880

 

 

3,047

 

 

2,656

 

Operating Expenses

 

3,501

 

 

2,963

 

 

10,303

 

 

9,098

 

Operating Income

 

467

 

 

541

 

 

2,085

 

 

2,140

 

Other Net Benefit Credits

 

69

 

 

63

 

 

203

 

 

194

 

Interest Income

 

4

 

 

2

 

 

34

 

 

8

 

Interest Expense

 

(133

)

 

(69

)

 

(394

)

 

(198

)

Cost of Early Extinguishment of Debt

 

 

 

 

 

(32

)

 

 

Investment Income (Loss)

 

7

 

 

(52

)

 

20

 

 

(24

)

Acquisition Related Derivative Contracts

 

 

 

(100

)

 

(8

)

 

(100

)

Income Before Income Taxes

 

414

 

 

385

 

 

1,908

 

 

2,020

 

Income Tax Expense

 

108

 

 

106

 

 

531

 

 

509

 

Net Income Before Non-Controlling Interests

 

306

 

 

279

 

 

1,377

 

 

1,511

 

Less: Net Income Attributable to Non-Controlling Interests

 

3

 

 

3

 

 

26

 

 

14

 

Net Income Attributable to the Company

 

$

303

 

 

$

276

 

 

$

1,351

 

 

$

1,497

 

Net Income Per Share Attributable to the Company:

 

 

 

 

 

 

 

 

– Basic

 

$

0.60

 

 

$

0.55

 

 

$

2.67

 

 

$

2.96

 

– Diluted

 

$

0.59

 

 

$

0.54

 

 

$

2.64

 

 

$

2.93

 

Average Number of Shares Outstanding

 

 

 

 

 

 

 

 

– Basic

 

506

 

 

504

 

 

506

 

 

506

 

– Diluted

 

511

 

 

510

 

 

511

 

 

512

 

Shares Outstanding at September 30

 

505

 

 

504

 

 

505

 

 

504

 

JLT’s results of operations for the three months ended September 30, 2019 are included in the Company’s results of operations for the three-month period ended September 30, 2019. JLT’s results of operations from April 1, 2019 through September 30, 2019 are included in the Company’s results of operations for the nine-month period ended September 30, 2019. Prior periods in 2018 do not include JLT’s results.

Marsh & McLennan Companies, Inc.

Supplemental Information – Revenue Analysis

Three Months Ended September 30

(Millions) (Unaudited)

The Company conducts business in more than 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as the revenue impact of acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

The calculation of underlying revenue growth for the three and nine months ended September 30, 2019 includes the results of JLT. The column “2018 Including JLT” includes JLT’s prior year third quarter revenue (See reconciliation of non-GAAP measures on page 14).

 

 

 

 

 

 

 

 

 

 

Components of Revenue Change

Including JLT*

 

 

Three Months

Ended

September 30,

 

%

Change

GAAP

Revenue

2018

Including

JLT

 

% Change

Including

JLT in

2018

 

Currency

Impact

 

Acquisitions/

Dispositions/

Other Impact

 

Underlying
Revenue

 

 

2019

 

2018

 

Risk and Insurance Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marsh

 

$

1,902

 

 

$

1,630

 

 

17%

$

1,889

 

 

1%

 

(1)%

 

(2)%

 

5%

Guy Carpenter

 

273

 

 

215

 

 

27%

248

 

 

10%

 

 

(1)%

 

11%

Subtotal

 

2,175

 

 

1,845

 

 

18%

2,137

 

 

2%

 

(1)%

 

(2)%

 

5%

Fiduciary Interest Income

 

31

 

 

18

 

 

 

23

 

 

 

 

 

 

 

 

 

Total Risk and Insurance Services

 

2,206

 

 

1,863

 

 

18%

2,160

 

 

2%

 

(1)%

 

(2)%

 

6%

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercer

 

1,280

 

 

1,175

 

 

9%

1,261

 

 

2%

 

(2)%

 

 

3%

Oliver Wyman

 

505

 

 

481

 

 

5%

481

 

 

5%

 

(1)%

 

 

7%

Total Consulting

 

1,785

 

 

1,656

 

 

8%

1,742

 

 

3%

 

(2)%

 

 

4%

Corporate/Eliminations

 

(23

)

 

(15

)

 

 

(15

)

 

 

 

 

 

 

 

 

Total Revenue

 

$

3,968

 

 

$

3,504

 

 

13%

$

3,887

 

 

2%

 

(1)%

 

(1)%

 

5%

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

 

 

 

 

 

 

 

 

 

 

Components of Revenue Change

Including JLT*

 

 

Three Months

Ended

September 30,

 

%

Change

GAAP

Revenue

 

2018

Including

JLT

 

%

Change

Including

JLT in

2018

 

Currency

Impact

 

Acquisitions/

Dispositions/

Other Impact

 

Underlying
Revenue

 

 

2019

 

2018

 

Marsh:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

$

536

 

 

$

441

 

 

22%

 

$

550

 

 

(2)%

 

(2)%

 

(2)%

 

2%

Asia Pacific

 

242

 

 

167

 

 

45%

 

240

 

 

1%

 

(2)%

 

(4)%

 

7%

Latin America

 

110

 

 

96

 

 

14%

 

132

 

 

(17)%

 

(5)%

 

(11)%

 

(1)%

Total International

 

888

 

 

704

 

 

26%

 

922

 

 

(4)%

 

(3)%

 

(4)%

 

3%

U.S./Canada

 

1,014

 

 

926

 

 

10%

 

967

 

 

5%

 

 

(1)%

 

6%

Total Marsh

 

$

1,902

 

 

$

1,630

 

 

17%

 

$

1,889

 

 

1%

 

(1)%

 

(2)%

 

5%

Mercer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth

 

592

 

 

525

 

 

13%

 

592

 

 

 

(3)%

 

2%

 

Health

 

441

 

 

415

 

 

7%

 

432

 

 

2%

 

(1)%

 

(3)%

 

7%

Career

 

247

 

 

235

 

 

5%

 

237

 

 

5%

 

(2)%

 

1%

 

5%

Total Mercer

 

$

1,280

 

 

$

1,175

 

 

9%

 

$

1,261

 

 

2%

 

(2)%

 

 

3%

 

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc.

Supplemental Information – Revenue Analysis

Nine Months Ended September 30

(Millions) (Unaudited)

The Company conducts business in more than 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as the revenue impact of acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

The calculation of underlying revenue growth for the three and nine months ended September 30, 2019 includes the results of JLT. The column “2018 Including JLT” includes JLT’s prior year revenue beginning April 1, 2018 (See reconciliation of non-GAAP measures on page 14). The decrease in revenue due to the disposal of JLT’s aerospace business in the second quarter of 2019 is reflected in the acquisitions/dispositions column. All other acquisitions/dispositions activity is included in the acquisitions/dispositions column.

 

 

 

 

 

 

 

 

 

 

Components of Revenue Change

Including JLT*

 

 

Nine Months Ended

September 30,

 

%

Change

GAAP

Revenue

2018

Including

JLT

%

Change

Including

JLT in

2018

 

Currency

Impact

 

Acquisitions/

Dispositions/

Other Impact

 

Underlying

Revenue

 

 

2019

 

2018

 

Risk and Insurance Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marsh

 

$

5,795

 

 

$

5,073

 

 

14%

$

5,684

 

2%

 

(2)%

 

 

4%

Guy Carpenter

 

1,328

 

 

1,184

 

 

12%

1,292

 

3%

 

(1)%

 

 

4%

Subtotal

 

7,123

 

 

6,257

 

 

14%

6,976

 

2%

 

(2)%

 

 

4%

Fiduciary Interest Income

 

80

 

 

46

 

 

 

54

 

 

 

 

 

 

 

 

Total Risk and Insurance Services

 

7,203

 

 

6,303

 

 

14%

7,030

 

2%

 

(2)%

 

 

4%

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mercer

 

3,695

 

 

3,504

 

 

5%

3,677

 

 

(3)%

 

1%

 

2%

Oliver Wyman

 

1,563

 

 

1,470

 

 

6%

1,470

 

6%

 

(2)%

 

 

9%

Total Consulting

 

5,258

 

 

4,974

 

 

6%

5,147

 

2%

 

(3)%

 

1%

 

4%

Corporate/Eliminations

 

(73

)

 

(39

)

 

 

(39

)

 

 

 

 

 

 

 

Total Revenue

 

$

12,388

 

 

$

11,238

 

 

10%

$

12,138

 

2%

 

(2)%

 

1%

 

4%

Revenue Details

The following table provides more detailed revenue information for certain of the components presented above:

 

 

 

 

 

 

 

 

 

 

Components of Revenue Change

Including JLT*

 

 

Nine Months Ended

September 30,

 

%

Change

GAAP

Revenue

2018

Including

JLT

%

Change

Including

JLT in

2018

 

Currency

Impact

 

Acquisitions/

Dispositions/

Other Impact

 

Underlying

Revenue

 

 

2019

 

2018

 

Marsh:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EMEA

 

$

1,821

 

 

$

1,610

 

 

13%

$

1,871

 

(3)%

 

(4)%

 

 

2%

Asia Pacific

 

698

 

 

514

 

 

36%

697

 

 

(4)%

 

(3)%

 

7%

Latin America

 

304

 

 

279

 

 

9%

350

 

(13)%

 

(8)%

 

(8)%

 

3%

Total International

 

2,823

 

 

2,403

 

 

17%

2,918

 

(3)%

 

(5)%

 

(2)%

 

3%

U.S./Canada

 

2,972

 

 

2,670

 

 

11%

2,766

 

7%

 

 

3%

 

5%

Total Marsh

 

$

5,795

 

 

$

5,073

 

 

14%

$

5,684

 

2%

 

(2)%

 

 

4%

Mercer:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth

 

1,748

 

 

1,642

 

 

6%

1,776

 

(2)%

 

(4)%

 

3%

 

(1)%

Health

 

1,341

 

 

1,286

 

 

4%

1,322

 

1%

 

(2)%

 

(1)%

 

4%

Career

 

606

 

 

576

 

 

5%

579

 

5%

 

(3)%

 

3%

 

5%

Total Mercer

 

$

3,695

 

 

$

3,504

 

 

5%

$

3,677

 

 

(3)%

 

1%

 

2%

 

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures – Actual as Reported

Three Months Ended September 30

(Millions) (Unaudited)

Overview

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as “GAAP” or “reported” results). The Company also refers to and presents below certain additional non-GAAP financial measures, within the meaning of Regulation G under the Securities Exchange Act of 1934. These measures are: adjusted operating income (loss), adjusted operating margin, adjusted income, net of tax and adjusted earnings per share (EPS). The Company has included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables.

The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company’s performance across periods. Management also uses these measures internally to assess the operating performance of its businesses, to assess performance for employee compensation purposes and to decide how to allocate resources. However, investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company’s non-GAAP measures include adjustments that reflect how management views our businesses, and may differ from similarly titled non-GAAP measures presented by other companies.

Adjusted Operating Income (Loss) and Adjusted Operating Margin

Adjusted operating income (loss) is calculated by excluding the impact of certain noteworthy items from the Company’s GAAP operating income or (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income or loss, on a consolidated and segment basis, for the three and nine months ended September 30, 2019 and 2018. The following tables also present adjusted operating margin. In 2019, the Company changed its methodology for calculating adjusted operating margin due to the significant amount of identified intangible asset amortization related to the JLT Transaction, on April 1, 2019. For the three and nine months ended September 30, 2019 and 2018, adjusted operating margin is calculated by dividing the sum of adjusted operating income plus identified intangible asset amortization by consolidated or segment adjusted revenue.

The information presented below represents the actual as reported results for the three months ended September 30, 2019 and 2018. Results for the three months ended September 30, 2018 are for MMC only, as previously reported, and do not include JLT results.

 

 

Risk & Insurance

Services

 

Consulting

 

Corporate/

Eliminations

 

Total

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

218

 

 

$

317

 

 

$

(68

)

 

$

467

 

Operating margin

 

9.9

%

 

17.7

%

 

N/A

 

 

11.8

%

Add (Deduct) impact of Noteworthy Items:

 

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

 

 

10

 

 

2

 

 

12

 

Changes in contingent consideration (b)

 

5

 

 

1

 

 

 

 

6

 

JLT integration and restructuring costs (c)

 

58

 

 

5

 

 

14

 

 

77

 

JLT acquisition-related costs (d)

 

16

 

 

1

 

 

4

 

 

21

 

Disposal of businesses (e)

 

13

 

 

(14

)

 

 

 

(1

)

Other

 

3

 

 

 

 

 

 

3

 

Operating income adjustments

 

95

 

 

3

 

 

20

 

 

118

 

Adjusted operating income (loss)

 

$

313

 

 

$

320

 

 

$

(48

)

 

$

585

 

Total identified intangible amortization expense

 

$

73

 

 

$

11

 

 

$

 

 

$

84

 

Adjusted operating margin

 

17.4

%

 

18.7

%

 

N/A

 

 

16.9

%

 

 

 

 

 

 

 

 

 

 

As Reported Results

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2018

 

 

 

 

 

 

 

 

 

Operating income (loss), as reported

 

$

293

 

 

$

291

 

 

$

(43

)

 

$

541

 

Operating margin

 

15.7

%

 

17.6

%

 

N/A

 

 

15.5

%

Add (Deduct) impact of Noteworthy Items:

 

 

 

 

 

 

 

 

 

Restructuring, excluding JLT (a)

 

29

 

 

 

 

2

 

 

31

 

Changes in contingent consideration (b)

 

7

 

 

2

 

 

 

 

9

 

Disposal of business (f)

 

(46

)

 

 

 

 

 

(46

)

Operating income adjustments

 

(10

)

 

2

 

 

2

 

 

(6

)

Adjusted operating income (loss)

 

$

283

 

 

$

293

 

 

$

(41

)

 

$

535

 

Total identified intangible amortization expense

 

$

39

 

 

$

8

 

 

$

 

 

$

47

 

Adjusted operating margin

 

17.7

%

 

18.2

%

 

N/A

 

 

16.8

%

(a) Includes severance and related charges from restructuring activities, adjustments to restructuring liabilities for future rent under non-cancellable leases and other real estate costs, and restructuring costs related to the integration of recent acquisitions. Consulting in 2019 reflects severance related to the Mercer restructuring program. Risk & Insurance Services in 2018 reflects severance and consulting costs related to the Marsh simplification initiative.

(b) Primarily includes the change in fair value as measured each quarter of contingent consideration related to acquisitions.

(c) Includes costs incurred for staff reductions, lease related exit costs as well as legal and consulting costs related to the integration.

(d) Reflects retention costs in the Risk & Insurance Services and Consulting segments and legal fees at corporate related to the closing of the JLT Transaction.

(e) Reflects the loss on the sale of a U.S. Specialty business at Marsh and a gain on the sale of Mercer’s stand-alone U.S. large market health and defined benefit administration business, which are both included in revenue. These amounts are removed from GAAP revenue in the calculation of adjusted operating income.

(f) Relates to a gain on the disposal of a risk management software and services business unit of Marsh. The $46 million gain is removed from GAAP revenue in the calculation of adjusted operating margin.

Contacts

Media:
Erick R. Gustafson

Marsh & McLennan Companies

+1 202 263 7788

[email protected]

Investors:
Sarah DeWitt

Marsh & McLennan Companies

+1 212 345 6750

[email protected]

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