Business Overview
Marsh & McLennan Companies (MMC) is a global leader in risk, strategy, and people advisory services, operating through four distinct business segments: Marsh, Guy Carpenter, Mercer, and Oliver Wyman. With a history spanning over 150 years, the company has weathered numerous economic cycles and market disruptions, consistently delivering value to its clients and shareholders.

Marsh & McLennan's origins can be traced back to 1871, when the company was founded as a small insurance brokerage firm in Chicago. Over the decades, the company has evolved into a diversified professional services powerhouse, expanding its capabilities and geographic reach through both organic growth and strategic acquisitions.

In 1905, the company opened its first international office in London, marking the beginning of its global expansion. The 1970s and 1980s saw significant growth through strategic acquisitions, including the purchase of Johnson & Higgins in 1976 and Sedgwick Group in 1998, which expanded the company's geographic reach and service capabilities.

The early 2000s presented a significant challenge for Marsh & McLennan when it faced a bid-rigging scandal involving its insurance brokerage business. This resulted in over $850 million in fines and settlements, as well as the departure of several senior executives. The company worked diligently to rebuild its reputation and regain trust within the industry.

Continuing its growth trajectory, Marsh & McLennan acquired Kroll in 2004, further diversifying its service offerings. The company's expansion in consulting and advisory services has been complemented by strategic acquisitions, with the 2018 purchase of Jardine Lloyd Thompson Group being a notable example that strengthened the company's capabilities in risk management, reinsurance, and human capital consulting.

Today, Marsh & McLennan stands as a global professional services firm with over 90,000 colleagues operating in more than 130 countries. The company's four main business segments - Risk and Insurance Services, Consulting, Mercer, and Oliver Wyman - provide a comprehensive suite of data-driven risk advisory services, insurance solutions, and specialized consulting services to clients worldwide.

Financial Performance and Ratios
Marsh & McLennan's financial performance has been consistently strong, with the company reporting annual revenue of $24.46 billion and net income of $4.06 billion in 2024. The company's operating cash flow for the year was $4.30 billion, with free cash flow reaching $3.99 billion.

In the most recent quarter (Q4 2024), MMC reported revenue of $6.1 billion, representing a 9% year-over-year increase. Net income for the quarter stood at $788 million. The growth was driven by 8% underlying revenue growth in the Risk and Insurance Services segment and 6% underlying revenue growth in the Consulting segment.

The company's financial ratios reflect its solid financial position and ability to generate robust cash flows. Marsh & McLennan's current ratio stands at 1.13, indicating a strong ability to meet its short-term obligations. The company's debt-to-equity ratio is 1.62, suggesting a balanced capital structure that allows for financial flexibility.

Marsh & McLennan's return on assets (ROA) and return on equity (ROE) for 2024 were 7.19% and 30.64%, respectively, demonstrating the company's efficient use of its assets and capital to generate returns for shareholders.

Segmental Performance
Marsh & McLennan's four business segments have each contributed to the company's overall success, showcasing the benefits of its diversified business model.

The Risk and Insurance Services segment, comprising the Marsh and Guy Carpenter businesses, generated $15.39 billion in revenue in 2024, representing 63% of the company's total revenue. Marsh, the larger of the two, reported an 8% increase in underlying revenue, driven by strong retention and new business growth across its regions and specialty practices.

Marsh, the world's leading insurance broker and risk advisor, provides a wide range of services to clients, including risk analysis, insurance program design and placement, claims support and advocacy, and alternative risk strategies. The firm has a large global footprint, with approximately 48,800 colleagues providing services in over 130 countries. In 2024, Marsh's revenue increased 10% to $12.5 billion, reflecting a 7% increase on an underlying basis and a 3% contribution from acquisitions, partially offset by a 1% negative impact from foreign currency translation.

Guy Carpenter, the company's reinsurance intermediary and advisor, generated approximately 10% of total revenue in 2024. Guy Carpenter provides clients with a combination of specialized reinsurance broking expertise, strategic advisory services, and analytics solutions. The segment's revenue increased 5% to $2.4 billion in 2024, driven by an 8% increase in underlying revenue, partially offset by a 3% decline from the impact of acquisitions.

The Consulting segment, which includes Mercer and Oliver Wyman Group, reported revenue of $9.13 billion, or 37% of the company's total revenue. Mercer's underlying revenue growth of 5% was fueled by robust performance across its Health, Wealth, and Career business lines. Oliver Wyman Group also delivered a 6% increase in underlying revenue, reflecting growth across all regions and service offerings.

Mercer's revenue increased 3% to $5.7 billion in 2024, with a 5% increase in underlying revenue partially offset by a 2% decline from dispositions and a 1% negative impact from foreign currency translation. Mercer's Wealth business grew 4% on an underlying basis, driven by both investment management and defined benefits consulting. The Health business saw 8% underlying growth, while the Career business grew 4%.

Oliver Wyman Group, the company's management consulting business, reported a 9% increase in revenue to $3.4 billion in 2024, including a 6% rise in underlying revenue and a 3% contribution from acquisitions. The increase in underlying revenue was primarily driven by strong performance in the Middle East and Asia.

Within the Risk and Insurance Services segment, the company also earns revenue from fiduciary interest income, which increased $44 million to $497 million in 2024 due to higher average interest rates compared to the prior year. Overall, the Risk and Insurance Services segment's operating income grew 11% to $4.4 billion in 2024, with the operating margin expanding to 28.4% from 28.0% in the prior year.

The Consulting segment's operating income rose 6% to $1.8 billion in 2024, with the operating margin expanding to 19.4% from 19.1% in the prior year. This improvement was driven by the revenue growth and disciplined management of expenses across both Mercer and Oliver Wyman Group.

Geographic Performance
Marsh & McLennan operates globally, with approximately 52% of total revenue generated outside the United States in 2024. The company saw strong underlying revenue growth across its international regions, including 8% growth in EMEA, 10% in Latin America, and 6% in Asia Pacific. The U.S. and Canada region also delivered 7% underlying revenue growth.

Guidance and Outlook
Marsh & McLennan's management has provided a positive outlook for 2025, projecting mid-single-digit underlying revenue growth, continued margin expansion, and solid adjusted earnings per share growth. The company expects to face some near-term headwinds from lower fiduciary income and foreign exchange, but remains confident in its ability to navigate these challenges and capitalize on the diverse growth opportunities across its business segments.

For 2025, MMC expects fiduciary income to be approximately $100 million in Q1 2025 and a $0.04 headwind in Q1 2025 and a $0.09 headwind for the full year 2025 due to foreign exchange. The company anticipates an adjusted effective tax rate of between 25% and 26% in 2025.

The acquisition of McGriff Insurance Services is expected to be modestly dilutive to adjusted EPS in Q1 2025, but modestly accretive for the full year 2025, becoming more meaningfully accretive in 2026 and beyond. Marsh & McLennan's balanced approach to capital allocation, which includes strategic acquisitions, dividend increases, and share repurchases, underscores its commitment to driving long-term shareholder value. The company plans to deploy approximately $4.5 billion of capital across dividends, acquisitions, and share repurchases in 2025, with the ultimate level of share repurchase dependent on the M&A pipeline.

It's worth noting that this outlook assumes current macroeconomic conditions persist, but the company acknowledges that the environment remains uncertain and the economic backdrop could be materially different than their assumptions.

Risks and Challenges
Like any global professional services firm, Marsh & McLennan faces a range of risks and challenges that require careful management. These include macroeconomic uncertainties, such as the potential impact of geopolitical tensions, trade disputes, and market volatility, which can affect client demand and the company's financial performance.

The company also faces operational risks, including cybersecurity threats, regulatory changes, and the ability to attract and retain top talent. Marsh & McLennan's decentralized structure and diverse service offerings, while providing strategic advantages, also introduce complexities in terms of risk management and integration.

Additionally, the company's reliance on contingent commissions and other forms of insurer-based compensation presents potential conflicts of interest and regulatory risks that require ongoing monitoring and mitigation efforts.

Liquidity
Marsh & McLennan maintains a strong liquidity position, which is crucial for its operations and ability to weather economic uncertainties. The company's robust cash flow generation, combined with its access to credit facilities, provides ample liquidity to fund operations, pursue strategic initiatives, and meet financial obligations.

As of the end of 2024, Marsh & McLennan reported cash and cash equivalents of $2.4 billion, providing a solid foundation for financial flexibility. The company also has a $3.5 billion multi-currency unsecured revolving credit facility, which was undrawn as of the end of 2024. The company's strong credit ratings further enhance its ability to access capital markets on favorable terms when needed.

Human Capital Management and ESG
Marsh & McLennan places a strong emphasis on human capital management and environmental, social, and governance (ESG) practices. The company has introduced a shared Colleague Value Proposition to articulate the unique experience offered to colleagues, which is centered around key pillars such as Impact, Leadership, Culture, Career, and Rewards.

As of December 31, 2024, Marsh McLennan employed more than 90,000 colleagues worldwide, including approximately 52,400 in the Risk and Insurance Services segment and 30,500 in the Consulting segment. The company invests heavily in professional development, learning, and leadership initiatives to support the growth and advancement of its colleagues worldwide. Marsh McLennan conducts an annual engagement survey to understand the evolution of its culture and identify areas for improvement.

Furthermore, the company is focused on enhancing its ESG practices and disclosure. Marsh McLennan has established an ESG Committee and Compensation Committee of the Board of Directors to provide oversight on various aspects of human capital management and ESG initiatives. The company is also actively monitoring the evolving regulatory landscape related to ESG reporting and ensuring compliance with new laws and regulations in the jurisdictions where it operates.

Acquisitions and Inorganic Growth
Marsh & McLennan has a history of strategic acquisitions to enhance its capabilities and expand its global reach. In 2024, the company completed the acquisition of McGriff Insurance Services, LLC, a U.S.-based insurance broking and risk management services provider, for $7.75 billion in cash consideration. McGriff's results of operations were included in the company's financial performance starting from the acquisition date of November 15, 2024.

The Risk and Insurance Services segment completed 10 acquisitions in 2024, while the Consulting segment completed 7 acquisitions. These transactions were aimed at strengthening the company's industry expertise, expanding its geographic footprint, and enhancing its digital and analytical capabilities to better serve clients.

Marsh McLennan also selectively divests certain businesses to optimize its portfolio and focus on its core strategic priorities. In 2024, the company sold its Mercer U.K. pension administration and U.S. health and benefits administration businesses, recording a net gain of $35 million.

Conclusion
Marsh & McLennan's long history of resilience, innovation, and strategic execution has positioned the company as a global leader in risk, strategy, and people advisory services. Its diversified business model, balanced capital allocation, and commitment to delivering value to clients and shareholders have enabled the company to navigate dynamic market conditions and emerge as a trusted partner to organizations around the world.

As Marsh & McLennan continues to expand its capabilities, integrate strategic acquisitions, and leverage emerging technologies, the company is well-poised to capitalize on the growing demand for its services and deliver sustainable growth in the years to come. The company's focus on human capital management and ESG initiatives further strengthens its position as an attractive employer and responsible corporate citizen, which will be crucial in attracting and retaining top talent, maintaining its strong reputation, and positioning the company for long-term sustainable growth.