Executive Summary / Key Takeaways

• Marsh McLennan (MMC) delivered solid third-quarter 2025 results, with consolidated revenue increasing 11% to $6.4 billion (4% underlying growth) and adjusted EPS rising 11% to $1.85, demonstrating resilience amidst macroeconomic headwinds.
• The company is undergoing a significant strategic transformation, rebranding to "Marsh" in January 2026 and launching the "Thrive" program, which includes the new Business and Client Services (BCS) unit. This initiative targets $400 million in savings over three years, with a portion reinvested in talent and technology, particularly AI.
• MMC's competitive advantage is fortified by its global reach, diversified service offerings, and substantial investments in AI and data analytics, including proprietary tools like Len.ai, AIDA, and Centrisk, which enhance client value and operational efficiency.
• Despite challenges from declining P&C pricing, lower fiduciary interest income, and economic uncertainty, MMC maintains a positive outlook for 2025, expecting mid-single-digit underlying revenue growth, continued margin expansion (marking its 18th consecutive year), and solid adjusted EPS growth.
• The company remains committed to a balanced capital allocation strategy, deploying approximately $4.5 billion in 2025 across dividends, acquisitions, and share repurchases, with a bias towards high-quality acquisitions that enhance capabilities and scale.

A Legacy of Resilience and Strategic Adaptation

Marsh McLennan, a global professional services firm founded in 1871, has consistently evolved to meet the complex demands of risk, strategy, and people worldwide. With operations spanning over 130 countries and a workforce of more than 90,000 colleagues, the company has established itself as a leader in the insurance industry and risk management sectors. This enduring presence is a testament to its adaptability and strategic foresight, particularly evident in its long history of acquisitions and continuous operational refinement.

The company's strategic journey has been marked by significant expansion, including the acquisition of the U.K.-based Sedgwick Group in 1998 and a "string of pearls" acquisition strategy over the past decade, investing approximately $24 billion across more than 200 transactions. A pivotal year was 2024, which saw MMC's largest-ever acquisition year with $9.4 billion invested, notably the $7.75 billion acquisition of McGriff, which significantly expanded Marsh McLennan Agency's (MMA) presence in the middle market. This focus on strategic acquisitions, alongside divestitures of non-core assets, underscores a commitment to enhancing capabilities and scale.

Fortifying the Moat: Technology and Competitive Edge

Marsh McLennan's competitive advantage is deeply rooted in its global reach, diverse service offerings, and a steadfast commitment to technology and innovation. The company operates through two primary segments: Risk and Insurance Services (RIS) and Consulting, which together generated $24.5 billion in revenue in 2024. This diversified portfolio allows MMC to offer comprehensive risk management solutions and maintain a leading market position against key competitors such as Aon , Willis Towers Watson , and Arthur J. Gallagher & Co. .

MMC's technological differentiators are central to its strategy, enhancing risk assessment capabilities, operational efficiency, and client value. The company has invested in digital capabilities like Marsh Digital Labs and is actively leveraging artificial intelligence (AI) across its businesses. For instance, Len.ai, a proprietary Gen.AI tool for colleagues, processes approximately 1 million inquiries per week, significantly boosting internal efficiency and automation. In its Consulting segment, Mercer introduced AIDA, an AI-powered assistant within its Talent All Access portal, a global intelligence platform supporting HR decision-making. Similarly, Marsh's Centrisk platform, an AI-enabled supply chain risk assessment tool, provides clients with critical insights into vulnerabilities amidst global trade disruptions and geopolitical tensions.

The Blue[i] Suite of analytics, built on a vast dataset comprising $1.12 trillion of analyzed premium and over $100 billion of claims, offers unique insights into market trends and insurer performance. This data-driven approach, coupled with AI tools that can interrogate claims databases, allows MMC to negotiate better terms for clients and identify emerging risks. Guy Carpenter's analytics platform, considered vital for clients managing volatility and maximizing capital efficiency, is also integrating AI to model future climate change impacts and build proprietary risk models. These technological advancements not only strengthen MMC's competitive moat against startups and niche players but also differentiate it from larger competitors by offering more integrated and sophisticated solutions. While competitors like Aon emphasize data-driven analytics, MMC's strength lies in its ability to combine this with a broader, integrated service offering.

Financial Performance and Operational Strength

Marsh McLennan reported solid financial results for the third quarter ended September 30, 2025, underscoring its operational effectiveness in a complex environment. Consolidated revenue increased 11% year-over-year to $6.4 billion, with underlying revenue growth of 4%. This performance was achieved despite headwinds from lower fiduciary interest income, declining property and casualty (P&C) pricing, and economic uncertainty. Adjusted operating income grew 13% to $1.4 billion, leading to an adjusted operating margin of 22.7%, an increase of 30 basis points from the prior year. Adjusted diluted earnings per share (EPS) rose 11% to $1.85.

For the nine months ended September 30, 2025, consolidated revenue reached $20.4 billion, an 11% increase (4% underlying), with adjusted operating income growing 11% to $5.7 billion and adjusted EPS increasing 9% to $7.63. The Risk and Insurance Services (RIS) segment, comprising Marsh and Guy Carpenter, saw revenue increase 13% to $3.9 billion in Q3 2025 (3% underlying growth), with adjusted operating income up 13% to $965 million. Marsh's revenue alone grew 16% to $3.4 billion (4% underlying), significantly benefiting from the McGriff acquisition. International operations within Marsh demonstrated robust underlying growth of 5%, including 6% in Asia Pacific and 5% in EMEA. Guy Carpenter's revenue increased 5% on both a GAAP and underlying basis to $398 million, reflecting solid performance despite softer reinsurance market conditions.

The Consulting segment, which includes Mercer and Oliver Wyman Group, reported a 9% revenue increase to $2.5 billion in Q3 2025 (5% underlying growth), with adjusted operating income rising 11% to $545 million. Mercer's revenue grew 9% to $1.6 billion (3% underlying), driven by strong 6% growth in Health across all regions and 3% growth in Wealth, led by investment management. Oliver Wyman Group posted an impressive 9% revenue increase (8% underlying growth) to $886 million, benefiting from favorable timing and growth across all regions.

The company's cash and cash equivalents stood at $2.5 billion at the end of Q3 2025, with operating cash flow of $3.1 billion for the first nine months of the year.

Strategic Evolution and Future Outlook

Marsh McLennan is embarking on a significant strategic evolution with the launch of the "Thrive" program and a company-wide rebranding. Effective January 2026, Marsh McLennan Companies, Inc. will rebrand as "Marsh," with its stock ticker changing from MMC to MRSH. This move aims to increase visibility, strengthen the value proposition, and simplify the firm's story to showcase its comprehensive capabilities in risk, strategy, and people.

The "Thrive" program, introduced in Q3 2025, is designed to accelerate growth and improve efficiency, targeting approximately $400 million in savings over three years. These savings will be achieved through automation efforts, workforce actions, and the optimization of its global operating model, with a significant portion reinvested in talent and technology, particularly AI. The program is expected to incur around $500 million in charges. A key component of Thrive is the creation of Business and Client Services (BCS), a new unit centralizing operations and technology teams to drive innovation and operational excellence.

For the full year 2025, Marsh McLennan expects to deliver mid-single-digit underlying revenue growth, achieve its 18th consecutive year of reported margin expansion, and generate solid adjusted EPS growth. This outlook factors in anticipated headwinds from lower fiduciary interest income (projected at approximately $85 million for Q4 2025) and foreign exchange rates (expected to be a $0.04 benefit to adjusted EPS in Q4 2025). Interest expense is forecast at approximately $235 million for Q4 2025, and the adjusted effective tax rate is expected to be between 25% and 26% for 2025, excluding discrete items. The company plans to deploy approximately $4.5 billion of capital in 2025 across dividends, acquisitions, and share repurchases, with McGriff expected to be modestly accretive to adjusted EPS for the full year 2025 and more meaningfully accretive in 2026 and beyond.

Risks and Competitive Dynamics

Despite its strong positioning, Marsh McLennan faces several risks and competitive pressures. The macroeconomic and geopolitical environment, characterized by global conflicts, trade policy changes, slower GDP growth, and capital markets volatility, could impact its business, financial condition, and results of operations. Declining commercial insurance rates, particularly in property, present a potential revenue challenge, as brokers generate revenue through commissions based on premiums.

The U.S. litigation environment is a significant concern, with excessive litigation and "nuclear verdicts" (cases exceeding $100 million, which have grown 400% over the past decade) driving a surge in U.S. liability insurance costs. This trend, coupled with the increasing frequency and severity of natural catastrophes, underscores a rising cost of risk that could strain clients and impact insurance markets. Marsh McLennan is actively working with the business community and policymakers to address these tort abuses and advocate for greater resilience investments in disaster-prone areas.

Competition in the professional services sector remains intense, with direct rivals like Aon (AON), Willis Towers Watson (WTW), and Arthur J. Gallagher & Co. (AJG) offering similar services. MMC differentiates itself through its global reach, diversified service offerings, and technological innovation. However, the company acknowledges that some competitors engage in "unlawful and unethical hiring practices" to attract talent, which MMC actively counters by emphasizing its collaborative, team-based model and strong colleague value proposition. While MMC's scale and data assets provide a significant moat against technology disruptors, it must continuously invest in innovation to remain competitive.

Conclusion

Marsh McLennan stands as a resilient powerhouse, strategically positioning itself for sustained growth and enhanced client value in a dynamic global landscape. The company's solid Q3 2025 financial performance, coupled with its ambitious "Thrive" program and rebranding to "Marsh," signals a forward-looking strategy focused on operational efficiency, technological leadership, and integrated client solutions. By leveraging its vast data sets, AI-powered tools, and global expertise, Marsh McLennan is not only adapting to evolving market conditions but actively shaping the future of risk, strategy, and people. While macroeconomic uncertainties, P&C pricing pressures, and the challenging U.S. litigation environment present headwinds, MMC's disciplined capital allocation, strategic acquisitions, and unwavering commitment to innovation underscore a compelling investment thesis for long-term shareholders seeking exposure to a market leader poised for enduring success.