MMC - Earnings call transcript Q2 2020 | Marsh & McLennan Companies, Inc.

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Operator

Welcome to the Marsh & McLennan Companies Conference Call. Today's call is being recorded.

Second quarter 2020 financial results and supplemental information were issued earlier this morning. They are available on the company's Web site at www.mmc.com. Please note that remarks made today may include forward-looking statements, including certain expectations related to COVID-19 and other matters.

to cause uncertainties materially actual contemplated such subject of a from are by may factors results statements. statements risks and and variety those Forward-looking to differ

to of to the and most MMC available XX-K, recent our factors, discussion all this including our detailed filings, Web recent more Release for site. a please For on refer most our SEC of Earnings quarter are those Form which

today, we may also non-GAAP certain measures. call discuss financial the During

most reconciliation closely & today's President GAAP release. over of refer these the a I'll of this McLennan the to to For Please comparable measures turn Marsh and CEO Glaser, measures. schedule earnings Companies. to in Dan now

Dan Glaser

earlier of Thank and us you you, discuss joining Marsh Good Glaser, for thank morning President and I'm & today. Dan results McLennan. CEO our operator. reported to second quarter

the and CFO this of of Carpenter; Sarah on Head Scott Mercer; McGivney, me John the DeWitt, morning Peter and CEOs call Martine Hearn today pleased recession. Mark Doyle with I our experiencing us of dramatic Wyman. results the of same Guy the as and global unforeseen navigate which Also and strength and with businesses, & is of am our Marsh; resiliency we is second our is Joining Ferland Oliver of Investor current crisis events at health demonstrates The Relations. world Marsh economic quarter McLennan's uncertain, too time. McDonald

economic an crisis global the by simultaneous global the in second, part driven the almost of First, world. pandemic and lockdown unprecedented every

of colleagues the thank in face for I colleagues of breaking clients events, and racial challenging distinction. combination persisted which our and execution In on times. inequalities leadership outstanding their dedication to the point with serve our these our too want In reached extraordinary occasion McLennan for and far team rose & Marsh the addition, society XX,XXX continued and to globally excellence to has this long.

The has downturn so world extremely been and certain this and expected, troubled in may remain many have the in of health may in resurgence times to manageable, the avoided but than be While scenarios, conditions initially and and case the from longer health difficult far viruses live the our downturn of business geographies. uncertain. the crisis when world economic worst ways impact we parts many economic

most in health the around outcomes. we the parts phase peak of While fear world initial uncertainty are of and through

We in fallout These XXXX. into the are year implications. period well and of companies dealing living recovery, solutions strong critical uncertainties the last businesses a or the health the continuing and our now with challenging now have economic of could a health our with shape for economic advice expense we our is the we resilience, proven have than ever. more and of Regardless control and over need space longer,

I as calls of management and a has tough we Our of made number through the team ones these navigated crisis. first months right believe the

driven and deemed dislocation. essential with growth. jobs we bar this significantly which and preserve inorganic of We for our in that We've costs actions MMA with take increases, on strategic the freeze as well continuing cut and a forward avoiding pursue with thick so These the balance industry high in while as the discretionary short-term continue on focus we of pandemic, is what to continue proceeding acquisitions And salary salaries. down for far in maintain jobs the moving year as make hires to expenses annual to the back set several spending, have long-term. is hiring face include a a positioning

a We liquidity by also enhanced our credit and issuing facility new additional debt. establishing long-term

a as the we Looking believe I stronger crisis, beyond current emerge will firm.

been recently society than point I is on a careers, The George racial came me wealth, others. with events inequality of the and comment familiar been creation that healthcare, have and to inequality. all racial better injustice, caused to flatter, to freedom. want tragic recent education, it Systemic to racism has faster our breaking shocking connected Floyd. inequities, issue and The never and is death too Our pause in today. organization a pervasive has

committee been fully listening has colleagues a others, actions black concrete and alongside our and them up executive to Our engaged, to make difference. implementing speaking

We rising are to dynamic to inclusive diverse more risk and moment determined are In solutions evolving seize to pressing to this create address new these we globally. company. develop and a times,

our to ever bring to Our collaborating businesses are of clients. firm the more than power

For Carpenter] a to pandemic would in resiliency new recovery private in to March dialogue companies future among industry We for facilitate create going market a forward. late a pandemic [Washington public which economic [ph] and create example, Congress initiated partnership leading for enhance the insurance. risk,

cash pressures to We developing losses And how and innovate of being was solutions model, of returns in am and strategies. reinvent spreads and I private forces the also clients have while new disease Pandemic early a crisis. make work manage virus time their joined wondering for assess plans, consulting is chains caused as I companies an multiple Pandemic proud to demands Helping Mercer developed responding In we across are more and by also credit employers normal industries patterns, which Both pandemic immediate number predict with opportunity used Marshall's future supply Mercer and to use company governments to Wyman this guide warning clients Navigator to public leading to become on decisions. progression our recovery the countries. a to Oliver resilient. adapt, are by Navigator, continues summary, understand office utilizing advising and signals.

fees. global earned typically and a XX%, Global in XX% while Market continues P&C our XX% The pricing are property year-over-year mind, on moment in insurance Marsh insurance and Insurance insurance X% were a fourth spend the was average. large XX% Index up up up where casualty index XXXX. me on the first XX% and in versus professional global quarter financial business of Global accelerate. rates lives Keep increased account to market current used conditions. quarter we P&C Let

middle underwriters for push meaningfully and to result pricing number pressures, the complex higher same is is This social rate up levels and although not low before of small the a to U.S. accounts. COVID-XX. market including a magnitude peak large of continue of well, insurance increases inflation persistently underwriting of hurricane large as as as losses However, yields Overall, the season.

risk capital reduced adequate, of as While insurers uncertain are in remains cautious is the appetite environment. increasingly they

amount mid-year U.S. on highest of rate increases. XX%. programs Turning to remain to largely they renewals would the willing typically narrowing applies great peak were and uncertainty. rate where regarding to advice increases our southeast are solutions meaningful and reinsurance cautious reinsurance, Non-Florida XX% the with like Reinsurers price and since seen increases a insurance are are exposure saw which critical. P&C property even It the are being mid-year Florida catastrophe zone reinsurance some experienced markets more of are an up these focused to environment of and conditions. is times accelerating challenging These global XX%. wind capital terms renewals currently expose XXXX. in in Overall,

Now, impact performance. despite let financial the to EPS me of turn COVID-XX. adjusted our second global growth excellent We of quarter XX%, delivered

the or crisis expense booked X% Guy consulting. down strong Underlying X% quarter underlying the of Oliver and underlying our management is second basis both services an and and result reflects strong revenue XX% declined in in reduction XXX risk we growth in and expanded an adjusted of part the the X% declined face a margin greatest operating by the points Carpenter year the income strong X% COVID-XX was XXX our which the operating quarter ago quarter a RIS on consulting, X%. increased great X% income estimated of second X.X adjusted at increased RIS XX revenue X% for in billion, versus Mercer's on ago. XX% In related operating year basis, was quarter, growth was in was Wyman versus revenue growth downturn. saw versus increase points and billion, the on and delayed basis X% business declines, reflecting up Total up lockdown the insurance of the on underlying impact colleagues, career revenue. year benefit X.X adjusted quarter Consulting revenue a quarter. operating Marsh, underlying of ago. immediate adjusted Overall revenue declined was a X.X economic to declined actions adjusted our Our revenue income the down exposure X% in and in RIS X% and In a million grew margin revenue by quarter excluding the revenue execution XX% EPS the to as the in Marsh expected. to impact billion in million. the in by XXX

quarter strong XX% increased adjusted that earnings basis the Even environments. our points and results Our ago though expense manage reflecting margin versus $X.XX impact year will execution. second Adjusted share are XXX cents challenging resilient is to to tightening performance our remainder per is the for a XX.X%. evidence strong to our that of COVID-XX able we increased and operating through business year,

While economic weak is our year-to-date results and very is high. uncertainty are the strong, outlook still

full modest year a revenue. For the we XXXX, decline expect in underlying continue to

quarter it modest the review for despite revenue. more second With our detailed in to over However, adjusted decline let Mark results. me growth given for we to generate now expect turn year, our the that, performance, full strong underlying a and of

Mark McGivney

XXX adjusted underlying Adjusted to and million, XX% increased $X.XX a good crisis; modest and and basis. to increase X% last an current EPS Operating was Dan, in an our increased with declined the our the morning. and our pleased quarter sheet balance delivered quarter despite adjusted to decline position. to quarter you, was year. or GAAP income second points enhance in revenues driven million earnings quarter XX% in margin X.X Overall, XXX of EPS revenue XX% over we X% down $X.XX. to on income increased the results, the billion XX.X%. second strong in Thank operating basis and XXX continue by We're liquidity

income to For points six $X.XX. was operating of increased the increased to X.X adjusted XX% revenue grew basis adjusted our margin first XXX growth X%, our EPS XX% our billion, adjusted XXXX, months and underlying

ultimate brokerage the in some premiums these are revenue Mercer of portion was go on of in models. I health. estimates and impacted of cases policy policy recorded until exposure in I discuss inception uncertain. end deeper reduction is our as variability units. million we the estimated in It on typically there A booked to at downturn the primarily is impact are Before cases reduction a This want term based is a estimates commissions of updated revenue in recorded significant where including economic the results, ultimate but previously revenue $XX reflects most These In also not exposure. Marsh, adjustment to the quarter. cases, recognized into

many A revenue increased adjustment. XXX or was interest to was drag X.X X% Returning lines excluding underlying we be basis in to of business and estimates XXX decline to due points underlying charge is adjusted of anticipated, growth originally and exposures will a that million. revenue than and COVID-XX underlying sooner. income in requiring income the XX XX% services, of to likely note margin second point to growth update fiduciary the adjusted with important expanded in increased is earnings. operating XX.X%. basis million included on that However, revenue. in the impact and results the risk XX% insurance X% to our downturn, economic billion Operating XXX also this lower Adjusted quarter It income

Canada, the or result an X% the strong X% flat international EMEA operating X%. was environment. underlying a division up in underlying X.X quarter, X% months points up was the growth a XX.X% underlying impact and up an the the X.X a was down billion of billion, with in for year of For the Marsh the Latin increased underlying increase current on with U.S. In in revenue America of quarter income the In six and billion, with period first was Asia the in XX% from same revenue year the of first X%, Adjusted growth to year adjustment, of of basis, growth X%, half margin excluding ago. basis X%. revenue the XXX Pacific X.X

was from six was revenue Guy with the Marsh's was up XXX U.S. year had growth X%. quarter driving strong revenue another environment. pricing solid and Growth growth of growth the For and billion Canada international of business reflecting underlying retention, X%. tailwind by great a demand months first Carpenter X%. and of was underlying underlying was current X.X new X% driven the million

reflecting six XXX to points year, and For operating XX generated first X.X an the Guy half basis margin the to X.X the the the revenue Adjusted crisis, to of income adjusted representing of X%. billion for a X% the underlying the of XXXX of X% revenue Consulting billion solutions. an first X% decline XX.X%. income underlying of in XX% segment, of impact million basis. on six management underlying was down the revenue by current quarter the Carpenter million. X.X generated XXX Wealth down operating months million. and the months Mercer's was reflecting declined revenue decreased operating of in growth. modest and quarter X% offset XXX year decreased revenue X% defined income billion investment benefits declined first for underlying growth in consulting Adjusted decreased X% the underlying decline In to

in of second X%, quarter have more the business impact revenue year-over-year. underlying XX%, we billion management which up under increased X% the career In the on basis were or revenue revenue discretionary quarter declined an X% the drove projects assets Our approximately XXX careers underlying the Health of decline. adjustments. excluding end at where the

year The X.X months Wyman's basis, we decline into XX% was was quarter. of which was quarter Mercer XXX the first of with underlying at six growth. an revenue the than a better coming expected in underlying billion X% the revenue on million Oliver

the XXX Forbes. an approximately Adjusted we in basis. [Indiscernible] quarter. loss equity six our an the XX Wyman of reported million our we sale on XX months in with expense Alexander year underlying On an was outlook, total GAAP the expect corporate million first the investment adjusted for year. the Based current was had investment million a on in on portion of a primarily million X half X% we the of revenue loss of second decline For of a basis, quarter. driven XX investment income Oliver by basis, of ownership of in the an million

of the FX current assuming EPS the Foreign exchange would for exchange we was a in levels, at neutral EPS quarter have remainder remain to on year. rates impact to expect minimal the

effective tax second XX%, quarter adjusted the second in rate was in year. with last the Our XX.X% compared quarter

tax with current approximately the was year. effective environment adjusted on year, effective half adjusted our XX% the XX.X%. of tax XX.X% items, rate and discrete the last rate Excluding was Based our and first us continue to well Through our most excluding strong JLT expect half as demonstrated XXXX, a for XX% tax rate first The discrete the integration between parts results. challenging behind XX% of items. now are by compared

on bringing XXX we least key and the the cost generate total and restructuring We are on non-cash savings milestones, second XXX quarter, In total, XXX incurred incur million million XX XX to-date to all We cash including our plan still million of or cost ahead JLT to of expect savings. actions. of schedule of of integration in to restructuring million and of million. approximately at costs costs

provide I year. costs the these the incurred in minute of a majority to the expect take by will We for and of savings end XXXX. be achieved this outlook an to want our update

it could least the out through conditions persisting Our turn which uncertainty our that conditions remainder affect revised our would goes different high at remains of saying assumptions, than projections. very contemplates and recessionary without view materially XXXX. But

spending in some modest the certain year for EPS the we year generate of expect full revenue underlying the growth half be well see our reflecting full now revenue We back decline Marsh, the to for in the mentioned, revenue. still potential impact despite challenging. as although as For to growth, XXXX, currently year a in At pandemic on half the Dan back expect we decline modest will EPS as adjusted the outlook rebound for the of in areas. modest underlying

of which Also second for muted, last keep of Guy a million that mid-single comparison in $XX more continue quarter, Carpenter. as from the a in faces revenue growth Guy year digit to For the small these seasonally full Underlying half will true we year-over-year year difficult multi-year a mind Guy year, contract. we growth be at mentioned Carpenter benefited the are likely third expect up the quarters for but Carpenter. XXXX,

to will full down Mercer's revenue the the of underlying year. decline modestly the We expect year and for for continue be remainder

back persist of the could weakness the half year. in through revenue Oliver Finally, Wyman

XX.X to sequential in sheet, Turning outstanding with the our the We combined in XX debt available. the year, remain expect reduction committed deleveraging X.X a XX.X cash of debt Since we and years Total at cash, quarter of of quarter, XXX million was billion the reduce from of credit ended in billion X.X entirety a facilities down balance we of of generation reduction quarter the the to of prudent X.XX%. our flexibility. a secured a April, notes debt million. at on end the taken In in representing May coupon we will billion the $X the onset although pandemic, and to financial ultimate this senior depend the amount end line the billion first environment. billion enhance and have of steps XXX second issued resources new current of our credit at to of

Our next is notes XXX million in December debt mature. when senior of XXXX, scheduled maturity

$XXX in a on quarter. third XXXX. XXX We forecast, due expense Based expect second expense in current million. loan our term million also we approximately the XXX was million Interest have of January in interest quarter the

quarter outlook resources Although with comfortable our uncertainty our high, any liquidity in from call, line the have on a the second and quarter. feel commentary flexibility manage through perspective. in we not In repurchase we crisis the that to we shares the remains did first

this quarterly shares million XXX million for XXth environment, at McLennan. acquisitions for included and $X.XXX year cash million Given the the repurchase XXX of dividends. Uses the Marsh we not totaled share. increase to of & quarter dividend the Earlier of and increases represents increase for second of an current remainder This in per consecutive XXX the month, announced our XXXX. we dividend do ongoing uncertainty plan to to

of outstanding. well. from has totaled first commitment And of we shown and XXX Dan. back million to are and for XXXX. happy to level execution XXX six it pleased We've throughout billion the turn been continue I'm navigate Overall, performance of first our positioned it dividends. believe million we resiliency, and for is cash X.X organization With are the the far included over, with months, while the the For acquisitions half crisis that, uses to in we to

Dan Glaser

are Thanks, ready begin we Mark. the Operator, Q&A. to

Operator

comes Instructions] [Operator question with Deutsche first And Phil our the of Certainly. line Stefano from Bank.

Phil Stefano

about action in talked second like feels the on margin remarks, expense results, of clearly from opening revenue it seen your impact the the And in you immediate the it was COVID. of benefit delayed Dan, quarter in with brokerage. most

Something be you a expansion into hard maybe maybe couple or even then help in year the the what think do they or this dialed revenue as little two, do dig expenses more and managing understand that are your quarters, and second could drove point? decisions, can what How about quarter we think you us the the about versus the back? expectations at next

Dan Glaser

Sure, sure.

environment not scenarios. but may case world So saying downturn health of were be longer, it's so like I I'd I worst since and at early far it, there economic the feel avoided by likely let's economic has mean, bit. good the start mean, the it question. a still the the look resurgence. a may waves virus overall in macro days, we're last

from planning a been very And it's some here. doing appear lot were could imagine stages we scenarios, rosy worst testing, But of case certainly our stress when of forward the So, the of health -- of have elements avoided. crisis, not picture and you early a right? the to scenarios of all very scenario

believes type divisions, say in leadership, field what and the of We're expenses of essentially expenses set company our authority have And pull contractors but for authority were, to only on that of so items. proud preserve it move heavily we in to and over slowing a but and committee and of the pulled not quickly pull that cetera. things hiring, did bar there et expense back away very I need our that on focusing you very revenue where out T&E, very jobs the other leaders I'm not pandemic, hiring control then, back times lot I the executive distributed but only we the producing time of fall pace and very in decided to But are not Not notion back a down a slowing camps, base freeze, like our of that positions. company cut thick to also down put the salaries. team high quickly. that the countries the specialty the essential with hiring we naturally in we that in and a the

revenue we pretty down lag able et dial may the turns off. notice growth and of good X% our some there then time expenses. overall at our bit. terms cetera. some first over some [ph] about, back quarter sales some our overall. things and you And how feel a includes actually had that's like looked underlying category is is And because you in quickly bit a a plans headwind how pipeline, were broad and number confidence that of absolute we [comp] to of variable good Now I of Clearly, also results, plans contractors

and we quarter nice second had into that and the early So of away. of momentum the goes parts carried that some momentum

unlikely that economy, ease other little bit we dramatically the we levels to up And a occur health also or have will little more ease of bit a the open become on could are investment a will And will worst case pressure. type scenarios revenue make. bit, so but macro because factors either we'll to more up of

right And still the of of so in think the is delivering the the while to of for We context invest growth there's that the uncertainty. be in. us second look continuing deal financial when crisis, at to position in year, results future great we reasonable half a

Phil Stefano

follow talking of something I and of at as Last would has least could actions some rear unfolded the -- the we're you feel appreciate, things. as sustainability actions the in like once were have hard but world based Do early far you I these at My the it's be on it that seen first, is put you've the quarter, up be view? maybe comfortably understand. can benefit around about how days. took thoughts COVID the maybe you any

Dan Glaser

there things all I and circumstances, on is can it Yes. pretty in it's manage I ideal that not demonstrate placement to we've now, remote are been do basis but mean, some circumstances. mean, client certainly able in deliverables certain we activity ideal a

we're many many, So I'm for benefit operation through than we second I in to envision be the Yes, also more invest will was we sure while could much think continuing it's our also a it's likely. know may to our Singapore real in footprints CapEx of the there'll CapEx And I where not come actually to to mean, quarter, we that important in airplane for I digital. bit come previous never. running it of bit a spending see we'll Flexible the business. it's so to little higher go more of a an to down item type can a back, because hybrid return or six I maybe go we is persist. about to social slowed more months back of workplace a agile year levels requirements. for locations. tell can't crisis opportunity. and also of last go think distancing it worst today. to collaborative underestimate or work office arrangement has And you. more have are we a the are over our I more brought and hopping how it or time, sometimes while our $XXX,XXX Marsh and Maybe costs an that this out notion the T&E home & you the cautious Crisis been time, the would be and that on those estate, little in to colleagues we things never type won't some than connected while long in best and from ago is risen not work McLennan together. firm a the week during you, estate I can But bring of of because has type real items probably another and

Operator

line And our with next question of the comes Zaremski Suisse. from Credit Mike

Mike Zaremski

more the kind fortunately segment avoided maybe First we Does far. I Dan, the have guys that you case most asking were of questions hold true [since focusing have maybe [ph], question, SX] think fortunately, what about. investors worst the consulting you are for on all you think scenarios I to last organic to Clearly in revenues but much all so were your consulting hearing least can as said of segment? consulting maybe the on they not in down as happen consensus kind us relative maybe the might updates segments the seeing overall what and down thinking give at expected quarter? and you're you some thoughts

Dan Glaser

some Sure. business we very I oriented in be purely Wyman project project like of projects on consultings with the We pressure, and business parts is to and the overall in were decline eyes career tend growth. related Mercer, in performance businesses. organic and pleased the revenue expected of particularly mean, clearly Oliver is discretionary clients. almost a project

had of in within that different row and actually job back. within contraction. protecting own consulting lot done down down, more OW on a was nice focusing pulling at X% is think in crisis. ways in and quarters really Mercer a consulting I the shareholders our and our a both discretionary and our expenses business. mean, minus good by overall so, have is And result I a circumstances a X% businesses every global Wyman was a main crisis, of crisis shop six you of is crisis in Mercer global financial and look more XXXX when in XXXX; than in the XXXX significantly the But bit Oliver this financial concerning And

Wyman for operate don't those focus to overall a issues discretionary would back of in as their for lack across bounce And on be they issues. doesn't people future go and to their growth future it we and projects XXXX, need something an we resilient and on on is company firm, want and that And we're we're don't they firm strategy And the If them there mean quite so to companies, that efficient and projects similar. that was a can ways good. basis. expect Mercer Oliver more

have them the had positioned our And results we And so brings. quarterly many at those worse. more year. about both to we've down a for the consulting we in we're of think be that it, They to overall could on times down. feel the areas decent the we of we year, second indicated ended where end, we bottom and than think know quarter, well other little very said expect nice we a modestly when before, Mercer line what first And Wyman, business. It for pretty I half businesses. any but At good of will feel don't bit looked about as modestly shape. Oliver the good be company. in up been I has we're the I But volatility the

Mike Zaremski

That's understood. helpful. Okay,

could talk thinking Lastly, should be an you the it lot. a I'm forward? dollars Mark, not whether about having impact moved FX sure, going you about and

Dan Glaser

take want thanks, Mark, to Well, that? you Mike.

Mark McGivney

year year rates Yes. of expect back they looked the much for much impact the stay half as the The second don't we the Sure. FX of was for in where quarter impact, we much EPS. not balance to a of if the EPS at story are

Operator

Jimmy comes the our And with Bhullar question of next line from JPMorgan.

Jimmy Bhullar

reinsurances, on question a that's the had Guy Carpenter. I

possible some to in your versus think better, slowdown the actually half you and exposures? with in just like, interplay maybe are are imply second or overly they declining? difficult the comps And comps being what's getting headwinds in you How growth much you is are exposures of being if more I given pricing growth the conservative getting that comments.

Dan Glaser

also our mean, the always overly realistic to base. and I not be Sure. be trying conservative, but to with end we're we transparent investor at want

talk one year where million and Carpenter, this tall fourth different in want is rates the as our remarks, a could smaller third overly overcome. last a swing off a exposure we so to or Peter, this acknowledged directions. out was whether see you in and or $XX little to hard so hill account the two conservative last that lot therefore pointed quarter is a we things are not? And And year about of either there bit and you much But,

Peter Hearn

what with says, and buying anticipate events again, business of years from year, they're From habits. tough new our to reiterate the and growth the have QX. QX we or rest quarter stress has QX same anticipate past with business strong we Dan bases QX sheets movement adverse client three the regard standpoint, one the to just to we've the tests Dan. QX or balance volatility are done and thing revenue been from but catastrophic And an in subject in year QX comparables But seen business COVID-XX. you, timing. no of small situation and Thank in from look several I historically Jimmy, new next of hundred could quarters for would and what to diminution over on last like the we've a

exposure with good So we've that basis. volatile for where they're regular no and Mark small we're there's seen a about I Dan on quarters new we subject are as both to overarching mandates in feel issue winning change, and the basis year revenue. been said, and but

Jimmy Bhullar

because been exposure your views of on your concern there's some sort of that what against quantification And about you among investors exposure can be negligence what be you or sort are something to and any see would -- that Do brokers. were anything your of well. have lawsuits related E&O got insurance you've Okay. as on if you retention I'm might assuming what

So --

Dan Glaser

publicly we insurance our details the so mean, haven't disclosed I to E&O of Yes. going not do it I'm program, here.

by in level focus got training of of coverages to forcefully high and with best principal professional have to colleagues. our a that a the we've our do as a they of we E&O recoveries standards, for risk management obtaining system claim, thousands practices, and do and broker advocate goal very strong is We Our flood policyholders. event,

we So some end, related that Obviously, who on. not some spend lot something they at that their policies may a it's some clients believe the coverage of coverage of time COVID. disputes that have between occurring are to within there's

not with And overly some but concerned it. occurred And I'm that may of suing really clients, those end everybody yet. up hasn't

have systems not partnerships scale talked it market and certain that be public think in a trillions It we into of that gotten are clients I so could of industries, basis, impossible on. like because for the would private today just control. every pandemic potential full certain why targeted, good limited have not it's about of exposure and there's it pandemic insurance very broad client Frankly, not had expensive. On goes insurable. dollars and being like broad protection scale and it, be to is

Operator

Your next question Yaron comes with from of Kinar line the Goldman Sachs.

Yaron Kinar

CARES one can color First Act, was but your to question the very curious, bit, what like on flows I pushing how back the for tax about a of rest this think were cash payments quarter little that. seem talked any too? on they maybe offer free year And drove competitors have about cash flows, think you strong, that? of

Dan Glaser

sure. take want Sure, that? Mark, to you

Mark McGivney

pleased the you in generation said, obviously quarter strong that. Cash as Yes. was with we're

contributed, most was earnings the growth. factors of important strong just which the of number a Here

solid So we earnings had growth.

spending So related in other of a flow so that a there's driving factor then on was and big free factors, JLT items. cash less number

more a If there FX quarter last with results good that affect in by little any it capital we given can year. be had you we And did balance on compare front. the accounts cash of this working nicked year, bit and we some sheet got that flows fluctuation then, and can in than

strong. And quarter whether cash it's our generation year-to-date, so was the

year, remainder of the trend. going be how to earnings For is about really the our it

Yaron Kinar

Okay. I impact with I the about correctly. or thinking regards want then was sure just And exposure of exposure declines, to make to it

then, a summation? immediate. to of fee, consulting fair in RIS, is there's the that takes more more be bit And lag, a a impact tends it -- So

Dan Glaser

of Most exposures of actually clients the in were Marsh.

business It's looking of little an health generally you and areas decline. So where and types I'll for bit mild and proxy can see would and the around consulting describe off example, you're exposure as employment hand if as at the he a more a to john talk plan, where employment because down exposure world is adjustment units if took of premium most you that's covered lot there John, large under because the lives anticipated be the the amount slide. of a of about is then want and down would within to the place.

John Doyle

Sure.

earlier As are exposed unit different Mark number on the of driven. adjustable a the about and talked products call, to

some the kinds are the unit more Product of we of over course course, groups, that commercial were for [indiscernible] things. auto adjustment aviation, example, calm, accept lines impacted, an So, the industry accrue policy energy, marine, for period. to of those transaction make risk, of

policies. correlated historically adjustment to the impacts prior write economic So, flows our that investment and down attempted but growth we lag other of also new obviously, period to effect. growth flows for overall, a make then, our bit construction down, an is business And ability there adjustable is a so,

Operator

line Our of Fargo. next the Wells from Greenspan question Elyse with comes

Elyse Greenspan

question first EPS My is full on year the side.

on first about decline year. you before, kind So it implies XX% off the I took in where slightly a mid-single half, growth EPS about your about under been guys year. of probably the organic digit printed the have have half of just in But right, depending [prior been would to the would which half [ph] the -- think just negative in that to for that just we guys which was year, full the what whereas back guy] second for modest growth, happened positive of if for maybe you

better comments guess it's cautious trying half although for I'm -- still together of year. I the the second all outlets your So does package seem like the on to of

is of that why months expenses stronger were do something that for perhaps ago? think that what EPS than the it thought quarter? would trying I three in Just come the was the more outlook together second you timing in JLT to that second or EPS guide, half it pronounced of So isn't with year, understand to

Dan Glaser

It's fair a Sure. question.

on this let in go point so company as great very the any time, figuring art at we is science. We we're every out going it we're for is our business and day, me stronger. art Leading The rehiring much it way. what can the while deal. as off the the make should address company being do emerge by drawing as the while is horns business And future, leaders pulling it just today by expenses, tough position within to back deliver up margin a by investing to

of in spending headwind But way so the at immediate revenue lower benefit And we yes, a the expense reality revenue since projects and in since benefited that second came us quarter pre-COVID that in all the there's was terrific. that's our from standpoint, felt really terms second of hard. a is, that, is the we the higher look performance quarter. in we levers full the activity And the still pulled bit the lag

is go to half And And year back will we that modest what is the reasonable pressuring you've little we do be not to going the bit of are the ease scenarios in combination year. scenarios worst got stiffer the overall which environment the headwind case overall pressure in EPS will year. expect we've firm. into the of in can transactions. our think our half of deliver these RIS that you decline be look, modest a worst some anticipate of the though of a So And revenue revenue consultants. result improvement and focus And the will expect bit shareholders okay, in to we got because second the to a not macro the off in on case

I better the going think when drive consulting not the RIS have in that artificially and that under margin margin idea we're will consulting do things top-line of what kind can have to to of pressure. you than the on division will cottoned outlook, kind is to

Elyse Greenspan

Marsh. of specifically it just maintained guys is if to I your that spike a Thanks. And represent quarter? Do would lag that is second then, if comments the question think to question out my quarter. pointed kind the And My worse you there quarter a know, is still what within third think this the cases like in out guess. should a today? business, no you that, I there sounds thinking specific would than the bounce and quarter further your holds, be third from will have be on than that second It is be last isn't more Marsh. from QX COVID

Dan Glaser

Okay.

and look capability, couldn't single positioning team, terms capabilities happier advisory hand of together I one leadership total thrilled throughout structure bit textbook this and businesses, happens reminder, and when planned, off kudos to are position John, see schedule half a ahead placement back to Marsh led, and made Obviously, in XXXX, as And that you be for growth decisions my as couldn't growth with integration on off. Marsh. are in we talent, little it growth So second. a in and XXXX, well timing to JLT. and with within risk the as to And just executed. amount well worked about our flavor? company through you fact, and of that's combination want I'll came year earnings the John a And a be all future capabilities. better in you team one this very to formidable XXXX of we structural water in and really to people with of how our we revenues, in we out the we comes Marsh, look at We cost savings. our and it and the of year, well about for talk quickly, pulling scale, Overall, when terms in growth, year the we your

John Doyle

Dan. Sure,

times, economic be of don't pandemic. uncertain the fourth into things half, more well we're are many having environment, likely third about bit out, consequences I in, positioned. mean, that, as pandemic Dan it's said pointed obviously, the to economic consequences. to get about the As given fluid to I quarter. quite with we've versus extraordinarily want hard a talked challenging the we the quarter I and predict the operated it's think talked second We've

highly our clients obviously, the focused for difficult a team best one very They've been another, [indiscernible]. Our there is is environment. getting on very, I'm and stress It outcome.

the we've that exceedingly pleased course, a well. And integration tragedy, been are how more gone all of some silver there cultural linings, what overall couldn't And through on living human with be while has together. so, I comes

we'll things in the a improve, confident in improved I'm to perform, So when see performance well basis to business. our ability continue on and relative

Operator

from next the Our question KBW. of Shields comes Meyer with line

Meyer Shields

question to for exposure as line? Mark expenses? reductions revenue to the releases adjustment accounting offsetting pointed Does $XX fall Are there that press million units. the to quick One all start. out bottom in

Dan Glaser

Mark.

Mark McGivney

our shrink specific could it be a a bottom-line. It all earnings of Meyer. but it little impact bonus falls to adjustment, grow or I for year, directed to revenue in is mean, bit formulas the the overall and that to extent, bottom-line, earnings and

Meyer Shields

Okay.

would think good news. powerful. were was time I we it of that have How general conditions. able focused, think is less for had question, fee to obviously matched the higher negotiate I that environment? was play this does Marsh a a Back, that Dan. is that fees or last because but And come recessionary given work know more revenue don't incremental I'm out this that the rate very takeaway So, the increases the Broader I like, had commission that on was in increases wondering, and heavily basis. current the

Dan Glaser

was, it on company. the you Well, about firm, there a whether a with It's a buy, with basis we negotiating more last Marsh with a there an easy negotiating to I And bit spoke little and and particularly in two-thirds or U.S. of and period U.K. client fee third around mean much a time market think was the element think on middle be I not over a larger basis. commission insurance the to a that, gets long fee. become And out commission time has versus of

so and And is the negotiations the as level what for account of work proper there's place the by take that account of remuneration intermediary. level

value to or premium market, This the and the basis an direct a provide line the insurance immediately, as also as a in is but sometimes that account trying determine for we by about not companies. and therefore, on all up we it's pop one account there. so clients to and discussion is advisor so And same that revenue negotiation distributor

Operator

And comes from question of Paul Sandler. line next Piper with the our Newsome

Paul Newsome

gotten as market? easier and your Just we're competitors Aon from change can't And of questions enormous just investors a Willis. be] for the firm the it [it changes, happening one popping there's seen in question. about Marsh up we've and day seems given all hunt some with or with harder it Getting amount every having with merging and the a private is equity What's the talent, competitor. like [ph]

Dan Glaser

good because that it's is Do market really And start point more it talent largely it's No, of and part out creative, competition front the competition of what good. Competition foot your the have is, to a that's more a innovative. by piece And working saying and on business. in broadly than do? you the service on refreshes, in the our we're keeps some smarter, a you business dedicated clearly that's business. harder puts I'll competitors PE market very middle there's active colleagues very we what client Yes. actually

that with depth and I XX going anything you a and have You little a the like But I And you for scared about strategic news get thought that could comment Aon Aon of on I to who's mean, I clients good be mean, I'm with comment positioning. lots two, second. me any your this Marsh, market. do come were in I trade three not bit think together how for & in breaking and the the for places our opportunities. do will wouldn't to Willis. benefit the with big for We there becomes But or I to us? think of do on, think our good Marsh years I competitors. the And not on that a comment, personal a McLennan. don't as is Willis big somebody business, it's had Aon almost combination good

Operator

with Michael Morgan the Our of next Phillips Stanley. question comes from line

Michael Phillips

just the one for pandemic your influenced M&A brokers. valuations hear just Dan, love is as well. to I how for in space on me the thoughts

Dan Glaser

a as First most there's the leverage two bit even more then just in ability the of ago. than was least that at and upper middle higher. different be them levels it year seen for Mac And lot brokers, bit market below. for alluding rates, borrow is M&A to, you all, the was in to activity and where Paul of at or little low or because money interest of may the probably PE are space the space a have And a a the [indiscernible]

probably much in are multiples our that's too right opinion high, you're think high. change so I remain multiples high, going an don't in And are now, but multiples in areas, some market. to to the see going active

would With see structured most really have actually of on to all be there, is get it [indiscernible]. speak out the you EBITDA so important and a sale basis EBITDA I also are companies the component which two And is, really deal. an so be the or what well to gets probably than the you more calculation look the businesses for a forma year all ago. the but itself. and what's on to of at multiple So comfortable And you scrutinized it out pro private reviewed focused think uncertainty are with more otherwise and to earn

to a with continue want will that part to we're discussions still and We think your generally business what compete a we space in that know Marsh to You active. the McLennan don't in hands brokerage having we're so, with because market. limited We more the generally in a we're great companies space, will do and be in U.S. & the with business particularly agency, but committed that buyer. of it's PE

Operator

next of Bank the comes Our line from with Josh America. Shanker question of

Josh Shanker

how And some, quarter? T&E -- do suppressed could us you this. Mark you to talk T&E? can How much do numbers give be we Maybe behind at on detail in starting And little But said you're a much least going a about to numbers. again, put in can little second the was the

Dan Glaser

one, because obviously, Yes, percentage was entertaining. quarter, type spending mid and big and travelling was things T&E, absolute We not it's time. immaterial you there's the travelling second or you about numbers forever. think do talking me off not of an talking double never think But on of to once give to I Josh. T&E you're mean, have XXs T&E two number. Like you it digits points, in entertainment, nobody but got

don't talked I So bounce year. I that's I back half may And in in terms way to of have in the a T&E, any of huge expect misspoke the downdraft. second when T&E about

across I'm I travel looking because won't into as year, T&E for if was necessary I know get at and before. put ever this there entertainment XXXX as same much think trying was it be I perception what it XXXX. to not really way will or even don't people the time, balance over it's was was much level sure the the of travel what don't the pre-COVID. So,

will near had those be do an over lasting T&E I have it up may go level -- areas it that been where back where will So of to we think from expense benefit the where is that one T&E zero, and the go but we long-term obviously won't pre-COVID.

Josh Shanker

a EPS a half you're I'm year-over-year even of half think in I that still of sort revenues with down expect from of earnings, mind, off down, guidance in the know be giving seems like but expenses back you're with expect fall turn mean, if of but not to persisting in expenses the year. and sure 'XX. year, increase for the the in half full I about down back [indiscernible] the materially not guidance, I the should them So the expenses second going I back know when why we it not still modest explicit decline try year implies But material year, of EPS a half for bit. the I

Dan Glaser

at end, a we're Well, company. I mean, revenue based the

the going have second going we're expenses uncertainty what's does It happen the of But were on more a top-line. feel top-line fall across And have our is with release that doesn't in organization, rather the cliff. top-line. which will the little the large on base to of means sustainable, drawback than science. we of the expenses at had was mean, deliver basically saying and second firm now of second cut clarity negative, fourth and the then is of our the to looked RIS have. bit points, off the now believe the back You that as we're just increase expense quarter a it up the art to swathes of some midterm of pressure before, modest revenue faced in this we the half than could but bit company a quarter. that or we improvement want a margins margin with to first, of of from an at levels the a perspective. pullback any not And the we We down as for if and even not we of around happen top-line significantly type I momentum benefits some from going was to our pressure we We the because in be would than margins XXX more do good mean the obviously basis it were great quarter where and the long-term is shut Josh, here year, what our this revenue

technology, that. in ability the not the we're in work to going market, strategically We're movements dislocation of we're invest continues, going that that recruit, So to exists the to modernization, all going digitization, to and this the do organization, continue. our continue to of

Operator

Dan Glaser, remarks. would closing & I for of now like to President call any Companies and Marsh turn to the McLennan over CEO back

Dan Glaser

local challenging you you these and want I impressed during communities. look forward In by for the support. all for other, you our and their call clients times. of quarter. joining XX,XXX I I humbled and to thank And as speaking and operator. dedication you this you, closing, continued am hard our next also of morning. want very us to Thank each response their on Thank much to thank support thank well clients colleagues their to their as work all I with

Operator

concludes conference and disconnect. Thank participating today's Ladies and call. for now gentlemen, you may this you

Marsh & McLennan Companies (MMC) 30 Jul 202020 Q2 Earnings call transcript