MMC - Earnings call transcript Q2 2022 | Marsh & McLennan Companies, Inc.

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Operator

Welcome to Marsh McLennan’s Second Quarter 2022 Financial Results Conference Call. Today’s call is being recorded.

Second quarter 2022 financial results and supplemental information were issued earlier this morning. They are available on the company’s website at marshmclennan.com. Please note that remarks made today may include forward-looking statements.

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 our Marsh into recent McLennan on all SEC most factors, discussion of this our most detailed including website. Form more release for a please For the refer recent our filings, which earnings quarter available those XX-K, are

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

closely now comparable these the Glaser, of a over Marsh most of refer earnings to For McLennan. to CEO measures, measures to GAAP the schedule release. reconciliation please [Operator turn Dan today’s in and Instructions] President I’ll this

Dan Glaser

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

call in of was Martine of McLennan’s investments second XX% expenses of morning quarter the our Marsh of second the CFO; such T&E. XXXX. our talent two is results XX% with of consecutive year run Marsh; second to our our strategic robust and quarterly of as extending the strongest DeWitt, and top quarter top was momentum tough today of Head EPS to topping growth Investor quarter Mark Adjusted growth in higher and bottom Wyman. given business, growth our notable It quarter Underlying Oliver on XX% Relations. Top in our decades. of Dean businesses, prior the year. South us on growth $X.X John record Nick cross of and in comparables COO; our XXXX, of and Also related income this the XX% growth Group We fifth growth, X% Martin of ago. strength Ferland quarter of XX% quarter is over on a underlying of building continued outstanding. generated costs grew billion operating line organization. Sarah line Klisura considerable me X% line is top Adjusted a second the the in Mercer; represents rebound Carpenter; Joining and President the reflects Studer McGivney, across or of CEOs our of Doyle, Guy

more year. risk has hear was bear generations, macroeconomic geopolitical for tumult, above the and and we of of We do quarterly over results, also colleagues. strength level completed decade, especially highest the XXXX, Overall, second I’m forward assets. over and million relevance cautiously quarter the repurchases when to quarter average risk the back of momentum a highest and Fast bank performance the in of outlook in of of expertise today the course $XXX of second a central of markets geopolitical backdrop and the the optimistic, that the our share what pleased our recession, reflecting Marsh Entering our viewed tense growth. we the increasingly expectations hawkishness in of become GDP reflects rising McLennan, inflation the about buying two stock. with context

conditions We be to act have to prepared firm are resilient as warrant. proven a we and

However, believe in to nuances supportive remains of noting we the macro story the our current it is environment, worth that some growth.

growth on will for softened, and higher increase GDP offsetting real insurance growth softens likely outlook two values outlook the predicted, factors loss risen. insured While impacts Even inflation has as premiums. the higher somewhat inflation has cause have GDP costs. These if

market. Insurers the some inflation catastrophe severity remain environment account risk insurance where continue reinsurance helping clients conditions where the of are and underwriters navigate also they rising remain and social capital we to and an product Additionally, P&C firm, of conditions deploy for and in about losses, cautious how are terms lines. and pricing frequency firmer tight

is and the benefits century. U.S. unemployment tempered tightest Even health the labor market it interest tightening, to will if to rate employment margins, lows past are the back the has jobs to million workforce short-term rates half And at among pre-pandemic benefit bank which U.S. at central remains due be rising a and XX environments fiduciary sectors, the remain unfilled. yet of income. over the Looking

are of in demand Importantly, rises. we when risk, the our strategy is people and world services for unsettled business the

to We landscape are as changing long-term helping our as rapidly this well opportunities. challenges navigate clients and adapt

markets clients McLennan recession are labor increasingly of global such climate the Even in We threats, our pandemic, have went volatility, collective ways positioned notably geopolitical as new perform working. risk, capital recessionary tight issues we the if XXXX. all as they the severe with guide that of public does recessions grown global during pandemic the firm EPS in cycle. markets well change, is we deal XXXX, the cyber financial supply Most to accompanied harnessing power and economic through Marsh to crisis periods. emerge, Since the and disruptions, chain a in

ability both manage our expense base good demonstrated have expenses. revenues to and to our faster in run and times than We tough grow the business

adjusted XX reported consecutive We years. operating improvement for have margin

also demand executing turn have volatility I clients for investing over how today while and John financial our given capabilities. the we and let comments for same strong, me includes track we attractive for it proud solutions for the on believe investing performance, talent are while and a to future. across the his With We am in This delivering generating Overall, that, long-term uncertainty remain time today, landscape. record continue and business and advice the will the at of of our delivering of quarter. that over levels rising to complexity,

John Doyle

and morning everyone. Dan good Thanks,

the with colleagues and had growth clients, second they for our our a underlying grateful quarter business and income second operating pleased deliver to value and XX% set revenue shareholders. We adjusted with outstanding. to our the record. were communities performance momentum quarter I’m results Our across our

are harnessing in the our we I Before collective market which on I McLennan. discuss performance, Marsh trends comment the strength to of and want ways

of more to bring ideas agile deliver to as conversations impact I date, are growth well value where that this have a We client to range year, and unique number or of Year and succeed capabilities clients. a become identify drive as to we see we can efficient accelerate Earlier have businesses McLennan every our mentioned involving where significant our I meeting we and innovation, growth. with day have potential more our These areas finding generated more client to shareholders. solutions, the Marsh for greater critical colleagues intersections was yielded serve wins together. two and we

Knowing Mercer capability them Oliver risk helped and so the me with pleased engagement. client and in created was and engaged Let insurance. facilitate about The recent Wyman valued has Wyman to issues. a consult expertise on opportunity lines Oliver a enterprise Mercer conversations further client a risk the management workforce education client our healthcare risk Marsh the client higher a management. about this Marsh involved States team strategy. a share that Marsh ability with examples. regional of United The broad of in delivered few for was total the all value enterprise to across

opportunities expected about reposition Carpenter core and we student coverage. lead Mercer become examples resilient. to grow future projects. was partner further just advice ways are to product. a few faster the large is U.S. successful business collaboration insurer of helping more a clients The and to additional on to These strategic are has and with insurance Wyman engaged to the client Marsh also program awarded Oliver and and secured result, help a of property joint and Guy business. since expanding recently athletics The came team travel the the health, a casualty lines together additional As

insurance along Now with let marks Market tightening reinsurance me showed P&C impact price the provide market of increases an year-over-year. of marketplace. concerns update commercial XXth marketplace continued the Global around Index increases Rate conditions. market. X% Marsh loss inflation and on the in increases on current of persist consecutive The rate cost quarter This the insurance in Insurance a P&C

Market Looking increased property rates Index at the Marsh single rates up while Global low in digits, both some XX% average. by global excluding financial pricing lines, professional global casualty geographies. cyber rose showed X% and and on cyber insurance nearly line,

large the reminder, business. account index a As our skews

continue market less for as and insurance well, rise small middle complex large to However, rates accounts. than although

geographies. half and reinsurance saw Rate increase years and capacity Turning We and experience. largest Index helping of to to of or year, risk terms markets focused midyear, remain renewals and one property some reflected lines Catastrophe challenging the navigate through on markets of U.S. XX% escalating driven by Property loss first we approximately the reinsurers heightened tougher challenging Throughout these with specific Midyear Carpenter’s on pricing risk many environment. on portfolios in clients take insurance XXXX. our conditions business the in reinsurance. of most Line certain increases geopolitical since the the shift Guy positions limit and showed inflation,

quarter. the in performance our to Turning

with year prior had of quarter the underlying earlier, fantastic and growth growth noted Bottom results. quarter year had quarter, result we I a ago. with strong income a As line in XX%. Marsh results growth the to second is X% in McLennan In in growth was as XX% X% compared excellent XX% well XX% operating adjusted considering RIS second consulting. were This the revenue underlying

Looking at risk and insurance services.

segment a U.S. basis on supported quarter operating and X% the fifth with X% was $X.X high growth. the In midyear. to and This XX% adjusted basis. an our renewal to underlying up was underlying or as X% income Consulting driven and underlying the up compared second of and a XX% was The of a X% XX.X%. underlying $XXX by record X% both marks business. the X% up X% operating strong basis $X digit and and quarter reported revenue ago. quarter Pacific line year ago. At X%. as XX% of up growth growth. of up Marsh, from U.S. quarter also double of increased Second was basis of versus quarter record was revenue XX% began a million. in strong This growth up was ago increased a well quarter Career double billion is underlying new in grew a Canada’s underlying basis points this America revenue Guy Adjusted at million had four $X.X International $X.X quarters. a retention business. year revenue on $X.X XX was adjusted consecutive revenue with continued XX%, quarter underlying Guy on a an billion, basis. underlying growth. expanded was second points X%. consecutive last to $XXX underlying revenue operating record Carpenter’s of up Mercer’s of on year an and grew was with and growth quarter on Asia Canada XX now operating billion EMEA margin compared or was which in Latin revenue Revenue year margin second revenue achieved Consulting’s by reporting in ago five underlying increases, on XX.X% an has X% we digit down underlying Adjusted revenue basis, a billion income since fifth basis. higher an Carpenter new rate X% growth strong business billion,

transformation robust workforce all underlying excellent across rewards. geographies. in growth see to for demand reflecting XX% quarter, and linked to compensation at continue growth and also We solutions was Health the revenue

our quarter’s inflation. an for benefits, decline wealth lives accelerating X% a market growth results which offset modest demand This Reflecting underlying medical defined labor increased investments. and Wealth continue in and enrolled retention, business, a on strong new from modest higher to basis. from strong benefit increased increase solutions,

from Westpac transaction invest the market of XX% Our a the exchange Mercer momentum in $XX agreement XX% Australians in reflecting billion billion despite half end helping second under announced for create environment. Australia. Trust headwinds. completed the were assets our of May, will geographies. performance, more quarter continued across momentum an $XXX second million, fund an second Mercer XXX,XXX The comparable quarter foreign uncertain demonstrates Super our I’m is and proud prior second In increase This was capital XXXX Management Asset down Wyman in XXXX. management with $XXX BT all basis. to expected follows XX% and be the Overall, to acquire on of at the a This retirement. strong of quarter first advanced than and Oliver underlying which of continued. a spend reflects more an the across continued macro Revenue quarter business, the year

Mark of detail for the discussion a call XXXX. over on financial for Now to results the our further of and our rest outlook I’ll turn

Mark McGivney

Thank good you, and John morning.

year. GAAP financial EPS and underlying year strong our revenue tough our second generated As Dan We the business. across John reflects and growth saw quarter mentioned momentum of performance comparisons. expense We revenue and quarter another prior meaningful of in growth $X.XX earnings was continued despite double top income of This a adjusted from EPS of and in of last in was $X.XX the quarter second and of adjusted billion. on quarter up billion $X.X XX% the ago. growth EPS adjusted income X% comes $X.X year operating Operating

Our John adjusted operating quarter second covered up XX operating business XX.X% basis our was points the margin in results. year-over-year.

aspects So I’ll our approximately our expense corporate was in quarter. other half the Based second of million of we some of the the for performance expect cover outlook. outlook, current $XX and on second the million Adjusted year. $XXX

a Foreign currencies. of adjusted Year-to-date headwind. exchange the $X.XX the dollar against most headwind represents to was strength due $X.XX our of foreign major to exchange U.S.

exchange levels. current rates at remain Assuming

and the quarter. expect third FX the We a headwind be $X.XX in quarter of to $X.XX in fourth

the Our quarter. million other net $XX benefit credit in was

million. second income reflects equity and million $XXX we full expense of year quarter the $X the million portfolio. second Based second other of be was private to our in our and in about quarter $XXX gains an on XXXX, basis to million adjusted GAAP we in million about basis the on the compared and on quarters. expense third $XXX forecast, Interest net For credit be $X in was mainly in benefit the XXXX. a $XXX expect Investment expect fourth our interest each quarter current million will

Our was The second in quarter XX.X% by tax quarter a XX.X% in was rate effective rate XX.X% decline our with from tax the a year ago. underlying compared the of second year. lower XX% quarter last this to rate driven adjusted in

XX% Based forward current from quarter rate environment, included the an compensation. to favorable not a do give tax of stock in XXXX. tax project which items, or discrete largest be can it the benefit also negative. we related reasonable around rate is rate, on adjusted which effective items, guidance tax discrete we of When to the Our positive for assume

our quarter capital to debt sheet, total management, billion. $XX.X with the ended balance Turning we of

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

back stock quarterly our outlook bought dividend million to expect second will level acquisitions depend repurchase quarter, XXth In we dividend consecutive to dividends, billion continue X.X of the how of strong ultimate our M&A develops. the position shares $XXX and and across We deploy our raised pipeline for increases. marking reflecting Last XX% we for in million share XXXX generation. week, financial $X share repurchases, capital on approximately of year our of cash our

pipeline acquisition Our remains active.

announced Mercer Mercer’s Super with As and combine Australia. John in BT Westpac mentioned, we to recently Trust agreement the

are looking Management We forward Advanced to of also Mercer’s Asset acquisition from Westpac.

how We are extend excited leading they OCIO. about Mercer’s in these deals and position

the in $XXX at $XXX $XXX $X.X billion position included and repurchases. cash Our $XXX for Uses cash for million this acquisitions of quarter million dividends, of share million. totaled million and for quarter was end the

repurchases. million months uses $XXX six $X.X billion first the for for acquisitions dividends, million included of totaled $XXX for cash and billion share For $X.X and

a Regarding track year. the outlook for for terrific on we the rest remain of XXXX,

outlook. Our the macro get top greater there’s half, second in in line uncertainty the comps and tougher

first digits strong higher. upper our full-year we or guidance at single of end of our the half, growth mid with However, see underlying

margin We adjusted back expansion and also that, solid EPS. Dan. in year the turn expect continue full happy for I’m to to it With to growth

Dan Glaser

Mark. Q&A. Thanks we’re ready Richard, to begin

Operator

[Operator first Elyse online Greenspan Wells Fargo. Instructions] our question from And from comes

Elyse Greenspan

Hi, new morning. was first just the quarter. impact hoping thanks. get this some Good I the color hires My of on to question,

that Did Marsh quarter? continue second see you quarter Guy benefit also in a the see and last an in Carpenter. think impact I did

Dan Glaser

drive individual talent. kind At client distribution, know quickly or our necessarily before, building about what kind Yeah, the plenty of production be our to to the after how largely about, well, It’s morning I talent. of and get there book business McLennan, with and good mean Elyse It’s as our they as can not I’ve capabilities world, on we all that go what of the you talent engaged. our that focused that building all get to said of base, prospects opportunities in and Marsh of we’re complexity will does the well. our

Now of arrived we base having we that had build for year at our different variety to a said talent last yes, reasons, strategy. strategy a that,

in little give right how new you’re about it of the bit acute terms seeing now a us more But revenue you revenue firm. want does a bit hires? little obviously translate So across to to from what detail more it’s the and John, from it’s

John Doyle

the we’re we Sure, pleased Dan. Yeah, at did with least hiring very year. last

worked As our and brand you know, out for we us. in on capitalized – strong brand an And dislocation. our well employer it’s as marketplace as market some the exceedingly

been has and talent of this focus level bringing year that a success productivity. to Our onboarding them a and

clients I the the on Marsh expected in noted last is be particularly of impact as been but the colleagues, worked as at at well. well. Guy helpful in than a As out new will we feels think has earlier teams. we it these Carpenter bit just Guy We brought very was one very very, serve Carpenter, quarter, about that talent our things good cultural the fit And of it’s very, Marsh,

feel slightly on and made. target terrific the about from investments we’re productivity. We we So ahead we

Dan Glaser

think important, And what we teams. it’s really I serve That’s do. comment clients about John’s in we that

there’s of a we that given of value is produce on lasting built an firm, a not capabilities to have individual’s increasing clients. that provide timeframe. Do in of they basis number So a you back and to have the We’ve the a what follow-up?

Elyse Greenspan

kicked recession. you call of Dan off the potential impact so follow-up, My thanks. Yeah, the discussing a

that the as highlighted pricing. could commercial inflation as still also benefit be good a well You

when can those XXXX, recession, that hit So to is this in that single if McLennan that’s an pieces whether year that into growth mid Marsh we digit environment continue about you target? a still moving do later or enter organic think

Dan Glaser

I about to how EPS grew that or and in and recessions, bad think guidance revenue And I you give past do resilient later. firm. it’s XXXX, know to we a we’ve business next all important times run Yeah. note proven adjusted a be I’m since in good we not times. in our going mean, to very to year

the insurance certainly geopolitical be its and strong our direct is tightening. even about outlook concerned in sure. today. it’s is side in But to about uncertainty mentioned, there as economic are which that’s on tend I on market the world times, are And growth. script, anything, fiduciary our factors be and to there I property to which Now, basis a difficult big support reinsurance other is the a macro its profitability, deal services basis firm, noted the mean, in and you whether inflation, demand higher if rates, and interest income to whether the benefit firm and for as

So good where we about we positioned feel are now.

we’ve As in business are seen our Mercer of most the parts Oliver could you see Wyman and past recessions, discretionary Career.

them the take about they in XX% the of together, and it’s firm, total downturn. be You quickest to XX% impacted or tend

now However and been pipelines remarkably right strong has performance in Career, their strong. both their Oliver remain Wyman and Mercer

not going is So up the quite watch but yet, it red flag carefully. we

John Doyle

You in, noted and tailwind medical thing a exposed a know, us. more about you better asked that throw P&C the medical also at is but that, talked revenue to to Dan, pricing but inflation. market, maybe in also is line I prepared one least inflation in our about remarks, commercial inflation my for

Dan Glaser

a point. good That’s

question, Next please.

Operator

Goldman from Our Cox next one Robert [Operator Instructions] Sachs. Mr. from comes

Robert Cox

Hey, question. thanks for taking my

about being with and maybe one, more first like they’re I some to and professional wanted slowing So to environment yeah, notable respect companies cautious have the in said come spend fees. that, things on my hiring and out just noting ask

but particularly Wyman? little a the your it to guess, runway on touched work? just project impact that for are I you you respect any mean, of I Oliver with seeing bit, related So, on in

Dan Glaser

a across to Everything mean, Pipelines in to strong. They’re from has a No, of lot but looks Wyman’s Nick Oliver areas. second, still look performance different very hand growth I good. getting plays plays. efficiency been I’ll off

to And you a give us so little want bit Nick, more.

Nick Studer

for mean, thanks Dan, summarized I I think it Yeah. the you question. well, Robert,

our and in We with in robust regions them. progress are of all of growth the four looks double been delighted continued all really the digit four across pipeline we’ve

in that gave and digit of retail XX operational a in to working efficiency double capital. is countercyclical the We sciences, risk. organizational and have of majority capabilities healthcare private the by led we’re finance there. automotive broad offerings led manufacturing industry have some and by different and by nod of by banking, energy, been practices. growth The seeing There also restructuring, range effectiveness Dan quite and And life also our work, again, but those few

still high think to that do looks average. over mid digit Dan obviously as all will faster the we growth time through cycle And been But recently. of sort be So pipeline it’s mentioned. good single the

Dan Glaser

degree thing I States. in around been that your mention, the hiring year-by-year you client to colleagues year are the labor you had on hiring. retrospect focused more our that Robert, to that XXXX and hiring that McLennan, have in a I and we it’s how hiring year the of in a around Companies of pretty large say is see, can mean XXXX, it’s question caution we as just CAGR within And we hiring one hiring, regularly pattern particularly engage had those net of entering I’ll very base, recognition our year today. would United in very timing hiring tight normal in at market, really where are And say caution, with the aggregate hiring environment attract that. to basis. very look specifically, pace our X,XXX retain that XXXX, Marsh on last in consistent a in the if in gone this and did not Mercer back they is It’s our respect perfect just And last we or we our

to up And normal you hiring so Robert? back follow it’s the on a kind front, have do of

Robert Cox

yeah. Hey,

own to Or is margin a hold base and XXXX, in headwind? with now, this right So for respect certainly look say a those – would those tailwinds talent business with the, recession, the that comments, at enough potential are that a brokerage that in you you is that to to hires environment? those their going you tailwinds there’s kind recessionary some have think be as just made about

Dan Glaser

times. pace is in good at bad times grow expansion this run grow year certainly our We business. faster of than be the we we fundamentally this margin because margins – a and will our our grown the in XXth expenses. it’s philosophically And way we’ve No, revenues

And margins up that go so on basis. our will

Now, the about growth, see we’ll and more higher our would a have year times next things make growth the that in can able in times. difficult. levels be the underlying bad But levels the think margins, tighter levels a big the to we of of of company year, we’re impact, more after growth good that perform those

so in recessions, And they’re capitalist like a a things natural form cycle society. of the economic

we we results and go. all So fine much don’t it. fret that our continue that run deliver as to over plan we’ll don’t and around We’ll we’ll business invest and we

Next question, please.

Operator

you. Thank

from next Morgan. Our comes J.P. Bhullar Mr. Jimmy question from

Jimmy Bhullar

morning. good Hey,

just I the first, your on the question in any response to parts the environment. on in and pricing comments on a following in Are reinsurance? higher up you changes pricing, seeing both of your So side had clients primary also

Dan Glaser

don’t why that take one? John, So you

John Doyle

they around I’ll of ask just about and Dean current Jimmy, of the some have bit talk to observations background some and Martin the a marketplace, little Sure. marketplace.

concerned the So, Inflation, losses, as lot of cat prices time elevated over social secondary I remain perils. market then of including and up their the better and as perils. secondary large years, Insurers frequency several in both modeling led insurers inflation ago. core concerns and the well. years reining but inflation said understanding They’re And in about turn the reinsurers last losses several spending insurance a both re-insurance. about earlier,

pricing Now on pressing reinsurers and and conditions. terms are

to pricing retail up. have insurance talk but Martin, then remains changed I’d I going Dean reinsurance mentioned, So on what’s ask some a observations as the share bit, pricing, about in the to market. maybe first, and ask you we’ll things

Martin South

is which is get take by just numbers moderate rates up Well, some though, which casualty X%, the core second which are things is the challenging really in It’s is clients Rates to clients, course, the upper driving up which cyber noted. in very of repeating XX%, away, up just and X%, over as FINPRO. is is John. pricing you, for our actually Thank the flattish quarter, risk growth to squared there, continue for question prior good our property cyber news is FINPRO quarter. strong driven

inflationary the the those clients it. would normal those to have see possible and declining issues. a environment. got rates, our have captives options. in although It’s manage a with are retain their so captive to course, And difficult risk of which they’re rate it’s inflationary drivers able some for impacts in real in been some faster that any And more increase deal to we We

John Doyle

Thanks. Good. my with as on there’s Jimmy. you, of segments Martin. Thank market observations you And prepared touch maybe Dean, reinsurance in I that constraints, share some the can some capacity as noted are you remarks,

Dean Klisura

the the world. on challenging inflation, globally from That rising noted global property mid-year John particularly first losses solutions uncertainty market London XXXX, increase say of on including capacity Every Yes. renewal, of Dan, noted certainly volatility to renewal question, the as change both the the macro John market our secondary about year. are U.S. reinsurers. since Thanks, cyber, in your we the reduced John the rates strategic challenging our John on noted to perils. continued number in side, mentioned day, read advice behalf wildfires, we’ve one said most was our war, sheets balance on Russia-Ukraine property particular very with saw half and behalf the ESG, challenge reinsurers, and demand John. we advice of on and climate reinsurance systemic protections Jimmy, seen throughout manage I constrained our largest a property and clients U.S. the The terms cat convective and would was try retrocession property June strong emergence remains cat climate, reinsurance our impacting increase really first anxiety clients the of through the years. and influences of XX% half have the the for as floods seeking we wholesale as their risk. of cat of in market. increasing And storms, clients and on average seen the in many being

that volatility through build manage and asking their moving are tools businesses forward. to manage clients us understand and Our how they to help

John Doyle

Thanks, Dean.

Jimmy Bhullar

the And fact your just down. Oliver showing there’s does about consulting that as the outlook But the in your lot in an a business economy results. momentum what’s concern you’re of for not bit? down a slow follow and Obviously in little and a Wyman what’s as been economic business flow the up, market driving the there with

Dan Glaser

Yes.

I how talked nothing over growing a that And XX time be on of year so, how of there’s many could see And the Oliver do to we’ve XX Nick, top you pleased. you dramatically to before negatively our over Oliver Wyman a years say line. right tends things? I in segment. now on stretches posting been the top about about mean, we long fastest But Wyman

Nick Studer

sort pipeline. Yes, I growth mean, robust of I think and broad

in answers We It’s questions and our of offerings. are client terms cycle the changes we that when prepared the new for with are change, important prepared those questions.

offerings been created quite in I’d those few years different the now. market serve. that And very we we’ve preparing sectors also a pandemic say for so of conditions the each

But a pipeline very time for have our of in see time we’ve quite been to-date. no a down and others some have client overall, long booming. tough the So having segments been slow

Dan Glaser

specifically? what about And Mercer and Sure. to in seeing you talk career Mercer want generally you’re Martine,

Martine Ferland

in we the question. work. Jimmy, change absolutely. you, the the and see particular. just accelerated similar Yes, in We pandemic career that for so the Nick around the In And way very we mentioned, a strong Thank much business, labor being shortages. see instigated fashion, pipeline Dan had as career and services

as but was the are don’t of slowdown saying flags will help certainly in We or and they any evidence the expertise conditions it. cautious any market these where questions now, different in So see can when at answer. there where – that looking Nick our is up, clients right pop red we currently

Jimmy Bhullar

Thank you.

Dan Glaser

please. question, Next

Operator

you. Thank

ISI. David next Mr. from on Motemaden line Our question comes from Evercore

David Motemaden

Hi, away thanks. prepared take Good some you’re of act maybe before in these actions? of how What conditions mentioned morning. sort Dan, as economic to environment from start these for the of Could elaborate looking to bit you on some just in some you you and putting actions are a those place? of warrant. you’re you far

Dan Glaser

upon throughout both working estate working our say ultimately, long-term efficient way mean, that would of modernization, midterm that a several on, things organization as short-term, more and I colleagues. and touches are rationalization, ways a I Yes, over different to technology there’s real for become in we

able a higher focused excellence, the improvements to at mid on we’re of on. cost. firm, client number in being operational certainly in levels of very service lower Looking I mean, And that’s create stages that we’re think the to factors internal early at I which within of deliver operational still something of general, levels

well get of that too looking at too is don’t to cautious, things we’re you as early. want the One

both doing invest through Our as significantly as business And XXXX. We’ve continue pandemic in throughout been to the we well investing – today. in is well.

We’re in still a hiring mode.

identifiable. we hiring costs a Although, the pretty are our it is more surge pace real been of in to than XXXX where would XXXX, had hiring, in have similar strategic most

You and have compensation benefits.

have got premises and or have you You’ve technology, T&E. you real estate,

that So the to have levers we I pool profitability. very by variable you say, a have utilize And can driven large compensation available. are

ago that decade some headwinds profitability than is on dramatically that it larger. our we larger five dramatically in event flexibility or protecting And ago or shareholders us is because factors. macroeconomic hit a growth gives And years was of tremendous the that so, it

to the So I want there’s and we’re more actually other you think never don’t you hand, in. resilient about organization on could invest that a But not. be macroenvironment tangling

David Motemaden

Got it. No that...

Dan Glaser

follow-up? any have you Do

David Motemaden

That I focused question, related expense makes just – guess an the on guess that. sort And sense. I but of for margins. Thanks more then

expansion, a because expansion think we supposed XX good half the basis of So, was the sort in first of that into the be get half points pretty out tougher first XXXX. as in first we to tick we got just of an no shifted half Or up quarter standpoint? back tougher of from expect of Should sort – I comps, the any half that these a tough little anything as the the back there there’s was there the one-off are comps this expense of expense to in that were quarter longer mean or year? first of the might some in bit half flow

Dan Glaser

a super are as deliver modest we or say benefit in to growth future I expansion. most our past. benefit our to is our all, the grow of business opposed modest I all margin hired some to able we’ve people last the our in And expansion year growth shouldn’t and on, come Yes. clear, year with been and X,XXX mean, margin net date. to pleased I mean, on basis be we

So, have the been if we to on look from third headwind expensed begins of the at the back comp hiring quarter, all half abate. the of

the be And growth and so, – continue. will there’ll benefit

guidance But go year. up don’t we to quarter. and we’re margin saying by so by And give year we give it margins this going our are

EPS have to strong in going XXXX. We’re

growing about margins. are are so the top expense. very margins, growing it’ll the growing line at we year. back think And will the out year. We But our than business run and margins our and frankly, our we an revenue business our faster outcome – obsessing the half on about a a and good don’t We we’ll be good of profitability we strong growing deliver looking of run feel our play where year

Next question, please.

Operator

Thank you.

from Our Weston question Bloomer online from next comes UBS.

Weston Bloomer

but comp. how one for Thanks growth. we is year? little your higher cash free there second flow any My the question. free Growth like out? the been a the headwinds morning. to about flow in crude bit question mostly looks My good point in to tailwinds And growth is Hi, should one is cash are or of my first XQ, half taking okay notable think lower, on half has

Dan Glaser

Mark, don’t Sure. you why that? take

Mark McGivney

Sure.

lot not volatility. is cash cash it we focus we’ve double that too quarter, the strong cash going free growth a time back free a growth in of digit for cash deliver over outlook of As flow or over course flow year, we try delivered stretch growth back when a consistently and flow a be because decade will continue to look a can particular on long free free of say, we growth. particular more, our to in But flow much even

comparison You tough year because is And of generation early of half payouts. first challenge. out comparable. of cash year the comp pointed low has the this The part the a variable our our seasonal for

on pools performance. year comp up based significant last good our variable Our were substantially

against low base year. tough have the been and that’s you that so comp And the the drag in early

bottom flow but the pointed remains you want for outlook our But the on we that second generation think I cash cash As particular up line and were strong. focus in in out a is to quarter I X%. quarter, not

Dan Glaser

follow a have you up? Do Thanks.

Weston Bloomer

much My the throughout capital multiples M&A? a higher And where repurchases I allocation Yes. or is I think to and kind you allocation of was due in second in second opportunities M&A it’s of we should do. of richer lower the your maybe less question how could for guess, from Thank share second on quarter was the see versus year. could I price expand repurchases perspective about kind you on the multiple seeing you’re opportunities? how where M&A hoping half? you. environment or

Dan Glaser

gone last gone stretches have multiples the And over they’ve of at clearly Well, certainly when materially. few longer up Sure. look you up years. time,

be what’s to and through forma have we pro how we really real so the about statements think what as in And go private deciding diligent we will remain more of business. companies, and

in business. a pretty that is When in year, we – that Westpac to terms acquiring not next we’ve year, pipeline that though, regard what made Our is announce good. has this even the out commitment we with door Australia cash though a of

of a you’re budget We repurchase repurchases share pipeline to part a and on of being a share acquisitions. favor our light as what sheet. our but the over have to If acquisitions, with somehow competency very – a duo with that’s And we So do firm. we no year share acquisitions. a on balance Acquisitions right particularly dual then as on year repurchase. focus we stronger are a cash remains building a would core we have regard strong, have

you They occur. we have front on the press at which occur at building repurchase call. in a balance XX%, share budget but acquisition, first our on So of the acquisitions. look on went Then we sheet. that’s dividend, Then look they cash acquisitions, goes we don’t by up and don’t when

yes, repurchase. so, far, Doesn’t out. year has of will. plays this half mean so see share to have the second And first We’ll half just it favored how

Weston Bloomer

taking Great. for Thanks questions. my

Dan Glaser

Next question please. Sure.

Operator

Thank you.

Our from Katie comes Sakys Research. next from Autonomous question

Katie Sakys

my EPS Katie color some despite question it local I on for headwinds, foreign much further which give a on impact Hi your modest currencies? to revenue matter perhaps there. Ryan rather Tunis in USC revenues mix confidence your question. you or at particularly the versus in taking of currency of guided us international had Marsh’s currency in of so about a seems Thank moves. Could just the foreign Autonomous. guidance is of you on moderate third recognition recognition quarter? you’ve timing or Is for international the This the

Dan Glaser

take why you that? Mark, don’t Katie. Thanks,

Mark McGivney

impact across they’re major of And and actually several. tracks with year, back look over $X.XX the the meaningful when course full half, Yes, first over in in the well XX-K guidance at when $X.XX the what look then sure. that the back you XX% disclosure last you move currencies dollar our our so And pretty of the means. against pretty half,

assuming rates we’ve For there Really because the actually other will pound act a that coming that third hedge are quarter. weak a currencies. most talked a this see they are you and a impact third and London the natural against third in that if pound dollar quarter this relative strong activity where the in past, in significant what is you placement is dollar quarter stay to of as is modelling, And a bit is about of what the though, today. that we modest impact impact, hedge in

currencies. you we what that benefit is from a to and so some we quarter. offsetting in see the weak that benefit the strong fourth And when of then quarter, get as But as other pound $X.XX the fourth the see that’s

Katie Sakys

it. margin Got year? back foreign the currency follow you. And as any expecting half quick up, Thank tailwinds of you a from in the are

Dan Glaser

that you to at about do talk want all? Mark,

Mark McGivney

driven operating most our going significantly, be performance. not by Generally of our margin Yes. is to

Dan Glaser

Thanks.

Operator

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

Dan Glaser

hard I to our XX McLennan. And I’d thank thank you joining dedication with to and to like commitment, for this work all want Goodbye. morning. call speaking Terrific. quarter. forward to everyone on next the their for us Marsh colleagues Look

Operator

ladies for you, concludes conference. participating. you today’s and Thank gentlemen. This Thank

You may now disconnect.

Marsh & McLennan Companies (MMC) 21 Jul 222022 Q2 Earnings call transcript