Marsh & McLennan Reports Third Quarter 2020 Results

Third Quarter Operating Income Rises 15% and Adjusted Operating Income Increases 9%

Third Quarter EPS Rises to $0.62 from $0.59 and Adjusted EPS Increases 6% to $0.82

Nine Months Operating Income Rises 20% and Adjusted Operating Income Increases 12%

Nine Months EPS Rises to $3.21 from $2.64 and Adjusted EPS Increases 9% to $3.77

Marsh & McLennan Companies, Inc. (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, today reported financial results for the third quarter ended September 30, 2020.

Dan Glaser, President and CEO, said: “Marsh & McLennan’s strong performance in this period of uncertainty demonstrates our continued excellent execution and the resilience of our business. In the third quarter, we generated 9% adjusted operating income growth and 6% growth in adjusted EPS, despite a modest decline in underlying revenue. For the first nine months of 2020, we achieved 1% underlying revenue growth, 12% adjusted operating income growth and 9% adjusted EPS growth.

“I am proud of the extraordinary dedication of our colleagues in serving our clients and supporting each other.”

Consolidated Results

Consolidated revenue in the third quarter of 2020 was $4.0 billion, flat compared with the third quarter of 2019. Underlying revenue declined 1% compared to the prior period. Operating income was $540 million compared with $467 million in the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 9% to $638 million. Net income attributable to the Company was $316 million, or $0.62 per diluted share, compared with $0.59 in the third quarter of 2019. Adjusted earnings per share increased 6% to $0.82 compared with $0.77 for the prior year period.

For the nine months ended September 30, 2020, consolidated revenue was $12.8 billion, an increase of 3%, or 1% on an underlying basis. Operating income was $2.5 billion, while adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 12% to $2.8 billion. Net income attributable to the Company was $1.6 billion. Fully diluted earnings per share was $3.21 compared with $2.64 in the first nine months of 2019. Adjusted earnings per share increased 9% to $3.77 compared with $3.47 for the comparable period in 2019.

Risk & Insurance Services

Risk & Insurance Services revenue was $2.3 billion in the third quarter of 2020, an increase of 4%, or 2% on an underlying basis. Operating income was $333 million compared with $218 million in the third quarter of 2019. Adjusted operating income was $388 million, an increase of 24% compared with $313 million in the prior year period. For the nine months ended September 30, 2020, revenue was $7.8 billion, an increase of 8%, or 3% on an underlying basis. Operating income increased 28% to $1.9 billion, and adjusted operating income rose 20% to $2.1 billion.

Marsh's revenue in the third quarter was $2.0 billion, an increase of 3% on an underlying basis. In US/Canada, underlying revenue rose 5%. International operations produced 2% underlying revenue growth with 4% growth in Asia Pacific, 2% growth in Latin America and flat in EMEA on an underlying basis. For the nine months ended September 30, 2020, Marsh’s underlying revenue growth was 3%.

Guy Carpenter's revenue in the third quarter was $274 million, flat on an underlying basis, compared with the third quarter 2019. For the nine months ended September 30, 2020, Guy Carpenter’s underlying revenue growth was 6%.

Consulting

Consulting revenue in the third quarter was $1.7 billion, a decrease of 5%, or 4% decline on an underlying basis. Operating income decreased 12% to $278 million, and adjusted operating income decreased 5% to $306 million. For the first nine months of 2020, revenue was $5.1 billion, a decrease of 4%, or 2% decline on an underlying basis. Operating income of $815 million decreased 7%, and adjusted operating income decreased 6% to $860 million.

Mercer's revenue was $1.2 billion in the third quarter, a decrease of 3% on an underlying basis. Health, with revenue of $430 million, was flat on an underlying basis compared with third quarter 2019. Wealth revenue of $566 million decreased 3% on an underlying basis, and Career revenue of $220 million was down 11% on an underlying basis. For the nine months ended September 30, 2020, Mercer’s revenue was $3.6 billion, a decrease of 1% on an underlying basis.

Oliver Wyman’s revenue was $480 million in the third quarter, a decrease of 6% on an underlying basis. For the first nine months ended September 30, 2020, Oliver Wyman’s revenue was $1.5 billion, down 6% on an underlying basis.

Conference Call

A conference call to discuss third quarter 2020 results will be held today at 8:30 a.m. Eastern time. To participate in the teleconference, please dial +1 866 437 7574. Callers from outside the United States should dial +1 409 220 9376. The access code for both numbers is 8343803. The live audio webcast will be accessible at mmc.com , and a replay will be available approximately two hours after the event.

About Marsh & McLennan Companies

Marsh & McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s 76,000 colleagues advise clients in over 130 countries. With annual revenue of $17 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh advises individual and commercial clients of all sizes on insurance broking and innovative risk management solutions. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and solutions to help organizations reshape work, retirement, investment and health outcomes for a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit mmc.com , follow us on LinkedIn and Twitter @mmc_global or subscribe to BRINK .

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would."

Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:

• the financial and operational impact of COVID-19 on our revenue and ability to generate new business, our overall level of profitability and cash flow, and our liquidity, including the timeliness and collectability of our receivables;
• the impact of disruption in the credit or financial markets, or changes to our credit ratings, including as a result of COVID-19, on our ability to access capital or repay our significant outstanding indebtedness on favorable terms and our compliance with the covenants contained in the agreements that govern our indebtedness;
• the impact from lawsuits, other contingent liabilities and loss contingencies arising from errors and omissions, breach of fiduciary duty or other claims against us, including claims related to pandemic coverage;
• the impact of investigations, reviews, or other activity by regulatory or law enforcement authorities, including the ongoing U.K. FCA review of legacy JLT enhanced transfer value advice;
• the financial and operational impact of complying with laws and regulations where we operate and the risks of noncompliance with such laws, including anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act, trade sanctions regimes and cybersecurity and data privacy regulations such as the E.U.’s General Data Protection Regulation;
• our ability to manage risks associated with our investment management and related services business, particularly in the context of volatile equity markets caused by COVID-19, including our ability to execute timely trades in light of increased trading volume and to manage potential conflicts of interest between investment consulting and fiduciary management services;
• our ability to compete effectively and adapt to changes in the competitive environment, including to respond to technological change, disintermediation, digital disruption and other types of innovation;
• our ability to attract and retain industry leading talent;
• our ability to maintain adequate safeguards to protect the security of our information systems and confidential, personal or proprietary information, including those in the existing JLT information systems, particularly given the increased risk of phishing and other cybersecurity attacks or unauthorized dissemination of information caused by remote work arrangements;
• the regulatory, contractual and reputational risks that arise based on insurance placement activities and various insurer revenue streams;
• our ability to successfully recover if we experience a business continuity problem due to cyberattack, natural disaster or otherwise; and
• the impact of changes in tax laws, guidance and interpretations, or disagreements with tax authorities.

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

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

The Company acquired JLT on April 1, 2019 and JLT's results are included in the Company's consolidated results of operations from that date.

Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended September 30
(Millions) (Unaudited)

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

Revenue Details

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

Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Nine Months Ended September 30
(Millions) (Unaudited)

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

The calculation of underlying revenue growth for the nine months ended September 30, 2020 includes the results of JLT. The column "2019 Including JLT" includes JLT's prior year first quarter revenue (See reconciliation of non-GAAP measures on page 14).

Revenue Details

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

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures - Actual as Reported
Three Months Ended September 30
(Millions) (Unaudited)

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures - Actual as Reported
Nine Months Ended September 30
(Millions) (Unaudited)

The information presented below represents the actual as reported data for the nine months ended September 30, 2020 and 2019. Results for the nine months ended September 30, 2019 do not include JLT's results of operations for the period January 1, 2019 through March 31, 2019.

Marsh & McLennan Companies, Inc.
Reconciliation of Non-GAAP Measures
Three and Nine Months Ended September 30,
(Millions) (Unaudited)

The Company acquired JLT on April 1, 2019 and JLT's results are included in the Company's consolidated results of operations from that date.