Marsh McLennan Reports Fourth Quarter and Full-year 2021 Results

Full-Year Revenue Growth of 15%; Underlying Revenue Growth of 10%

Full-Year GAAP Operating Income Rises 41%; Adjusted Operating Income Increases 18%

Full-Year GAAP EPS Increases 56% to $6.13; Adjusted EPS Increases 24% to $6.17

Fourth Quarter GAAP EPS of $1.57; Adjusted EPS Increases 14% to $1.36

NEW YORK, January 27, 2022--(BUSINESS WIRE)--Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, today reported financial results for the fourth quarter and year ended December 31, 2021.

Dan Glaser, President and CEO, said: "In our 150th year, we produced one of the finest results in our Company's history. We generated underlying revenue growth of 10% and adjusted EPS growth of 24%, both the highest in over two decades. We also grew our adjusted operating income by 18% and expanded adjusted margins for the 14th consecutive year. I am proud of our colleagues' hard work, dedication and unwavering focus in achieving these results. With this outstanding year, we enter 2022 well positioned for continued growth."

Consolidated Results

Consolidated revenue in the fourth quarter of 2021 was $5.1 billion, an increase of 16% compared with the fourth quarter of 2020, or 10% on an underlying basis. Operating income was $986 million compared with $571 million in the prior year period. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, was $905 million, compared with $855 million in the prior year period. Net income attributable to the Company was $803 million, or $1.57 per diluted share, compared with $0.73 in the fourth quarter of 2020. Adjusted earnings per share was $1.36, compared with $1.19 for the prior year period.

For the year 2021, revenue was $19.8 billion, an increase of 15% compared with 2020, or 10% on an underlying basis. Operating income was $4.3 billion, and adjusted operating income rose 18% to $4.3 billion. Net income attributable to the Company was $3.1 billion. Earnings per share increased 56% to $6.13. Adjusted earnings per share increased 24% to $6.17 compared with $4.97 in 2020.

Risk & Insurance Services

Risk & Insurance Services revenue was $3.0 billion in the fourth quarter of 2021, an increase of 20%, or 9% on an underlying basis. Operating income was $667 million, compared with $463 million in the fourth quarter of 2020. Adjusted operating income increased 6% to $557 million. For the year 2021, revenue was $12.1 billion, an increase of 17%, or 10% on an underlying basis. Operating income was $3.1 billion, compared to $2.3 billion in 2020. Adjusted operating income rose 17% to $3.0 billion.

Marsh's revenue in the fourth quarter of 2021 was $2.9 billion, an increase of 22%, or 9% on an underlying basis. In U.S./Canada, underlying revenue rose 11%. International operations underlying revenue increased 7% compared to the prior year period, reflecting underlying growth of 14% in Latin America, 10% in Asia Pacific and 5% in EMEA. For the year 2021, Marsh’s revenue growth was 19%, or 11% on an underlying basis.

Guy Carpenter's fourth quarter revenue was $170 million, an increase of 4%, or 5% on an underlying basis. For the year 2021, Guy Carpenter’s revenue grew 10% compared to a year ago, or 9% on an underlying basis.

Consulting

Consulting revenue was $2.1 billion in the fourth quarter of 2021, an increase of 10%, or 11% on an underlying basis. Operating income increased 120% to $395 million, compared with $179 million in the fourth quarter of 2020. Adjusted operating income was $410 million, an increase of 6% compared with $387 million in the fourth quarter of 2020. For the year 2021, revenue was $7.8 billion, an increase of 12%, or 10% on an underlying basis. Operating income was $1.5 billion, compared with $1.0 billion in 2020. Adjusted operating income increased 19% to $1.5 billion.

Mercer’s revenue was $1.4 billion in the fourth quarter of 2021, an increase of 5%, or 6% on an underlying basis. Wealth, with revenue of $648 million, increased 4% on an underlying basis. Health, with revenue of $457 million, increased 4% on an underlying basis. Career revenue of $272 million increased 15% on an underlying basis. For the year 2021, Mercer’s revenue increased 7%, or 5% on an underlying basis.

Oliver Wyman’s revenue was $722 million in the fourth quarter of 2021, an increase of 22% on an underlying basis. For the year 2021, Oliver Wyman’s revenue was $2.5 billion, an increase of 21% on an underlying basis.

Other Items

For the year 2021, Marsh McLennan Agency (MMA) completed 11 transactions with approximately $170 million of combined revenue, including the acquisition of PayneWest, one of the largest independent agencies in the U.S.

Marsh announced in December that it increased its stake in Marsh India Insurance Brokers Pvt. Ltd. from 49% to 92%.

The Company repurchased 2.6 million shares of stock for $425 million in the fourth quarter. For the year 2021, the Company repurchased 7.9 million shares for $1.2 billion.

In the fourth quarter of 2021, the Company raised $750 million of senior notes and repaid $500 million of senior notes due in January 2022.

Conference Call

A conference call to discuss fourth quarter 2021 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 8019728. The live audio webcast may be accessed at marshmclennan.com. A replay of the webcast will be available approximately two hours after the event.

About Marsh McLennan

Marsh McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s 83,000 colleagues advise clients in 130 countries. With annual revenue of nearly $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, reshape retirement and investment outcomes, and unlock health and well being 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 marshmclennan.com, follow us on LinkedIn and Twitter 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 impact from lawsuits or investigations arising from errors and omissions, breaches of fiduciary duty or other claims against us in our capacity as a broker or investment advisor;

• the increasing prevalence of ransomware, supply chain and other forms of cyber attacks, and their potential to disrupt our operations and result in the disclosure of confidential client or company information;

• the financial and operational impact of complying with laws and regulations, including anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act and cybersecurity and data privacy regulations, in an environment of increased regulatory activity and enforcement;

• our ability to attract, retain and fully develop industry leading talent;

• the impact of and uncertainty around COVID-19;

• the impact of macroeconomic, political or market conditions on us, our clients and the industries in which we operate, including from inflation, foreign exchange and interest rate fluctuations;

• 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 manage risks associated with our investment management and related services business, particularly in the context of uncertain equity markets, including our ability to execute timely trades in light of increased trading volume and to manage potential conflicts of interest;

• the impact of changes in tax laws, guidance and interpretations, or disagreements with tax authorities; and

• the regulatory, contractual and reputational risks that arise based on insurance placement activities and insurer revenue streams.

The factors identified above are not exhaustive. Marsh McLennan 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 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.

Marsh & McLennan Companies, Inc. Consolidated Statements of Income (In millions, except per share data) (Unaudited)
		Three Months Ended December 31,								Twelve Months Ended December 31,
		2021				2020				2021				2020
Revenue		$	5,137			$	4,416			$	19,820			$	17,224
Expense:
Compensation and benefits			2,905				2,650				11,425				10,129
Other operating expenses			1,246				1,195				4,083				4,029
Operating expenses			4,151				3,845				15,508				14,158
Operating income			986				571				4,312				3,066
Other net benefit credits			66				70				277				257
Interest income			—				2				2				7
Interest expense			(109	)			(128	)			(444	)			(515	)
Investment income (loss)			18				25				61				(22	)
Income before income taxes			961				540				4,208				2,793
Income tax expense			154				161				1,034				747
Net income before non-controlling interests			807				379				3,174				2,046
Less: net income attributable to non-controlling interests			4				5				31				30
Net income attributable to the Company		$	803			$	374			$	3,143			$	2,016
Net income per share attributable to the Company
- Basic		$	1.59			$	0.74			$	6.20			$	3.98
- Diluted		$	1.57			$	0.73			$	6.13			$	3.94
Average number of shares outstanding
- Basic			504				507				507				506
- Diluted			511				513				513				512
Shares outstanding at December 31			504				508				504				508

Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended December 31
(Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as 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.

													Components of Revenue Change*
		Three Months Ended December 31,								% Change GAAP Revenue			Currency Impact			Acquisitions/ Dispositions/ Other Impact			Underlying Revenue
		2021				2020
Risk and Insurance Services
Marsh		$	2,876			$	2,364			22	%		—			13	%		9	%
Guy Carpenter			170				162			4	%		(1	)%		—			5	%
Subtotal			3,046				2,526			21	%		—			12	%		9	%
Fiduciary Interest Income			3				6
Total Risk and Insurance Services			3,049				2,532			20	%		—			12	%		9	%
Consulting
Mercer			1,377				1,312			5	%		—			(1	)%		6	%
Oliver Wyman Group			722				590			22	%		(1	)%		1	%		22	%
Total Consulting			2,099				1,902			10	%		—			—			11	%
Corporate Eliminations			(11	)			(18	)
Total Revenue		$	5,137			$	4,416			16	%		—			7	%		10	%

Revenue Details

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

											Components of Revenue Change*
		Three Months Ended December 31,						% Change GAAP Revenue			Currency Impact			Acquisitions/ Dispositions/ Other Impact			Underlying Revenue
		2021			2020
Marsh:
EMEA		$	713		$	688		4	%		(1	)%		(1	)%		5	%
Asia Pacific			560			269		109	%		(1	)%		100	%		10	%
Latin America			155			141		10	%		(4	)%		—			14	%
Total International			1,428			1,098		30	%		(1	)%		24	%		7	%
U.S./Canada			1,448			1,266		14	%		—			3	%		11	%
Total Marsh		$	2,876		$	2,364		22	%		—			13	%		9	%
Mercer:
Wealth		$	648		$	629		3	%		—			(1	)%		4	%
Health			457			445		3	%		(1	)%		(1	)%		4	%
Career			272			238		14	%		(1	)%		—			15	%
Total Mercer		$	1,377		$	1,312		5	%		—			(1	)%		6	%

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Twelve Months Ended December 31
(Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as 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.

													Components of Revenue Change*
		Twelve Months Ended December 31,								% Change GAAP Revenue			Currency Impact			Acquisitions/ Dispositions/ Other Impact			Underlying Revenue
		2021
Risk and Insurance Services
Marsh		$	10,203			$	8,595			19	%		...