• Total Revenue: $24.5 billion, up 8% for 2024.
• Underlying Revenue Growth: 7% for 2024.
• Adjusted Operating Income: $6.2 billion, up 11% for 2024.
• Adjusted Operating Margin: Increased by 80 basis points to 26.8% for 2024.
• Adjusted EPS: $8.80, up 10% for 2024.
• Acquisitions: $9.4 billion invested, including $7.75 billion for McGriff.
• Dividend Increase: 15% for 2024.
• Share Repurchases: $900 million completed in 2024.
• Fourth Quarter Revenue: $6.1 billion, up 9%.
• Fourth Quarter Adjusted EPS: $1.87, up 11%.
• Risk & Insurance Services Revenue: $15.4 billion for 2024, with 8% underlying growth.
• Consulting Revenue: $9.1 billion for 2024, with 6% underlying growth.
• Assets Under Management: $617 billion at the end of Q4 2024.
• Interest Expense: $231 million in Q4 2024.
• Cash Position: $2.4 billion at the end of Q4 2024.

• Warning! GuruFocus has detected 5 Warning Sign with MMC.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Marsh & McLennan Companies Inc (NYSE:MMC) reported a strong financial performance for 2024, with total revenue growing 8% to $24.5 billion and adjusted operating income increasing by 11% to $6.2 billion.
• The company achieved its 17th consecutive year of reported margin expansion, with an 80 basis point increase in adjusted operating margin.
• Marsh & McLennan Companies Inc (NYSE:MMC) had a record year of mergers and acquisitions, investing $9.4 billion, including a significant $7.75 billion acquisition of McGriff.
• The company returned significant capital to shareholders by raising its dividend by 15% and completing $900 million in share repurchases.
• Marsh & McLennan Companies Inc (NYSE:MMC) continues to innovate with digital tools like Sentrisk, Blue[i], and LenAI, enhancing value for clients and colleagues.

Negative Points

• The California wildfires resulted in insured losses expected to exceed $30 billion, impacting the insurance industry significantly.
• The global insurance and reinsurance market remains dynamic, with a decrease in the Marsh Global Insurance Market Index by 2% in the fourth quarter.
• Fiduciary income is expected to face a headwind in 2025 due to anticipated short-term interest rate declines.
• The integration of McGriff is expected to be modestly dilutive to adjusted EPS in the first quarter of 2025.
• The company faces potential headwinds from foreign exchange and favorable discrete tax items in 2024, which could impact financial performance in 2025.

Q & A Highlights

Q: Can you explain the flat margin in the fourth quarter and why the expected margin improvement in the second half of the year did not occur? A: John Doyle, President and CEO, explained that while the fourth quarter margin was impacted by foreign exchange and acquisitions, the overall year saw an 80 basis point margin expansion, marking the 17th consecutive year of margin growth. The company remains optimistic about future margin expansion, driven by shared infrastructure, workflow optimization, and automation efforts.

Q: What impacted free cash flow growth in 2024, and how should we think about it for 2025? A: John Doyle noted that free cash flow grew by 4% in 2024, following a 28% increase in 2023. Mark McGivney, CFO, added that over the past five years, free cash flow has doubled, and while it can be volatile year-to-year, it generally tracks earnings growth over time.

Q: Is there a change in your outlook for organic growth in 2025, given the shift in language from "mid-single digits or better" to just "mid-single digits"? A: John Doyle clarified that the company remains optimistic about growth in 2025, with strong performance across its businesses. The change in language does not indicate a significant shift, and the company continues to invest in its business mix, including the integration of McGriff.

Q: How is the integration of McGriff progressing, and what impact will it have on growth? A: John Doyle expressed excitement about McGriff, noting that while it will be modestly dilutive to earnings early in 2025, it is expected to be accretive for the full year and beyond. The integration is proceeding well, and McGriff's capabilities are expected to enhance Marsh McLennan's reach in the middle market.

Q: What is the impact of the California wildfires on the insurance and reinsurance markets? A: John Doyle stated that while the wildfires are a human tragedy, the financial impact on Marsh McLennan is limited. Dean Klisura, CEO of Guy Carpenter, noted that the reinsurance market impact is uncertain, but risk-adjusted rate reductions could be tempered. Martin South, CEO of Marsh, added that it's too early to determine the impact on the insurance market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.