Marsh & Mclennan Companies, Inc 10-Q for FY2023 Q1

Marsh & Mclennan Companies, Inc. (MRSH)

10-Q 2023-04-20 For: 2023-03-31

Added on April 08, 2026

About this 10-Q

Marsh & Mclennan Companies, Inc filed this 10-Q on April 20, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.92B; up 6.8% from $5.55B a year earlier
Net income: $1.24B; up 15.3% from net income of $1.07B a year earlier
Diluted EPS: $2.47; up 17.6% from $2.10 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


PART I. FINANCIAL INFORMATION		4

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	4

	CONSOLIDATED STATEMENTS OF INCOME	4

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5

	CONSOLIDATED BALANCE SHEETS	6

	CONSOLIDATED STATEMENTS OF CASH FLOWS	8

	CONSOLIDATED STATEMENTS OF EQUITY	9

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	10

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS	33
	OF OPERATIONS
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	47

ITEM 4.	CONTROLS & PROCEDURES	48

PART II. OTHER INFORMATION		49

ITEM 1.	LEGAL PROCEEDINGS	49

ITEM 1A.	RISK FACTORS	49

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	49

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	49

ITEM 4.	MINE SAFETY DISCLOSURE	49

ITEM 5.	OTHER INFORMATION	49

ITEM 6.	EXHIBITS	49


	Three Months Ended March 31,
(In millions, except per share data)	2023		2022
Revenue	$	5,924	$	5,549
Expense:
Compensation and benefits	3,207		3,100
Other operating expenses	991		1,004
Operating expenses	4,198		4,104
Operating income	1,726		1,445
Other net benefit credits	58		62
Interest income	14		1
Interest expense	(136)		(110)

Investment income	2		26

Income before income taxes	1,664		1,424
Income tax expense	412		338


Net income before non-controlling interests	1,252		1,086
Less: Net income attributable to non-controlling interests	17		15
Net income attributable to the Company	$	1,235	$	1,071
Net income per share attributable to the Company:
– Basic	$	2.50	$	2.13

– Diluted	$	2.47	$	2.10

Average number of shares outstanding:
– Basic	495		503
– Diluted	500		509
Shares outstanding at March 31,	495		502


	Three Months Ended March 31,
(In millions)	2023		2022
Net income before non-controlling interests	$	1,252	$	1,086
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	119		(169)

(Loss) gain related to pension/post-retirement plans	(58)		86
Other comprehensive income (loss) before tax	61		(83)
Income tax (credit) expense on other comprehensive loss	(19)		21
Other comprehensive income (loss), net of tax	80		(104)
Comprehensive income	1,332		982
Less: comprehensive income attributable to non-controlling interest	17		15
Comprehensive income attributable to the Company	$	1,315	$	967


(In millions, except share data)	(Unaudited) March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,006	$	1,442
Receivables
Commissions and fees	5,966		5,293
Advanced premiums and claims	98		103

Other	790		616
	6,854		6,012
Less-allowance for credit losses	(154)		(160)
Net receivables	6,700		5,852


Other current assets	1,407		1,005
Total current assets	9,113		8,299
Goodwill	16,300		16,251
Other intangible assets	2,452		2,537
Fixed assets (net of accumulated depreciation and amortization of $1,579 at March 31, 2023 and $1,531 at December 31, 2022)	867		871
Pension related assets	2,200		2,127
Right of use assets	1,586		1,562
Deferred tax assets	369		358
Other assets	1,471		1,449
	$	34,358	$	33,454


(In millions, except share data)	(Unaudited) March 31, 2023		December 31, 2022
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	2,111	$	268
Accounts payable and accrued liabilities	3,406		3,278
Accrued compensation and employee benefits	1,443		3,095

Current lease liabilities	306		310
Accrued income taxes	356		221
Dividends payable	292		—
Total current liabilities	7,914		7,172
Fiduciary liabilities	10,834		10,660
Less – cash and cash equivalents held in a fiduciary capacity	(10,834)		(10,660)
	—		—
Long-term debt	10,841		11,227
Pension, post-retirement and post-employment benefits	896		921
Long-term lease liabilities	1,723		1,667
Liabilities for errors and omissions	355		355
Other liabilities	1,433		1,363
Commitments and contingencies	—		—
Equity:
Preferred stock, $1 par value, authorized 6,000,000 shares, none issued	—		—
Common stock, $1 par value, authorized 1,600,000,000 shares, issued 560,641,640 shares at March 31, 2023 and December 31, 2022	561		561
Additional paid-in capital	1,064		1,179
Retained earnings	20,949		20,301
Accumulated other comprehensive loss	(5,234)		(5,314)
Non-controlling interests	243		229
	17,583		16,956
Less – treasury shares, at cost, 65,836,882 shares at March 31, 2023 and 65,855,914 shares at December 31, 2022	(6,387)		(6,207)
Total equity	11,196		10,749
	$	34,358	$	33,454


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the Three Months Ended March 31,
(In millions)	2023		2022
Operating cash flows:
Net income before non-controlling interests	$	1,252	$	1,086
Adjustments to reconcile net income provided by operations:
Depreciation and amortization of fixed assets and capitalized software	84		89
Amortization of intangible assets	85		91

Non-cash lease expense	73		77
Adjustments and payments related to contingent consideration assets and liabilities	8		10
Deconsolidation of Russian businesses	—		39


Net gain on investments	(2)		(26)
Net loss (gain) on disposition of assets	21		(1)
Share-based compensation expense	99		105

Changes in assets and liabilities:
Net receivables	(775)		(429)

Other assets	(163)		(117)

Accrued compensation and employee benefits	(1,670)		(1,528)
Provision for taxes, net of payments and refunds	189		144
Contributions to pension and other benefit plans in excess of current year credit	(75)		(125)
Other liabilities	134		(33)
Operating lease liabilities	(79)		(84)

Net cash used for operations	(819)		(702)
Financing cash flows:
Purchase of treasury shares	(300)		(500)
Net proceeds from issuance of commercial paper	594		825
Borrowings from term-loan and credit facilities	250		—
Proceeds from issuance of debt	589		—
Repayments of debt	(4)		(4)




Shares withheld for taxes on vested units – treasury shares	(136)		(134)
Issuance of common stock from treasury shares	42		34
Payments of deferred and contingent consideration for acquisitions	(13)		(16)
Receipts of contingent consideration for dispositions	2		3
Distributions of non-controlling interests	(3)		(7)
Dividends paid	(296)		(272)
Change in fiduciary liabilities	48		926
Net cash provided by financing activities	773		855
Investing cash flows:
Capital expenditures	(84)		(122)
Purchases of long term investments	(4)		(8)



Dispositions	(20)		(4)
Acquisitions, net of cash and cash held in a fiduciary capacity acquired	(263)		(24)

Other, net	3		(1)
Net cash used for investing activities	(368)		(159)
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	152		(136)
Decrease in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	(262)		(142)
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period	12,102		11,375

Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period	$	11,840	$	11,233


Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets
Balance at March 31,	2023		2022
(In millions)
Cash and cash equivalents	$	1,006	$	772
Cash and cash equivalents held in a fiduciary capacity	10,834		10,461
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	$	11,840	$	11,233


(In millions)	March 31, 2023		December 31, 2022
Contract assets	$	366	$	335
Contract liabilities	$	906	$	837


Basic and Diluted EPS Calculation	Three Months Ended March 31,
(In millions, except per share data)	2023		2022
Net income before non-controlling interests	$	1,252	$	1,086
Less: Net income attributable to non-controlling interests	17		15
Net income attributable to the Company	$	1,235	$	1,071
Basic weighted average common shares outstanding	495		503
Dilutive effect of potentially issuable common shares	5		6
Diluted weighted average common shares outstanding	500		509
Average stock price used to calculate common stock equivalents	$	166.93	$	157.49



(In millions)	Pension and Post-Retirement Plans Gains (Losses)		Foreign Currency Translation Adjustments		Total
Balance as of December 31, 2022	$	(2,721)	$	(2,593)	$	(5,314)

Other comprehensive (loss) income before reclassifications	(48)		125		77
Amounts reclassified from accumulated other comprehensive loss	3		—		3
Net current period other comprehensive (loss) income	(45)		125		80
Balance as of March 31, 2023 (a)	$	(2,766)	$	(2,468)	$	(5,234)


Acquisitions through March 31, 2023
(In millions)
Cash	$	11
Estimated fair value of deferred/contingent consideration	4

Total consideration	$	15
Allocation of purchase price:


Net receivables	$	2

Goodwill	11
Other intangible assets	4





Total assets acquired	17
Current liabilities	2







Total liabilities assumed	2

Net assets acquired	$	15


For the Years Ending December 31,
(In millions)	Estimated Expense
2023 (excludes amortization through March 31, 2023)	$	241
2024	301
2025	268
2026	250
2027	249
Subsequent years	1,143
Total future amortization	$	2,452


	Identical Assets (Level 1)				Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Total
(In millions)	03/31/23		12/31/22		03/31/23		12/31/22		03/31/23		12/31/22		03/31/23		12/31/22
Assets:
Financial instruments owned:
Exchange traded equity securities (a)	$	5	$	6	$	—	$	—	$	—	$	—	$	5	$	6
Mutual funds (a)	162		162		—		—		—		—		162		162
Money market funds (b)	130		146		—		—		—		—		130		146
Other equity investment (a)	—		—		—		13		—		—		—		13
Contingent purchase consideration assets (c)	—		—		—		—		—		3		—		3
Total assets measured at fair value	$	297	$	314	$	—	$	13	$	—	$	3	$	297	$	330
Fiduciary Assets:


U.S. treasury bills (d)	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Money market funds	67		201		—		—		—		—		67		201
Total fiduciary assets measured at fair value	$	67	$	201	$	—	$	—	$	—	$	—	$	67	$	201
Liabilities:
Contingent purchase consideration liabilities (e)	$	—	$	—	$	—	$	—	$	383	$	377	$	383	$	377

Total liabilities measured at fair value	$	—	$	—	$	—	$	—	$	383	$	377	$	383	$	377


	Three Months Ended March 31,
(In millions)		2023		2022
Marsh:
EMEA (a) (b)		$	932	$	869
Asia Pacific (a)		312		294
Latin America		115		104
Total International		1,359		1,267
U.S./Canada		1,385		1,279
Total Marsh		2,744		2,546
Guy Carpenter		1,071		999
Subtotal		3,815		3,545
Fiduciary interest income		91		4
Total Risk and Insurance Services		$	3,906	$	3,549

Mercer:


Wealth (c)		$	581	$	617
Health		545		524
Career		218		202
Total Mercer		1,344		1,343
Oliver Wyman Group (b)		687		667
Total Consulting		$	2,031	$	2,010


	March 31, 2023						December 31, 2022
(In millions)	Gross Cost		Accumulated Amortization		Net Carrying Amount		Gross Cost		Accumulated Amortization		Net Carrying Amount
Client relationships	$	3,969	$	1,561	$	2,408	$	3,993	$	1,508	$	2,485
Other (a)	361		317		44		360		308		52
Other intangible assets	$	4,330	$	1,878	$	2,452	$	4,353	$	1,816	$	2,537


Combined U.S. and significant non-U.S. Plans	Pension Benefits

March 31,	2023		2022
Weighted average assumptions:
Expected return on plan assets	5.31	%	4.56	%
Discount rate	5.16	%	2.28	%
Rate of compensation increase	3.16	%	2.16	%


(In millions)	March 31, 2023		December 31, 2022
Short-term:
Commercial paper	$	594	$	—

Revolving credit facility	250		—
Current portion of long-term debt	1,267		268
	2,111		268
Long-term:

Senior notes – 4.05% due 2023	250		250
Senior notes – 3.50% due 2024	599		599
Senior notes – 3.875% due 2024	999		998
Senior notes – 3.50% due 2025	499		499
Senior notes – 1.349% due 2026	600		587
Senior notes – 3.75% due 2026	599		598
Senior notes – 4.375% due 2029	1,499		1,499
Senior notes – 1.979% due 2030	589		576
Senior notes – 2.25% due 2030	739		739
Senior notes – 2.375% due 2031	397		397
Senior notes – 5.750% due 2032	492		493
Senior notes – 5.875% due 2033	298		298
Senior notes – 4.75% due 2039	495		495
Senior notes – 4.35% due 2047	493		493
Senior notes – 4.20% due 2048	593		593
Senior notes – 4.90% due 2049	1,238		1,238
Senior notes – 2.90% due 2051	346		346
Senior notes – 6.25% due 2052	491		492
Senior notes – 5.45% due 2053	591		—
Mortgage – 5.70% due 2035	297		301

Other	4		4
	12,108		11,495
Less: current portion	1,267		268
	$	10,841	$	11,227


(In millions)	Real Estate Leases
Remainder of 2023	$	274
2024	338
2025	308
2026	287
2027	250
2028	180
Subsequent years	667
Total future lease payments	2,304
Less: Imputed interest	(275)
Total	$	2,029
Current lease liabilities	$	306
Long-term lease liabilities	1,723
Total lease liabilities	$	2,029



Amounts recorded in the Consolidated Statements of Income
Combined U.S. and significant non-U.S. Plans	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2023		2022
Compensation and benefits expense	$	6	$	8
Other net benefit credit	(58)		(63)
Net benefit credit	$	(52)	$	(55)



U.S. Plans only	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2023		2022

Interest cost	$	65	$	48
Expected return on plan assets	(78)		(84)

Recognized actuarial loss	5		19
Net benefit credit	$	(8)	$	(17)


Significant non-U.S. Plans only	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2023		2022
Service cost	$	6	$	8
Interest cost	83		52
Expected return on plan assets	(134)		(118)

Recognized actuarial loss	1		20
Net benefit credit	$	(44)	$	(38)


(In millions)	Severance		Real Estate Related Costs (a)		Information Technology		Consulting and Other Outside Services		Total
Liability at 1/1/22	$	35	$	34	$	—	$	—	$	69
2022 charges	111		195		15		106		427
Cash payments	(58)		(25)		(6)		(104)		(193)
Non-cash charges	—		(148)		(9)		—		(157)

Liability at 12/31/22	$	88	$	56	$	—	$	2	$	146
2023 charges	19		17		1		16		53
Cash payments	(45)		(17)		—		(17)		(79)
Non-cash charges	—		(7)		(1)		—		(8)
Liability at 3/31/23	$	62	$	49	$	—	$	1	$	112


Three months ended March 31, (in millions, except percentages)	GAAP Revenue				% Change GAAP Revenue*		Non-GAAP Revenue				Non-GAAP Underlying Revenue*
	2023		2022				2023		2022
Risk and Insurance Services
Marsh	$	2,744	$	2,546	8	%	$	2,791	$	2,568	9	%
Guy Carpenter	1,071		999		7	%	1,075		980		10	%
Subtotal	3,815		3,545		8	%	3,866		3,548		9	%
Fiduciary interest income	91		4				93		4
Total Risk and Insurance Services	3,906		3,549		10	%	3,959		3,552		11	%
Consulting
Mercer	1,344		1,343		—		1,413		1,316		7	%
Oliver Wyman Group	687		667		3	%	679		678		—
Total Consulting	2,031		2,010		1	%	2,092		1,994		5	%
Corporate Eliminations	(13)		(10)				(13)		(10)
Total Revenue	$	5,924	$	5,549	7	%	$	6,038	$	5,536	9	%


	Three Months Ended March 31,
(In millions, except percentages)		2023			2022
Revenue		$	3,906		$	3,549
Compensation and benefits		1,880			1,801
Other operating expenses		631			627
Operating expenses		2,511			2,428
Operating income		$	1,395		$	1,121
Operating income margin		35.7		%	31.6		%


	Payment due by Period
(In millions)	Total		Within 1 Year		1-3 Years		4-5 Years		After 5 Years
Commercial paper	$	594	$	594	$	—	$	—	$	—
Term loan facility	250		250		—		—		—

Current portion of long-term debt	1,267		1,267		—		—		—
Long-term debt	10,926		—		1,739		637		8,550
Interest on long-term debt	6,842		491		832		746		4,773
Net operating leases	2,304		362		632		515		795
Service agreements	445		220		180		45		—
Other long-term obligations (a)	579		245		279		51		4


Total	$	23,207	$	3,429	$	3,662	$	1,994	$	14,122


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1-31, 2023	351,570	$	171.1736	351,570	$	4,253,815,341
February 1-28, 2023	642,652	$	168.4791	642,652	$	4,145,541,881
March 1-31, 2023	823,882	$	159.6671	823,882	$	4,013,995,053
Total	1,818,104	$	165.0070	1,818,104	$	4,013,995,053


Date:	April 20, 2023	/s/ Mark C. McGivney
		Mark C. McGivney
		Chief Financial Officer

Date:	April 20, 2023	/s/ Stacy M. Mills
		Stacy M. Mills
		Vice President & Controller
		(Chief Accounting Officer)


Exhibit No.						Exhibit Name

4.1						Sixteenth Supplemental Indenture, dated March 9, 2023, between Marsh & McLennan Companies, Inc. and the Bank of New York Mellon, as trustee (incorporated by reference to the Company’s Current Report on Form 8-K dated March 9, 2023)

10.1						Letter Agreement, effective as of January 1, 2022, between Marsh & McLennan Companies, Inc. and Martin South

10.2						Non-Competition and Non-Solicitation Agreement, dated as of December 1, 2021, between Marsh & McLennan Companies, Inc. and Martin South

10.3						Form of Deferred Stock Unit Award, with grant dates from March 1, 2023 through February 1, 2024, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan – Cliff Vesting

10.4						Form of Deferred Stock Unit Award, with grant dates from March 1, 2023 through February 1, 2024, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan – Ratable Vesting

10.5						Form of Restricted Stock Unit Award, dated as of February 23, 2023, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan

10.6						Form of Performance Stock Unit Award, dated as of February 23, 2023, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan

10.7						Form of Stock Option Award, dated as of February 23, 2023, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan

31.1						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1						Section 1350 Certifications

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema

101.CAL						XBRL Taxonomy Extension Calculation Linkbase

101.DEF						XBRL Taxonomy Extension Definition Linkbase

101.LAB						XBRL Taxonomy Extension Label Linkbase

101.PRE						XBRL Taxonomy Extension Presentation Linkbase


Board or Committee Memberships			None
Annual Base Salary			$1,000,000 effective January 1, 2022.
Annual Target Bonus Opportunity			Bonus awards are discretionary. Target bonus of $2,250,000 commencing with the 2022 performance year (awarded in February 2023). Actual bonus may range from 0% - 200% of target, based on achievement of individual performance objectives, Marsh’s performance and/or Marsh McLennan’s performance as Marsh McLennan may establish from time to time.
Annual Target Long-Term Incentive Opportunity			Long-term incentive awards are discretionary. Target grant date fair value of $2,500,000, commencing with the award made in 2022.


Date:	April 20, 2023	/s/ John Q. Doyle
		John Q. Doyle
		President and Chief Executive Officer