Marsh & McLennan Companies Inc. (NYSE: MMC) posts solid Q1 2025 performance with revenue growing 9% year-over-year

Marsh & McLennan Companies Inc. (NYSE: MMC) posted a solid Q1 2025 performance with revenue growing 9% year-over-year, buoyed by solid contributions from both the Risk & Insurance and Consulting segments.

Marsh & McLennan (NYSE:MMC) shares dropped on Thursday after the company’s first-quarter earnings report showed signs of margin pressure and interest income decreased.

Here’s a summary of the report:

* **Earnings and Margin Performance:** Adjusted EPS rose 5% to $3.06, including a 10-cent benefit from favorable tax items and a 5-cent drag from foreign exchange effects. GAAP EPS decreased 1% to $2.79. Adjusted operating income increased 8% to $2.2 billion, with an adjusted operating margin of 31.8%, a 20 basis point decrease year-over-year, partly due to seasonality linked to the McGriff acquisition.

* **Strong Gains in Risk and Insurance Services:** The Risk and Insurance Services segment's revenue soared 11% to $4.8 billion, or 4% on an underlying basis. Marsh, the brokerage unit, reported a 15% surge in revenue to $3.5 billion, while underlying revenue grew by 5%.

* **Consulting Business Delivers Modest Growth:** Revenue from the Consulting segment rose 5% to $2.3 billion, or 4% on an underlying basis. Adjusted operating income increased 8% to $491 million. Mercer, the HR and investment advisory unit, contributed $1.5 billion, with its Health segment rising 7% and Wealth increasing by 3%.

* **Capital Allocation and Balance Sheet:** Marsh & McLennan returned capital to shareholders with $300 million in share repurchases during Q1. The company also repaid $500 million in senior notes and ended the quarter with a cash balance of $1.6 billion. For the full year, it expects to deploy $4.5 billion across dividends, share repurchases, and acquisitions.

* **Caution Flags and Outlook:** Fiduciary income dropped $19 million due to lower interest rates. Global property insurance rates decreased by 6%, and overall insurance prices fell by 3%. This will impact the outlook for commission-based revenue.

Here are a few more things to watch:

* Despite the positives, GuruFocus flagged seven warning signs for MMC, signaling the need for closer scrutiny of valuation and financial health.

* While MMC shares fell after the earnings release, the stock has delivered strong returns over time. It’s up 12.99% over the past year and 35.39% over the past three years. The five-year return of 140.29% far exceeds the S&P 500's 83.77%.

* With steady earnings growth, diversified business lines, and strong capital discipline, Marsh & McLennan remains a long-term performer, even as short-term pressures may weigh on the stock.

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