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Marsh & McLennan's (MMC) Earnings Beat in Q3, Decline Y/Y

Marsh & McLennan Companies, Inc . MMC delivered third-quarter 2018 adjusted earnings per share of 78 cents, beating the Zacks Consensus Estimate by 4%. However, the bottom line slid 1% year over year, mainly due to the application of ASC 606.

Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise

Marsh & McLennan Companies, Inc. Price, Consensus and EPS Surprise | Marsh & McLennan Companies, Inc. Quote

Marsh & McLennan's consolidated revenues were $3.5 billion, beating the Zacks Consensus Estimate by 3%. The same was up 5% year over year. This upside is majorly attributable to the Risk and Insurances Services plus Consulting Segments.

Total operating expenses of $2.9 billion in the third quarter were up 4.6% year over year due to high compensation and benefits as well as other operating expenses.

Quarterly Segment Results

Risk and Insurance Services

Revenues at the Risk and Insurance Services segment were $1.9 billion, up 4% on an underlying basis, driven by higher contribution from Marsh. Adjusted operating income declined 3% to $283 million from the prior-year quarter's level.

Marsh, a unit within this segment, generated revenues of $1.6 billion, up 3% on an underlying basis. In U.S./Canada, underlying revenues rose 5%. Underlying revenue growth of 2% from international operations includes an improvement of 3% in Asia Pacific and 7% in Latin America while remaining flat in EMEA.

Another unit under this segment - Guy Carpenter - displayed a revenue rise of 11% on an underlying basis to $215 million in the quarter under review.

Consulting

The Consulting segment's revenues grew 5% on an underlying basis to $1.7 billion. However, adjusted operating income declined 6% year over year to $293 million.

A unit within this segment - Mercer - reported revenues of $1.2 billion, up 3% on an underlying basis. Wealth with revenues of $525 million, nudged up 2% on an underlying basis.

Another unit, Oliver Wyman Group, posted revenues of $481 million, up 11% on an underlying basis.

In the quarter under consideration, the company announced to acquire Jardine Lloyd Thompson Group (JLT), which is expected to close during the spring of 2019. Also, the company realized a gain of $46 million on the sale of a business in Marsh.

Financial Update

Marsh & McLennan exited the quarter with cash and cash equivalents of $951 million, down 21.1% from the figure at 2017 end.

As of Sep 30, 2018, Marsh & McLennan's total assets were $2.1 billion, up 3.4% from the tally at 2017 end.

Total equity was $7.5 billion, up 1.3% from the level at year-end 2017.

Capital Deployment

The company bought back 2.1 million shares of its common stock for $175 million in the third quarter.

Zacks Rank

Marsh & McLennan carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Performance of Other Companies in the Finance Sector

Some stocks worth considering from the insurance industry with the right combination of elements to surpass estimates this time around are as follows:

Everest Re Group, Ltd. RE has an Earnings ESP of +7.29% and a Zacks Rank #3. The company is set to announce third-quarter earnings on Oct 30.

American Financial Group, Inc. AFG has an Earnings ESP of +4.92% and is a #3 Ranked player. The company is set to announce third-quarter earnings on Oct 30.

Willis Towers Watson Public Limited Co. WLTW has an Earnings ESP of +3.91% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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