MMC, FY2017: 6% increase in revenues, in an active M&A year

Marsh & McLennan Companies recorded in 2017 a 6% increase in revenues, to USD 14 billion. Risk & Insurance Services contribution to this total was of USD 2 billion, the company announced in a press conference today.

Dan GLASER, President and CEO, commented: "Marsh & McLennan Companies generated strong results in the fourth quarter of 2017. On a consolidated basis, we produced 10% revenue growth with underlying revenue growth of 4%, including 3% in Risk & Insurance Services and 6% in Consulting. Adjusted operating income increased 12% in the quarter with double-digit growth in both segments."

"For the year, Marsh & McLennan Companies generated solid underlying revenue growth of 3%, adjusted EPS growth of 15% and adjusted operating margin expansion of 70 basis points, with higher margins in both segments for the eighth consecutive year."

"In addition to our excellent underlying performance, we had another active year of acquisitions while delivering on our capital return commitments. We are proud of our accomplishments this past year and believe we are well positioned for another strong year in 2018," concluded Mr. GLASER.

Consolidated Results

Consolidated revenue in the fourth quarter of 2017 was USD 3.7 billion, an increase of 10% compared with the fourth quarter of 2016, or 4% on an underlying basis. Operating income rose 8% to USD 686 million and included a USD 54 million pension charge as described in the supplemental schedules. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, increased 12% to USD 755 million. Earnings per share declined to USD 0.06 reflecting a charge of USD 460 million related to the changes in U.S. tax reform as well as the pension charge noted above. Adjusted earnings per share rose 18% to USD 1.05 compared with USD 0.89 in the prior fourth quarter.

For the year 2017, revenue was USD 14 billion, an increase of 6% compared with 2016, or 3% on an underlying basis. Earnings per share declined 15% to USD 2.87 and includes the previously mentioned tax and pension charges. Adjusted earnings per share increased 15% to USD 3.92 compared with USD 3.42 in 2016.

Risk & Insurance Services

Risk & Insurance Services revenue was USD 2 billion in the fourth quarter of 2017, an increase of 9%, or 3% on an underlying basis. Operating income of USD 416 million was essentially flat with the prior year and includes USD 47 million of the previously mentioned pension charge. Adjusted operating income increased 12% to USD 473 million. For the year 2017, revenue was USD 7.6 billion, an increase of 7%, or 3% on an underlying basis. Operating income rose 7% to USD 1.9 billion while adjusted operating income rose 11%.

Marsh's revenue in the fourth quarter of 2017 was USD 1.7 billion, an increase of 9%, or 3% on an underlying basis. In U.S./Canada, underlying revenue rose 4%. International operations produced underlying revenue growth of 1%, reflecting underlying growth of 5% in Asia Pacific, and 9% in Latin America partially offset by a decline of 3% in EMEA. For the year 2017, Marsh's revenue growth was 7%, or 3% on an underlying basis.

Guy Carpenter's fourth quarter revenue was USD 239 million, up 7% on an underlying basis. For the year 2017, Guy Carpenter's underlying revenue growth was 4%.

Consulting

Consulting revenue was USD 1.7 billion in the fourth quarter of 2017, an increase of 10%, or 6% on an underlying basis. Operating income of USD 321 million rose 21%. Adjusted operating income increased 10% to USD 330 million. For the year 2017, revenue was USD 6.4 billion, up 5%, or 4% on an underlying basis. Operating income increased 6% to USD 1.2 billion on both a GAAP and adjusted basis.

Mercer's revenue was USD 1.2 billion in the fourth quarter, an increase of 9%, or 4% on an underlying basis. Wealth revenue grew 4% on an underlying basis. Within Wealth, Defined Benefit Consulting & Administration increased 1% on an underlying basis, while Investment Management & Related Services increased 12%. Health revenue increased 3% on an underlying basis and Career increased 6%. For the year 2017, Mercer's revenue growth was 5%, or 2% on an underlying basis.

Oliver Wyman Group's revenue was USD 546 million in the fourth quarter, an increase of 9% on an underlying basis. For the year 2017, Oliver Wyman Group's revenue increased to USD 1.9 billion, up 7% on an underlying basis.

Other Items

The effective tax rate in the fourth quarter of 2017 was 95.5% compared with 24.9% in the year ago period. For the year 2017, the effective tax rate was 42.9% compared with 27.6% for the year ago period.

The effective tax rate in the fourth quarter and full year 2017 reflects the estimated impact of the enactment, in December 2017, of U.S. tax reform. An aggregate provisional charge of USD 460 million reflects a USD 220 million write down of our net deferred tax asset to reflect the decrease of the U.S. federal corporate income tax rate from 35% to 21% and a USD 240 million charge related to deemed repatriation.

The tax rate in the fourth quarter and year 2017 also reflects the impact of the required change in accounting for equity awards.

The Company repurchased 3.6 million shares of stock for USD 300 million in the fourth quarter. For the year, 11.5 million shares were repurchased for USD 900 million.