Marsh & Mclennan ((MRSH)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Marsh & McLennan’s latest earnings call struck an upbeat tone, pairing solid top-line and earnings growth with visible progress on strategic initiatives such as AI and cost efficiencies. Management acknowledged sizable litigation charges and pricing pressure in insurance and reinsurance, but argued that operational momentum, margin ambitions and disciplined capital deployment leave the firm well positioned.
Revenue Growth Holds Up Despite Market Headwinds
Total consolidated revenue climbed 8% year over year to $7.6 billion, with underlying revenue up 4% even as lower fiduciary interest income and softer P&C pricing weighed on results. Management highlighted the breadth of growth across businesses and stressed that the company is maintaining pricing discipline while navigating an increasingly competitive insurance market.
Profitability and EPS Expand in Line With Revenue
Adjusted operating income rose 8% to $2.4 billion, matching the revenue growth pace, and adjusted EPS increased 8% to $3.29, underscoring stable profitability. GAAP operating income was $1.8 billion and GAAP EPS came in at $2.36, with the gap versus adjusted figures largely driven by noteworthy items including the sizable litigation charge.
Consulting and Mercer Lead Segment Performance
Consulting revenue advanced 11% to $2.6 billion, with 5% underlying growth, while Mercer revenue also grew 11% to $1.7 billion on the same 5% underlying pace. Consulting adjusted operating income grew 13% and its adjusted margin improved by 40 basis points to 21.6%, reflecting operating leverage as demand for advisory, wealth and health solutions remains robust.
Risk & Insurance Services Maintains High Margins
Risk & Insurance Services generated $5.1 billion of revenue, up 6% with 3% underlying growth, as Marsh Risk delivered $3.7 billion of revenue on 8% headline and 4% underlying growth. RIS adjusted operating income rose 7% and its adjusted margin edged up 10 basis points to a strong 38.3%, helped by sequential improvement in Marsh Risk growth despite mounting pricing pressure.
Assets Under Management Continue to Scale
Assets under management reached $727 billion, up 5% sequentially and 19% year over year, supported by new client wins, positive capital markets and bolt-on acquisitions. Management framed the expanding AUM base as a durable revenue driver, enhancing fee income and cross-selling potential across retirement, investment and outsourced solutions.
Capital Returns and M&A Remain Active
In the quarter, Marsh & McLennan repurchased $750 million of stock and paid $440 million in dividends, demonstrating continued commitment to shareholder returns. The company also deployed $89 million on acquisitions and reiterated its intention to put roughly $5 billion of capital to work in 2026 through a mix of dividends, deals and further buybacks.
AI Strategy Shows Early but Tangible Productivity Gains
Management detailed a three-pillar AI strategy focused on growth, productivity and efficiency, already visible in tools such as ADA, Centrus, UCLI, GC Quotebox and Claims IQ. Early results include AI systems processing thousands of documents weekly with roughly 20% efficiency gains, an AI-enabled broker workbench rebuilt in days, and more than 2 million internal prompts per month supporting employees.
Thrive Program On Track to Deliver Cost Savings
The firm’s Thrive program remains on course to generate $400 million in total savings, though it will require about $500 million in related charges over time. In Q1, Marsh & McLennan booked $37 million of Thrive costs, with management positioning the initiative as a key driver of margin expansion and funding source for growth and technology investments.
Litigation Charge Weighs on Reported Results
A $425 million charge tied to litigation following the 2021 collapse of Greenfield Capital significantly affected reported earnings for the quarter. Management described the amount as its best current estimate of potential liability, stressed that the litigation is ongoing and emphasized that core operating trends remain intact despite the one-off impact.
Insurance and Reinsurance Pricing Pressure Intensifies
The Marsh Global Insurance Market Index showed primary commercial insurance rates down 5% in Q1, with property the main drag as global property pricing fell 9% year over year. In reinsurance, non-loss-impacted U.S. property catastrophe rates declined 15% to 20% on renewals, with similar 15% to 20% risk-adjusted rate drops in Japan at April 1, signaling a softer market backdrop.
Guy Carpenter Faces Growth Headwinds
Guy Carpenter revenue increased 3% with 2% underlying growth, but management noted the segment is cycling tough comparisons after outsized growth last year. With reinsurance pricing weakening, leaders cautioned that Guy Carpenter is unlikely to deliver its best growth year under current market dynamics, even as it continues to support clients through more competitive renewal seasons.
Fiduciary Interest Income Moves Lower With Rates
Fiduciary interest income declined to $85 million in Q1, down $18 million from the prior year period, reflecting the impact of lower interest rates on client balances. Management guided to approximately $80 million of fiduciary interest income for Q2, signaling another modest step down but one they see as manageable within the broader earnings mix.
Noteworthy Items Distort the Quarter’s GAAP View
Total noteworthy items in Q1 reached $521 million, including the $425 million litigation charge and $37 million of Thrive costs, materially shaping GAAP results. Executives urged investors to focus on the underlying 8% growth in adjusted operating income and EPS, arguing those better reflect ongoing business performance than the one-time charges.
Forward Guidance Signals Confidence in 2026 Trajectory
Looking ahead, Marsh & McLennan expects 2026 underlying revenue growth to be similar to 2025, with ongoing margin expansion more weighted to the second half and “solid” adjusted EPS growth. The company projected a 2026 adjusted effective tax rate of 24.5% to 25.5%, Q2 fiduciary interest income of about $80 million, corporate expense around $90 million, interest expense near $245 million and largely immaterial FX, alongside plans to deploy roughly $5 billion of capital in 2026.
Marsh & McLennan’s call portrayed a company balancing meaningful short-term pressures with clear strategic momentum and disciplined financial management. Solid revenue and earnings growth, expanding AUM, a tangible AI productivity story and a sizable capital deployment plan underpin a constructive outlook, even as litigation, pricing pressure and lower interest income remain key watch points.