Marsh McLennan ups 2023 revenue targets: everything is a driver

Global re/insurance broker  Marsh McLennan took enough confidence from H1 growth and a "terrific" H2 outlook to boost its expectations for underlying revenue growth to a high single-digit pace.

“We are positioned for a strong year in 2023,” president and CEO John Doyle told his company's second quarter earnings call. “We are well positioned, our team is executing very well in the marketplace.”

Top officials refused to commit to a favoured driver among the many on hand. To hear Doyle and deputies give the recipe, it’s equal parts H1 outperformance and H2 optimism and one part apiece supportive conditions, a shift in business mix, talent acquired to date and each of the group’s major business lines.

“It’s not in the parts of the business, but broad based,” CFO Mark McGivney said. Asked if he was more inspired by H1 performance or H2 outlook, he demurred again: “it's really a function of both.”

Comments follow 9% y/y revenue growth in the second quarter to $5.9 billion, an 11% gain on an underlying basis. Core risk and insurance services revenues grew a stronger 12% or 13% in underlying terms. Mark reinsurance broker Guy Carpenter with 11% underlying revenue growth to $576 million, and primary insurance broker Marsh at a 10% gain to $3.0 billion.

Consulting businesses on aggregate moved a bit slower. Mercer posted underlying revenue growth of 6% while Mercer managed an 11% pace.

Part of the upgraded revenue outlook comes on an unspecified shift in the business mix.

“We continue to shift our business growth mix to faster growth areas,” CEO Doyle said, without offering specifics in direction.

But the H1 numbers and underlying drivers might speak for themselves. The reinsurance hard market, for example, can only continue to drive revenues at Guy Carpenter, where the group is also moving to heap on new business, unit CEO Dean Klisura noted.

“There is not enough capital in the marketplace to change the trajectory of the pricing environment,” Klisura said of his unit's underlying driver. At the same time, "new business across Guy Carpenter continues to accelerate."

Along with the upper single digit revenue growth, Marsh McLennan continues to expect margin expansion and strong EPS growth, officials added in confirmation of the outlook.

Forecasts come with a higher than average dose of uncertainty for macroeconomic and geopolitical conditions, officials admitted. The balance remains growth-supportive for now.

“The macro environment, although volatile, remains supportive of good strong growth,” Doyle told analysts.

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