Q2 2021 Marsh & McLennan Companies Inc Earnings Call

[music].

Okay.

Yeah.

Welcome to Marsh Mclennan. This conference call today's call is being recorded second quarter 2021 financial results and supplemental information were issued earlier. This morning. They are available on the company's website at M C Dot com.

Please note that remarks made today may include forward looking statements, including certain expectations related to COVID-19, and other matters forward looking statements are subject to risks and uncertainties and a variety of factors may cause actual results to differ materially from those contemplated by such statements.

For a more detailed discussion of those factors. Please refer to our earnings from this quarter into our most recent SEC filings, including our most recent form 10-K, all of which are available on the Marsh Mclennan website.

During the call today, we may also discuss certain non-GAAP financial measures for a reconciliation of these measures to the most closely comparable GAAP measures. Please refer to the schedule in today's earnings release on.

And now turn this call over to Dan Glaser, President and CEO of Marsh Mclennan.

Good morning.

Thank you for joining us to discuss our second quarter results reported earlier today.

And then what is your president and CEO of Marsh Mclennan.

Joining me on the call.

And our CFO.

Ceos about purpose and this is Tom.

Mark and Peter.

Peter Harrington and Carpenter.

Yes.

Our.

The next day.

And then.

So with US. This morning is Sarah Dewitt head of Investor Relations.

I'd like to welcome Nick who became CEO of Oliver Wyman and July 1st.

Nick his way and many of Oliver Wyman and major processes and his 23 years.

Business.

OTC, Oliver Wyman and continue to grow and thrive.

Under his leadership.

Okay.

Okay.

I also want to thank Scott Macdonald for his many contributions during his distinguished from here.

And at the firm.

And outside.

And I think second quarter.

We're well positioned and benefiting from the abundance of opportunities we.

We are stronger and our broader capabilities.

Acquisition.

We're benefiting from what may be and stronger second half rebound and nearly 4 decades.

And our largest region the U S.

And there was high demand per hour advice and solutions and this time of uncertainty and the.

Facing challenging market conditions.

We are seeing a flight to quality and speed.

The ability of these contributing to high levels of new business growth and client retention and its helping us attract talent.

And there's a long runway for growth as we think about major protection gaps around the world New emerging risks.

And as Asian workforce of the future and Underpenetrated markets such as small commercial.

We are focused on capitalizing on these opportunities and I am proud of our execution and the quarter.

We generated record second quarter revenue and earnings the best underlying growth of any quarter in 2 decades other applauded for on an excellent year.

The strength of our results was broad based with each of our businesses and virtually all of our major geographies seeing an acceleration and growth.

Our adjusted EPS increased by an impressive 33% and we generated margin expansion despite challenging expense comparisons.

As we look ahead, the economic outlook for the U S and most of the major countries, we operate and is encouraging however.

However, the pandemic is not over yet.

Vaccine hesitancy creates risk and.

And there are many parts of the world where vaccine availability is limited.

As a result much of the world is experiencing another wave of the pandemic with ryzen and case counts due to the spread of variance.

In addition, the shape of this economic recovery is very different from any we've seen before.

Some industries are thriving while others are being impacted by supply chain disruption inventory issues and labor shortages and.

Navigating this dynamic landscape is challenging even confounding for some businesses.

The growth opportunity for Marsh and Mclennan and has significant during this time of uncertainty and recovery, we are aiding and guiding our clients through the complexities of the new normal as well as helping them tackle issues like climate risk cyber diversity, and inclusion and employee safety and wellbeing.

And workforce disruption.

Our ability to provide differentiated high quality solutions to our clients left on our talent and expertise.

Our colleagues are our number 1 competitive advantage and the potential for industry consolidation, we see a meaningful opportunity to invest and hiring and deepen our world class talent pool.

We have strong momentum and as we mentioned last quarter, our efforts were focused on resurgence and expansion.

Let me provide some examples of how we are helping our clients address comp type issues of the day, specifically 2 major challenges cyber security and climate change.

Cyber security is 1 of the greatest risks facing society <unk>.

Supply chain and ransomware attacks continue to rise with a number of recent high profile attacks affecting organizations across all sectors and segments from technology to critical infrastructure and health care.

And the continent and is helping clients manage cyber risk increasingly we are bringing our businesses together to leverage all of our expertise and data and relationships with public and private partners to help clients become more resilient.

Our growth and participation and cyber extends well beyond the placement of insurance.

Under the leadership of John Doyle, we are leveraging the collective capabilities of Marsh Guy Carpenter and Oliver Wyman to bring cyber solutions from across our enterprise to clients.

Not only are we helping clients with risk transferred from our insurance businesses.

Through our cyber risk assessment tools, we help clients measure and quantify their cyber risk exposure to better informed decisions about cyber security risk mitigation and transfer of strategies.

We also have clients with incident response before during and after events as well as a part of our broader effort and stockpile build resilience and the face of a constantly evolving threat landscape.

Our second defining challenge of our time is climate change climate and the broader topic of ESG or complex multi dimensional challenges virtually all companies face.

The threat of a changing climate presents obvious questions for companies and touching everything from strategy to resilience to their workforce and how they communicate.

Even though the climate change is a long term threat issue is proximate and has immediate consequences as firms deal with calls for action strategies to respond and more input from various stakeholders led.

Led by Nick Studer, we are bringing together our businesses to help our clients and anticipate climate risks and opportunities.

For example.

Oliver Wyman is working with our insurance businesses to support clients and the transition to a low carbon economy and bad its climate risk. We are assisting clients with the development of carbon like business models and to Derisk investment and sustainable technologies.

At Marsh and Guy Carpenter, we are helping to develop innovative climate solutions to bridge protection gaps.

We assist clients with stress testing models.

And the impact of climate change and providing risk management, and and and insurance services to protect against climate impacts.

And MRSA is responsible investment business helped Stuart and as fiduciaries of investment pools understand how it changed and climate impact investment returns and the future and anticipate them today.

Overall, we are uniquely positioned to help our clients with their most pressing challenges.

Let me spend a moment on current P&C insurance market conditions.

Second quarter marks the 15th consecutive quarter of rate increases and the commercial P&C insurance marketplace.

<unk> Global insurance market index showed price increases of 15% year over year versus 18% and the first quarter.

The pace of price increases continued to moderate but still remains high reflecting elevated loss activity and concerns about inflation and level of interest rates.

Mobile property and insurance was up 12% and global financial and professional lines were up 34% driven in part by steep cyber increases while global casualty rates are up 6% on average and U S workers' compensation rates declined modestly and the quarter.

Keep in mind, our index skews to large account business, however, and the U S small and middle market insurance pricing continues to rise as well, although the magnitude of price increases is less debt for large complex accounts.

Turning to reinsurance Guy Carpenter's global property catastrophe radar and life index increased 6% estimate either.

And the second quarter, the market was more orderly and balance than a year ago, reflecting adequate capital and increase your willingness to deploy capacity.

<unk> and moderate single digit rate increases where typical after 2 years of double digit rate increases. However programs that had significant losses are higher on increases and capacity remains constrained on certain lines of business, most notably cyber.

Concerns remain around inflation losses, and certain lines and extreme weather events and the beginning of a new hurricane season.

It is in times like these where our expertise and capabilities shine.

And we're working hard to help our clients navigate the carbon free environment.

Now, let me turn to our fantastic second quarter financial performance, we generated adjusted EPS of $1, 75%, which is up 33% versus a year ago, driven by strong top line growth and continued low levels of TNA.

Total revenue increased 20% versus a year ago and rose, 13% on an underlying basis, the highest quarterly growth in 2 decades.

Underlying revenue grew 13% and RIS and 12% and consulting.

<unk> grew 14% and the quarter on an underlying basis, the highest quarterly underlying growth and nearly 2 decades and benefited from strong new business and renewal growth.

<unk> grew 12% on an underlying basis and the quarter continuing a string of excellent results.

Mercer underlying revenue from 6% and the quarter, the highest and almost a decade.

Oliver Wyman and posted record reported underlying revenue growth of 28%.

Overall, the second quarter saw adjusted operating income growth of 24% and.

Our adjusted operating margin expanded 90 basis points year over year.

As we look out for the rest of 2021, when you are well positioned with 9% underlying revenue growth year to date or a full year growth will be strong.

We expect favorable market dynamics to persist for at least the remainder of the year, although the pace of growth could moderate versus the second quarter as year over year comparisons become more challenging.

We also expect to generate margin expansion for the full year and strong growth and adjusted EPS.

With that let me turn it over to Mark from a more detailed review of our results.

Thank you Dan and good morning.

Our results were excellent with record second quarter revenues and earnings the best quarterly underlying growth and 2 decades meaningful margin expansion and significant growth and adjusted earnings.

Highlights from our second quarter performance included strongest underlying growth Mark and first quarter 2003, the strongest big Guy Carpenter and 15 years solid for 2006% at Mercer and record reported underlying growth at all of the 1.

Second quarter growth and adjusted earnings per share was also impressive rising and the fastest pace of any quarter in more than a decade.

Yeah.

Consolidated revenue increased 20% from second quarter to $5 billion, reflecting underlying growth of 13%.

Operating income and the quarter was $1.2 billion and increase of 39% over the prior year.

Adjusted operating income increased 24% to $1.2 billion and our adjusted operating margin increased 90 basis points to 26, 4%.

EPS was $1 and the quarters and.

EPS increased 33% to $1.75.

For the first 6 months of 2021 underlying revenue growth of 9% from adjusted operating income grew 22% to $6 billion. Our adjusted operating margin increased 170 basis points and our adjusted EPS increased 26% to $3.70 force.

Looking at risk and insurance services second quarter revenue was $3.1 billion up 21% compared with a year ago from 13% on an underlying basis.

Operating income increased 37% and $950 million.

Adjusted operating income increased 22% and $927 million and our adjusted operating margin expanded 30 basis points to 32, 4%.

For the first 6 months of the year revenue was $6.4 billion with underlying growth of 10%.

Adjusted operating income for the first half of the year increased 19% to $2 billion. The margin of 34, 5% up 110 basis points from the same period a year ago.

Yeah.

At March revenue and the quarter was $2.7 billion up 23% compared with a year ago, 14% on an underlying basis.

Even excluding the impact of the revenue adjustment, we recorded a year ago underlying revenue at Marsh was up 12%.

Growth in the quarter was broad based and was driven by robust new business growth and solid retention.

The U S and Canada region delivered another exceptional quarter with underlying revenue growth of 15%. The highest result, since we began reporting this segment.

And international underlying growth was 13%.

EMEA was up 16% Asia Pacific was up 10% and Latin America grew 2%.

For the first 6 months of the year Marsh's revenue was 5 billion with underlying growth of 11%.

U S and Canada underlying growth was 12% and international was up 9%.

Okay.

Guy Carpenter's second quarter revenue was $488 million up 13% compared with a year ago or 12% on on underlying basis.

Growth was broad based across all geographies and specialties.

Guy Carpenter and has now achieved 7% per higher underlying growth and 6 of the last 8 quarters.

For the first 6 months of the year Guy Carpenter generated $1.4 billion of revenue and 8% underlying growth.

And the consulting segment revenue and the quarter was $1.9 billion up 17% from a year ago or 12% on on underlying basis.

Operating income increased 35% to $344 million.

Adjusted operating income increased 34% to $356 million and the adjusted operating margin expanded by 220 basis points from 19, 5%.

Consulting generated revenue of $3.8 billion for the first 6 months of 2021, representing underlying growth of 8%.

Adjusted operating income for the first half of the year increased 31% to $726 million.

<unk> revenue was $1.3 billion and in the quarter up 6% on an underlying basis, representing a meaningful acceleration from the first quarter.

Career from 15% on an underlying basis, reflecting the rebound on the economy and business confidence.

Wealth increased 4% on an underlying basis, reflecting strong growth and investment management offset by a modest decline and defined benefit.

Our assets under delegated management grew to 393 billion at the end of the second quarter up 28% year over year, and 3% sequentially benefiting from net new inflows and market gains.

<unk> underlying revenue growth was 4% and the quarter driven by strength internationally.

Okay.

Oliver Wyman revenue and the quarter was $618 million and increase of 28% on an underlying basis.

Second quarter results represent a sharp rebound from the contraction we saw on the second quarter last year.

For the first 6 months of the year revenue, but Oliver Wyman is $1.2 billion and increase of 19% and on underlying basis.

Adjusted corporate expense was $62 million and the second quarter.

Foreign exchange was a modest benefit to earnings and the quarter.

Assuming exchange rates remain at current levels, we expect FX to have a minimal impact on EPS for the remainder of the year.

However, the net benefit credit was $71 million and the quarter and the remaining 2 quarters of the year. We expect our other net benefit credit will be mostly consistent with the level and the second quarter.

Investment income was $19 million and the second quarter on a GAAP basis and $18 million on an adjusted basis and mainly reflect gains on our private equity portfolio.

Interest expense from the second quarter was $110 million compared to $132 million and the second quarter of 2020, reflecting lower debt levels and the period.

Based on our current forecast, we expect approximately $110 million of interest expense from the third quarter.

Our adjusted effective tax rate and the second quarter was 24, 4% compared to the 25% and the second quarter of last year.

Tax rate benefited from favorable discrete items, the largest of which was the accounting for share based compensation.

Excluding discrete items, our effective adjusted tax rate was approximately 25, 5%.

Our GAAP tax rate was 31, 6% and the second quarter up from 26, 2% and the second quarter of 2020.

The increase reflects a $100 million impact from the revaluation of deferred tax liabilities due to an increase and the UK statutory tax rate that goes into effect in 2023.

Yeah.

Through the first half of the year, our adjusted effective tax rate was 24, 4% compared with 24% last year.

Based on the current environment and continue to expect and adjusted effective tax rate between 25, and 26% for 2020, 1 excluding discrete items.

And we currently look out from the balance of the year, we expect our topline growth to remain strong, reflecting the economic rebound and favorable environment.

Keep in mind and second quarter faced the most favorable year over year comparison per revenue growth.

As we progress through the rest of the year. This combined with continued normalization of expenses will result in more challenging comparison.

However, our businesses have momentum and we expect positive trends to continue resulting in strong performance and the second half and a terrific full year.

Okay.

Turning to capital management, and our balance sheet, we ended the quarter with $10.8 billion of total debt.

This reflects repayment on $500 million of senior notes in April, which completed our <unk> related deleveraging.

Our next scheduled debt maturities and January of 2022, and $500 million of senior notes mature.

We continue to expect to deploy approximately $3.5 billion and possibly more capital in 2021 of which at least 3 billion and will be deployed across dividends acquisitions and share repurchases.

The ultimate level of share repurchases will depend on how the M&A pipeline development.

Last week, we raised our dividend, 15%, which is the largest increase since the third quarter of $19.98.

We also repurchased 2.4 million shares of our stock for 322 million and the second quarter.

Okay.

Our cash position at the end of the second quarter was $888 million.

Uses of cash and in the quarter totaled $993 million and included $241 million for dividends and $322 million per share repurchases and $430 million per acquisition.

For the first 6 months uses of cash totaled $1.4 billion and included $478 million per dividend $434 million per share repurchases and $473 million per acquisition.

Overall, we had an exceptional second quarter positioning us well to deliver strong growth in both revenue and adjusted earnings from 2021, and with that I'm happy to turn it back to Dan.

Terrific, Thanks, Mark and operator, we are ready to begin Q&A.

And the interest and interest and.

From as many participants as possible, we would ask that participants limit themselves to 1 question and 1 follow up question.

And to ask a question and we need to press star.

To withdraw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from Elyse Greenspan with Wells Fargo. Your line is open.

Hi, Thanks, and good morning. My first question is on the organic growth outlook.

Recognizing the comps do get a little bit harder and the second half of the year, but the Q3.

It's still negative.

Last year. So I guess my question is given what you know now it sounds like you guys are positive, but a little bit cautious about the economy.

Is it possible it sounds like it's still possible, we could see double digit organic growth over the remaining 2 quarters of the year.

Yeah. So.

And we obviously as Mark was saying, we've got momentum and we feel very good about how we're positioned and what we're not.

And that fearful about the economy, we are fearful about continuing waves of COVID-19, but the economies have adjusted somewhat and in many parts of the world and a more resilient and certainly than they were in the spring of 2020, and so that the impact economic impact.

Won't be as severe as what we've seen even with continuing waves of Covid and we last quarter release, we said that 2021 growth will be at the high end of our 3% to 5% range and possibly higher.

At 9% underlying growth through 6 months, it's safe to say that we're in the higher category.

We feel very good about our position and we're going down a very good year and 2021 is just going to set a new base for us we intend to grow revenues and earnings in 2022 as well. So this is not going to be a 1 year wonder.

Yeah.

Okay. That's helpful. And then my second question was on the margin side sales and Eli.

Dan I think you said that <unk> is not fully come back but also you know.

The pretty impressive revenue growth helped drive that margin improvement as well, so and we think about the back half of the year and keeney coming back and you just help us think through.

The other resulting impact on the margin on especially if revenue remains strong maybe the second half, but also see some margin improvement.

I'll start by saying that we absolutely expect margin expansion and the year and this will be our 14th consecutive year of margin expansion and margins are an outcome of how we run the business I mean, we grow our revenue every year at a pace that's faster than how we grow our expenses.

I think he may be overly optimistic about <unk> really roaring back in the back half of this year I think it's going to be very gradual.

And slow actually and I think there is that companies not just marsh and mclennan will travel with more appropriate and it will be more thoughtful about about traveling and and I think clients will we will expect the same av providers like ours, and so we do expect and hope that all of them.

Tie T and he gets back to kind of 2019 levels, but but we may be quite a ways away from that point in time.

We were very pleased with our margin expansion and the quarter and as you said that was driven by our top line, but that's where it largely came from and it helps us that strong top line and helped us overcome a comparable which led the -5% ex.

<unk> growth I mean look and look at RIS margins were up 30 bps, but thats on top of 430 Bips of margin expansion and the second quarter of last year. So we like where we are.

We will grow margins for the year and may not be every quarter don't know that right now, but but ultimately we feel good for the year.

Next question please.

Our next question comes from Jimmy <unk> with Jpmorgan. Your line is open.

Hi, good morning, So just on organic growth again, obviously, you mentioned easy comps.

Are there any other tailwind and such.

Such as maybe pent up demand and certain industries or just the.

Benefit of higher price hikes, and P&C debt might not repeat to the same extent in future periods.

Yes.

The high levels of growth, we're not just because of easy comps at all I mean.

Zack Carpenter comp was.

Was live and 9 last year.

March was a 1.

It was not exactly layoffs in terms of comps I think.

We have real momentum right now and the U S economy, and stronger <unk> integration is well behind us and the combined organization is emerging from the pandemic stronger than what we went in and focused and on our front foot new business generation was terrific across the businesses and our growth.

And was broad based retention and strong pricing is a tailwind and we're benefiting from disruption and flight to quality and stability. So if they're on a lot of factors that are that are underpinning our revenue growth and and we feel very good about revenue growth into the future.

Okay, and then on share buybacks.

I think you've spent over $300 million into Q over 400 for the first half and that's a higher pace than you've typically debt.

Prior to the pandemic. So is it more of a catch up from not buying back stock last year or should we assume this is going to be more of a run rate going forward.

And we're not catching up with every day of every year and has its own adventure and ultimately as we've said before we start every period Bill.

Leaving and a balanced approach to capital management not that we'll spend the same money and in each of our 3 principal buckets of dividend and acquisition and share repurchase.

But we don't have.

And approach that weighted to 1 versus and the other and so share repurchase and large part is a function of what our acquisition activity looks like and every year might not be perfectly balanced but boy the first half was pretty balanced.

And our uses of.

$478 million of dividends <unk> 34 of share repurchase and 473 and of acquisition. So it is it is a balanced approach and I think youll see that from us at the end as Mark was saying we have.

3 and $5 billion or more and deploy.

We are on a cash generation type of companies. So this is again not a 1 year wonder this is and every year, but willing to book money towards our dividend and we're going to grow our dividend, we're going to acquire high quality firms and we're going to buyback our own shares I mean, thats going to be year after year.

Okay.

Okay. Thank you.

Next question please.

Our next question comes from David <unk> with Evercore ISI. Your line is open.

Okay.

Hi, Thanks, good morning.

I wanted to talk a little bit more.

About.

About the expenses.

The other operating expenses were up.

Not as much as I would've thought I mean, it sounds like <unk> continues to be a benefit that's not going to roar back, but still up only 6% year over year, Despite a pretty favorable on a pretty tough comp on the expense side.

And I'm wondering if there was anything else and 1 off and there.

And Relatedly I guess are you guys and realizing more sustainable expense saves as a result of some other operational changes due to COVID-19, like real estate expense saves and that that sort of thing.

Well, it's a good question, David and we certainly are going to realize a number of efficiency gains over the next several years and that's just.

As you mentioned real estate, more purposeful TNA or traveling and general and hopefully even as well also.

And we've been undergoing some significant modernization projects on technology and on operations and so that that will benefit us more and the future than it is doing right now.

On the biggest growth and our expenses expenses frankly is compensation and I.

So that's a good thing and as our variable comp is going up along with our growth.

We're in the market, we're hiring I mean, the first 6 months of this year, our head count head count as well and the early 2000 and most of that is coming within marsh and there.

Capitalizing on the opportunity they see with their 2 biggest competitors.

Having some element of distraction and uncertainty so at the end of its more expense related to head count.

And expense related to compensation that debt.

Where the growth of expenses coming from it and we feel pretty good about that we can manage that over time, but we're in the market right now building our business and building on already the industry, leading pool of talent, we already have.

Yes.

Great that's good to hear.

I guess, maybe just a follow up on that on that head count I mean, I think that's.

The 2000 and head count growth. This year is definitely more than and I was thinking where I had thought.

How much of a how much of a tail does that have like is that something.

And that you think and continue through the end of the year or is.

Is that something that you have like this.

Period of time, where the consolidation is sort of and.

There is some uncertainty there and you guys are capitalizing on that and then once that's over it some sort of back to normal course, where you guys are still still getting talent.

And just not as significant.

I think part of the guest.

Our people are attracted to work and environments with smart creative dedicated people and the more people like that you have the more talent you attractive and it is it's clear that day.

And.

And that the issues of Willis and and <unk>.

Particular, NAR and are creating a short term opportunity that will run its course, 1 way or the other I mean I was just looking at the stats recently are hiring from a on a wellness post the announcement is 3 times higher on a net basis than it was and the 15 months prior to the announcement so that that's not going to run forever.

But ultimately.

And our best to continue.

Continue to build our health and capabilities within our already formidable firm.

The next question please.

Our next question comes from Marsh with <unk>. Your line is open.

Thanks, So 2 questions I think related to what you were talking about first when you talk about the flight to stability was that a headwind or a tailwind to margins on the quarter.

I think the flight to stability indicates that our accounts retention levels and our new business are higher than they otherwise would be and so that that would be benefits not only revenue, but put a benefits and margins because of the revenue is higher than it would otherwise not have an impact on.

And on expense.

Okay perfect and.

And then.

Obviously, the reinsurance organic growth and fantastic for a long time there are it seems like there are a lot of new companies out there and I'm, hoping you can give us a little bit more color on what's happening in the competitive environment.

Yes.

Slowly and it.

We're very pleased with Guy Carpenter performance over a number of years, but I'll hand off to Peter So he can dig in a little bit deeper.

And so Peter you want to take that.

Yes, Thanks, Dan and thanks Meyer.

We have we've enjoyed a terrific run over the past several years.

Our model is based on consistent growth over a long period of time and.

<unk> been able to capitalize on that model.

As a result, and a very compelling proposition.

Discipline around both sales and pipeline.

And have resulted in new business wins, and as we look at our new business wins over the past several quarters Meyer the amount of new business coming from new clients has grown significantly to the extent and in Q2.2021 that number was 56% of our revenue growth from new business came from new new clients. So we are seeing.

<unk> growth based on the model that we've built yes. There are a number of new challenger brokers out there and we have to be mindful of all of our competitors who are worthy adversaries, but we believe we have a very compelling proposition that over a long period of time has produced sustained growth and opportunity for us and on a continuing basis.

Okay and definitely thank you.

Alright.

Question. Please.

Our next question comes from Brian Meredith with UBS. Your line is open.

Yeah. Thanks, just 2 quick ones here first 1.

Wondering if you could breakdown at marsh.

Generally speaking, what's the impact on organic revenue growth was from rate versus call exposure growth versus market share gains just generally speaking.

And if he can speak up just a little bit more I got the question, but it is a.

A little faint.

2 hour from.

And on for John.

But the net.

Start by saying how thrilled we all are with and our.

100, 150 year anniversary as a company, we could grow the GAAP top line by 20% and Boston in particular.

As debt.

The best growth and a couple of decades.

So it is a phenomenal overall performance, but Jon you are on a breakdown on the growth a bit.

Alright, thanks for the thanks for the question and.

<unk> mentioned, we certainly benefit from the economic rebound.

And really soft prior year comparable proud of that growth and the second quarter last year during the tech and the pandemic.

The pricing environment and talked about it a little bit and his remarks earlier.

About 50% of heart revenue sensitive to P&C pricing and.

And while rate increases have come down modestly compared to the fourth quarter of last year and the first quarter of this year.

Held really compare horse.

Q2 pricing and wherever debt, where we get commissions, but it's from a number of different areas, but I.

And I also want to emphasize that we executed really well on the quarter. Our team has deep and a strong as it's ever been they're highly engaged and focused on delivering on growth.

From our clients and the margin remains challenging again, while rates arent nearly as much as they work for.

They are quite difficult and I do think there is.

<unk> been a bit of catch up and some markets. There is a fair amount of new new business.

And our results, whether it's and transaction risk and cyber.

Org and construction there are.

Examples of where that is the case.

And we're very very pleased with the results for the quarter.

Or anything else clients.

Yeah.

Great. Thanks, and then second question is and I can talk a little bit about kind of the M&A environment here.

And it looks like right now and also <unk>.

The issues debt.

On and Willis has kind of run into with some regulatory approvals does that at all change your strategic view of M&A right now.

No and kind of tightened on the back on our philosophy and M&A is basically we like fly and firms that are high quality with a <unk>.

<unk> team generally remains in place and.

Recurring revenue streams high cash generation and low capital requirements and a history of success.

And that sets it up for us and that is.

It's really getting to know each other over a long stretch of time and figuring out it's not us.

Not on selling with deciding to come together and we believe the outcome for our clients and our people will be better together than separate and that's that's the approach.

Pipeline remains strong for us throughout our businesses in fact last year.

Was the highest acquired revenue within Marsh and Mclennan agency, which as you know has been more than a decade long in terms of strategy build and so we feel very good about that and then obviously, there's a lot of capital and the world. So multiples are higher than what we would like and we need to be very selective and.

And very careful in our evaluation of of pro forma results.

And the companies, we look at our our private but our strategy from a long period of time.

<unk> has been more of a string of pearls, not something where it's 1.

Meg.

Type of acquisitions, but it's building and the company's capabilities.

<unk> half.

Broader and JL team was an anomaly and some ways and was perhaps our biggest acquisition in history and.

And we told you at the time of that acquisition.

Cultivating a broad relationship from a long period of time and there were coming together because when we bought the combination of <unk> will be better.

And if city.

Inc. A manifestation of that growth and is better because of our combination with <unk>, a particularly and our specialty operation and so.

And kind of where we are.

Our thoughts on M&A and have not.

What changed.

Great. Thank you.

Next question please.

Our next question comes from Rodman and this with autonomous Research Your line is open.

Okay, Thanks, and good morning.

I guess, just thinking about consulting couple things there first of all with Oliver Wyman and the 28 organic any any color on.

And I guess, how you're thinking about that any day.

Visibility on towards the back half of the year and.

And.

I guess just within Mercer it sounds it has been.

And from focus on the call about.

Comps are becoming more difficult, it's not obvious that the comps get that much more challenging there from.

And maybe curious of marsh team could give us some perspective on.

But sort of.

Our business develops and the 3 months of the quarter and when and where we're at now look into the back half.

And I'm glad that yes, it's been a consult their debt is a big part of our business and a big part of our performance.

And I'll hand off from Nick first and then over to Martine, but let me just say a couple of comments first 1 we've mentioned before that Oliver Wyman will tend to be our fastest grower over long stretches of time.

But with more volatility and.

And so if you look back to the second quarter of last year and -13, So we love the 28 on Florida.

And ultimately you put them together and at 6% over 1 and more difficult periods and.

Recent human history, and so yeah, we tick the box on that and that's a terrific result, Mercer on ahead, other and merchandize and terrific growth businesses health wealth carrier and Martina and does a great underpinning work and if you go back to the end of 2019.

2% growth, 3% growth and 4% growth and sequential quarters, and then 5% growth and the first quarter of 2020, and then got last by the pandemic as Ed as expected in some ways and held up very well with a minus III throughout last year, So mark teen and Mercer going.

And back to a terrific result, and in the second quarter and sort.

And getting back to the same pace or getting back to the same processes that existed pre pandemic and let's start with Nick and then we'll go to my team.

Net thank you very much.

So it's on sides, where we're thrilled with the performance.

And as to where it's coming from it and but incredibly broad based.

Growth from the quarter was highest in the regions and the sectors.

And most adversely affected by the pandemic and.

And referred to the comp.

The Americas, particularly in the U S and seen a very sharp rebound and client demand.

Both from the economic conditions and business confidence rising materially and if you take for example, the transportation sector, which was the fact that suffered the greatest and pipes from depends on and last year springing back very strongly.

Sorry, this was the Americas growth in Europe, and in the Asia Pacific Region, and we're also quite robust and across our major industry groups financial services consumer and industrial health care all.

And actually growing remarkably similar rates.

And while we do think that sorry, it's growth and Q2 and that we see business confidence remaining high.

Economic conditions improve and we see some semblance of it sounds from a metals and some other places we operate.

And there's also a partner from the labor market and from the skill set that all consultants possess.

So we have a day.

And some outlook for the business for the rest of the year.

Thanks Martine.

And thanks for the question and similar to other alignment and growth and the quarter and really came on lines of business and other regions.

I think it's worth spending a moment on tribune inherently and through the pandemic that this is where we have the most discretionary project and a little bit more connected to our Oliver Wyman will be operating and it.

And he come back times debt.

We started projects.

And there's a lot of demand out there and helping clients and I hope it.

Debt post pandemic work force there is a war for talent out there so.

And from the demand for scalable and skill set and assessment engagement transformation as companies accelerate.

And it will and.

And.

Technology, so that is sustaining our career business, we see strong SaaS and good momentum towards the next year.

I want to spend another moment on our wealth business I think.

4% growth in the quarter is we have not seen that since Q4.2017.

And again and all.

And.

Substitution in our wealth business did well and particular, our CIO business, which is the part of the business, where we implement assets.

Management for our clients and ECB slight 2 strong governance their deep manager research and.

Combined with our questions and helping clients with ESG and DTI in pipe.

And Thats net.

And the likes.

And this fall.

Best of NUCYNTA, Victor commented a little bit on them.

And lastly on on what else.

This is <unk>.

<unk> of our portfolio, which you also have and structural decline and <unk>.

For several years actually the same.

Same time and kind of smaller and then.

Investment management and solution and we haven't and portfolio and we can see that this should be providing some tailwind as the company on 2010 loans.

Got it thanks Mark.

And then just a follow up for Dan and maybe John Daniel as well.

And just give us an update on the strategic importance of using wholesale brokers on the P&C side and maybe how that's evolved over time.

Yes.

And take it it had all driven and John It's an interesting question and I think I think wholesale brokers and a lot of ways like the misnamed and that.

Specialist and <unk>.

And in areas with some really good skills on exactly.

What I think back in my career.

Wholesale really does debt paydown.

And in years ago, I think specialty and placement and might be more appropriate, but but John you want to talk about use of wholesalers.

Sure.

That's right.

Largely focused on specialty capabilities and horses.

Barbara and views wholesalers, and we need to access certain markets.

Certainly.

The insurers and estimates.

In terms and in particular.

Their distribution access.

2 circles.

And that expense.

And we'll use wholesale brokers.

For the most part that happens.

It states almost no utilization for us.

And I'd say.

Risk originated from the United States.

And to some extent it happens.

On the marketplace and as well.

But we.

Preferred relationship with a couple of other specialty wholesalers and focus our efforts to make sure. We're delivering the same quality outcome for our clients and we can't get from.

From utilizing our own teams.

Next question please.

Thank you as a reminder to ask a question on please press Star then 1 our next question comes from Paul Newsome with Piper Sandler Your line is open.

Good morning, and.

Congrats on the court.

My question is about.

Potential persistent and see if some of these market share gains.

And I'm thinking about back to the <unk> acquisition and it seem to me there was a little bit of drag on organic growth for about a year as things sort of moved through the system and the integration happen do you think there's a read through to kind of what's happening for you on a positive sense today that as you hire these do people and they really take kind of a.

Year for the full revenue impact to impact and so that's kind of how we should think about.

On the benefit of the flight to quality day, it's kind of a year by year kind of.

Effect.

Yes.

Our pulp.

And we're in an awfully big companies.

So where we've made decisions to add to our talent and capability and our broad capabilities.

More generally to build scale content et cetera.

And as opposed to necessarily say oh that person.

Project cost estimates about that we expect them to produce based and about over the course of the next couple of years.

Basic premise net element you hire.

Senior people that generally you take the expense first and then some revenue might come later.

And this is true.

And as they get involved with with the firm more broadly, but but unlike some more peaky firms.

It's not just us.

And so focused on.

This is a producer and this is what they think their book of businesses and.

And that we're buying.

Debt.

Net producer that's just not how we operate we're much more of a constant culture and building capabilities.

John.

Thoughts on that.

Our market share is a hard thing to that mature.

I've read some estimates.

And on insurance premiums will grow about 10% per share.

If you use that as a proxy for the market.

Yes accounts.

Sure.

And I mentioned earlier, we're picking on us and.

New group business.

Loans, however to your construction, primarily our win rates are up 32, and Brexit is and when I look at.

The success and Rfps compared to historical levels and the number of offensive Rfps.

Rfps.

Considerably considerably better rich and it's been.

And past all of that I think speaks to the quality and the team.

And the same time, we're investing in talent, that's going to drive our future growth.

We're on and Turkey.

We have good momentum and we're excited about what that means for us debt.

Yeah, just a little bit more on the market share it looks like it came everywhere in terms of gains in your businesses is that really a fair sense or was there some benefits.

This is <unk>.

Thank you.

Relative to the level of business growth that we've.

We've seen certainly.

And at the company and so it is occurring and many different spots and I would put it down to net wattenberg and fundamental growth market risk strategy and people.

Companies, whether Europe is on large accounts segment. The middle market segment is a small segment and if youre already at work for our organization and our government you have a focus on those 3 things are completely relevant to how do you approach the business, we've got competitive advantages.

Start with the quality of our people our culture.

Capabilities that got even further broaden and fluidity acquisitions, we've done over the last number of years, most notably J L T and our global footprint both on our competitive advantages. We don't have a lot of competitors and any way that can match up those advantages and.

And we have continued to acquire best in class businesses on a number 1 focus is on quality and history of success, and so that's particularly and middle market brokerage.

We've got all kinds of opportunities, we spoke about cyber and climate and our script, but digital small commercial risk awareness in general is much higher and so.

And.

And I've mentioned before.

Identic Meda brought us closer than we ever were before where we're more connected with our collaborative than ever before and we're leveraging our combined strength like never before so all of those factors come together.

And and we are a more formidable force in the market.

And were going on with business.

And.

That's going to continue.

Thank you that's great.

Next question.

Thank you I would now like to turn the call back over to Dan Glaser, President and CEO of Marsh Mclennan for any closing remarks.

Okay, well that's their first.

Okay, but I appreciate everyone joining us on the call. This morning, I want to thank our 78000 colleagues for their commitment and hard work and dedication the marsh <unk> Mclennan and I look forward to speaking with you next quarter. Thank you very much.

This concludes today's conference call. Thank you from participating you may now disconnect.

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Welcome to Marsh Mclennan and conference call today's call is being recorded second quarter 2021 financial results and supplemental information were issued earlier. This morning. They are available on the Companys website at M C Dot com.

Please note that remarks made today may include forward looking statements, including certain expectations related to COVID-19, and other matters forward looking statements are subject to risks and uncertainties and a variety of factors may cause actual results to differ materially from those contemplated by such statements.

For a more detailed discussion of those factors. Please refer to our earnings from this quarter into our most recent SEC filings, including our most recent form 10-K, all of which are available on the Marsh Mclennan website.

During the call today, we may also discuss certain non-GAAP financial measures for a reconciliation of these measures to the most closely comparable GAAP measures. Please refer to the schedule in today's earnings release on.

And now turn this call over to Dan Glaser, President and CEO of Marsh Mclennan.

Good morning.

Thank you.

On to discuss our second quarter results reported earlier today.

And Dan Glaser, President and CEO of Marsh and Mclennan.

Joining me on the call.

Our CFO.

Ceos of our businesses.

And as Tom Mark and Peter.

Peter Harrington Carpenter.

And Mercer and mixed.

And all of them.

Also with US. This morning is Sarah Dewitt head of Investor Relations.

And I'd like to welcome Nick who became CEO of Oliver Wyman and July 1st.

Nick has led many volatile items major profit and is 23 years.

Business.

And to see Oliver Wyman and continue to grow and thrive under his leadership.

Okay.

Commodity I also want to thank Scott Macdonald for his many contributions during his distinguished career.

Sure.

Mark Macfarlane and added outstanding second quarter.

And well positioned and benefiting from the buckets of opportunities.

We are stronger and our broader capabilities.

The acquisition.

We're benefiting from what may be even stronger economic rebound and nearly 4 decades that's on.

And our largest region the U S.

There was highest in Manhattan per hour advice and solutions and this time of uncertainty and in the face of challenging market conditions.

We are seeing on flight to quality and stability, which is contributing to high levels of new business growth and client retention and its helping us attract talent.

And there's a long runway for growth as we think about major protection gaps around the world newer margin risks Digitization work force of the future and Underpenetrated markets such as small commercial.

We are focused on capitalizing on these opportunities and I am proud of our execution and the quarter.

We generated record second quarter revenue and earnings the best underlying growth of any quarter in 2 decades other positives for an excellent leader.

And the strength of our results was broad based with each of our businesses and virtually all of our major geographies seeing an acceleration and growth.

Our adjusted EPS increased by an impressive 33% and we generated margin expansion despite challenging expense comparison.

As we look ahead, the economic outlook for the U S and most of the major countries, we operate and is encouraging however.

However, the pandemic is not over yet.

Vaccine hesitancy creates risk and.

And there are many parts of the world where vaccine availability is limited.

As a result, much of the world and experiencing another wave of the pandemic with rising case counts due to the spread of areas.

In addition, the shape of this economic recovery is very different from any we've seen before.

Some industries are thriving while others are being impacted by supply chain disruption inventory issues and labor shortages.

Navigating this dynamic landscape is challenging even confounding for some businesses.

The growth opportunity for Marsh and Mclennan and has significant during this time of uncertainty and recovery, we are aiding and guiding our clients through the complexities of the new normal as well as helping them tackle issues like climate risk cyber diversity, and inclusion and employee safety and wellbeing.

And workforce disruption.

Our ability to provide differentiated high quality solutions to our clients less on our talent and expertise.

Our colleagues are our number 1 competitive advantage and with the potential for industry consolidation, we see a meaningful opportunity to invest and hiring and deepen our world class talent pool.

We have strong momentum and as we mentioned last quarter. Our efforts are focused on resurgence and expansion.

Let me provide some examples of how we are helping our clients address complex issues of the day, specifically 2 major challenges cyber security and climate change.

Cyber security is 1 of the greatest risks facing society <unk>.

Supply chain and ransomware attacks continue to rise with a number of recent high profile attacks and effective organizations across all sectors and segments from technology to critical infrastructure and health care.

And it is helping clients manage cyber risk increasingly we are bringing our businesses together to leverage all of our expertise data and relationships with public and private partners to help clients become more resilient.

Our growth and participation and the size of our extended well beyond the placement of the insurance.

Under the leadership from time to oil we are leveraging the collective capabilities of Marsh Guy Carpenter and Oliver Wyman to bring cyber solutions from across our enterprise to clients.

Not only are we helping clients with risk transfer throughout our insurance businesses.

Through our cyber risk assessment tools, we help clients measure and quantify their cyber risk exposure to better informed decisions about cyber security risk mitigation and transfer of strategies.

We also have clients with incident response before during and after events as well as a part of our broader efforts to help clients build resilience and the face of a constantly evolving threat landscape.

Our second defining challenge of our time is climate change climate and the broader topic of ESG or complex multi dimensional challenges virtually all companies face.

The threat of a changing climate presents obvious questions for companies touching everything from strategy to resilience to their workforce and how they communicate.

Even though the climate change is a long term threat issue is proximate and has immediate consequences as firms deal with calls for action strategies to respond and more input from various stakeholders led.

Led by mix Studer, we are bringing together our businesses to help our clients and anticipate climate risks and opportunities.

For example.

Oliver Wyman is working with our insurance businesses to support clients and the transition to a low carbon economy and bad its climate risk.

We are assisting clients with the development of carbon like business models and to Derisk investment and sustainable technologies and.

And at Marsh and Guy Carpenter, we are helping to develop innovative climate solutions to bridge protection gaps.

We assist clients with stress testing models.

And the impact of climate change and providing risk management, and and and insurance services to protect against climate impacts.

And Mercer has responsible investment business help steward and fiduciaries of investment pools understand how a changing climate impact investment returns and the future and anticipate them today.

Overall, we are uniquely positioned to help our clients with their most pressing challenges.

Let me spend a moment and on current and P&C insurance market conditions.

The second quarter marks the 15th consecutive quarter of rate increases and the commercial P&C insurance marketplace Tomorrow.

The Marsh global insurance market index showed price increases of 15% year over year versus 18% and the first quarter.

The pace of price increases continued to moderate but still remains high reflecting elevated loss activity and concerns about inflation and level of interest rates.

Global property and insurance was up 12% and global financial and professional lines were up 34% driven in part by steep cyber increases while global casualty rates are up 6% on average and U S workers' compensation rates declined modestly and the quarter.

Keep in mind, our index skews to large account business. However, the U S small and middle market insurance pricing continues to rise as well, although the magnitude of price increases and as less debt.

Large complex accounts.

Turning to reinsurance Guy Carpenter and global property catastrophe radar and lighting index increased 6% estimate either.

And the second quarter, the market was more orderly and balance than a year ago, reflecting adequate capital and it increased willingness to deploy capacity.

Measured and moderate single digit rate increases where typical after 2 years of double digit rate increases. However programs that had significant losses are higher increases and capacity remains constrained on certain lines of business, most notably cyber.

Concerns remain around inflation losses, and certain lines extreme weather events and the beginning of a new hurricane season.

And in times like these where our expertise and capabilities Shine we have.

Working hard to help our clients navigate the current environment.

Now, let me turn from our Fantastic second quarter financial performance, we generated adjusted EPS of $1, 75%, which is up 33% versus a year ago, driven by strong top line growth and continued low levels of TNA.

Total revenue increased 20% versus a year ago and rose, 13% on an underlying basis, the highest quarterly growth in 2 decades.

Underlying revenue grew 13% and RIS and 12% and consulting Marsh.

<unk> grew 14% in the quarter on an underlying basis, the highest quarterly underlying growth and nearly 2 decades and benefited from strong new business and renewal growth.

Scott Carpenter grew 12% on an underlying basis and the quarter continuing a string of excellent results.

Mercer underlying revenue from 6% and the quarter, the highest and almost a decade.

Oliver Wyman and posted record reported underlying revenue growth of 28%.

Overall, the second quarter saw adjusted operating income growth of 24% and our adjusted operating margin expanded 90 basis points year over year.

As we look out for the rest of 2021, when you are well positioned.

With 9% underlying revenue growth year to date or a full year growth will be strong we expect favorable market dynamics to persist for at least the remainder of the year, although the pace of growth could moderate versus the second quarter as year over year comparisons become more challenging.

We also expect to generate margin expansion for the full year and strong growth and adjusted EPS with that let me turn it over to Mark from a more detailed review of our results.

Thank you Dan and good morning.

Our results were excellent with record second quarter revenue and earnings per quarter.

Quarterly underlying growth and 2 decades meaningful margin expansion and significant growth and adjusted earnings.

Highlights from our second quarter performance included strongest underlying growth Mark and first quarter 2003 and <unk>.

And the Guy Carpenter, and 15 years solid reserve of 6% and Mercer and record reported underlying growth at Oliver Wyman.

Second quarter growth and adjusted earnings per share was also impressive rising asset pace of any quarter in more than a decade.

Consolidated revenue increased 20% and second quarter to $5 billion, reflecting underlying growth of 13%.

Operating income and the quarter was $1.2 billion and increase of 39% over the prior year.

Adjusted operating income increased 24% to $1.2 billion and our adjusted operating margin increased 90 basis points to 26, 4%.

EPS was $1.

And the quarter and adjusted EPS increased 33% to $1.75.

For the first 6 months of 2021 underlying revenue growth of 9% from adjusted operating income grew 22% and $2.6 billion. Our adjusted operating margin increased 170 basis points and our adjusted EPS increased 26% to $3.70 force.

Looking at risk and insurance services second quarter revenue was $3.1 billion up 21% compared with a year ago or 13% on an underlying day.

Operating income increased 37% and $950 million.

Adjusted operating income increased 22% and $927 million and our adjusted operating margin expanded 30 basis points to 32, 4%.

For the first 6 months of the year revenue was $6.4 billion with underlying growth of 10%.

Adjusted operating income for the first half of the year increased 19% to $2 billion. The margin of 34, 5% up 110 basis points from the same period a year ago.

Okay.

At March revenue and the quarter was $2.7 billion up 23% compared with a year ago, 14% on an underlying basis.

Even excluding the impact of the revenue adjustment, we recorded a year ago underlying revenue at Marsh was up 12%.

Growth in the quarter was broad based and was driven by robust new business growth and solid retention.

The U S and Canada region delivered another exceptional quarter with underlying revenue growth of 15%. The highest result, since we began reporting this segment.

And international underlying growth was 13% EMEA.

EMEA was up 16% Asia Pacific was up 10% and Latin America grew 2%.

For the first 6 months of the year Marsh's revenue was 5 billion with underlying growth of 11%.

U S and Canada underlying growth was 12% and international was up 9%.

Yeah.

Guy Carpenter's second quarter revenue was $488 million up 13% compared with a year ago or 12% on on underlying basis.

Growth was broad based across all geographies and specialties.

<unk> has now achieved 7% per higher underlying growth and 6 of the last 8 quarters.

For the first 6 months of the year Guy Carpenter generated $1.4 billion of revenue, 8% underlying growth.

And the consulting segment revenue and the quarter was $1.9 billion up 17% from a year ago or 12% on on underlying basis.

Operating income increased 35% to $344 million.

Adjusted operating income increased 34% to $356 million and the adjusted operating margin expanded by 220 basis points from 19, 5%.

Yeah.

Consulting generated revenue of $3.8 billion for the first 6 months of 2021, representing underlying growth of 8% adjusted.

Operating income for the first half of the year increased 31% to $726 million.

<unk> revenue was $1.3 billion and in the quarter up 6% on an underlying basis, representing a meaningful acceleration from the first quarter.

Career from 15% on an underlying basis, reflecting the rebound on the economy and business confidence.

Wealth increased 4% on an underlying basis, reflecting strong growth and investment management.

Set by a modest decline in defined benefits.

Our assets under delegated management grew to 393 billion at the end of the second quarter up 28% year over year, and 3% sequentially benefiting from net new inflows and market gains.

<unk> underlying revenue growth was 4% and the quarter driven by strength internationally.

Okay.

Oliver Wyman revenue and the quarter was $618 million and increase of 28% on an underlying basis.

Second quarter results represent a sharp rebound from the contraction we saw on the second quarter last year.

For the first 6 months of the year revenue, but Oliver Wyman and was $1.2 billion and increase of 19% and on underlying basis.

Adjusted corporate expense was $62 million and the second quarter.

Foreign exchange was a modest benefit to earnings and the quarter.

Assuming exchange rates remain at current levels, we expect FX to have a minimal impact on EPS for the remainder of the year.

However, the net benefit credit was 71 million and the quarter and the remaining 2 quarters of the year. We expect our other net benefit credit will be mostly consistent with the level and the second quarter.

Investment income was $19 million and the second quarter on a GAAP basis and $18 million on an adjusted basis and mainly reflect gains on our private equity portfolio.

Interest expense from the second quarter was $110 million compared to $132 million and the second quarter of 2020, reflecting lower debt levels and the period.

Based on our current forecast, we expect approximately $110 million of interest expense and the third quarter.

Our adjusted effective tax rate and the second quarter was 24, 4% compared with 25% and the second quarter last year.

<unk> benefited from favorable discrete items, the largest of which was the accounting for share based compensation.

Excluding discrete items, our effective adjusted tax rate was approximately 25, 5%.

Our GAAP tax rate was 31, 6% and the second quarter up from 26, 2% and the second quarter of 2020.

The increase reflects a $100 million impact from the revaluation of deferred tax liabilities due to an increase and the UK statutory tax rate that goes into effect in 2023.

Through the first half of the year, our adjusted effective tax rate was 24, 4% compared with 24% last year.

Based on the current environment and continue.

And you do expect and adjusted effective tax rate between 25% and 26% for 2021 ex.

Excluding discrete items.

And we currently look out from the balance of the year, we expect our top line growth to remain strong, reflecting the economic rebound and favorable environment.

Keep in mind and the second quarter faced the most favorable year over year comparison per revenue growth.

As we progress through the rest of the year. This combined with continued normalization of expenses will result in more challenging comparison.

However, our businesses have momentum and we expect positive trends to continue resulting in strong performance and the second half and a terrific full year.

Turning to capital management, our balance sheet, we ended the quarter with $10.8 billion of total debt.

This reflects repayment on $500 million of senior notes in April, which completed our <unk> related deleveraging.

Our next scheduled debt maturities and January of 2022, and $500 million of senior notes mature.

We continue to expect to deploy approximately $3.5 billion and possibly more capital in 2021 of which at least 3 billion and will be deployed across dividends acquisitions and share repurchases.

The ultimate level of share repurchases will depend on how the M&A pipeline develop.

Last week, we raised our dividend, 15%, which is the largest increase since the third quarter of $19.98.

We also repurchased 2.4 million shares of our stock for $322 million and the second quarter.

Okay.

Our cash position at the end of the second quarter was $888 million.

Uses of cash and the quarter totaled 993 million and included $241 million for dividends and $322 million per share repurchases and $430 million per acquisition.

For the first 6 months uses of cash totaled $1.4 billion and included $478 million for dividend $434 million per share repurchases and $473 million per acquisition.

Overall, we had an exceptional second quarter positioning us well to deliver strong growth in both revenue and adjusted earnings in 2021, and with that I'm happy to turn it back to Dan.

Terrific. Thanks margin, operator, and we are ready to begin Q&A.

Yeah.

And the interest and interest from as many participants as possible, we would ask that participants limit themselves to 1 question and 1 follow up question.

To ask a question on we need to press star.

On to withdraw your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from Elyse Greenspan with Wells Fargo.

Line is open.

Hi, Thanks, and good morning. My first question on is on the organic growth outlook.

On recognizing the comps do get a little bit harder and the second half of the year, but the Q3.

And what's still negative.

Last year. So I guess my question is given what you know now it sounds like you guys are positive, but a little bit cautious about the economy on.

Is it possible it sounds like it's still possible, we could see double digit organic growth over the remaining 2 quarters of the year.

Yeah. So.

Yes.

We obviously and Clark with saying, we've got momentum and we feel very good about how we're positioned and we're not that CFO of <unk>.

The economy, we are fearful about continuing waves of COVID-19, but.

And the economies have adjusted somewhat in many parts of the world and a more resilient and certainly than they were in the spring of 2020, and so that the impact economic impact won't be as severe as what we've seen even with continuing waves of COVID-19 and the last quarter at least we said that 2021 growth will be at.

The high end of our 3% to 5% range and possibly higher.

And I think at 9% underlying growth through 6 months, it's safe to say that were and the higher category.

We feel very good about our position we're going to have a very good year and 2021 is just going to set a new base for us we intend to grow revenues and earnings in 2022 as well. So this is not going to be a 1 year wonder.

Yeah.

Okay. That's helpful. And then my second question was on the margin side, so and <unk>.

Dan I think you said that <unk> is not fully come back, but also the pretty impressive revenue growth helped drive that margin improvement as well. So when you think about the back half of the year and keeney coming back and you just help us think through.

The resulting impact on the margin on.

And if revenue remains strong maybe the second half, but also see some margin improvement.

I'll start by saying that we absolutely expect margin expansion and the year and this will be our 14th consecutive year of margin expansion and margins are and outcome of how we run the business I mean, we grow our revenue every year at a pace that's faster than how we grow our expenses.

I think he may be overly optimistic about <unk> really roaring back in the back half of this year I think it's going to be very gradual.

And slow actually and I think there is that companies not just marsh mclennan will will travel with more appropriate and will be more thoughtful about.

Traveling and.

And I think clients will we will expect the same av providers like ours, and so we do expect and hope that over time <unk> gets back to kind of 2019 levels, but well.

And we may be quite a way away from that point in time.

We were very pleased with our margin expansion and the quarter and as you said that was driven by our top line.

And where it largely came from and it helps us that strong top line and helped us overcome a comparable which led to a -5%.

Expense growth I mean look on look at RIS margins were up 30 bps, but that's on top of 430 Bips of margin expansion and the second quarter of last year. So we like where we are we.

And we will grow margins for the year and may not be every quarter I don't know that right now, but but ultimately we feel good for the year.

Next question please.

Our next question comes from Jimmy <unk> with Jpmorgan. Your line is open.

Hi, good morning, So just on organic growth again, obviously, you mentioned easy comps.

Are there any other deal wins and such.

Such as maybe pent up demand and certain industries or just the.

Benefit of higher price hikes, and P&C debt might not repeat to the same extent in future periods.

Yes.

The high levels of growth, we're not just because of easy comps at all.

And in fact Carpenter comp was.

Was it was a 9 last year.

Marsh Marsh was 1 element.

Not exactly layouts in terms of comps I think that we have real momentum right now and the U S. Economy is getting stronger sales integration is well behind us and the combined organization is emerging from the pandemic stronger than what we went in and focused and on our front foot new business jet.

The ratio was terrific across the businesses and our growth was broad based retention and strong pricing is a tailwind and we're benefiting from disruption and flight to quality and stability.

There are a lot of factors that are that are underpinning our revenue growth and and we feel very good about revenue growth into the future.

Okay, and then on share buybacks.

I think you've spent over $300 million until Q over 400 for the first half and that's a higher pace than you've typically debt prior to depend on mix or is it more of a catch up from not buying back stock last year or should we assume that this is going to be more of a run rate going forward and.

We're not catching up with every day of every year and has its own adventure and ultimately as we've said before we start every period, while leaving a balance approach to capital management not that we'll spend the same money and in each of our 3 principal buckets of dividend.

And acquisition and share repurchase.

But we don't have.

Approach, that's weighted to 1 versus and the other and so share repurchase and large part is a function of what our.

Acquisition activity looks like and.

Every year might not be perfectly balanced, but boy the first half was pretty balanced.

And our uses of.

<unk> hundred $78 million of dividends funded 34 of share repurchase and 473 of acquisition. So it is it is a balanced approach and I think youll see that from us at the end as Mark was saying we have.

3 and $5 billion or more and deploy.

We are on a cash generation type of companies. So this is again not a 1 year wonder this is and every year from willing to book money toward our dividend and we're going to grow our dividend, we're going to acquire high quality firms and we're going to buyback our own shares I mean, thats going to be year after year.

Okay.

Okay. Thank you.

Net.

And next question comes from David Mood Madden with Evercore ISI. Your line is open.

Okay.

Hi, Thanks, good morning.

I wanted to talk a little bit more.

About.

About the expenses.

The other operating expenses were up.

Not as much as I would have thought I mean, it sounds like <unk> and continues to be a benefit that's not going to roar back, but still up only 6% year over year, Despite a pretty favorable on a pretty tough comp on the expense side.

Wondering if there was anything else from 1 off in there and.

And Relatedly I guess are you guys and realizing more sustainable expense saves as a result of some other operational changes due to COVID-19, like real estate expense saves and that that sort of thing.

Okay.

Good question, David and we certainly are going to realize a number of efficiency gains over the next several years and that's just.

As you mentioned real estate, more purposeful G&A or traveling and general and hopefully even as well also.

And we've been undergoing some significant modernization projects on technology and on operations and so that that will benefit us more and the future than it is doing right now.

On the biggest growth and our expenses expenses frankly is compensation and I.

And so that's a good thing and as our variable comp is going up along with our growth we.

We are in the market, we're hiring I mean, our the first 6 months of this year, our head count head count as well and the early 2000 and most of that is coming within marsh.

And they are capitalizing on the opportunity they see with their 2 biggest competitors.

Having some element of distraction and on uncertainty so at the end.

It's more expense related to head count.

And expense related to compensation that debt.

Whereas the growth of expenses coming from it and we feel pretty good about that we can manage that over time, but we're moving the market right now building our business and building on already the industry, leading pool of talent, we already have.

Yes.

Great that's good to hear.

I guess, maybe just to follow up on that on that head count I mean, I think that's.

The 2000 and head count growth. This year is definitely more than and I was thinking where I had thought.

How much of a how much of a tail does that have like is that something that you think and continue through the end of the year or is.

Is that something that you know you have like this.

A period of time, where the consolidation is sort of and.

There is some uncertainty there and you guys are capitalizing on that and then once that's over it some.

Sort of back to normal course, where you guys are still still getting talent.

Just not as significant.

I think talent begets talent people are attracted to working environment and spirit.

<unk> creative dedicated people and the more people like that you have the mortality you attractive and it is it's clear that day.

Is that the issues of Willis and.

And particular Nai are creating a short term opportunity that will run its course, 1 way or the other I mean I was just looking at the stats recently are hiring from a on a well as post the announcement is 3 times higher on a net basis than it was and the 15 months prior to the announcement so that that's not going to run forever.

But ultimately.

And we're doing.

Turning to build.

And capabilities with our already formidable firm.

Next question please.

Our next question comes from Marsh with <unk>. Your line is open.

Thanks, So 2 questions I think related to what you were talking about first when you talk about the flight to stability was that a headwind or a tailwind to margins on the quarter.

I think the flight and stability indicates that our accounts protection levels and our new business are higher than.

They otherwise would be and so that was a big benefits not only revenue, but put a benefits and margins because of the revenue was higher than it would otherwise be if not having an impact on on expense.

Okay, perfect and then.

Obviously, the reinsurance organic growth and fantastic for a long time there are.

Seems like there are a lot of new companies out there and I'm, hoping you can give us a little bit more color on what's happening in the competitive environment.

Yes, absolutely and it.

We're very pleased with Sky Carpenter's performance over a number of years, but I'll hand off to Peter and so we can dig in a little bit deeper.

So Peter you want to take that.

Yeah, Thanks, Dan and thanks Meyer.

We have we've enjoyed a terrific run over the past several years on.

Our model is based on consistent growth over a long period of time.

And we're a been able to capitalize on that model.

As a result of a very compelling proposition.

Discipline around both sales and pipeline.

That have resulted in new business wins, and as we look at our new business wins over the past several quarters Meyer the amount of new business coming from new clients has grown significantly to the extent and Q2.2021 debt number was 56% of our revenue growth from new business came from new new clients. So we are seeing.

<unk> growth based on the model that we feel yes, there are a number of new challenger brokers out there and we have to be mindful of all of our competitors who are worthy adversaries, but we believe we have a very compelling proposition that over a long period of time has produced sustained growth and opportunity for us and <unk>.

<unk> basis.

Okay and definitely thank you.

Alright.

Next question please.

Our next question comes from Brian Meredith with UBS. Your line is open.

Yeah. Thanks, just 2 quick ones here first 1 standard.

And I'm wondering if you could break down at Marsh, just generally speaking what the impact on organic revenue growth was from REIT versus call exposure growth versus market share gains just generally speaking.

And if you can speak up just a little bit more I got the question but.

Little fate.

Us too.

And on for.

John.

But the.

I'll just start by saying how thrilled we all are with and our 100.150 year anniversary as a company we could grow the GAAP top line by 20% and Bosch and in particular.

Debt.

The best growth and a couple of decades.

So it is a phenomenal overall performance, but Jon you are on a break down the growth a bit.

Sure Brian Thanks for the thanks for the question.

And Mark both mentioned, we certainly benefit from the economic rebound relatively soft prior year comparable proud of that growth and the second quarter cash.

<unk>, there and the effect of the pandemic.

On the pricing environment and talked about it a little bit and his remarks earlier.

About 50% of our revenue sensitive to P&C pricing.

And while rate increases have come down modestly.

Third to the fourth quarter of last year, and the first quarter of this year.

Held really care, we're sensitive to.

And to pricing wherever and wherever your calculation, but it's from a nurse.

Or different areas, but.

And I also want to emphasize that we executed really well on the quarter. Our team has deep and as strong as it's ever been they're highly engaged and focused on delivering on growth for.

For our clients and the margin remains challenging again, while rates arent nearly as much as they were before.

They are quite difficult and I do think there's been a bit of catch up and some markets Theres a fair amount of new new business.

Our results and whether it's and transaction risk and cyber.

And and construction there are.

Ample zone of where that is the case.

But again, we're very very pleased with the results and the quarter.

And anything else Brian.

That's great. Thanks, and then second question is if you could talk a little bit about kind of the M&A environment here kind of what it looks like right now and also have the issues that on and what was the kind of run into with some regulatory approvals does that at all change your strategic view of M&A right now.

And kind of tightened our attack on our philosophy and M&A is basically we like Phi and firms.

And at our high quality for the leadership team generally remains in place and having to recurring revenue streams high cash generation and low capital requirements and a history of success.

And that sets it up for us and debt.

It's really getting to know each other over a long stretch of time and figuring out it's not and it's <unk>.

Not on selling we're deciding to come together, we believe the outcome for our clients and our people will be better together than separate and that's that's the approach.

Pipeline remains strong for us throughout our businesses in fact last year.

Was the highest acquired revenue within Marsh <unk> Mclennan agency, which has been more than a decade long in terms of strategy build and so we feel very good about that and obviously theres a lot of capital and the world. So multiples are higher than what we would like and we need to be very selective and.

And very careful in our evaluation of of pro forma results the net loss.

And the companies, we look at our our private but our strategy from a long period of time.

<unk> has been more of a string of pearls, not something where it.

1 mega type of acquisitions, but it builds on the company's capabilities geographic half.

Broader and <unk> was an anomaly and some ways and was.

Our biggest acquisition and history.

And we had total net cost of that acquisition and beta.

And cultivating of broad relationship for a long period of time that they were coming together frequently and brought the combination with golf will be better.

And exiting and manifestation of that growth and is better because of our combination with <unk>, a particularly and our specialty operation and so.

Kind of where our thoughts about M&A and have not changed.

Thank you.

Next question please.

Our next question comes from Rodman and this with autonomous Research Your line is open.

Okay. Thanks, good morning.

I guess I was thinking about consulting couple of things there first of all on with Oliver Wyman and the 28 organic any any color on.

And I guess, how you're thinking about that.

Any visibility on toward the back half of the year.

And I.

I guess, you said and Mercer it sounds it has been from focus on the call about.

Becoming more difficult and it's not obvious that the comps get that much more challenging there and Sean maybe curious mark and you could give us some perspective on.

But sort of how business develops and the 3 months of the quarter and when and where we're at now looking at the back half.

And I'm glad to debt that.

Yes, as a consolidated debt a big part of our business and a big part of our performance.

And so ill add up and Nick first and then over to Martine, but let me just say a couple of comments first 1.

And we've mentioned before that Oliver Wyman will tend to be our fastest grower over long stretches of time.

And <unk>.

And with more volatility.

And so yes, if you look back to the second quarter of last year -13, So we love the 28.

And ultimately you put them together and at 6% over 1 and more difficult periods and.

And recent human history, and so yeah, we tick the box on that and Thats terrific.

Mercer on ahead, and other and merchandize and terrific growth businesses health wealth career, and Marty and us a great underpinning work and if you go back to the end of 2019.

2% growth, 3% growth and 4% growth and sequential quarters, and then 5% growth and the first quarter of 2020, and then got last by the pandemic as Ed as expected in some ways and held up very well with a -3 throughout last year, So martine and Mercer going.

Back to the terrific results in the second quarter and sort of getting back to the same pace or getting back to the same processes that existed pre pandemic and let's start with Nick and then we'll go to my team.

Net thank you very much.

So as Tom said.

Thrilled with the performance.

And that's where it's coming from it and but incredibly broad based.

Growth from the quarter was highest in the regions and the sectors.

It had been most adversely affected by the pandemic and.

And referred to the comp from the.

Americas, particularly the U S and seen a very sharp rebound and client demand.

Both from the economic conditions and business confidence rising materially and if you take for example, the transportation sector, which was the effect on the suffered the greatest and pipes from the pandemic and last year springing back very strongly.

Volume for the Americas growth in Europe, and in the Asia Pacific Region, and we're also quite robust and across all major industry groups financial services consumer and industrial health care, all actually growing remarkably similar rates.

And while we do think it's growth and Q2 was an outlier.

See business confidence remaining high and I was going.

Economic conditions improve and we see some semblance of it sounds momentum and some other places we operate.

And there's also other partners from the labor market and from a skill set that all consult with us.

So we have a day.

And some outlook for the business for the rest from here.

Thanks, Nick March Inc.

And thanks for the question similar to other alignment and growth and the quarter I really can't.

The business and other regions.

I think it's worth spending a moment on distributing inherently and through the pandemic that this is where we have the most discretionary projects and a little bit more connected to our Oliver Wyman will be operating and it.

And he come back.

We started the project.

And there's a lot of demand out there and helping clients with.

They are posted and that make work force there is a war for talent out there so.

From the demand for scalable and skill set assessment engagements transformation as companies and et cetera.

And.

And you know our technology, so that is sustaining our career business, we see strong sales and good momentum towards the next year and.

Want to spend another moment on our wealth business I think.

4% growth and the quarter is we had not seen that since Q4.2017.

And again and all.

Substitution in our wealth business did well and particular, our CIO business, which is part of the business, where we implement assets.

Management for our clients and UCB and flight to strong governance their deep manager research and <unk>.

Combined with our questions and help from clients with HD and DDI and pipe.

And Thats net.

And the likes.

Dennis.

Best of NUCYNTA.

And then a bit.

And lastly on on the warehouse.

This is the year, where the DB parts of our portfolio, which you all coming from structural decline and <unk>.

<unk> actually the accounts same time.

And <unk>.

Investment management solution, and we haven't and telling you and we can see that this should be providing some tailwind as the company on 2021.

Got it thanks Mark.

And then just a follow up for Dan and maybe John Doyle and as well I guess give us an update on the strategic importance of using wholesale brokers on the P&C side and maybe how that's evolved over time.

Yes.

And I'll take it and hand over to Jonathan interesting question.

I think wholesale brokers and a lot of ways like the Misnamed and.

Net income.

And they become quite specialist and a lot of it from there.

And really good skilled sales on exactly.

What I think back in my career.

Sales per.

20 years ago, I think specialty and placement might be more appropriate, but but John you want to talk about use of wholesalers.

Sure.

Okay great.

And largely focused on our specialty capabilities and voice.

And part of abuse wholesalers and with me.

Need to access certain markets.

Certain specialty insurers and estimates.

And in particular.

Restrict their distribution access.

Sure.

And that expense.

We'll use wholesale brokers.

For the most part that happens and it isn't.

And it states almost no utilization for us.

And in the United States.

Risk originate from.

To some extent it happens.

But the marketplace and as well.

But we.

Our preferred relationships with a couple of other specialty wholesalers and focus our efforts to make sure. We're delivering the same quality outcomes for our clients and we can't get from.

And from utilizing our own teams.

Next question please.

Thank you as a reminder to ask a question on please press Star then 1 our next question comes from Paul Newsome with Piper Sandler Your line is open.

Good morning, and.

Congrats on the core.

My question is about the.

Potential persistent and see if some of these market share gains.

And thinking about back to the <unk> acquisition and it seem to me there was a little bit of a drag on organic growth for about a year as things sort of moved through the system and the integration happen do you think there's a read through to kind of what's happening for you on a positive sense today that as you hire these do people it really take kind of a.

And here for the full revenue impact to impact and so that's kind of how we should think about.

On the benefit of the flight to quality day, it's kind of a year by year kind of.

Effect.

Yes, I will.

Start pulp.

And we're an awfully big company so so.

And we make decisions to add to our talent and capability and our broad capabilities.

More generally to build scale content et cetera.

As opposed to necessarily say oh that person.

And project cost estimates amount and we expect them to produce based on about over the course of the next couple of years your basic premise debt.

And even higher.

Senior people that generally you take the expense first and then some revenue might cut later, yes basic premise is true.

And as they get involved with with the firm more broadly, but but unlike some more peaky firms.

It's not just us.

<unk> focused on this.

And Sarah this is what they think their book of businesses.

And that we're buying.

And that.

That producer that's just not how we operate we're much more of a cost and culture building and capabilities.

John.

Thoughts on that.

The market share is a hard thing to temperature.

I've read some estimates.

Personal insurance premiums will grow about 5% per share.

If you use that as a proxy for the market.

Yes.

Sure.

And earlier, we're picking on us.

New group business.

However to your construction, primarily our win rates are up though too.

And when I look at.

The success and rfps compared to historical levels and the.

And number of offensive Rfps.

The rfps.

Considerably considerably better rich.

And then passed on but I think speaks to the quality and the team.

And the same time, we're investing in talent, that's going to drive future growth.

We're on and Turkey.

We have good momentum and we're excited about with that range for us debt.

Yes, just a little bit more on the market share it looks like it came everywhere in terms of gains in your businesses is that really a fair sense or was there some benefits.

Business you are free.

These.

Relative to the level of business growth that.

We've seen certainly.

And at the company and.

So it is occurring and many different spots and I would put it down to that wattenberg and fundamental growth market risk strategy and people.

Companies led to Europe, and large accounts segment, the middle market segment of the small segment. If you already have work for our organization and our government you have and focus on those treatment and there are completely relevant to how do you approach the business, we've got competitive advantages.

It starts with the quality of our people our culture.

And as capabilities that got even further broaden and through the acquisitions. We've done over the last number of years, most notably J L T and our global footprint both on our competitive advantages. We don't have a lot of competitors and any way that can match up and those advantages and we have.

Continuing to acquire best in class businesses on a number 1 focus is on quality and history of success and so that's particularly and middle market brokerage and we've got all kinds of opportunities, we spoke about cyber and climate and our script, but digital small commercial risk awareness in general.

Is much higher and so.

And.

And the.

And I've mentioned before.

Pandemic, maybe brought us closer than we ever were before where we're more connected with our collaborative than ever before and we're leveraging our combined strength like never before so all of those factors come together and.

And we are a more formidable force.

And the market.

And looking at moving business.

And that's going to continue.

Thank you that's great.

Next question.

Thank you I would now like to turn the call back over to Dan Glaser, President and CEO of Marsh Mclennan for any closing remarks.

Okay, well that's their first.

Okay, but I appreciate everyone joining us on the call. This morning, I want to thank our 78000 colleagues for their commitment and hard work and dedication the marsh Mclennan and I look forward to speaking with you next quarter. Thank you very much.

Okay.

This concludes today's conference call. Thank you from participating you may now disconnect.