Marsh McLennan disavows slowdown, firms revenue forecast

Global insurance brokerage and consultancy  Marsh McLennan is sufficiently bullish on outlook to firm its 2022 forecasts and disavow any indication that economic uncertainty could turn to a slowdown in its business.

“There is certainly uncertainty about the macroeconomic outlook .... but there are other factors that tend to support our growth,” President and CEO Dan Glaser (pictured) told his company’s Q2 earnings call.  “When the world is unsettled, demand for our services rises.”

While growth is slowing, the prospect of higher inflation cushions brokerage earnings via a rise in property values and as P&C pricing conditions “remain firm,” Glaser indicated.

Consultancy units Mercer and Oliver Wyman should be the most sensitive to slowdown amongst  Marsh McLennan units, but officials assured that pipelines remained strong with “no red flags” to suggest macroeconomic uncertainties had turned to palpable change in economic activity.

That leaves  Marsh McLennan on track for what CFO Mark McGivney calls “a terrific year” and officials spent the bulk of the call ballyhooing the group’s track record of over a decade of annual margin expansion and EPS growth through over half a century’s worth of recessions.

Marsh McLennan is now guiding investors for underlying organic revenue growth “at the upper end” of the full-year forecast it set previously for the mid to upper single digits. 2022 will bring the fifteenth straight year of margin expansion, CFO McGivney reiterated.

Revenue growth will come despite headwinds from the strong US dollar which undermines the reporting values on foreign sales. That impact is now considered likely to continue throughout the second half.

Margin expansion should also overcome the boost to expenses stemming from record hiring of some 6000 staff in 2021.  Marsh McLennan is “on target” for productivity goals vis-à-vis those new hires who additionally will start to come out of the cost base calculations in Q3.

The group has a series of efficiency initiatives, including tech upgrades, real-estate rationalization and operational initiatives, and additionally has a natural recession hedge in its reliance on profit-based variable compensation, officials noted.

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