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F500-2021-175-Marsh & McLennan

The global professional services firm, which in April rebranded to Marsh McLennan, has businesses in insurance brokerage, risk management, reinsurance services, talent management, investment advisory, and management consulting.

This year's Fortune 500 marks the 66th running of the list.

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This professional services giant oversees businesses including risk management companies Marsh and Guy Carpenter and consulting firms Mercer and Oliver Wyman Group.

This year's Fortune 500 marks the 65th running of the list.

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This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Marsh &amp; McLennan is a professional services company that provides advisory and insurance solutions to clients in the areas of risk, strategy, and people. Founded in 1871, Marsh &amp; McLennan operates across four major businesses—Marsh, Guy Carpenter, Mercer, and Oliver Wyman—serving clients in more than 130 countries.

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Marsh & McLennan (MRSH): Company Profile, Stock Price, News, Rankings

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Marsh & McLennan

marsh & mclennan

Welcome to Marsh McLennan's Earnings Conference Call. Today's call is being recorded. 4th Quarter 2024 Financial Results and Supplemental Information were issued earlier this morning. They are available on the company's website at marshmclennan.com. Please note that remarks made today may include forward looking statements.

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 release for this quarter and to our most recent SEC filings, including our most recent Form 10 ks, 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.

I'll now turn this over to John Doyle, President and CEO of Marsh McLennan.

Good morning, and thank you for joining us to discuss our Q4 and full year results reported earlier today. I'm John Doyle, President and CEO of Marsh McLennan. On the call with me is Mark McGivney, our CFO and the CEOs of our businesses, Martin South of Marsh Dean Klasseur of Guy Carpenter Hat Tomlinson of Mercer and Nick Studer of Oliver Wyman. Also with us this morning is Jay Gelb, who recently joined Marsh McLennan as our new Head of Investor Relations. Many of you know Jay from his time as an equity analyst covering the insurance industry.

Before I discuss our results, I want to take a moment to comment on the California wildfires. These events represent a profound human tragedy. Lives have been lost and tens of thousands of people have been left homeless and hurting. Among those affected are Marsh McLennan colleagues and clients in the Los Angeles area, and our company is committed to doing everything we can to support them during this challenging time. With regard to the wildfires impact on the insurance industry, insured losses are expected to exceed $30,000,000,000 This means the LA wildfires will be among the top 10 largest natural disasters in history in terms of insured losses.

The increasing frequency and severity of natural disasters along with rising property values and continued development in catastrophe prone areas underscore the need for greater resilience and risk mitigation planning. Marsh McLennan will continue to bring together stakeholders, including individuals, businesses, the insurance industry and governments to build the resilience to mitigate the devastating impact from these catastrophic events and to accelerate recovery. Turning to our results. 2024 was a milestone year for Marsh McLennan. We executed against our strategic objectives, generated excellent financial performance and had the largest year of acquisitions in our history.

Total revenue grew 8% to $24,500,000,000 We generated 7% underlying revenue growth, continuing our best stretch of growth in more than 2 decades with both risk and insurance services and consulting delivering strong results. Our adjusted operating income grew 11% to $6,200,000,000 This is on top of 17% growth in 2023. Our adjusted operating margin increased 80 basis points, marking the 17th consecutive year of reported margin expansion and adjusted EPS grew 10%. In addition to another year of excellent financial performance, we continue to execute on our key priorities. We had a record year of M and A by investing $9,400,000,000 in acquisitions, including our $7,750,000,000 acquisition of McGriff.

We also delivered significant capital return to shareholders, raising our dividend by 15% and completing $900,000,000 of share repurchases. And we successfully completed our restructuring program, achieving the goals we set 2 years ago, accelerating client impact, reinvesting in our capabilities, boosting efficiency and increasing collaboration across the firm. Let me touch briefly on our acquisition of McGriff, which closed on November 15. McGriff has great momentum and I couldn't be more excited to have them join Marsh McLennan Agency. Our integration is proceeding according to plan and although it's early days, our fundamental outlook remains the same.

As I said when we announced the transaction, it's a business with excellent leadership, outstanding talent and a record of strong growth. The addition of McGriff also extends our presence and capabilities in the growing middle market. It's worth noting that MMA would be the 5th largest broker in the United States on a standalone basis. In addition to McGriff, we completed several other notable acquisitions, including 2 top 100 agencies in MMA as well as Vanguard's OCIO business and Cardano in Mercer. As we start the New Year, I want to take a moment to give you an update on our strategy.

1st and foremost, we are a growth company that is well positioned globally in market leading businesses with significant opportunities. We strive for outstanding near term results, while also investing to sustain our strong performance over the long term. We consistently reinvest the significant portion of our cash flow into organic investments, particularly in talent, technology and capabilities. Innovations like Centrisq, BlueEye, Len AI and other digital tools are examples of how we are delivering value for our colleagues and clients. Investing in data and insights enables us to work smarter on behalf of our clients, helping them gain the perspective needed to pursue their ambitions.

We also maintain a balanced approach to capital management. We look to maintain financial flexibility as we manage the efficiency of our capital structure. We have a bias to reinvest the capital we generate into high quality acquisitions. However, we also recognize that returning capital to shareholders delivers meaningful value over time. And each year, we target raising our dividend and repurchasing enough stock to reduce our share count.

A focus on high quality acquisitions is also an important part of our growth strategy. Over the past decade, we've invested approximately $24,000,000,000 in M and A across more than 200 transactions that have accelerated our growth at attractive returns. These acquisitions extend our reach, enhance our capabilities and boost our scale. The growth plans of our businesses remain at the core of our strategy. At the same time, we're working together better than ever to capture opportunities at the intersections of our businesses, and we constantly challenge ourselves to operate more efficiently.

We've expanded our operating margin by over 900 basis points in the past decade and we've improved our margin by nearly 500 basis points in the last 5 years alone. This has been achieved primarily through increasing efficiencies and other operating expenses, while continuing to grow our talent base. Despite these gains, we still see opportunities for further improvement. While the core tenets of growth, discipline and balanced investment will continue to underpin our strategy, we are constantly evolving to deliver greater value to our clients and all of our stakeholders. Turning to insurance market conditions, the global insurance and reinsurance market remains dynamic.

At nearly $130,000,000,000 2024 was the 5th consecutive year of more than $100,000,000,000 of insured natural catastrophe losses. Despite an elevated risk landscape, we year of more than $100,000,000,000 of insured natural catastrophe losses. Despite an elevated risk landscape, the Marsh Global Insurance Market Index decreased by 2% in the 4th quarter compared to a 1% decline in the 3rd quarter. As a reminder, our index skews to large account business. Overall, rates in the U.

S. Were flat. Latin America was up low single digits. Europe, UK and Asia were down low to mid single digits and Pacific was down high single digits. Global property rates declined 3% compared to down 2% in the 3rd quarter.

Global casualty rates increased 4% with U. S. Excess casualty up approximately 15% in the quarter. Workers' compensation decreased mid single digits. Global financial and professional liability rates were down 6%, while cyber decreased 7%.

In reinsurance, underwriting discipline persisted, particularly on program retentions. Capacity increased at a more significant pace than client demand. In Global Property Cat Reinsurance, accounts not impacted by loss saw risk adjusted rates down 5% to 15%, while risk adjusted rates for loss impacted accounts were flat to up 30%. Casualty renewals were completed with varying outcomes. Excessive loss placements continue to face pressure on treaty terms.

Quota shares were more stable with sufficient capacity, while ceding commissions were flat to slightly down. Turning to health trends. Our surveys indicate medical costs are expected to increase 11% on a global basis in 2025. This would be the 5th consecutive year of at least a 10% increase. On a regional basis, the pace of anticipated increase is 8% in North America, 9% in the Pacific region, 10% in both Europe and Latin America, 11% in the Middle East and Africa, and 13% in Asia.

For employee sponsored health plans in the U. S, the total health benefit cost per employee is expected to rise 5.8% on average in 2025 after accounting for planned cost reduction measures. This would be the 3rd consecutive year of cost growth around 5%. As always, our focus is on helping our clients navigate these dynamic market conditions. Now let me turn to our Q4 financial performance, which Mark will cover in more detail.

We are pleased with our Q4 performance, where growth remains strong and solid earnings capped another terrific year. Revenue grew 7% on an underlying basis with 8% growth in RIS and 6% in consulting. We had adjusted operating income of 9% and we generated adjusted EPS in the quarter of $1.87 which is up 11% from a year ago. Turning to our outlook for 2025, we are well positioned for another strong year. We currently expect mid single digit underlying revenue growth, including an anticipated headwind from fiduciary income, along with continued margin expansion and solid adjusted EPS growth.

Our outlook assumes current macro conditions persist. However, the environment remains uncertain and the economic backdrop could be materially different than our assumptions. In summary, we are pleased with our performance in 2024. We executed against our strategic objectives and continued our track record of delivering strong results. With that, let me turn it over to Mark for a more detailed review of our results.

Thank you, John, and good morning. Our solid 4th quarter results reflected continued momentum and capped an excellent year with strong underlying revenue growth, double digit growth in adjusted EPS. Our consolidated revenue increased 9% in the 4th quarter to $6,100,000,000 with underlying growth of 7%. Operating income was $1,100,000,000 and adjusted operating income was $1,300,000,000 up 9%. Our adjusted operating margin was 23.3%.

GAAP EPS was $1.59 adjusted EPS increased 11% to $1.87 and included a $0.05 benefit from favorable discrete tax items and a $0.02 headwind from foreign exchange. For the full year, underlying revenue growth was 7%, adjusted operating income grew 11% to 6,200,000,000 dollars adjusted EPS grew 10% to $8.80 and our adjusted operating margin expanded 80 basis points to 26.8 percent marking our 17th consecutive year of reported margin expansion. 2024 was also a record year for capital deployment. We invested $9,400,000,000 in acquisitions, the largest year in our history. We also raised our quarterly dividend 15% and bought back $900,000,000 of our stock.

Looking at risk and insurance services, 4th quarter revenue was $3,600,000,000 up 11% or 8% on an underlying basis. Operating income in RIS increased 2% to 770,000,000 dollars Adjusted operating income increased 13% to $893,000,000 and our adjusted margin was 27%. For the full year, revenue in RIS was $15,400,000,000 with underlying growth of 8%. Adjusted operating income increased 13% to $4,600,000,000 and our adjusted operating margin increased 70 basis points to 32%. At Marsh, revenue in the quarter was $3,300,000,000 up 15% from a year ago or 8% on an underlying basis, reflecting continued growth across our regions as well as a rebound in transaction risk products and claims activity in our Torrent flood business.

This result marks the 16th consecutive quarter of 6% or higher underlying growth at March. In U. S. And Canada, underlying growth was 8% for the quarter. In international, underlying growth was 9% with Latin America up 13%, EMEA up 9% and Asia Pacific up 6%.

For the full year, Marsh's revenue was $12,500,000,000 with underlying growth of 7%. U. S. And Canada was up 7% and international grew 8%. Sky Carpenter's revenue in the quarter was $201,000,000 up 7% on an underlying basis driven by growth across our regions and Global Specialties.

For the year, revenue was $2,400,000,000 representing 8% underlying growth, Guy Carpenter's 4th consecutive year of 8% or higher underlying growth. In the Consulting segment, 4th quarter revenue was $2,400,000,000 up 6% on both a GAAP and underlying basis. Consulting operating income was $466,000,000 dollars and adjusted operating income was $484,000,000 up 1%. Our adjusted operating margin in consulting was 20.7% compared to 21.3% a year ago, reflecting seasonality in the impact of acquisitions and dispositions. For the full year, consulting revenue was $9,100,000,000 with underlying growth of 6%.

Adjusted operating income increased 6% to $1,800,000,000 and our adjusted operating margin increased 30 basis points to 20.7%. Mercer's revenue was $1,500,000,000 in the quarter, up 5% on an underlying basis. This was Mercer's 15th consecutive quarter of 5% or higher underlying growth and continues the best run of growth in over 15 years. Health underlying growth was 5% in the quarter reflecting growth across all regions. Wealth was up 4% led by growth in investment management.

Our assets under management $617,000,000,000 at the end of the 4th quarter, up 13% sequentially and up 47% compared to the Q4 of last year. Year over year growth was driven by our transactions with Cardano and Vanguard, positive net flows and the impact of capital markets. Career increased 7% driven by growth in talent and rewards, surveys and products. For the year, revenue at Mercer was $5,700,000,000 an increase of 5% on an underlying basis, 4th straight year of 5% or higher underlying growth. Oliver Wyman's revenue in the 4th quarter was 954,000,000 dollars an increase of 7% on an underlying basis.

This reflects growth across all regions and businesses and was achieved despite a tough comparison to 9% growth in the Q4 of last year. For the full year, Oliver Wyman's revenue was $3,400,000,000 reflecting underlying growth of 6%. Fiduciary income was $112,000,000 in the quarter, a decline of $26,000,000 from the 3rd quarter reflecting lower interest rates. Looking ahead to the Q1 of 2025, we expect fiduciary income will be approximately 100,000,000 dollars Foreign exchange was a $0.02 headwind in the 4th quarter and a $0.05 headwind for the full year. Assuming exchange rates remain at current levels, we expect FX will be a headwind of $0.04 in the 1st quarter and $0.09 for all of 2025.

Turning to our McGriff transaction, we closed the deal in mid November and as John mentioned, the integration is going well. McGriff is a terrific business and we're excited about what they bring to MMA. In November, we issued $7,250,000,000 of senior notes to fund the transaction. The Q1 is McGriff's seasonally smallest from a revenue perspective. So for Q1, we expect McGriff will be modestly dilutive to adjusted EPS.

However, I want to emphasize that we continue to expect McGriff will be modestly accretive to adjusted EPS for full year 2025, becoming more meaningfully accretive in 2026 and beyond. We expect noteworthy charges associated with McGriff of approximately $450,000,000 to $500,000,000 in total over the next 3 years with the vast majority of these costs associated with retention incentives, a significant portion of which was put in place by the seller. These costs flow through our financial statements, but were funded by the seller through a purchase price adjustment. Also note that we will exclude Magritte from our underlying growth calculations for the 1st year as is our convention. Total noteworthy items in the quarter were 154,000,000 dollars including $136,000,000 of restructuring costs, primarily related to the program we began in the Q4 of 2022.

Interest expense in the Q4 was $231,000,000 up from and $51,000,000 in the Q4 of 2023. This increase reflects higher levels of debt as well as $26,000,000 of bridge financing fees associated with the McGriff transaction. Based on our current forecast, we expect interest expense in the Q1 of 2025 of approximately $246,000,000 Our adjusted effective tax rate in the 4th quarter was 21.1% compared with 25.5% in the Q4 last year. For the full year 2024, our adjusted effective tax rate was 24.5% compared with 24% in 2023. Excluding discrete items, our adjusted effective tax rate in 2024 was 25.8% compared with 25% in 2023.

When we give forward guidance around our tax rate, we do not project discrete items, which can be positive or negative. Based on the current environment, we expect an adjusted effective tax rate of between 25% 26% in 2025. Turning to capital management and our balance sheet. We ended the year with total debt of $19,900,000,000 Our next scheduled debt maturity is in the Q1 of 2025 when $500,000,000 of senior notes mature. Our cash position at the end of the 4th quarter was $2,400,000,000 Uses of cash in the quarter totaled $8,500,000,000 and included $403,000,000 for dividends and $8,100,000,000 for acquisitions including the BRIF.

For the year, uses of cash totaled $11,800,000,000 included $1,500,000,000 for dividends, dollars 9,400,000,000 for acquisitions and $900,000,000 for share repurchase. Looking to 2025, based on our outlook today, we expect to deploy approximately $4,500,000,000 of capital across dividends, acquisitions and share repurchases. The ultimate level of share repurchase will depend on how the M and A pipeline develops. As we discussed last quarter, beginning in the Q1 of 2025, we will exclude the impact of acquisition related intangible amortization and the other net benefit credit from adjusted EPS. We've provided tables in our Q4 earnings release that recast adjusted operating income and adjusted EPS for the past 8 quarters on this basis.

Turning to 2025, as John noted, we remain positive in our outlook for growth. For 2025, we currently expect mid single digit underlying revenue growth, margin expansion and solid growth in adjusted EPS. This outlook contemplates anticipated headwinds from short term interest rate declines, foreign exchange and favorable discrete tax items in 2024. We expect these headwinds will have a more significant impact in the first quarter, which will also reflect a difficult revenue growth comparison versus a year ago. Overall, we are pleased with our performance in 2024.

We have momentum across our business and are well positioned for another strong year in 2025. With that, I'm happy to turn it back to John.

Thank you, Mark. Andrew, we're ready to begin Q and A.

We will now begin the question and answer session. And our first question comes from the line of Elyse Greenspan with Wells Fargo.

Hi, thanks. Good morning. My first question is on margin. So the margin was flat overall right in the Q4. But earlier in the year, you guys had pointed to second half margin improvement being greater than the first half, which didn't transpire.

So I'm just trying to get a sense of what went on with the margins in the second half relative to prior expectations and also specifically the Q4?

Yes. Good morning, Elyse. I was pleased with our margin expansion for the year, 80 bps of margin expansion, our 17th consecutive year. As we've talked about in the past, from quarter to quarter, it will be different outcomes. And really 17 consecutive years just says it's a reflection of our disciplined approach to the way we run our business.

And it's not a primary objective. Margins are an outcome of the way we run the business. And we're going to continue to make attractive investments. They're going to drive medium to longer term growth in the company as well. The Q4 was impacted by FX.

It was also impacted by acquisitions and divestitures, but it wasn't a disappointment. It was a good strong year of margin expansion. And as we guided to for 2025, we expect it to be our 18th consecutive year of margin expansion. And we've got opportunities to continue to focus on the shared infrastructure across the company with some opportunities in operations. We've got important workflow optimization efforts happening at Marsh, Mercer and Guy Carpenter.

And of course, automation is an important lever for us too. And as we learn and continue to test and experiment around AI, we see possibilities there as well. So we're quite optimistic about the possibilities looking forward and we're pleased with the outcome in 2024. Do you have a follow-up?

Yes. My second question is on free cash flow. I know you guys typically haven't provided annual guidance, but the growth there was 4% in 2024. I think when I look at the CAGR right over the past 3 years, it was around 7%. So both below double digits.

So I'm not sure if there was anything in 2024 that was impacted by McGriff's. But anything you could provide just in terms of what impacted free cash flow in 2024? And how we should think about growth headwinds and tailwinds in free cash flow in 2025?

Yes. I don't have a 3 year CAGR in front of me, but I know we had north of 20% free cash flow growth in 2023 and 4%, I believe, in 2024. It's obviously not going to track as a straight line whereas consistently with earnings growth, but over time it will. Mark, do you have anything to add there?

Yes, Elyse. Free cash flow, we were really pleased with 4%, as John mentioned. We were up 28% last year. So kind of holding that and growing a little bit is not bad. And if you look over the last 5 years, we've doubled free cash flow since 2019.

So that has been a very good story for us. Given the nature of our business as we've talked about, you would expect free cash flow would track our earnings growth over time and it certainly has over a long stretch. We've had double digit growth in free cash flow. And as you pointed out, we don't typically give guidance because it can be volatile period to period, year to year. But over time, it will track.

It should track in line with our earnings growth. And as our guidance suggests, we have an outlook for earnings growth into the future.

Thank you, Elyse. Andrew, next question please.

Certainly. Our next question comes from the line of Jimmy Bhullar with JPMorgan.

Hey, good morning. First is a question for Mark. I think you mentioned you expect organic growth of mid single digits in 2025. I think previously you'd been saying mid to high or mid single digits are better. So I'm not sure if I'm reading too much into your comments or is there a change that you're seeing in any aspect of your business that's making you adjust the language slightly?

Hey, Jimmy, it's John. Let me jump in front of Mark. First of all, I just want to talk about our strong finish to the year, 7% in the 4th quarter underlying revenue growth, terrific full year revenue growth as well. And the strength was really broad based in the quarter. Marsh, 8%, Guy Carpenter is a seasonally small quarter, but a really good finish to what was an excellent year at Guy Carpenter, bursar above 5% underlying growth again, and a better finishing career where, as you know, growth has been a bit soft over the course of the last year or so.

And Oliver Wyman had a strong finish too where we're starting to see some demand pick up. The macros remain largely supportive of growth. Fiduciary income, as we mentioned, is the one real exception to it. But economic growth in most major markets remains resilient, strong labor markets in most of the economies that we're exposed to. And of course, there are a lot of risks out there, big geopolitical risks, uncertainty around tariffs and potential trade wars.

As I talked about, the frequency of extreme weather impacts economies around the world as well and then risks around technology and other areas. But those are areas that we help our clients and give them advice so that they can invest with a level of confidence. So we're optimistic about growth for 2025. I wouldn't read much into it. We feel like we're well positioned.

We continue to invest and shape the mix of our business, McGriff coming in and then admin businesses at Mercer going out in 2024 would be a good example of our focus there. And so our team is highly engaged and we're executing well. So we're we feel good entering 2025.

And just on McGriff, should we assume that it actually is a positive for your organic growth beyond 2025, just given their market focus and the fact that they'll be part of a larger platform, so maybe they could do a little bit better than they might have done in the past? Or should we not expect much of an impact on their or your growth as a result?

We're excited about McGriff. As Mark noted, from an earnings point of view, it will be slightly dilutive to us or modestly dilutive to us early in the year, but accretive over the full year and more so in 2026 and beyond. I talked about it so far so good in terms of the integration. Culturally, things seem to be going well. McGriff's a business that we've admired for a long time as a competitor.

We knew there were going to be a few big assets in the market in 2024 and McGriff was the business that we wanted. And it doesn't just make us bigger, they make us better. They've got terrific talent and leadership, as I talked about. They've got some real specialty capabilities. And it extends our reach into the middle market where we're quite focused on bringing scale benefits to that segment of the market.

Thank you, Jimmy. Andrew, next question please.

Our next question comes from the line of Alex Scott with Barclays.

Hey, good morning. First one I have for you is on March. I just want to see if you could help us unpack the strong organic growth. I mean just with rates in the U. S.

Being more flattish, I'm guessing most of that came from growth in the book.

you had any comments on new business versus retention, maybe just helping us understand the underlying dynamics where you're running?

Sure, Alex. Again, really strong finish. I'll ask Martin to comment in a second here. We're really well positioned. In terms of rates, I would say we're most exposed to pricing through commission in the middle market.

So it's a subset of our business overall. So it's an impact. It does have an impact, of course, pricing does, but we have a lot of fee based business as well. Mark commented on the notable pickup in M and A activity in the quarter that certainly helped with growth in the quarter. And we see a more positive environment there going forward as well.

But Martin, maybe you could share a little bit more color on the broad based growth that we had at Marsh in the quarter.

Of course, John De Laschase, yes. So we had a great year in 24%, 7% on top of 8% in 23%. Good balance of growth throughout the globe with international at 8%, and U. S. And Canada at 7%.

Looking at Q4, revenue was 8%, which is a reacceleration from Q3. And this signifies the 16th consecutive quarter of 6% or better underlying growth. U. S. And Canada had a very good year with growth of 7% consistent with the full year underlying growth of 2022 and 2023 and for the Q4 8% which is supported by improvement in retention and lost as well as a better balance of recurring business.

The U. S. Business also beginning to see some green shoots from deal activity from capital markets. However, we continue to see rate pressure on financial lines to offset that. International had a terrific year underlying growth of 8%, 4% in the quarter and consistently strong growth for EMEA, Latin America for both the full year and the quarter.

APAC continues to show some signs of moderation with solid growth of 5%. We've got great talent in all of the markets. We've been investing well, extremely well positioned for the future. So we feel very good about that. So yes.

Terrific. Thank you. It was a strong finish. Alex, do you have a follow-up?

Yes, I do. The other question I wanted to ask you all is on the potential for M and A, IPOs, etcetera, to have the environment improve more activity. As I think across your businesses, can you help us think through the different ways that benefits you? And is there any way you can help us frame the kind of impact that would have on organic growth if we do have a return of that kind of activity?

Yes. We're not going to report out separately around M and A or IPO activity, but we have important capabilities across the firm at Marsh, Mercer and Oliver Wyman in particular, of course, Guy Carpenter's almost entirely focused on the insurance industry, but we help with different levels of due diligence. We have a suite of products that can help facilitate transactions when there might be some terms that need to be settled between buyer and seller. So it's an important capability set that we bring to our clients. And it's obviously an important moment when a company is selling itself or divesting of a business and then of course, on the buy side, a meaningful investment.

And so those are important moments where we can really distinguish ourselves and show the overall strength of our company. So it's important capability. As we noted, we saw a pickup in M and A activity in the Q4. We'll see what 2025 brings. I know a couple of IPOs have been out in the market.

I'm not sure ready to declare some giant IPO year in 2025, but we'll see. It's an important capability. We distribute through a range of investors. We stay close to our corporate clients, of course, and spend a lot of time with law firms as well, again to support our clients' efforts to invest. Thank you, Alex.

Our next question comes from the line of David Motamedian with Evercore ISI.

Hey, thanks. Good morning. I had just a question more prospectively just on the market. And obviously, the wildfire is still very early days. But I'm wondering if you guys are seeing any impact on both the primary and reinsurance property markets and what your outlook is there given an over $30,000,000,000 insured loss?

Yes. Thanks, David. Maybe I'll make a couple of comments and then I'll ask Dean and Martin to talk about what they're seeing in the market, which I think highlight is not a lot in terms of market impact at this point. But as I noted in my prepared remarks, it's just absolutely devastating events in Southern California and our focus is on helping our colleagues and our clients recover. It's going to be a long road back and we're going to support them along the way.

We're helping with relocation of families, beginning to think about claims prep and filing claims with insurers and then the rebuilding effort. I would say that our exposure as a business is primarily as an advisor to high net worth homeowners. So it's a limited view in that perspective and not overall that impactful to Marsh McLennan from a financial perspective. But as a major risk advisor, we certainly have something to say about the future and efforts to build back with greater resilience. And I would say reading lots of comments about how to support the fair plan or how to create subsidies for insurance, candidly, it's the wrong conversation.

The conversation we should be having really is about building greater resilience into these communities rather than trying to find ways to subsidize insurance that will lead to happier homeowners and residents of Southern California and other cat prone areas over time. And of course, that conversation isn't limited to Southern California. So important steps need to be taken, so that we're not in the same place, this sad and devastating place again sometime soon. But with that, Dean, maybe you could talk about what you're seeing so far in the reinsurance market and then we'll have Martin comment on the insurance market.

Thanks, John. And David, from a reinsurance perspective, as John noted, we're 1st and foremost committed to supporting our clients as they navigate the complexity of this loss. Guy Carpenter has formed a dedicated wildfire task force comprised of our best meteorologists, cap modelers, analytics, claims, colleagues, brokers. We're fully engaging with our clients to give them insights, so they can better assess the magnitude of the loss. It's clear that many of our reinsurance clients will have losses resulting in claims to the reinsurance programs.

As John noted, we've seen industry estimates expect the loss to exceed $30,000,000,000 although we saw bigger numbers than that in the market yesterday being reported. The impact on the reinsurance market is uncertain at this time and will certainly depend on the ultimate magnitude of the reinsurance loss. But I would say, David, at this stage, the risk adjusted rate reductions that we witnessed in January 1 could certainly be tempered moving forward as we go into the April 1 renewal season.

Yes. The overall rates came down 2% in the 4th quarter. You have to put that in context. It's focused on a large account segment and it's gone up 1.5 times since 2012. We did see some rate decreases in property book in the last quarter and slow down across the world.

It's really too early to say what this impact is going to have. It's not a big commercial event for our clients.

have to wait and see and our focus is really on making sure that our colleagues, our clients are there and we're providing the right advice for our high net worth clients as they think about resilience and building forward. So not market hysteria, that's for sure.

David, as you know, the California market was on homeowners market was under real stress before these events. And so again, it just underscores the just the critical need to build better resilience into these communities. So do you have a follow-up?

I do, yes. And thanks for that answer. So just switching gears to consulting and the health business within Mercer, could you help me think through the underlying growth deceleration? I know the comp got a little bit more difficult, but I was surprised to see the 5% growth. I think it's the lowest it's been since 2021.

And I know, John, you mentioned health costs still increasing. I think it was 11% was the expectation in 2025. So could you help me think through the deceleration there and how you guys are thinking about growth as we go into 2025?

Sure, David. I'll ask Pat to comment in a second. I would say we're not necessarily exposed directly to those cost increases that I spoke about in my prepared remarks.

Marsh & McLennan (MRSH) Q4 2024 Earnings Call Transcript

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