Published
# Marsh & McLennan Companies, Inc. (MRSH) — Business, Risks and Management Discussion, Third Quarter 2026 Sources: the Annual Report on Form 10-K for fiscal year 2025 (year ended December 31, 2025; accession 0000062709-26-000022), the Quarterly Report on Form 10-Q for the quarter ended September 30, 2026 (accession 0000062709-26-000258) and the third-quarter 2026 earnings release furnished on Form 8-K (accession 0000062709-26-000256). The company operates as "Marsh"; on January 14, 2026 it dropped the "Marsh McLennan" brand, and its third-quarter 2026 reports are the first to use all of the new business names (see Business below). ## Business *From the FY2025 10-K, accession 0000062709-26-000022, unless noted.* Marsh is a professional services firm that earns commissions and fees advising businesses, governments, institutions and individuals in 130 countries. It sells four things: insurance broking and risk advice, reinsurance broking and capital-markets risk transfer, benefits, retirement and investment services, and management consulting. Revenue was $27.0 billion in 2025, earned by more than 95,000 colleagues. About 64% of that revenue came from brokerage and risk advice (the Risk and Insurance Services segment) and about 36% from consulting and investment services (the Consulting segment). Approximately 51% of 2025 revenue was generated outside the U.S. The two reporting segments contain four businesses. The 2025 names are below, with the names used in 2026 reporting in brackets: - **Marsh Risk [Risk]**, about 54% of 2025 revenue and about 52,000 colleagues. The company describes it as the world's leading insurance broker and risk advisor. It provides insurance broking, program management, risk consulting, analytical modeling and alternative risk financing. Its U.S. middle-market arm, Marsh McLennan Agency (renamed Marsh Agency in 2026), has acquired more than 135 agencies since 2009 and also sells employee benefits, wealth and private-client services. Victor Insurance Managers acts as an underwriting manager for specialty programs. - **Guy Carpenter [Reinsurance]**, about 10% of revenue and about 3,700 colleagues. It brokers treaty and facultative reinsurance and provides actuarial and analytics services. Its GC Securities unit structures and places insurance-linked securities such as catastrophe bonds and sidecars. - **Mercer [People and Investments]**, about 23% of revenue and about 21,900 colleagues. Its Health business is now called Health and Benefits, Wealth is now Investments and Retirement, and Career is now Workforce and Rewards. Mercer managed approximately $692 billion of assets worldwide at December 31, 2025. - **Marsh Management Consulting**, the former Oliver Wyman Group: about 13% of revenue and more than 7,200 colleagues. It works through Oliver Wyman (strategy, risk, actuarial and transformation consulting), Lippincott (brand strategy and design) and NERA Economic Consulting (economic analysis for complex business and legal matters). **How it makes money.** Brokerage is paid in commissions and fees. Commissions are usually a share of the premium the client pays, so revenue moves with insurance and reinsurance pricing, how much risk clients retain and the value of what is insured. Marsh Risk also earns "other compensation" from insurers, separate from retail fees and commissions. This covers consulting and analytics for insurers, administration of quota shares and facilities, and contingent commissions tied to the volume or profitability of placements. It was about 7% of Marsh Risk's 2025 revenue. The brokers also earn interest on premiums and claims money they hold as fiduciaries: $403 million in 2025, down from $497 million in 2024 as rates fell. Consulting is paid mainly in client fees. Mercer also earns insurance commissions in Health and fees based on assets under management or administration in its investment and administration businesses. For most Mercer-managed funds, revenue is reported gross, with sub-advisor fees shown as an expense. **Growth by acquisition.** Acquisitions are a central part of the strategy. The company made 102 acquisitions from 2021 to 2025, including McGriff Insurance Services, a U.S. insurance broker bought in November 2024 for $7.75 billion in cash, and Gerolamo Holding S.À.R.L. (Cardano). It completed 20 acquisitions in 2025 for total purchase consideration of $857 million. The largest of these was three Hawaii-based brokers (Atlas Insurance Agency, Pyramid Insurance Centre and NMF Insurance), for which it paid $324 million. **Competition.** Brokerage competes with global, regional and local brokers, with insurers and reinsurers that sell direct, and with banks, consultants and online platforms. Third-party capital, self-insurance and captives offer clients alternatives to traditional insurance. The 10-K notes that private equity sponsors have put tens of billions of dollars into insurance brokerage, reshaping existing competitors and creating new ones. Consulting competes with firms affiliated with accounting, technology and financial-services groups, with new entrants using generative AI and, in investments, with asset managers and financial institutions. ## Risk factors *Condensed from Item 1A of the FY2025 10-K, accession 0000062709-26-000022.* The risks most specific to Marsh are the insurance pricing cycle, the scrutiny of how brokers are paid, professional-liability claims and its reliance on technology and data. - **Premium cycle and broker pay.** Most Risk and Insurance Services revenue is commission paid out of premiums that Marsh does not set. The 10-K says property and casualty pricing has recently softened, and that insurers may try to cut costs by lowering commission rates. Other drags on commission revenue are clients self-insuring, using captives and turning to capital-markets alternatives. Insurer insolvencies and combinations in a downturn would hit Guy Carpenter especially hard, given the limited number of insurance-company clients and reinsurers. - **Insurer revenue under scrutiny.** The roughly 7% of Marsh Risk revenue that comes from insurers rather than clients carries extra regulatory, litigation and reputational risk, because of possible conflicts of interest and claims of anti-competitive behavior. That includes Guy Carpenter's dual role as intermediary and adviser to insurers. Future regulation could limit Marsh's ability to collect this revenue. - **Errors-and-omissions claims.** Placement, actuarial, pension and investment-management work exposes the company to significant claims, including punitive and treble damages. Such claims may not be fully insurable, particularly breach-of-fiduciary-duty claims. A liability is recorded only when a loss is probable and estimable. - **Lower interest rates.** Falling rates have already cut fiduciary interest income. At year-end 2025 balances, a 10% (31 basis point) change in short-term rates would move annual interest income by about $44 million. - **Cyber, data and AI.** Marsh holds sensitive client health, financial and M&A data and depends on hundreds of IT vendors. It has had data incidents, none material so far, and names supply-chain attacks such as the October 2025 Salesloft/Drift breach as a growing threat. Privacy laws such as GDPR carry fines that can reach 4% or more of global revenue. Its own generative AI use, including the internal tool LenAI, brings new operational, legal and reputational risks. AI is also a source of competitive disruption from insurtechs and technology firms. - **Regulation and sanctions.** The company operates under licensing regimes worldwide, under U.K. Financial Conduct Authority supervision, under sanctions and anti-corruption laws, and under fast-changing privacy and AI rules. Non-compliance could bring fines, loss of licences or restrictions on how it is paid. - **Talent.** Revenue depends on producers and client-relationship staff. Competitors have used "orchestrated team lifts" and misused confidential information, and Marsh pursues litigation in response. - **Acquisitions.** The risks include integrating McGriff, Cardano and other deals, inheriting legacy liabilities, and goodwill or intangible-asset impairment if acquired businesses underperform. - **Global operations, currency and tax.** About 51% of revenue comes from outside the U.S. A 10% move in the euro, pound, Australian dollar and Canadian dollar would change net operating income by about $109 million, based on 2025 rates. Tax risks include the OECD Pillar Two minimum tax and an appeal against U.K. tax assessments for 2016–2020 that disallowed interest deductions. - **Collections and pensions.** Receivables for commissions and fees were about $7.0 billion at December 31, 2025, roughly a quarter of annual revenue. Defined benefit obligations were about $11.7 billion against plan assets of about $13.1 billion. Changes in asset returns, discount rates or mortality assumptions can move earnings and cash funding. - **Consulting-specific risks.** Mercer's investment business faces fiduciary litigation, trading-error and "greenwashing" risk, and fee pressure from the shift to passive investing. Its revenue moves with asset values. Revenue from defined benefit pension work has been declining as clients freeze or curtail their plans. U.S. healthcare regulation, including rules on pharmacy-benefit management, could change how Mercer is paid. Consulting margins depend on keeping consultants busy and holding billing rates, which client demand for AI-driven cost savings could pressure. ## Management's discussion — fiscal year 2025 *From Item 7 of the FY2025 10-K, accession 0000062709-26-000022.* Revenue grew 10% to $27.0 billion in 2025. Underlying growth was 4% and acquisitions, including the first full year of McGriff, added 6%. Operating income rose 7% to $6.2 billion and net income attributable to the company was $4.2 billion. Diluted EPS grew only 3%, to $8.43 from $8.18, because interest expense rose to $960 million from $700 million on the debt raised to buy McGriff. The effective tax rate fell to 23.6% from 24.9%. - **Risk and Insurance Services** revenue rose 12% to $17.3 billion (4% underlying, 8% from acquisitions), and operating income was $4.6 billion versus $4.4 billion. Business-level revenue for Marsh Risk and Guy Carpenter follows the revenue analysis printed in both the 10-K and the fourth-quarter 2025 earnings release, and excludes interest income on fiduciary funds, which is reported separately within the segment. Marsh Risk grew 15% to $14.4 billion. Underlying growth was 4%: 3% in U.S./Canada and 5% internationally, made up of EMEA 6%, Asia Pacific 4% and Latin America 2%. Guy Carpenter grew 6% to $2.5 billion, 5% underlying. Management said new business and renewals drove growth, partly offset by falling insurance and reinsurance premium rates. McGriff integration and retention costs were about $211 million in 2025 (2024: $60 million), and a further ~$250 million, mainly retention incentives, was expected over the next two years. - **Consulting** revenue rose 7% to $9.8 billion (5% underlying), and operating income was $1.9 billion versus $1.8 billion. Mercer grew 8% to $6.2 billion, 4% underlying: Health grew 6%, Wealth grew 4% on investment management and capital markets, and Career fell 2% as U.S. and Canada project work declined. Marsh Management Consulting grew 6% to $3.6 billion, led by the Americas and the Middle East. - **Restructuring.** In the third quarter of 2025 the company launched Thrive, a three-year program covering brand strategy, client value, growth and efficiency. It also formed Business Client Services to centralize operations, technology, data and AI investment. Thrive was initially expected to cost about $500 million and deliver about $400 million of annualized savings. It cost $150 million in 2025, within total restructuring costs of $222 million. - **Cash and capital returns.** Operating cash flow rose to $5.3 billion from $4.3 billion. The company spent $291 million on fixed assets and software and paid $652 million, net of cash acquired, for acquisitions. It bought back 10.1 million shares for $2.0 billion and paid $1.7 billion of dividends ($3.43 per share). In November 2025 the Board raised the buyback authorization to $6 billion, of which about $5.7 billion was unused at year-end. The company repaid $500 million of senior notes in 2025. - **Greensill litigation.** Marsh Ltd. was insurance broker to Greensill Capital and placed its trade credit insurance policies. Credit Suisse funds (from 2023) and Greensill Bank AG (from 2024–2025) had added Marsh entities as parties to the omnibus trade credit insurance litigation in Australia. When the 10-K was filed the company could not estimate a loss, mediation was expected in the first quarter of 2026 and trial was scheduled for August 2026. ## Current quarter — third quarter 2026 *From the Q3 2026 10-Q, accession 0000062709-26-000258. Adjusted (non-GAAP) figures are from the earnings release, accession 0000062709-26-000256. Quarterly comparisons are with the third quarter of 2025.* Reported results in the quarter were shaped by two one-off items pulling in opposite directions. Revenue rose 8% to $6.86 billion (from $6.35 billion). Underlying growth was 5% and acquisitions contributed 3%. Reported growth includes a $126 million gain from remeasuring Marsh's previously held equity-method stake in Deasterra Partners, a Spanish broker, to fair value when it bought the remaining 60% in July. The gain is booked as revenue but excluded from underlying revenue. Expenses rose 9%, including a $144 million charge, net of insurance proceeds, related to the Greensill settlement. Operating income rose 4% to $1.215 billion, and the GAAP operating margin was 17.7% versus 18.4%. Net income attributable to the company was $808 million (from $747 million) and diluted EPS rose 12% to $1.69 from $1.51. The tax effect of the Deasterra gain lowered the effective tax rate by 2.8 points, to 21.3% (from 25.1%). On the company's adjusted basis, operating income rose 6% to $1.53 billion and adjusted EPS rose 10% to $2.03. The adjusted margin was unchanged at 22.7%. Adjusted figures exclude the quarter's $170 million of net "noteworthy items" and $142 million of acquired-intangible amortization. The noteworthy items were: - Greensill $144 million - restructuring $79 million - McGriff integration and retention $35 million - $30 million of legal costs for restrictive-covenant litigation against a competitor - contingent-consideration changes $12 million - less the $126 million Deasterra gain and $4 million of other deal gains. **Risk and Insurance Services.** Revenue rose 7% to $4.2 billion (3% underlying). Operating income was $745 million versus $750 million; the segment carries both the Greensill charge and the Deasterra gain. The segment's GAAP margin fell to 17.8% from 19.2%, while its adjusted margin was 24.6% versus 24.7%. Interest on fiduciary funds fell to $100 million from $109 million on lower rates. The Risk and Reinsurance revenue figures below, quarterly and nine-month, follow the earnings release and exclude this interest income on fiduciary funds, which is reported separately within the segment. - **Risk**: revenue $3.7 billion, up 10%. Underlying growth was 5% and acquisitions plus the Deasterra gain added 5%. Underlying growth was 4% in U.S./Canada and 6% internationally, made up of EMEA 7%, Asia Pacific 4% and Latin America flat. Management credits higher new business and renewals, partly offset by declining insurance premium rates. - **Reinsurance**: revenue $374 million, down 6% on both a reported and an underlying basis, driven primarily by declining reinsurance premium rates. Nine-month revenue was $2.3 billion, flat, with a 1% underlying decline offset by currency. **Consulting.** Revenue rose 9% to $2.7 billion (8% underlying). Operating income rose 12% to $563 million, and adjusted operating income rose 9% to $593 million. - **People and Investments**: revenue $1.7 billion, up 6% (5% underlying). - Investments and Retirement grew 8%, on positive net flows from new business and capital markets. - Health and Benefits grew 5%, across all regions and particularly International. - Workforce and Rewards fell 1%, as an International decline outweighed U.S. growth. - **Management Consulting**: revenue $1.01 billion, up 14% on both a reported and an underlying basis, with growth in most regions. This was the fastest-growing business in the quarter. **Nine months.** Revenue rose 7% to $21.9 billion (5% underlying). A weaker dollar added about 1% to revenue and about 2% to operating income. GAAP operating income fell 3% to $4.87 billion and diluted EPS fell to $6.68 from $6.75. Nine-month expenses include $569 million of Greensill charges, net of insurance. Adjusted operating income rose 7% to $6.1 billion and adjusted EPS rose 9% to $8.29. **Greensill.** The 2026 charges reflect the settlements reached in June and September 2026, which the company says end its involvement in the Australian proceedings; it does not expect further charges. **Thrive expanded.** In the third quarter the company raised Thrive's expected cost to about $750 million from $500 million and its expected annualized savings to about $600 million from $400 million. Program costs to September 30, 2026 total $310 million, of which $71 million fell in the quarter. Total restructuring costs were $79 million in the quarter and $182 million for nine months. Chief executive John Doyle said the company completed its brand transition in the quarter. **Acquisitions in 2026.** Through September the company completed eight acquisitions: six in Risk and Insurance Services, including the Deasterra step-up, and two in Consulting. Total consideration was $550 million, made up of $318 million of cash, $90 million of deferred and contingent consideration and $142 million for the fair value of the Deasterra stake it already held. Acquired businesses contributed $34 million of revenue in the quarter. The company also paid $101 million of deferred and $103 million of contingent consideration for earlier deals over the nine months. Separately, Marsh paid $54 million for the remaining interest in a subsidiary, completed in July. McGriff integration and retention costs were $35 million in the quarter and $124 million for nine months. **Cash, debt and shareholder returns.** Nine-month operating cash flow was $2.3 billion versus $3.1 billion; restructuring activities used $222 million of cash. Share repurchases totalled $2.0 billion over the nine months, leaving about $3.7 billion of authorization, and dividends paid were $1.4 billion ($2.79 per share). The company had $1.6 billion of commercial paper outstanding at September 30, at an average 4.13%, against none at year-end, after enlarging the program to $4.25 billion in June. Short-term debt totalled $1.64 billion and long-term debt $18.9 billion. Interest expense rose to $248 million from $237 million, which the company attributes mainly to higher short-term debt. Senior debt is rated A- by S&P, A3 by Moody's and A- by Fitch, all with stable outlooks. **Outlook.** Marsh gives no numeric revenue or earnings guidance in the release or the 10-Q. It does give several forward estimates: - if September 30 exchange rates hold, currency conversion would add about $93 million to full-year 2026 net operating income - Thrive's costs and savings are expected to be spread evenly over the program period - about $8 million of U.S. non-qualified and $15 million of non-U.S. pension contributions are expected for the rest of 2026. ## Subsequent events *From the Q3 2026 10-Q, accession 0000062709-26-000258.* The 10-Q has no separate subsequent-events note, and it reports no acquisitions, divestitures, borrowings or litigation outcomes after September 30, 2026. It mentions two items dated after the quarter-end. First, the $0.990 per-share quarterly dividend declared in September 2026 is payable in November 2026. Second, 475,514,327 common shares were outstanding at October 12, 2026.