NEW YORK--(BUSINESS WIRE)--Marsh & McLennan Companies, Inc. (NYSE: MMC), a global professional services firm offering clients advice and solutions in risk, strategy and people, today reported financial results for the third quarter ended September 30, 2018.

Dan Glaser, President and CEO, said: "We are pleased with our performance for the third quarter and first nine months of the year. In the quarter, we produced excellent underlying revenue growth of 5% in both Risk & Insurance Services and Consulting, and adjusted EPS growth of 8% excluding the impact of the new revenue standard. For the first nine months of 2018, we achieved strong underlying revenue growth of 4% on a consolidated basis and 10% adjusted EPS growth excluding the impact of the new revenue standard. Given our solid performance in the first nine months of 2018, the Company is well positioned to deliver full year underlying revenue growth in the 3 to 5% range, as well as margin expansion and strong growth in earnings per share."

"The highlight of the quarter was our agreement to acquire Jardine Lloyd Thompson Group. JLT is a premier organization in our industry that we have admired for a long time. The combination of Marsh & McLennan and JLT will create innovative solutions for our clients, career opportunities for our colleagues, and value for our shareholders,” concluded Mr. Glaser.

Consolidated Results

Consolidated revenue in the third quarter of 2018 was $3.5 billion, an increase of 5% compared with the third quarter of 2017. On an underlying basis, revenue increased 5%. Net income attributable to the Company was $276 million. Operating income was $541 million while adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, decreased 5% to $535 million. Excluding the impact of the new revenue recognition standard, ASC 606, adjusted operating income rose 3%.

On a per share basis, net income attributable to the Company in the third quarter declined to $0.54 from $0.76 in the prior year. Adjusted earnings per share of $0.78 was down 1% from the prior year period. The 1% decrease in adjusted EPS includes a $0.07 per share reduction from the application of ASC 606. Excluding ASC 606, adjusted EPS increased 8%.

For the nine months ended September 30, 2018, consolidated revenue was $11.2 billion, an increase of 9% and 4% on an underlying basis. Operating income was $2.1 billion, an increase of 8% from the prior year period. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 9% to $2.2 billion. Excluding the impact of ASC 606, adjusted operating income rose 5%. Net income attributable to the Company increased 2% to $1.5 billion. Earnings per share increased 4% to $2.93. Adjusted earnings per share increased 14% to $3.26 compared with $2.87 for the comparable period in 2017. The 14% increase in adjusted EPS includes a $0.10 per share benefit from the application of ASC 606. Excluding ASC 606, adjusted EPS increased 10%.

Risk & Insurance Services

Risk & Insurance Services revenue was $1.9 billion in the third quarter of 2018, an increase of 6%, or 5% on an underlying basis. Operating income was $293 million, an increase of 9%, and adjusted operating income declined 3% to $283 million. Excluding ASC 606, adjusted operating income increased 13%. For the nine months ended September 30, 2018, revenue was $6.3 billion, an increase of 11%, or 4% on an underlying basis. Operating income rose 12% to $1.5 billion and adjusted operating income rose 15% to $1.5 billion. Excluding ASC 606, adjusted operating income increased 10%.

Marsh's revenue in the third quarter was $1.6 billion, an increase of 10%, or 3% on an underlying basis. In U.S./Canada, underlying revenue rose 5%. International operations produced underlying revenue growth of 2%, reflecting flat underlying growth in EMEA, 3% in Asia Pacific, and 7% in Latin America. For the nine months ended September 30, 2018, Marsh’s underlying revenue growth was 3%.

Guy Carpenter's revenue in the third quarter was $215 million, an increase of 11% on an underlying basis. For the nine months ended September 30, 2018, Guy Carpenter’s underlying revenue growth was 7%.

Consulting

Consulting revenue in the third quarter was $1.7 billion, an increase of 4%, or 5% on an underlying basis. Operating income decreased 6% to $291 million and adjusted operating income decreased 6% to $293 million. For the first nine months of 2018, revenue was $5.0 billion, an increase of 6%, or 4% on an underlying basis. Operating income of $805 million increased 1% and adjusted operating income decreased 2% to $808 million. Excluding ASC 606, adjusted operating income decreased 1%.

Mercer's revenue was $1.2 billion in the third quarter, an increase of 3% on an underlying basis. Wealth, with revenue of $525 million, grew 2% on an underlying basis. Within Wealth, Defined Benefit Consulting & Administration decreased 3%, while Investment Management & Related Services increased 9%. Health revenue of $415 million was up 4% on an underlying basis and Career revenue of $235 million increased 5% on an underlying basis. For the nine months ended September 30, 2018, Mercer’s revenue was $3.5 billion, an increase of 3% on an underlying basis.

Oliver Wyman Group’s revenue was $481 million in the third quarter, an increase of 11% on an underlying basis. For the first nine months ended September 30, 2018, Oliver Wyman Group’s revenue increased to $1.5 billion, up 5% on an underlying basis.

Other Items

On September 18, 2018, the Company announced an agreement to acquire Jardine Lloyd Thompson Group (JLT), a leading provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services. JLT is based in London and has offices in over 40 countries including in key emerging markets across Asia and Latin America.

The transaction is expected to close in spring of 2019, subject to receipt of required antitrust and regulatory approvals and the approval of JLT shareholders. In order to protect the Company from pound sterling exchange rate volatility between announcement and closing, the Company entered into a deal contingent forward foreign exchange contract. As a result of entering into this contract, the Company recorded a charge of $100 million reflecting the fair value of the hedging instrument at the end of the quarter. This item is classified as noteworthy and excluded from our adjusted results.

In the third quarter, the Company recognized a charge of $81 million to reflect an other than temporary decline in the carrying value of its equity investment in South African based Alexander Forbes. Also in the quarter, a gain of $46 million was recognized on the sale of a business in Marsh. Both of these items are classified as noteworthy and therefore excluded from our adjusted results.

The Company repurchased 2.1 million shares of its common stock for $175 million in the third quarter. Through nine months, the Company has repurchased 8.2 million shares for $675 million.

About Marsh & McLennan Companies

Marsh & McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The company’s approximately 65,000 colleagues advise clients in over 130 countries. With annual revenue over $14 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading firms. Marsh advises individual and commercial clients of all sizes on insurance broking and innovative risk management solutions. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Oliver Wymanserves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit mmc.com, follow us on LinkedIn and Twitter @mmc_global or subscribe to BRINK.