Marsh & McLennan Companies, Inc.

Welcome to Marsh McLennan's second quarter 2022 financial results conference call. Today's call is being recorded. Second quarter 2022 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-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. If you have a question, please press 01 on your touchtone phone. If you wish to be removed from the queue, please press 02. If you're using a speakerphone, you may need to pick up on the handset before pressing the numbers. Once again, if you have a question, please press 01 on your touchtone phone. I'll now turn this over to Dan Glazer, President and CEO of Marsh McLennan.

Good morning. And thank you for joining us to discuss our second quarter results reported earlier today. I'm Dan Glazer, president and CEO of Marsh McLennan. Joining me on the call today is John Doyle, our group president and COO. Mark McGivney, our CFO. And the CEOs of our businesses, Martin South of Marsh, Dean Klasora of Guy Carpenter, Martine Ferland of Mercer, and Nick Studer of Oliver Wyman. Also with us this morning is Sarah DeWitt, Head of Investor Relations. Marsh McLennan's second quarter was outstanding. Top line momentum continued across our business, extending our strongest run of quarterly underlying growth in over two decades. We generated robust top and bottom line results, topping tough comparables in the prior year. Underlying growth of 10% in the quarter reflects considerable strength across our organization. It represents the fifth consecutive quarter of 10% or higher top-line growth, building on 13% growth a year ago. Adjusted operating income of $1.3 billion was the second quarter record and grew 8% on top of 24% in the second quarter of 2021. Adjusted EPS growth of 8% is notable, given our 33% growth in the second quarter of 2021, costs related to our strategic talent investments, and the rebound of expenses, such as T&E. We also completed the highest level of quarterly share repurchases in over a decade, buying back $600 million of stock. Overall, our second quarter performance reflects the strength of Marsh McLennan. the relevance of what we do, and the expertise of our colleagues. I'm pleased with the momentum of our second quarter results, especially when viewed in the context of a macroeconomic and geopolitical backdrop that has become increasingly tense over the course of the year. Entering 2022, the outlook was cautiously optimistic, reflecting expectations for above average GDP growth. Fast forward to today, and we hear more about the rising risk of recession, the highest inflation in two generations, geopolitical tumult, central bank hawkishness, and bear markets in risk assets. We have proven to be a resilient firm, and we are prepared to act as conditions warrant. However, in the current environment, we believe it is worth noting some nuances to the macro story that remains supportive of our growth. While the real GDP growth outlook has softened, the outlook for inflation has risen. These two factors have somewhat offsetting impacts on insurance premiums. Even if GDP growth softens as predicted, higher inflation will increase insured values and likely cause higher loss costs. Additionally, P&C insurance pricing conditions remain firm We are helping clients navigate an environment where underwriters remain cautious about where and how they deploy capital and terms and conditions are tight in some product lines. Insurers also continue to account for the rising frequency and severity of catastrophe losses, the risks of social inflation, and a firmer reinsurance market. Looking at the health benefits and workforce sectors, The U.S. labor market remains among the tightest employment environments of the past half century, even if it has tempered at the margins. The U.S. unemployment rate is back to pre-pandemic lows, and yet over 11 million jobs remain unfilled. And short-term interest rates are rising due to central bank tightening, which will be a benefit to fiduciary income. Importantly, we are in the business of risk, strategy, and people. When the world is unsettled, demand for our services rises. We are helping our clients adapt to this rapidly changing landscape and navigate long-term challenges as well as opportunities. We are increasingly harnessing the collective power of our firm to guide clients as they deal with issues such as geopolitical risk, the pandemic, cyber threats, global supply chain disruptions, capital markets volatility, climate change, tight labor markets, and new ways of working. Even if a recession does emerge, Marshall McLennan is well positioned to perform through the economic cycle. Since we went public in 1962, we have grown EPS during all recessionary periods, most notably in the severe recessions that accompanied the global financial crisis and the pandemic in 2020. We have demonstrated our ability to manage the expense space in both good and tough times and run our business to grow revenues faster than expenses. We have reported adjusted operating margin improvement for 14 consecutive years. We also have a track record of delivering today while investing for the future. This includes generating attractive financial performance while at the same time investing in our talent and capabilities. Overall, I am proud of how we are executing and delivering for clients today. And we continue to believe that over the long term, demand for our advice and solutions will remain strong given rising levels of complexity, volatility, and uncertainty across the business landscape. With that, let me turn it over to John for his comments on the quarter.

Thanks, Dan, and good morning, everyone. Our second quarter results were outstanding. We had 10% underlying revenue growth with momentum across the business, and our adjusted operating income set a second quarter record. I'm pleased with our performance and grateful to our colleagues for the value they delivered to our clients, communities, and shareholders. Before I discuss market trends and our performance, I want to comment on the ways in which we are harnessing the collective strength of Marsh McLennan. We are finding the intersections where we bring unique capabilities to serve our clients. Earlier this year, I mentioned that I was meeting with our colleagues to identify areas where we can have greater client impact as well as accelerate our growth. These conversations have yielded a range of ideas to drive innovation, deliver critical client solutions, become more agile and efficient, and create growth and value for shareholders. Year to date, we have generated a significant number of wins involving two or more Marsh McLennan businesses, and every day we see more potential to succeed together. Let me share a few recent examples. Marsh and Oliver Wyman helped a regional healthcare client with a broad enterprise risk management strategy. Knowing Marsh has this capability, Oliver Wyman involved them in the engagement. The client was so pleased with the value the team delivered that a further opportunity was created for Mercer to consult on workforce issues. Marsh and Mercer engaged a higher education client in the United States about enterprise risk management. The client valued our expertise and ability to facilitate conversations about total risk across all lines of insurance. As a result, Marsh was awarded the Property and Casualty Insurance Program and Mercer secured the student health, travel, and athletics business. The client has since engaged the joint team about expanding additional lines of coverage. Guy Carpenter and Oliver Wyman also came together recently to help a large US insurer with strategic advice to reposition a core product. The successful collaboration is expected to lead to additional business and further opportunities to partner on future projects. These are just a few examples of the ways We are helping clients grow faster and become more resilient. Now let me provide an update on current P&C insurance market conditions. Rate increases in the marketplace persist, along with continued concerns around the impact of inflation on lost costs and a tightening reinsurance market. The Marsh Global Insurance Market Index showed price increases of 9% year over year. This marks the 19th consecutive quarter of rate increases in the commercial P&C insurance marketplace. Looking at pricing by line, the Marsh Market Index showed both global property insurance and global casualty rates up 6% on average. Global financial and professional lines, excluding cyber, increased low single digits, while cyber rates rose nearly 80% in some geographies. As a reminder, our index skews the large account business. However, small and middle market insurance rates continue to rise as well, although less than for large, complex accounts. Turning to reinsurance, Guy Carpenter's U.S. Property Catastrophe Rate Online Index showed increases of approximately 15% through midyear, the largest increase since 2006. Midyear renewals reflected one of the most challenging property markets in many years, with pricing driven by inflation, escalating geopolitical risk, and loss experience. Throughout the first half of the year, we saw some reinsurers take tougher positions on specific terms and conditions and shift portfolios to limit capacity in certain lines of business or geographies. We remain focused on helping our clients navigate these challenging insurance and reinsurance markets and the heightened risk environment. Turning to our performance in the quarter, as I noted earlier, Marsh McLennan had excellent results. In the second quarter, we had 10% underlying revenue growth with 9% in RIS and 10% in consulting. This is a fantastic result considering the prior year second quarter underlying growth was 13%. Bottom line results were strong as well with adjusted operating income growth of 8% in the quarter compared to 24% growth a year ago. Looking at risk and insurance services, second quarter revenue was a record $3.3 billion. up 5% compared with a year ago, or 9% on an underlying basis. Adjusted operating income increased 9% to a second quarter record of $1 billion, and our adjusted operating margin expanded 40 basis points to 32.8%. At March, revenue in the quarter was $2.8 billion, up 5% compared with a year ago. Revenue growth was 9% on an underlying basis and supported by strong renewal growth and new business. U.S. and Canada had 10% underlying revenue growth. This marks U.S. and Canada's fifth consecutive quarter of double-digit underlying revenue growth. International was also strong, with underlying growth of 9%. Latin America grew 14%, Asia Pacific was up 11%, and EMEA was up 7%. Guy Carpenter's second quarter revenue was $522 million, up 9% on an underlying basis, driven by strong retention in new business, as well as rate increases, which continued at mid-year. Guy Carpenter has now achieved underlying revenue growth of 9% or higher in four of the last five quarters. In the consulting segment, revenue was $2.1 billion and up 10% from a year ago on both a reported and underlying basis. This is consulting's fifth consecutive quarter of double-digit underlying revenue growth. Adjusted operating income increased 4% to a second quarter high of $369 million. The adjusted operating margin was 19.3%, down 20 basis points versus a year ago. Mercer's revenue is $1.4 billion in the quarter, up 7% on an underlying basis. Career grew 17% on an underlying basis, a record since we began reporting this line of business. We continue to see robust demand for solutions linked to workforce transformation and compensation and rewards. Health underlying revenue growth was also excellent at 10% in the quarter, reflecting growth across all geographies. This quarter's results continue to benefit from strong demand for our solutions, accelerating new business, higher retention, increased enrolled lives from a strong labor market, and medical inflation. Wealth increased 1% on an underlying basis, reflecting modest growth in defined benefits, which offset a modest decline in investments. Our assets under management were $346 billion at the end of the second quarter, down 12% from the prior year, reflecting capital market and foreign exchange headwinds. In May, Mercer announced an agreement with Westpac to acquire BT Supertrust and Advanced Asset Management in Australia. This will create a $45 billion Mercer fund, helping more than 850,000 Australians invest for retirement. The transaction is expected to be completed in the first half of 2023. Oliver Wyman's strong momentum continued. Revenue in the second quarter was $695 million, an increase of 16% on an underlying basis. This follows a 28% comparable in the second quarter of 2021 and reflects continued strong demand across all geographies. Overall, I'm proud of our second quarter performance, which demonstrates the continued momentum across our business, despite a more uncertain macro environment. Now I'll turn the call over to Mark for further detail on our financial results and a discussion of our outlook for the rest of 2022. Thank you, Johnny.