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Marsh & McLennan Firms, Inc. (NYSE:MMC) Q2 2024 Earnings Name Transcript July 18, 2024 8:30 AM ET
Firm Individuals
John Doyle – President and CEOMark McGivney – CFONick Studer – President & CEO, Oliver Wyman GroupMartin South – President & CEO, MarshPat Tomlinson – President & CEO, MercerDean Klisura – President & CEO, Man Carpenter
Convention Name Individuals
David Motemaden – Evercore ISIJimmy Bhullar – JPMorganElyse Greenspan – Wells FargoScott Heleniak – RBC Capital MarketsMichael Zaremski – BMO Capital MarketsGregory Peters – Raymond JamesYaron Kinar – JefferiesMeyer Shields – KBWRob Cox – Goldman Sachs
Operator
Welcome to Marsh McLennan’s Earnings Convention Name. At this time’s name is being recorded. Second quarter 2024 monetary outcomes and supplemental info had been issued earlier this morning. They’re accessible on the corporate’s web site at marshmclennan.com.
Please word that remarks made immediately could embody forward-looking statements. Ahead-looking statements are topic to dangers and uncertainties and quite a lot of elements could trigger precise outcomes to vary materially from these contemplated by such statements. For a extra detailed dialogue of these elements, please confer with our earnings launch for this quarter and to our most up-to-date SEC filings, together with our most up-to-date Type 10-Ok, all of which can be found on the Marsh McLennan web site. Throughout the name immediately, we might also focus on sure non-GAAP monetary measures. For a reconciliation of those measures to probably the most intently comparable GAAP measures, please confer with the schedule in immediately’s earnings launch. [Operator Instructions]
I will now flip this over to John Doyle, President and CEO of Marsh McLennan.
John Doyle
Good morning, and thanks for becoming a member of us to debate our second-quarter outcomes reported earlier immediately. I am John Doyle, President and CEO of Marsh McLennan. On the decision with me is Mark McGivney, our CFO; and the CEOs of our companies, Martin South of Marsh; Dean Klisura of Man Carpenter; Pat Tomlinson of Mercer; and Nick Studer of Oliver Wyman. Additionally with us this morning is Sarah DeWitt, Head of Investor Relations.
Earlier than I get into our outcomes, I would prefer to touch upon the tried assassination of former US President, Donald Trump, this previous weekend. We’re grateful that he’s protected and our hearts exit to the victims and their family members. Violence has no place in our politics or our society. We condemn it and affirm our dedication to civil dialogue, debate, and determination. Our political course of and democracy depend upon all candidates being able to soundly convey their visions for our nation. We imagine that every of us may also help form peaceable public discourse and advocate for a tradition of respect and unity.
Now, turning to the second quarter, Marsh McLennan delivered robust outcomes throughout our companies and geographies. We generated 6% underlying income progress on high of 11% within the second quarter of final 12 months, reflecting robust execution in each RIS and Consulting. We grew adjusted working earnings a 11% from a 12 months in the past. Our adjusted working margin expanded 130 foundation factors and adjusted EPS grew 10%. We additionally introduced a 15% improve to our quarterly dividend to $0.815 and accomplished $300 million of share repurchases through the quarter. These outcomes spotlight our constant deal with delivering within the close to time period whereas investing for sustained progress over the long run. We’re benefiting from natural investments we have made in our expertise and capabilities, and we additionally proceed to make high-quality acquisitions that construct on the size and breadth of our enterprise.
Within the second quarter, we introduced a number of important transactions. Mercer introduced an settlement to accumulate Cardano, a long-term financial savings specialist within the UK and Netherlands. With roughly $66 billion in AUM, Cardano operates the third-largest UK grasp belief platform and serves greater than 2 million clients throughout 27,000 employers. This transaction builds on our main place in OCIO, enhances our DC choices, and provides necessary buying and selling capabilities. Oliver Wyman agreed to accumulate Veritas Whole Options, an advisor in commodity and vitality markets. And Marsh McLennan Company accomplished three acquisitions within the quarter. Fisher Brown Bottrell, one of many 5 largest financial institution affiliate businesses in the USA. Specializing in business P&C insurance coverage and worker advantages, FBB expands our presence throughout the Southeast. AC Danger Administration builds on our scale in business P&C within the Northeast and Perkins Insurance coverage Companies provides to our business P&C enterprise in Texas. Final week, MMA additionally introduced the acquisition of Horton, a High 100 dealer with over $100 million in income, working primarily within the Midwest. And we just lately introduced the acquisitions of AmeriStar, a business P&C high-net-worth company primarily based in Minnesota, and Hudson Shore, a public sector worker advantages company in New Jersey. These acquisitions are nice examples of our potential to draw the easiest insurance coverage businesses to our firm. And together with excessive charges of sustained underlying progress, they’ve helped to make MMA a $3.5 billion annual income enterprise.
We additionally proceed to assist our shoppers thrive by investing in innovation. Drawing on our experience, perspective, knowledge and insights, we’re creating new options for a posh atmosphere. For instance, Marsh continues to evolve Blue[i], a digital suite of options for insurance coverage technique selections that makes use of our knowledge and analytics to generate insights for shoppers. This quarter, we added Blue[i] Danger Urge for food Analytics to assist shoppers outline the quantity and kind of threat they’re keen to retain. With customizable calculations, our insights assist shoppers navigate a difficult panorama with better confidence.
Man Carpenter launched CatStop+, a brand new answer to deal with the volatility of cyber threat utilizing GC’s proprietary analytics. CatStop+ gives shoppers safety towards Cyber CAT losses. Mercer launched SelectRx, a expertise answer within the US that creates competitors amongst pharmacies for high-cost specialty medicines. Leveraging Free Market Well being’s cloud-based platform, SelectRx lowers prices for employers and delivers financial savings to workers by directing prescriptions to a curated community of specialty pharmacies. And Oliver Wyman helps our shoppers innovate in their very own companies with the launch of Quotient, which mixes our experience in AI implementation, deployment, and strategic advisory with our deep trade data. Quotient strikes shoppers past the hype surrounding AI to ship actual worth and significant outcomes. Our method to balancing near-term efficiency with funding and innovation delivers important worth to our shoppers. It additionally allows us to maintain progress over the long run and drive constant distinctive efficiency for shareholders.
Shifting to the macro image, we proceed to see important alternative to assist shoppers navigate the complexity they’re dealing with immediately. Past the surprising assassination try within the US, the geopolitical backdrop is unsettled with ongoing wars and areas of rigidity throughout the globe. Uncertainty additionally stays across the frequency of utmost climate, escalating cyber-attacks, and key variables within the financial outlook, just like the persistence of inflation and the timing of modifications to central financial institution coverage. Regardless of this uncertainty, the atmosphere stays supportive of progress in our enterprise.
On the whole, we see continued financial progress in most of our main markets. The price of threat in healthcare continues to rise and labor markets stay tight. And the consensus likelihood of a near-term recession for main economies continues to lower. We’ve carried out nicely throughout financial cycles as a result of resilience of our enterprise, sustained demand for our recommendation and options, and constant execution for our shoppers.
Turning to insurance coverage and reinsurance market situations, the Marsh International Insurance coverage Market Index was flat general within the second quarter versus a 1% improve within the first quarter. Usually, charges within the US, Europe, and Latin America continued to extend within the low to mid-single-digits, whereas the UK, Asia, and Pacific noticed low to mid-single-digit decreases. International property charges had been flat versus up 3% within the first quarter. Casualty elevated within the low-single digits with US extra casualty up 10% within the quarter, whereas staff’ compensation decreased low single-digits. Monetary {and professional} legal responsibility charges and cyber pricing had been down 5% and 6%, respectively.
Midyear reinsurance renewals mirrored elevated demand for property cat with easing charges after important will increase in 2023. Nearly all of property placements had been accomplished at renewal with satisfactory capability. The worldwide property cat reinsurance charges had been typically flat to down mid-single-digits with better decreases for higher layers on accounts with out losses. The cat bond market had probably the most energetic quarter on report with over 30 new bonds issued involving roughly $8 billion of restrict. Casualty packages confronted continued underwriting scrutiny, however there was satisfactory capability available in the market. Extra of loss packages with US publicity noticed upward pricing strain, whereas quota share ceding commissions had been flat to down barely. As at all times, we’re serving to our shoppers navigate these dynamic market situations.
Now, let me flip to our second-quarter monetary efficiency. We generated adjusted EPS of $2.41, which is up 10% from a 12 months in the past. On an underlying foundation, income grew 6%. Underlying income grew 7% in RIS and 4% in Consulting. Marsh was up 7%, Man Carpenter 11%, Mercer 5%, and Oliver Wyman grew 3%. General, the second quarter noticed adjusted working earnings progress of 11% and our adjusted working margin expanded 130 foundation factors year-over-year.
Turning to our outlook, we’re well-positioned for an additional nice 12 months in 2024. We proceed to count on mid-single-digit or higher underlying income progress, one other 12 months of margin enlargement, and robust progress in adjusted EPS. Our outlook assumes present macro situations persist. Nonetheless, significant uncertainty stays and the financial backdrop could possibly be materially totally different than our assumptions. General, I am pleased with our second-quarter efficiency, which demonstrates continued execution on key initiatives and momentum throughout our enterprise. I am grateful to our colleagues for his or her focus and dedication, and the worth they ship to our shoppers, shareholders, and communities.
With that, let me flip it over to Mark for a extra detailed evaluation of our outcomes.
Mark McGivney
Thanks, John, and good morning. Our second-quarter outcomes had been robust with stable underlying progress, important margin enlargement, and 10% progress in adjusted EPS. Our consolidated income elevated 6% to $6.2 billion with underlying progress of 6%. Working earnings was $1.6 billion and adjusted working earnings was $1.7 billion, up 11%. Our adjusted working margin elevated 130 foundation factors to 29%. GAAP EPS was $2.27 and adjusted EPS was $2.41. For the primary six months of 2024, underlying income progress was 8%, our adjusted working earnings grew 11% to $3.7 billion, our adjusted working margin elevated 100 foundation factors and our adjusted EPS elevated 12% to $5.30.
Danger and Insurance coverage Companies, second-quarter income was $4 billion, up 8% from a 12 months in the past or 7% on an underlying foundation. This outcome marks the 14th consecutive quarter of seven% or larger underlying progress in RIS and continues the very best stretch of progress in 20 years. RIS working earnings was $1.3 billion within the second quarter. Adjusted working earnings was additionally $1.3 billion, up 12% over final 12 months and our adjusted working margin expanded 110 foundation factors to 35.3%. For the primary six months of the 12 months, income in RIS was $8.3 billion with underlying progress of 8%, adjusted working earnings elevated 12% to $2.9 billion and our margin elevated 90 foundation factors to 37.3%.
At Marsh, income within the quarter was $3.3 billion, up 8% from a 12 months in the past or 7% on an underlying foundation. This robust progress got here on high of 10% progress within the second quarter of final 12 months. Development within the second quarter mirrored robust new enterprise and stable renewals. In US and Canada, underlying progress was 6% for the quarter. Worldwide underlying progress was 7%. EMEA was up 7%, Asia-Pacific grew 7%, and Latin America was up 8%. For the primary six months of the 12 months, Marsh’s income was $6.3 billion with underlying progress of seven%. US and Canada grew 7% and worldwide was up 8%.
Man Carpenter’s income was $632 million within the quarter, up 10% or 11% on an underlying foundation. This terrific outcome got here on high of 11% progress final 12 months and was pushed by double-digit progress throughout most geographies and specialties. For the primary six months of the 12 months, Man Carpenter generated $1.8 billion of income and 9% underlying progress.
Within the Consulting phase, second quarter income was $2.2 billion, up 2% from a 12 months in the past or 4% on an underlying foundation. Consulting working earnings was $410 million and adjusted working earnings was $426 million, up 6%. Our adjusted working margin in Consulting was 19.8% within the second quarter, a rise of 60 foundation factors. For the primary six months of 2024, Consulting income was $4.4 billion, reflecting underlying progress of 6%. Adjusted working earnings elevated 7% to $870 million and our margin elevated 50 foundation factors to twenty.3%.
Mercer’s income was $1.4 billion within the quarter, flat in comparison with a 12 months in the past, however up 5% on an underlying foundation. This was Mercer’s thirteenth straight quarter of 5% or larger underlying progress and continues the very best run of progress in 15 years. Wealth grew 3%, pushed by progress in each Funding Administration and DB Consulting. Our belongings below administration had been $492 billion on the finish of the second quarter, up 1% sequentially and up 25% in comparison with the second quarter of final 12 months. 12 months-over-year progress was pushed by our transaction with Vanguard, impression of capital markets, and optimistic internet flows. Well being underlying progress remained robust at 9% and mirrored progress throughout all areas. Profession income elevated 2%, persevering with the pattern of modest progress following a two-year stretch of robust progress in demand. For the primary six months of the 12 months, income at Mercer was $2.8 billion with 6% underlying progress.
Oliver Wyman’s income within the quarter was $837 million, a rise of three% on an underlying foundation. This comes on high of 11% progress a 12 months in the past. For the primary six months of the 12 months, income at Oliver Wyman was $1.6 billion, a rise of 8% on an underlying foundation, up from 6% progress within the first half of final 12 months. International alternate was a $0.02 headwind within the second quarter. Assuming alternate charges stay at present ranges, we count on FX to be a $0.02 headwind within the third quarter and $0.02 within the fourth quarter.
Whole noteworthy gadgets within the quarter had been $73 million. These included $44 million of restructuring prices, principally associated to this system we started within the fourth quarter of 2022 in addition to some transaction-related bills. Our different internet profit credit score was $66 million within the quarter. For the total 12 months, we proceed to count on our different internet profit credit score might be roughly $265 million.
Curiosity expense within the second quarter was $156 million, up from $146 million within the second quarter final 12 months, reflecting larger ranges of debt and better rates of interest. Primarily based on our present forecast, we count on roughly $154 million of curiosity expense within the third quarter and roughly $620 million for the total 12 months.
Our adjusted efficient tax fee within the second quarter was 26.2% in contrast with 24.2% within the second quarter of final 12 months. Our tax fee in each intervals benefited from favorable discrete gadgets. Excluding discrete gadgets, our adjusted efficient tax fee was roughly 26.5%. Once we give ahead steering round our tax fee, we don’t challenge discrete gadgets, which could be optimistic or unfavorable. Primarily based on the present atmosphere, we proceed to count on an adjusted efficient tax fee of between 25.5% and 26.5% for 2024.
Turning to capital administration and our stability sheet. We ended the quarter with complete debt of $13.5 billion. Our subsequent scheduled debt maturity is within the first quarter of 2025 when $500 million of senior notes mature. We proceed to count on to deploy roughly $4.5 billion of capital in 2024 throughout dividends, acquisitions, and share repurchases. The final word stage of share repurchase will depend upon how the M&A pipeline develops.
Final week, we introduced a 15% improve to our quarterly dividend, making this our fifteenth consecutive 12 months of dividend progress. This comes on high of a 20% improve a 12 months in the past and displays our robust earnings progress and confidence in our outlook. Our money place on the finish of the second quarter was $1.7 billion. Makes use of of money within the quarter totaled $1.2 billion and included $352 million for dividends, $500 million for acquisitions, and $300 million for share repurchases.
For the primary six months, makes use of of money totaled $2.2 billion and included $706 million for dividends, $847 million for acquisitions, and $600 million for share repurchases. Whereas there continues to be uncertainty within the outlook for the worldwide economic system, we be ok with the momentum in our enterprise and the present atmosphere stays supportive of progress. General, our glorious first half leaves us well-positioned for an additional nice 12 months in 2024.
Primarily based on our outlook immediately, for the total 12 months, we proceed to count on mid-single-digit or higher underlying progress, margin enlargement, and robust progress in adjusted EPS.
And with that, I am joyful to show it again to John.
John Doyle
Thanks, Mark. Andrew, we’re prepared to start Q&A.
Query-and-Reply Session
Operator
[Operator Instructions] And our first query comes from the road of David Motemaden with Evercore ISI.
David Motemaden
Thanks. Good morning. I simply had a query on the underlying income progress outlook of mid-single-digit or better. You guys simply did 8% within the first half of underlying income progress, however are growing the vary to excessive single-digit. May you simply assist me suppose by way of the places and takes when it comes to why you guys aren’t growing the vary?
John Doyle
Good morning, David. Positive. So yeah, let me to begin with, simply say, I used to be happy with our progress within the quarter. It was on high of a really large quarter a 12 months in the past at 11%. Marsh had good stable progress by area and observe on high of a tricky comp. Man Carpenter had a superb quarter. Market enhancements led to elevated demand after a fairly risky reinsurance market in 2023. Mercer once more had one other stable quarter of progress, as Mark famous in his feedback, greatest progress — stretch of progress in a protracted time period. Well being stays very robust. Wealth progress was stable and we really noticed an uptick in profession progress from the primary quarter. And Oliver Wyman had a really powerful comp, however had good progress — has had good progress year-to-date. And as we identified up to now, we’ll have extra quarter-to-quarter volatility than our different companies. What I might say is broadly talking, the macros proceed to be supportive of progress. It is a dangerous atmosphere we’re all working in, however GDP, inflation, labor markets, the price — rising value of threat, rising value of healthcare, all supportive. And I really feel very, very — I really feel like we’re very well-positioned. We’ve the very best expertise within the markets that we compete in. And so, we’re optimistic on our outlook for the second half, that once more stays a great marketplace for us. And so we be ok with the place we’re.
David Motemaden
Received it. Thanks, John. After which, Mark, I believe you talked about on final quarter’s name that you simply guys predict better margin enlargement within the second half than within the first half. Is that also the case?
John Doyle
You need to go forward, Mark?
Mark McGivney
Yeah. We’re actually proud of 130 foundation factors and it validated the statements we made in regards to the first-quarter margin enlargement dealing with headwinds from a number of gadgets. So we had been good — we’re glad to see the acceleration and we’re on monitor for stable margin enlargement for the 12 months.
John Doyle
Thanks, David. Andrew, subsequent query.
Operator
One second please for our subsequent query. Our subsequent query comes from the road of Jimmy Bhullar with JPMorgan.
Jimmy Bhullar
Hey, good morning. So first, John, simply following up in your feedback on Oliver Wyman. The expansion this quarter slowed versus what it has been in the previous few quarters. How a lot of that could be a operate of simply powerful comps and regular volatility within the enterprise versus possibly a slowdown within the pipeline?
John Doyle
Yeah, Jimmy, thanks for the query you recognize and I will hand it to Nick right here. However was it — I believe it is sum of each, proper? However it’s a — it was a tricky comp for certain, however we really feel excellent in regards to the year-to-growth — progress — year-to-date progress. Excuse me. Nick, you need to add a bit of bit extra depth?
Nick Studer
Yeah. I believe John is correct, Jimmy, it is a bit of little bit of each, however in the identical means that I famous final quarter that our 13% was towards a weak 0% comp, this 3% is towards a more durable 11%. That 8% year-to-date, I believe is bang in that zone of mid to high-single-digit progress we count on to common by way of the cycle. And as you recognize, our quarters are at all times considerably risky. Mark kindly famous in his feedback that the primary half really accelerated versus the primary half final 12 months. To provide you a bit of little bit of shade on the place we’re seeing larger progress, regionally, each Asia and our India, Center-East, and Africa areas have continued on robust progress. From an trade perspective, our communications, media, and expertise observe has been our fastest-growing year-to-date, however our very robust banking and insurance coverage practices additionally in optimistic territory as is our public sector observe. And we now have a big selection of capabilities. And our financial analysis enterprise, NERA, rising strongly. Our market-leading finance and threat observe, significantly in monetary companies, our pricing staff. And importantly, our folks and organizational efficiency observe, which actually works throughout our industries to assist on large consumer transformative moments. However the market is a bit of bit unsure. Whereas the economic system appears to be higher, it is nonetheless a pressured atmosphere for discretionary spending, some uncertainties as John and Mark have highlighted. And we do see — we’re kind of working by way of some pricing strain as a result of extra capability as a few of our rivals work by way of a few of their headcount actions.
John Doyle
Thanks, Nick. Jimmy, do you’ve gotten a follow-up?
Jimmy Bhullar
Yeah, simply on — and possibly it is for Mark on fiduciary funding earnings. It was — it has been kind of flattish on a sequential foundation. So ought to we assume given the place charges are that going ahead, it is going to develop simply with progress within the enterprise or was the sequential flat leads to 2Q extra of a operate of seasonality and balances or different elements?
John Doyle
Mark?
Mark McGivney
Jimmy, there may be — there may be seasonality in balances as we have talked about up to now. However I believe the most important driver, I believe, from right here is simply going to be the outlook for charges. As we have talked about and also you noticed on our stability sheet within the quarter, we have about $11.5 billion of fiduciary balances and so I believe simply the place we go from right here is simply going to be what the central banks do with short-term rates of interest. And simply as you are modeling going ahead, understand that our balances do mirror the income mixture of our enterprise. So it is not simply US charges, clearly that drive — we have balances due to the distributed nature of enterprise everywhere in the world. So yeah, in order I mentioned, the outlook actually goes to be principally a operate of what the speed image appears like.
John Doyle
Thanks, Jimmy. Andrew, subsequent query?
Operator
And our subsequent query comes from the road of Elyse Greenspan with Wells Fargo.
Elyse Greenspan
Hello, thanks. Good morning. My first query, inside RIS, are you able to give us a way of how a lot of the bills helped your margins within the quarter?
John Doyle
Expense saves, are you able to give me a [indiscernible] Okay. Okay. Positive. Positive. Thanks, Elyse. Mark?
Mark McGivney
Yeah. Elyse, we’re positively seeing the advantage of it. We have stayed away from quantifying particularly how a lot goes to drop quarter-to-quarter. However you simply even see the pattern in expense progress quarter-to-quarter that was positively an element. Our robust progress and the advantage of financial savings contributed to that 130 foundation factors of margin enlargement. So we’re — as I mentioned, we’ve not quantified the quantity that we’re seeing every quarter, however we’re on monitor for the extent of financial savings that we talked about and we’re seeing the advantage of it.
John Doyle
Do you’ve gotten a follow-up, Elyse?
Elyse Greenspan
Yeah. After which my second query inside Marsh, may you simply give us a way of what you are seeing, some extra shade in each the US and internationally inside natural progress, each for the Q2 after which how you concentrate on the outlook within the again half of the 12 months? And are US or internationally, are you guys extra listed to property in a single versus the opposite?
John Doyle
Yeah. I imply the markets are fairly dynamic, proper? And so, I might simply warning you a bit of bit on pricing, proper? I believe Man Carpenter is an efficient indication of that, proper? So we noticed a greater market result in elevated demand. However as I discussed earlier, it was a great stable progress by area and by observe, once more within the second quarter and on high of a tricky comp. However Martin, possibly you could possibly share a bit of bit extra shade on progress worldwide versus US and the demand you are seeing.
Martin South
Positive. So simply to restate 7% within the quarter, which is on high of 10% for the second quarter of ’23. Fairly balanced progress, the worldwide at 7% and the US at 6% — US and Canada at 6%. Our US enterprise MMA and Victor continued to carry out very nicely within the US. Canada had a weaker quarter, some macros there affected that, that pulled down a bit of bit. However throughout the worldwide area, worldwide was a 7% on high of 10% in ’23. Asia-Pacific accelerated from 7% on high of 6% in ’23, and Latin-America did 8% on high of 17% within the second quarter of ’23 and EMEA did 7% on high of 11% in ’23. The efficiency was pushed actually by very robust efficiency internationally in the advantages enterprise. Building, vitality, and energy all got here off robust double-digit progress as nicely, repeating what occurred final 12 months. And we’re starting to see some revitalization within the US capital markets, which has been a headwind for brand spanking new enterprise progress going again to ’21. Renewal base progress was robust and stable, as was new enterprise in each US and Canada and worldwide. And our misplaced enterprise improved barely as we proceed to construct stickier relationships with shoppers as we interact extra deeply, and we aspire to be the danger advisor of the long run, speaking to them nicely past typical threat. We really feel very well-positioned. General, the combination of premium within the US might be extra weighted to casualty in its broad phrases and possibly extra balanced in worldwide for property-casualty to reply your — when it comes to property to reply your query.
John Doyle
Yeah, reflection of the legal responsibility atmosphere within the US for certain. Thanks, Elyse, and thanks, Martin. Andrew, subsequent query?
Operator
Our subsequent query comes from the road of Scott Heleniak with RBC Capital Markets.
Scott Heleniak
Yeah, good morning. Only a fast query. Given the M&A tempo has been fairly robust over the previous few quarters and definitely for the 12 months, simply questioning if we must always assume sort of a deceleration within the run-rate for share backs — share buybacks within the second half versus the primary half? Simply the way you’re excited about that and the way is your M&A monitoring versus sort of what you thought going into the 12 months?
John Doyle
Yeah. Positive, Scott. Thanks for the query. No change to our philosophy. We proceed to take a balanced method to capital administration. We’ve about $4.5 billion to deploy through the course of the 12 months. Broadly talking, we favor engaging investments in our enterprise, whether or not it is natural or inorganic over buybacks, however we’re not going to let money construct up on the stability sheet both. And as I famous earlier, we elevated our dividend starting on this quarter. I imply, we aspire to lift our dividend yearly. We purchased again $300 million within the — of shares within the second quarter. We’re happy with what we have seen within the — within the M&A market. As I mentioned, it was an energetic quarter. I imply, we introduced a few offers actually initially right here of the second quarter simply after the first of July. And so, we’re enthusiastic about these offers and we’ll proceed to be energetic available in the market. However finally, the quantity of share repurchase will depend upon what’s clearly a risky M&A. You by no means know what the last word consequence might be in M&A however we’re seeing some good alternatives to spend money on our enterprise. Do you’ve gotten a follow-up?
Scott Heleniak
Yeah. Only one fast one, too. Simply typically on Mercer, the Well being natural progress actually robust once more, and 9% has been robust for fairly some time. And Profession and Wealth, I assume, is a bit of bit slower in comparison with Well being, however simply questioning for those who can simply sort of flesh out what you are seeing there, the power in Well being versus the opposite areas, if there’s something sort of holding these — again these areas apart from simply the sort of troublesome comps?
John Doyle
Yeah. Thanks, Scott, and I will ask Pat to remark in a second. However I discussed rising healthcare prices in my opening remarks. It is a large strain level for our shoppers on this economic system. And so — and significantly given the tight labor markets in most main economies world wide. So — it is actually a terrific worth we’re delivering to our shoppers in a really powerful market there. Wealth goes to have some volatility as nicely Profession quarter-to-quarter, however Pat, possibly you could possibly discuss a bit of bit about what we’re seeing within the market.
Pat Tomlinson
Positive. Thanks, and thanks a lot for the query. First off, we’re happy with the Q2 underlying progress of 5%. As Mark highlighted, our thirteenth consecutive quarter with 5% or extra progress and that every one the practices are contributing to progress. Definitely, well being has been contributing at a better fee. Shortly to sort of undergo the practices and what we’re seeing. Well being, as you highlighted, had that spectacular quarter with 9% progress. The robust efficiency was broad-based, proper? So there was double-digit progress throughout most areas. It comes predominantly from investments in hiring new expertise, investments in thought management, together with our Well being on Demand survey, new digital instruments, and a deal with consumer segmentation that is actually designed to match our shoppers’ healthcare wants with our revolutionary and tailor-made options. We benefited from renewal and a few new enterprise progress, some insurer income, and has been highlighted a few instances within the name, medical value inflation, actually. We proceed to see robust demand for digital options and revolutionary advantages underscoring actually the worth of — and the breadth of recommendation and options we convey to shoppers. Little much less progress in Wealth and Profession. So let me rapidly undergo them. Wealth, we grew the three% in Q2. That was balanced between DD&A and IMS, proper? So DB plans funding standing proceed to learn from elevated rates of interest. It is driving a rise in challenge work, predominantly revolving round threat transfers in addition to sure regulatory necessities which might be out in a few of the jurisdictions world wide. We head within the risky capital markets, it has been driving some robust demand for actuarial and the funding options. John had highlighted in OCIO we did profit from the transaction with Vanguard. We had some internet new inflows and capital markets additionally offered a income raise. It is necessary to notice that on IMS, from a enterprise perspective, it is a portfolio of options, proper, that features some advisory work and a few DC administration along with OCIO. So a number of instances, it is sometimes checked out as OCIO. And solely our OCIO enterprise is instantly impacted by AUM. In order we have seen a market run-up, actually, we solely have a subset of that enterprise that is instantly impacted by AUM. And our AUM is a diversified portfolio the place equities solely make up about half of our publicity, proper, as a result of we now have a number of shoppers which have heavy mounted earnings publicity. So whereas the markets can drive some volatility for us, the impression of fairness markets is a little more muted in IMS progress. After which on Profession, which had probably the most modest progress of two%, which was up sequentially over quarter, it’s following a protracted interval of progress after the pandemic. We noticed good progress momentum from a few our practices, expertise and transformation. Rewards was a bit extra muted. And I believe that is predominantly reflecting the impression of decrease wage inflation and lowered worker turnover, which is driving some barely decrease demand for our shoppers at rewards initiatives. However I believe it is also necessary to notice right here that whereas the expansion charges fell down, has been flat even during the last couple of quarters, it has been a bit extra modest. The general measurement of our Profession observe is almost 20% bigger than it was pre-pandemic. In order that’s — so we really feel very robust about that that we have been capable of keep these ranges in a predominantly project-based enterprise. So, general, I believe the situations have us very optimistic in regards to the outlook for Mercer.
John Doyle
Terrific. Thanks, Pat. Scott, thanks in your questions. Andrew, subsequent query.
Operator
Thanks. And our subsequent query comes from the road of Michael Zaremski with BMO Capital Markets.
Michael Zaremski
Okay. Nice. Good morning. Specializing in the property cat’s key pricing atmosphere, I assume, aggressive atmosphere. John, I imagine you mentioned that Marsh index [deceled] (ph) once more to zero from one. Simply curious, given Marsh does have much more small to mid-account enterprise now too, it looks like there’s like two totally different tales, two totally different tales occurring between the big account and the SMid accounts. I do not know for those who’d agree with that. And if sure, any shade you could possibly provide sort of why we’re seeing two totally different developments there on pricing?
John Doyle
Positive, certain. Positive, Mike. Thanks. Thanks for the query. I will share some high-level ideas, after which possibly I will ask each Martin and Dean to speak about some market observations. I might word, Mike, good out of the gate right here that sometimes, bigger account pricing has extra volatility connected to it. For those who look again on historic cycles, that is been the case. Mid-market pricing has traditionally been extra secure or extra constant, I assume, and have much less volatility from cycle to cycle. And our index is weighted in the direction of massive accounts to be clear, the place we now have the very best knowledge. However insurance coverage and reinsurance markets proceed to settle within the quarter after what’s been a few years of will increase. It isn’t simply center versus massive, it is a assortment of markets. And whereas as I identified in my ready remarks, cyber and FinPro, possibly the very best instance, costs proceed to average. Some segments of the market are displaying some — what is perhaps early indicators of stress. US Extra Casualty, for instance, costs had been up 10%, and loss value inflation there stays fairly difficult. However general, proper now, market is offering a chance for our shoppers to revisit some selections they’ve made about financing threat and that tighter market situations led them to make unsure selections. So it is a welcome second for a lot of of our shoppers to revisit a few of these selections. And Man Carpenter, as I discussed earlier, it led to better demand within the second quarter as evidenced by our robust progress. However Martin, possibly you could possibly share a bit of bit extra shade on what we’re seeing within the pricing market?
Martin South
Positive. Simply reminding ourselves, 26 quarters of fee will increase, which simply turned flat now. And as John famous, the — our index is geared way more in the direction of the bigger account phase of our enterprise. And clearly, the mid-market enterprise within the smaller finish has much less volatility in pricing. However simply by line of enterprise, casualty within the US is up 3%, which, as John mentioned, is de facto dominated by the ten% improve within the umbrella guide, which we talked about in earlier calls in regards to the volatility in claims inflation there. Property is flat in most areas, aside from the Center East and India, the place we’re nonetheless seeing some will increase in property, possibly because of a few of the exercise within the Center East on this previous quarter. Core FinPro contracting at 5%, with fee decline just about the world over, and cyber contracting 6% which is usually per what we noticed in Q1. The pricing developments per current quarters, we’re seeing some slight will increase in geographies, however fee contraction is greater than regular. And so these are the important thing points actually that I might touch upon now. However in fact, so far as our enterprise is worried, we — a number of our enterprise is fee-based or managed fee foundation, and publicity progress has been important over the previous few years as nicely, which is a counterweight to that.
John Doyle
Thanks, Martin. Dean, possibly you’ll be able to simply rapidly cowl the reinsurance market.
Dean Klisura
Yeah, thanks, John. And, Mike, simply a few headlines in regards to the property cat reinsurance market, which actually is linked to the underlying property market that Martin is describing. As John famous, it is a way more predictable and clean market than we skilled final 12 months within the 2023 arduous marketplace for property cat. Placements have been accomplished on time. There’s been satisfactory capability within the market for our shoppers. There’s an elevated reinsurer urge for food available in the market, and we all know why, proper? They’re driving 20% plus ROEs on this market given the speed will increase of final 12 months and the upper attachment factors our shoppers have been compelled to soak up with better volatility. We’re seeing very robust ILS exercise available in the market. John famous, report cat bond issuance within the quarter, 34 discrete cat bonds, some $8 billion of restrict within the quarter. And I believe that we’re seeing moderating cat charges available in the market in comparison with 2023. However I might say that for those who take a look at year-over-year premium spend for property cat and our fee on-line index, it is nonetheless up 1% year-over-year. It has not gone unfavorable available in the market. And actually, as John famous, Mike, I believe the headline, the important thing takeaway is critical elevated consumer demand for added property cat restrict. Within the first half of the 12 months, two-thirds of our US shoppers purchased extra property cat protection throughout an extra $10 billion of restrict, which is really important within the market. We’re additionally seeing shoppers reinsure by extra retrocession protection with improved pricing, market dynamics, improved urge for food by sellers, each rated and ILS autos available in the market. And I believe the final headline for you is there’s warning within the property market. There’s $50 billion-plus of insured losses within the first half of the 12 months. When you concentrate on extreme convective storms within the US and Japan, Taiwanese earthquake, floods in Germany, the UAE, Baltimore bridge collapse, Hurricane Beryl, I imply we could possibly be on monitor for an additional $100 billion a 12 months of insured losses. So there’s warning available in the market round property and property debt.
John Doyle
Thanks, Dean. So, Mike, not an enormous shift from the primary quarter, however a modest evolving market extra in favor of patrons. And in order that clearly elements into the recommendation we give to our shoppers and assist them navigate what’s a world the place, once more, the price of threat continues to escalate. Do you’ve gotten a follow-up?
Michael Zaremski
Yeah. Very fast follow-up. Thanks. Simply to not nitpick, but when I am simply complete income progress and I assume, finally, EBITDA adjusted, I believe divestitures and possibly a bit of FX is what, I believe, us and possibly the consensus was off on a bit of bit. Simply need to be sure that there’s nothing lacking, it is nonetheless a internet acquirer when it comes to M&A, however is there chunky divestitures? Is there something I must be excited about within the very close to time period that — when it comes to that impression?
John Doyle
No, no. I imply at Mercer, we offered two admin companies, one within the US, one within the UK to Aptia. And the explanation we offered them is that they’re comparatively low-growth and lower-margin companies. And once more on a relative foundation, they had been capital-intensive. And so we predict they’ve a greater proprietor now and so we be ok with that call. Thanks, Mike. Andrew, subsequent query, please.
Operator
Our subsequent query comes from the road of Gregory Peters with Raymond James.
Gregory Peters
Properly, good morning. I assume I would like to simply return to some feedback you made in your ready remarks. You talked about Blue[i]. I used to be questioning for those who may present some extra particular knowledge round that. It is a knowledge analytics enterprise, simply present some scope of how large it’s contained in the enterprise since you known as it out in your name.
John Doyle
Yeah, it is not a enterprise. It is a part of actually how we advise our shoppers at Marsh. And so Blue[i] is form the model, if you’ll, for our suite of analytics. And Martin, possibly you could possibly simply share some perception on the vary of forms of instruments that we use that assist our shoppers take into consideration how they handle and finance threat.
Martin South
Positive. In order you mentioned, John, it is a suite of analytics instruments that we use to assist our shoppers throughout totally different product strains assess what dangers to retain, what threat they might switch, the financial value of that. We pay them throughout a number of strains to present them publicity and complete value of threat situations. We assist them analyze claims and the analytics instruments in which might be capable of assist our shoppers who self-insure a number of losses to establish which losses they should get at early and how one can settled these. So it is a vary of real-time analytics constructed actually, and it is one of many distinctive issues about our enterprise is that we now have an unlimited lake of knowledge, and we predict that is one of many large moats that we now have to assist our enterprise. And a few of these analytics instruments that we use, we name them generically Blue[i]. We deploy on shoppers that really don’t even purchase insurance coverage. They are typically a few of our greatest shoppers within the US. So we’ll proceed to spend money on that. And as we introduced within the name final 12 months, we added to that with provide chain functionality and — so it is the way in which shoppers count on to be engaged, and that is the device that we use.
John Doyle
So we use these instruments to assist — and it is actually principally upfront, however to assist them perceive — our shoppers perceive these dangers, methods to handle and mitigate these dangers. We spend most of our time on these requires good causes, speaking in regards to the financing of threat once we go to market, however it’s an necessary a part of our worth proposition. It is one other instance of the place we are able to convey scale advantages to the market, given the distinctive knowledge set that we now have and the vary of proprietary analytics we use. And whereas it operates below a distinct model, the identical might be mentioned for the way in which we method our shoppers available in the market at Man Carpenter. Do you’ve gotten a follow-up, Greg?
Gregory Peters
I certain do. Thanks for the colour on that. Simply going by way of the working money movement and the free money movement for the six months, down a bit of bit. It appears prefer it’s modifications in working capital. Questioning for those who may simply present some further shade on the working money movement for the quarter and the 12 months — six-month foundation?
John Doyle
Positive, Greg. Yeah, it is going to be risky from quarter-to-quarter. However Mark, possibly you’ll be able to.
Mark McGivney
Yeah, Greg. Thanks. You’ll — we at all times — we’ll at all times warning towards focusing an excessive amount of on 1 / 4’s outcomes, and that is actually true on the subject of money flows and free money movement. They are typically risky, not solely quarter to quarter, however 12 months to 12 months due to timing of stability sheet gadgets. As you — so while you take a look at the six months, we’re seeing a decline in fact, given the numerous bonus payouts that we now have within the first quarter, you’ve gotten a bit of little bit of a denominator — small denominator subject. And so, it’s a must to be cautious. However two large elements simply within the first six months are the upper comp payouts that we had within the first quarter after which receivables are up due to the expansion within the enterprise. However we have a, as you recognize, a protracted monitor report of double-digit progress in free money movement that has stacked up nicely towards our progress in earnings, and that is what you’d count on in a capital-light enterprise like ours.
John Doyle
Thanks, Mark, and thanks, Greg, for the questions. Andrew, subsequent query, please.
Operator
Our subsequent query comes from the road of Yaron Kinar with Jefferies.
Yaron Kinar
Thanks. Good morning. I simply had a follow-up on an earlier query on margins. So I believe final quarter, you had mentioned that you simply anticipated the margin to speed up, significantly within the second half of the 12 months. Gave the impression of from the response this morning that possibly that is now not the case. So I assume simply to be very clear, if we take a look at the 100 foundation factors or so of margin enlargement within the first half of this 12 months, would you count on that to be higher within the second half or not? And I assume the second a part of the query, might be — if there was a little bit of a change, is it as a result of the margin enlargement within the second quarter was better than you initially anticipated or are you all anticipating some softening relative to your steering for the second half of the 12 months?
John Doyle
No. We count on margin enlargement within the second half to be higher than the primary half. Sorry, if we created any confusion earlier, however that is what we proceed to count on. And possibly I can simply share a bit of little bit of shade and simply remind all people, too, margins and consequence, proper? This might be 12 months 17 of — seventeenth consecutive 12 months of margin enlargement, and so we really feel terrific about that. However margin is an consequence of the way in which we run the enterprise. We handle investments and prices throughout the income progress of the enterprise. It isn’t going to occur in each enterprise in each single quarter, however that’s — it is the way in which we method our enterprise. We will proceed to make engaging investments to assist medium to long-term progress. However we see alternatives. As I’ve talked about up to now, we have workflow and automation efforts inside Marsh. Mercer and Man Carpenter. We’re testing AI at scale. In order that worth creation shouldn’t be a significant 2024 or most likely 2025 occasion. However as applied sciences emerge, we’ll proceed to problem ourselves to get higher. However once more, we do count on second-half margin enlargement to be higher than first half. Do you’ve gotten a follow-up?
Yaron Kinar
Thanks a lot for the colour and clarification. I requested a two-part query, so I will flip it again to you.
John Doyle
Received it. Thanks. Andrew, subsequent query please.
Operator
One second please. And our subsequent query comes from the road of Meyer Shields with KBW.
Meyer Shields
Nice. Thanks. Good morning, all. I assume to start out, are you able to speak about the way you’re advising each insurance coverage and reinsurance shoppers to consider their publicity to casualty strains following the overturning of the Chevron doctrine?
John Doyle
Properly, I am unsure I see a direct line between that individual case and the general atmosphere. However what I might say to you is that — and what we have talked about on this name traditionally — or I should not say traditionally, however over the course of the final couple of years is simply troubling indicators of loss value inflation, significantly right here in the USA. And the quantity of enormous or mega judgments and settlements is kind of difficult. And so we spend a number of time, and Martin talked briefly in regards to the suite of analytics we use. It is inside that suite of analytics, we assist our shoppers take into consideration a spread of outcomes, what sort of limits they need to contemplate shopping for, how they could benchmark anonymously towards others of their trade for example. However that is — these are all necessary inputs and finally, our shoppers make selections and judgments and a few have the flexibility to finance extra threat or select to finance extra threat on their very own. And others will look to finance threat on the stability sheets of insurance coverage firms or in sure circumstances to capital markets as nicely. So I hope that is useful, Meyer?
Meyer Shields
It’s. Thanks. It is extremely good large image. That is extra of a small-picture subject. However once we take a look at, for instance, the two-year stacked natural progress in Profession, that grew dramatically from the primary quarter, I assume, you had [12% plus 1% at 13% in this quarter 6% plus 2%, to 8%] (ph). Is your outlook for Profession primarily based on the gadgets or the difficulty you recognized earlier, is that slowing in comparison with possibly what you thought on the finish of the primary quarter?
John Doyle
No, I do not suppose there’s an actual change from the primary quarter. As Pat talked about a few of the dynamics, much less energetic labor markets from a turnover viewpoint, decrease comp [and ban] (ph) so it is a — we did not have expectations of upper progress in that enterprise through the course of 2024, and we’ve not seen something by way of six months that modifications that outlook.
Meyer Shields
Incredible. Thanks very a lot.
John Doyle
Thanks. Andrew, time for possibly yet one more?
Operator
Definitely. And our remaining query comes from the road of Rob Cox with Goldman Sachs.
Rob Cox
Hey, thanks for becoming me in. John, I wished to return to one thing you mentioned final quarter, which was that Marsh accesses most of its E&S market options instantly immediately. I am curious how that break up between the share of premiums positioned instantly in E&S versus by way of a third-party wholesaler has trended over current years and the way you suppose that may pattern going ahead?
John Doyle
Yeah. Once more, I — simply to be clear, we’re not seeking to construct a third-party wholesale enterprise. We need to convey the very best options to our shoppers. The E&S markets moved fairly a bit over the course of the final a number of years. That is actually a mirrored image of the excessive threat atmosphere that I’ve talked about the place insurers have, broadly talking, extra freedom to alter fee, to get off threat, to alter worth — or to alter phrases and situations as nicely. And so simply broadly talking, we need to handle our shoppers’ outcomes and experiences instantly as doable and never outsource what’s an necessary a part of the worth proposition. It is to not say that wholesalers do not do a pleasant job for us, they do and we’ll proceed to entry them the place it is smart. However — however we — a lot of the — majority of the wholesale premium, we really entry instantly immediately or E&S markets, we do this instantly immediately. However there’s been extra progress in intermediated wholesale premium over the course of the final couple of years. And so our efforts are to attempt to get as a lot entry to market as we are able to. Do you’ve gotten a follow-up, Robert?
Rob Cox
Yeah. Thanks. That is an important shade. Yeah, second query was simply on kind of the totally different economics Man Carpenter will get from cat bonds versus conventional reinsurance placement. And for those who may assist us take into consideration how a lot that report cat bond quarter contributed to natural progress?
John Doyle
Yeah. The economics could be totally different, in fact, and so they’re totally different from treaty to treaty as nicely. We work with our insurance coverage firm shoppers. As we talked about when the market was significantly tight final 12 months, whereas fee is an element and rising worth was a think about many respects, actually what we do with our massive insurance coverage firm shoppers is large wholesale relationships the place successfully we work on, what quantities to a price.
John Doyle
Thanks. Go forward, Andrew.
Operator
I might now like to show the decision again over to John Doyle, President and CEO of Marsh McLennan for any closing remarks.
John Doyle
Thanks, Andrew, and thanks all for becoming a member of us on the decision this morning. In closing, I need to thank our colleagues for his or her arduous work and dedication. I additionally need to thank our shoppers for his or her continued assist. Thanks all very a lot, and we stay up for talking to you once more subsequent quarter.
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