Underlying revenue growth of 4% when compared with the second-quarter of 2018, is calculated as if MMC and JLT were a combined company a year ago, but excludes the impact of currency and other acquisitions, dispositions, and transfers among businesses, explains MMC.
Operating income declined slightly in Q2 2019 to $680 million, compared with operating income of $691 million in the second-quarter of 2018. The firm’s net income declined year-on-year from $531 million to $332 million.
MMC notes that its second-quarter 2019 results include costs related to the JLT acquisition of $150 million, which is comprised of costs to close the deal and related debt refinancing. According to the broker, restructuring and integration costs related to the acquisition totalled $98 million in Q2 2019.
For the first six months of the year, MMC’s consolidated revenue increased 9% to $8.4 billion, while on an underlying basis it increased by 4%. Operating income increased to $1.6 billion, while its net income declined to $1.04 billion.
“We are pleased with our second quarter results, which include Jardine Lloyd Thompson for the first time. We generated solid growth in underlying revenue and adjusted EPS while welcoming 10,000 new colleagues. In the quarter, consolidated underlying revenue grew 4%, adjusted operating income rose 19% to $894 million, adjusted EPS grew 7% to $1.18 and our overall adjusted margin expanded 150 basis points. We are tracking well against our plans and are excited about the long-term growth prospects for our combined firm.
“We delivered solid performance in the first half of 2019, with 4% underlying revenue growth, 9% adjusted EPS growth, and adjusted margin expansion of 160 basis points,” said Dan Glaser, President and Chief Executive Officer (CEO) of MMC.
The firm’s Risk and Insurance Services unit recorded revenue of $2.6 billion, which is up 23%. Operating income jumped by 10% to $517 million. Marsh recorded Q2 2019 revenue of $2.2 billion, which is growth of 4% on an underlying basis, which reflects growth in all regions with the exception of the EMEA, which remained flat.
Guy Carpenter, which is the firm’s reinsurance arm, and which now includes JLT Re, recorded revenue of $392 million, which is a decline of 3% on an underlying basis. For the first-six months of the year, Guy Carpenter’s underlying revenue grew by 2%, says MMC. The inclusion of JLT Re has clearly impacted the performance of its reinsurance unit, although this is somewhat to be expected when taking into account the complexity of merging the two reinsurance businesses.
The company’s consulting segment also performed well in the quarter, with consulting revenues up by 9% to $1.8 billion, and up by 5% on an underlying basis. Mercer’s revenue grew by 2% on an underlying basis to $1.3 billion, while MMC’s Oliver Wyman division recorded revenue of $540 million, which is an increase of 13% on an underlying basis.