Marsh 2026 Q3 Earnings Call

Good morning, and thank you for joining us to discuss our third quarter results. I'm John Doyle, President and CEO of Marsh. On the call with me is Mark McGivney, our COO and CFO, and our business CEOs, Nick Studer from Risk, Dean Klisura, Reinsurance, Pat Tomlinson of People and Investments, and Ted Moynihan from Management Consulting. Also with us is Jay Gelb, Head of Investor Relations. Let me start by commenting on the conditions confronting businesses today. We're clearly in a period of change and uncertainty in the world. This change is structural, not cyclical, and it's happening at pace and all at once. Wars, geoeconomics, extreme weather, and AI advances are challenging long-established norms. Businesses require a new playbook, better insights and perspectives, and the flexibility to adapt as never before.

At the same time, access to information and technology, as well as greater focus on resilience, offers businesses great opportunity. It's why Marsh and Bloomberg announced the Competitive Resilience Coalition. As knowledge partner for the Bloomberg New Economy, Marsh will co-chair the coalition and bring together business and government leaders to strengthen resilience and help organizations in an increasingly complex environment. Marsh's vision and capabilities as a professional services firm across risk, strategy, people, and investments have us well-positioned to help clients be more resilient and to thrive in this moment. When it comes to AI, we believe it will be good for our country and the global economy. However, we need to deploy the technology responsibly to avoid potentially severe, systemic, or irreversible risks.

We are particularly concerned about the potential for heightened cyber exposure from AI, and we are working with governments, insurance companies, and businesses to create awareness and resilience to this risk. Responsible AI implementation begins with the developers, but businesses and governments have a role to play in ensuring safeguards are in place. Marsh will be active in helping clients manage the risks and capture the opportunities from AI. Turning to results, Marsh had a strong quarter, reflecting our market-leading positions, the value we deliver to clients, and the commitment of our colleagues around the world. In our consulting segment, growth was strong in People and Investments and Management Consulting. In RAS, growth accelerated in our risk business, while reinsurance faced continued market headwinds but executed well. Overall, revenue grew 8% in the quarter. Underlying revenue growth was 5%, adjusted operating income grew 6%, and adjusted EPS grew 10%.

We repurchased $500 million of stock in the quarter, bringing us to $2 billion year to date. We also made meaningful progress executing our Thrive program and successfully completed our brand transition. When we launched Thrive a year ago, we targeted $400 million in savings. We are now seeing greater opportunities coming from Business and Client Services, or BCS, and advances in technology. As a result, we are increasing our Thrive savings target to $600 million. The expanded savings will create additional capacity to invest in sales, new capabilities, our brand, and technology. Let me touch on some of the progress from our reinvestments. Thrive has enabled us to invest in sales capacity at a higher rate this quarter and year to date, and we are hiring producers and consultants in areas where we see the greatest opportunity for growth.

Our colleague value proposition is strong, and we remain the destination for top talent in our business. I have been pleased with the strong positive reaction from colleagues and clients to our new brand strategy, the efficiencies we have captured from it, and our progress marketing Marsh to prospective clients. As a result of very favorable market research, we accelerated the transition of Guy Carpenter and Mercer to Marsh several months ahead of schedule. We believe we can be the most impactful professional services firm in the world, and we are investing in our new brand to reflect that ambition. Since its introduction last year, BCS has fundamentally changed how we work. An important part of the team's mission is to build shared services for greater efficiency, including in areas such as client onboarding, data ingestion, commercial enablement, and operational excellence.

BCS is also re-engineering our processes and moving work to our capability centers, which is generating additional savings. Overall, our execution of Thrive has been excellent to date, and we are excited about the investments in growth it is enabling. Turning to AI in our business, we are not thinking about it as something that will be a factor in our business. It already is a factor in our business. It is enhancing our client relationships, how we manage operations, and how colleagues work every day. We are focused currently on several areas where AI is driving growth, including building AI-enabled products, consulting on AI transformation, serving the digital infrastructure ecosystem, and adding to capabilities and productivity for our producers and consultants. We have already deployed several AI-enabled products for clients that deliver valuable insights. These solutions tap into our large and expanding proprietary data sets in risk, health, and talent.

Marsh Risk Companion is a good example. This AI-enabled analytics suite provides actionable insights for client risk programs. We can more easily model and optimize client risk scenarios with the new platform. This is leading to faster, more informed decision-making and reduced administrative burden for the client's risk management team. We are also advising clients on AI transformation. For example, Oliver Wyman's fastest-growing practice, Quotient, is working with private equity firms to serve their portfolio companies. They are engaging us on everything from agentic commerce and commercial effectiveness to cost reduction and technology transformation. Digital infrastructure continues to be a growth driver for Marsh. More and more clients across broad sectors of the economy are asking for our help in risk, capital advisory, credit, and consulting in the wake of extensive growth in digital infrastructure. We are also working to bring the insurance capacity needed to support digital infrastructure.

Marsh recently launched the Stratus Exchange, which offers access up to $10 billion in property coverage for the ongoing operations of digital facilities. Stratus is a natural follow-up to Nimbus, our $2.7 billion insurance facility for construction risks. We are also focused on growth from greater colleague productivity. Notably, Broker WorkBench, launched in Q3 for our U.K. wholesale business. It uses our data and analytics to place a client's risks faster, matching risk and capital more efficiently. In fact, 93% of our wholesale trading in London is now digital, and the time to process placements has reduced from two to four weeks to a couple of hours with WorkBench. Although it is early, and it is early, AI is making us better now in delivering new perspectives and insights more efficiently and with greater impact for our clients. Now, turning to market conditions.

According to the Marsh Global Insurance Market Index, primary commercial insurance rates decreased 5% in Q3. This follows a 6% decline in the second quarter. As a reminder, our index skews to large accounts. Rates in the U.S. decreased 1%. Canada, Europe, and Asia declined mid-single digits. The U.K., Latin America decreased in the high single digits, and the Pacific region had double-digit decreases. Global property rates decreased 10%. Global financial and professional liability rates were down 3%, while cyber decreased 4%. Global casualty rates increased 1%, with U.S. excess casualty up 13%, reflecting inflationary pressure and loss costs. Workers' compensation decreased 5%. In reinsurance, market conditions led by short tail lines remain soft, driven by abundant capacity from both traditional reinsurers and alternative capital. Property cat reinsurance losses have been relatively benign this year, and capital is increasing, adding to a competitive market environment.

We expect these conditions to persist through the January 1 renewal cycle. In casualty reinsurance, capacity is generally adequate. Reinsurers are focused on loss development, and they are differentiating terms based on claims experience, exposure data, and portfolio quality. Our clients continue to explore alternative options to complement traditional strategies, including greater use of third-party capital solutions such as sidecar vehicles for their liability portfolios. Market conditions remain supportive of our insurance and reinsurance clients, even as the cost of risk continues to rise. We are committed to helping clients optimize their risk financing and strengthen resilience in an uncertain environment. Now to our third quarter financial performance, which Mark will cover in more detail. Consolidated revenue increased 8% to $6.9 billion, or an increase of 5% on an underlying basis, with 3% growth in RIS and 8% in consulting. Risk was up 5%. Reinsurance declined 6%, People and Investments increased 5%, and Management Consulting grew 14%.

Adjusted operating income grew 6%, and adjusted EPS was $2.03, up 10% year-over-year. Looking ahead, we continue to expect underlying revenue growth in 2026, similar to last year. We also anticipate another year of margin expansion and solid adjusted EPS growth. Our outlook is based on current market conditions, but the economic and geopolitical environment could change materially from our assumptions. This is an exciting time for us. We have a new Marsh brand and a business and client services team optimizing how we work. We have longstanding trusted client relationships and the advantage of large proprietary data sets. We are upsizing the Thrive program to drive greater efficiency and investment, and we see new possibilities from AI to better serve clients who strive to manage risk and capitalize on the opportunity of this moment.

With that, I will turn the discussion to Mark for a more detailed review of our results.