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Marsh & McLennan Companies · MRSH

Marsh lifts its savings target by half while its margin has yet to widen this year

Marsh says the extra savings will make room to hire salespeople and invest in technology. Its promise of a wider margin this year now rests on the fourth quarter.

Published · Updated · Inve Research Desk

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$600 million

Thrive savings target, raised from $400 million

Marsh expects the programme to cost about $750 million, with most of the work done by the end of 2028 and the savings arriving fairly evenly over its three years.

How they did last quarter

Revenue growth was in line with guidance, a touch faster than last year. The adjusted margin was flat in the quarter and slightly lower over nine months, against a promise of another year of expansion.

  • Underlying revenue growth
    5% in the quarter; 5% for the nine months
    vs Full-year guidance: growth similar to 2025's 4%
    On track. Unrounded, the nine months come to about 4.5%, against 3.9% for 2025.
  • Adjusted operating margin
    22.7%, level with a year earlier; 28.1% for the nine months against 28.2%
    vs Full-year guidance: another year of margin expansion
    Nothing gained so far, so the year's improvement has to come in the fourth quarter.
  • Adjusted earnings per share
    $2.03, up 10% from $1.85
    vs Adjusted income, up 6.7%
    Buybacks did part of the work: a 3% smaller share count supplied about three of the ten points.

Marsh is saving more, and spending part of it on growth

Marsh has raised the savings target for Thrive, the three-year efficiency programme it launched a year ago, to $600 million from $400 million. Getting there will cost more too: about $750 million, up from $500 million, according to its quarterly report. Mark McGivney, the chief operating and financial officer, said most of the work would be done by the end of 2028, with the savings arriving fairly evenly over the programme's three years. So far they have come mainly from simplifying the organisation, moving work to the firm's own capability centres and sharing services across it.

In July the target was still $400 million, a portion of which was to be reinvested for growth. John Doyle, the chief executive, was clear about what the extra money is for: "The expanded savings will create additional capacity to invest in sales, new capabilities, our brand and technology." Thrive had already let Marsh add sales capacity faster this year, he said, and the firm is hiring producers and consultants where it sees the most room to grow.

Growth held up as insurance prices fell

Nearly two-thirds of Marsh's revenue comes from arranging insurance and reinsurance for clients; the rest comes from consulting. Underlying revenue, which strips out currency moves, acquisitions and disposals, grew 5% in the third quarter and 5% over nine months. Unrounded, the nine-month figure is about 4.5%, against 3.9% for 2025 on the same basis, which fits guidance for growth similar to last year. Risk, the insurance-broking arm, grew 5%, its fastest pace in five quarters, even though Marsh's own index showed commercial insurance prices down 5% in the quarter after a 6% fall in the second. McGivney pointed to solid new business in digital infrastructure and in insurance for mergers and other deals; Doyle declined to say how much those areas added.

Management Consulting grew 14%, well ahead of the mid- to high single-digit pace McGivney had guided to in July. Some success fees Marsh had expected in the fourth quarter came early, though McGivney said the timing was "certainly not explaining the preponderance of growth". Reinsurance went the other way, down 6% against soft prices and a strong quarter a year earlier that included one-off items.

The margin is where it was a year ago

The margin Marsh guides on is its adjusted operating margin. It leaves out, among other items, restructuring costs (mostly Thrive), the Greensill litigation, McGriff integration costs, a one-time gain from taking full control of a Spanish broker, and the amortisation of acquired intangible assets. On that basis the quarter came in at 22.7%, the same as a year earlier, and the nine months at 28.1% against 28.2%. Doyle put it plainly on the call: "margins were flat, but we do expect to drive margin expansion for the year for the company".

A wider margin each year has become a Marsh habit: Doyle counted 2025 as its 18th consecutive year of reported margin expansion. He also made clear where the measure sits. Marsh wants to balance it against investment in future growth, and margin expansion, he said, "is an outcome of the way we run the business, it's not really a primary KPI for us inside of the company".

The fourth quarter has to carry the year

With the nine months slightly behind, the year's improvement has to come in the final quarter, and Marsh had pointed there before. In July McGivney said that, for modelling purposes, he expected more margin expansion in the fourth quarter than in the third. To lift the year, the fourth quarter has to beat the 23.7% of a year earlier, itself up from 23.3%, by enough to make up the small shortfall of the nine months.

Two smaller lines should be neutral or slightly helpful. Fiduciary interest income, which Marsh earns on client money it holds, fell to $273 million in the nine months from $311 million a year earlier; McGivney guided it to about $94 million for the fourth quarter, against $92 million a year before. He put adjusted corporate expense at about $80 million, against $81 million. Others will not help much. Management Consulting's full-year pace implies roughly flat fourth-quarter revenue there, partly because of the early fees, and Doyle expects soft reinsurance conditions to last through the January renewals. For the year, Marsh still expects growth similar to 2025's, "another year of margin expansion" and solid growth in adjusted earnings per share.

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The record: notes, full financial tables

Notes

  1. Impact 3/5 Balance sheet Mixed

    Marsh paid out more than its free cash flow in the first nine months

    Marsh paid out $3.4 billion in buybacks and dividends in the first nine months, against $2.1 billion of free cash flow, its operating cash flow less capital spending. Operating cash flow fell 26%, and McGivney said the cash-flow statement includes the Greensill settlement payments. Total debt rose to $20.5 billion from $19.6 billion a year earlier. The final quarter matters for cash: it brought in about two-fifths of 2025's operating cash flow.

    “We continue to expect to deploy approximately $5.5 billion of capital in 2026 across dividends, acquisitions and share repurchases.”— Mark McGivney, COO and CFO

  2. Impact 3/5 One-off Mixed

    Marsh has settled the Greensill case after $569 million of charges this year

    Marsh has settled its part in the Australian Greensill litigation, through agreements with Greensill Bank in June and with two Credit Suisse funds in September, and expects no further charges. The case cost $144 million in the third quarter and $569 million over nine months, net of insurance recoveries, of which $425 million was taken in the first quarter. These costs are left out of the adjusted figures.

    “we have settled our involvement in this litigation and do not expect any additional charges relating to the case”— Mark McGivney, COO and CFO

Financials

Income statement, last 8 quarters

$ million; YoY and margin in %
Quarter endSalesYoYOperating profitOp. marginPBTNet profit
Sep 20266,863+8.1%1,21517.7%1,033808
Jun 20267,404+6.2%1,89925.6%1,7021,266
Mar 20267,597+7.6%1,75423.1%1,5811,146
Dec 20256,595+8.7%1,21918.5%1,056821
Sep 20256,351+11.5%1,17018.4%1,010747
Jun 20256,974+12.1%1,82926.2%1,6461,211
Mar 20257,061+9.1%2,00528.4%1,8271,381
Dec 20246,067+9.2%1,14218.8%1,009788

Balance sheet

$ million
As ofEquityDebtCashFixed assetsTotal assets
Sep 202614,91020,5331,84281559,806
Jun 202615,43320,5611,70080659,682
Mar 202614,80620,6021,61181458,552
Dec 202515,31519,5872,68782958,710

Cash flow

$ million
Year endOperatingInvestingFinancingFree cash flow
Dec 20255,292−845−4,6345,001
Dec 20244,302−8,8214,4553,986
Dec 20234,258−1,417−1,1193,842
Dec 20223,465−850−1,0462,995