Marsh & McLennan: Insurance Premium Growth Ahead

Core Viewpoint - Marsh & McLennan is strategically positioned in high-growth areas such as digital, climate resilience, sustainability, cyber, and affordable healthcare, which are expected to drive revenue growth and margin expansion in FY24 [1][4][16] Financial Performance - In Q1 FY24, Marsh & McLennan achieved 9% organic revenue growth and 14% adjusted EPS growth, with risk and insurance services growing 9% year-over-year [2][4] - The company anticipates a 9% organic revenue growth for FY24, driven by strong performance in its risk and insurance business and new growth areas [6][7] Market Trends - The US P&C insurance premiums are projected to grow by 8% in 2024, following a 9.3% growth in 2023, influenced by inflation and rising management costs [4][5] - The global cyber insurance market is expected to grow from $14 billion in 2023 to $29 billion by 2027, indicating a CAGR of 17.8% [10] Margin Expansion - Marsh & McLennan has been shifting its revenue mix towards higher-margin businesses, contributing to margin expansion over time [9][12] - The company is expected to continue benefiting from operating leverage in compensation and SG&A expenses, projecting a 20 basis points margin expansion [12] Valuation - The fair value price of Marsh & McLennan is estimated at $220 per share, based on discounted future free cash flows and net debt adjustments [13][16]