Marsh & McLennan Cos. Inc. President and CEO Daniel Glaser said there is potential for a "slightly better operating environment" in 2018 compared with 2017, one of the costliest catastrophe loss years in U.S. history.
The "macro picture seems stable, if not a bit brighter. But bear in mind overall GDP growth rates across the globe are still extremely modest by historical standards," Glaser said on a call to discuss earnings.
Marsh & McLennan has notched consolidated underlying revenue growth of 3% to 5% for the past eight years, and the same growth is expected in 2018, Glaser said. The company reported underlying revenue growth of 4% in the fourth quarter of 2017 and 3% for the full year.
He also expects to expand margins in both the consulting and the risk and insurance services segments in 2018 and to deliver "strong growth in adjusted EPS." Glaser reiterated that "the market will find its equilibrium" against the backdrop of the 2017 loss activity "as capital remains abundant and demand has not fundamentally changed."
Glaser added that the new corporate tax rate in the U.S. "goes a long way toward leveling the playing field from a capital flexibility and tax rate perspective, not only for us, but for all U.S.-based multinationals that compete globally and have done so at a disadvantage."
He expects the legislation to provide a "sustained benefit to our tax rate, earnings and cash flow." The company expects a tax rate of 25% to 26% for 2018.
Marsh & McLennan deployed $2.5 billion of capital across dividends, acquisitions and share repurchases in 2017, and expects to deploy “at least” that amount of capital in 2018 across the same three means, CFO Mark McGivney said during the call.
