MRSH Marsh McLennan
A wonderful, wide-moat broker with excellent management — but priced today for near-perfection.
The business
Marsh McLennan is the largest insurance broker in the world (Marsh, Guy Carpenter) alongside a professional services arm (Mercer consulting/benefits, Oliver Wyman strategy consulting). It earns commissions and fees for placing insurance/reinsurance risk and advising clients on HR, retirement, and strategy — largely non-balance-sheet-risk, fee-based revenue tied to global insurance premiums and payrolls.
Quality gate · 87/100
Moat & management
| Moat | wide moat |
| Source | switching costs |
| Trajectory | widening |
| Management | excellent |
Insurance broking is an entrenched oligopoly (Marsh, Aon, WTW, Gallagher) where client relationships, embedded renewal cycles, proprietary placement data, and specialized underwriting expertise create high switching costs; scale in claims/analytics and cross-sell into Mercer/Oliver Wyman reinforce the position, and continued industry consolidation is widening the gap versus smaller brokers.
Consistent bolt-on M&A (Marsh, Mercer, Oliver Wyman) at high returns on capital, disciplined buybacks (share count down ~0.7%/yr) rather than dilutive stock issuance, and FCF conversion above 1x indicate owner-oriented capital allocation.
Owner-earnings inputs
| Owner earnings (TTM) | 3.98B |
| Owner-earnings yield | 4.6% |
| Free-cash-flow yield | 5.5% |
| Growth used (normalized) | 8.0% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 7.4% |
Key risks
- Soft insurance pricing cycle (premium deceleration) compresses commission growth
- Heavy M&A reliance could overpay or integrate poorly if discipline slips
- Regulatory/legal scrutiny of broker compensation practices (contingent commissions) recurs periodically
- Current price appears to already embed growth well above what a conservative underwrite supports
Catalysts
- Continued cross-sell of risk, health, and consulting services to existing global clients
- AI-driven analytics/underwriting tools improving margins and client stickiness
Recent news
score · 8 articles
- Marsh & McLennan Companies (MRSH) Could Be 38% Undervalued As Earnings Raise Fresh Valuation Questions
- Can AON Beat Q2 Earnings on Commercial Risk Solutions Strength?
- CoreWeave upgraded, IBM initiated: Wall Street's top analyst calls
- Marsh (MRSH) Q2 2026 Earnings Call Highlights: Strong Revenue Growth and Strategic Investments in AI
- Sector Update: Financial Stocks Advance Late Afternoon
- Sector Update: Financial Stocks Rise in Afternoon Trading
- Marsh Q2 Earnings Beat Estimates on Consulting Unit Strength
- Marsh & McLennan Companies Q2 Earnings Call Highlights
⚠ financial — owner earnings ≈ net income · financial — valued by residual income (ROE vs cost of equity on book equity) · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.