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Marsh & McLennan Companies Inc (NYSE:MMC)
Q2 2021 Earnings Call
Jul 22, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to Marsh & McLennan's conference call. Today's call is being recorded. Second quarter 2021 financial results and supplemental information were issued earlier this morning. They are available on the company's website at mmc.com. Please note that remarks made today may include forward-looking statements, including certain expectations related to COVID-19 and other matters. Forward-looking statements are subject to risks and uncertainties and a variety of factors may cause actual results to differ materially from those contemplated by such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, including our most recent Form 10-K, all of which are available on the Marsh & McLennan website. During the call today, we may also discuss certain non-GAAP financial measures. For a reconciliation of these measures to the most closely comparable GAAP measures, please refer to the schedule in today's earnings release. I'll now turn this call over to Dan Glaser, President and CEO of Marsh & McLennan.

Dan Glaser -- President and Chief Executive Officer

Good morning, and thank you for joining us to discuss our second quarter results reported earlier today. I'm Dan Glaser, President and CEO of Marsh McLennan. Joining me on the call today is Mark McGivney, our CFO; and the CEOs of our businesses, John Doyle of Marsh; Peter Hearn of Guy Carpenter; Martine Ferland of Mercer; and Nick Studer of Oliver Wyman. Also with us this morning is Sarah Dewitt, Head of Investor Relations. I'd like to welcome Nick who became CEO of Oliver Wyman on July 1. Nick has led many of Oliver Wyman's major practices in his 23 years with the business and I look forward to seeing Oliver Wyman continue to grow and thrive under his leadership. On behalf of the executive committee, I also want to thank Scott McDonald for his many contributions during his distinguished 26-year career at the firm. Marsh McLennan had an outstanding second quarter. We are well positioned in benefiting from the abundance of opportunities. We are stronger and have broader capabilities post the JLT acquisition. We are benefiting from what may be the strongest economic rebound in nearly four decades, led by our largest region, the U.S. There is high demand for our advice and solutions in this time of uncertainty and in the face of challenging market conditions. We are seeing a flight to quality and stability, which is contributing to high levels of new business growth and client retention and is helping us to attract talent.

And there is a long runway for growth as we think about major protection gaps around the world, new emerging risks, digitization, workforce of the future and underpenetrated markets such as small commercial. We are focused on capitalizing on these opportunities, and I am proud of our execution in the quarter. We generated record second quarter revenue and earnings, the best underlying growth of any quarter in two decades, and we are poised for an excellent year. The strength of our results was broad-based with each of our businesses and virtually all of our major geographies seeing an acceleration in growth. Our adjusted EPS increased by an impressive 33%, and we generated margin expansion despite challenging expense comparisons. As we look ahead, the economic outlook for the U.S. and most of the major countries we operate in is encouraging. However, the pandemic is not over yet. Vaccine hesitancy creates risk and there are many parts of the world where vaccine availability is limited. As a result, much of the world is experiencing another wave of the pandemic with rising case counts due to the spread of variants. In addition, the shape of this economic recovery is very different from any we have seen before. Some industries are thriving, while others are being impacted by supply chain disruption, inventory issues and labor shortages. Navigating this dynamic landscape is challenging, even confounding for some businesses.

The growth opportunity for Marsh McLennan is significant during this time of uncertainty and recovery. We are aiding and guiding our clients through the complexities of the new normal as well as helping them tackle issues like climate risk, cyber, diversity and inclusion, employee safety and well-being and workforce disruption. Our ability to provide differentiated high-quality solutions to our clients rest on our talent and expertise. Our colleagues are our Number one competitive advantage. And with the potential for industry consolidation, we see a meaningful opportunity to invest in hiring and deepen our world-class talent pool. We have strong momentum. And as we mentioned last quarter, our efforts are focused on resurgence and expansion. Let me provide some examples of how we are helping our clients address complex issues of the day, specifically two major challenges: cybersecurity and climate change. Cybersecurity is one of the greatest risks facing society. Supply chain and ransomware attacks continue to rise with a number of recent high-profile attacks affecting organizations across all sectors and segments from technology to critical infrastructure and healthcare. Marsh & McLennan is helping clients manage cyber risk. Increasingly, we are bringing our businesses together to leverage all of our expertise, data and relationships with public and private partners to help clients become more resilient. Our growth in participation in cyber extends well beyond the placement of insurance, under the leadership of Tom Doyle, we are leveraging the collective capabilities of Marsh, Guy Carpenter and Oliver Wyman to bring cyber solutions from across our enterprise to clients.

Not only are we helping clients with risk transfer through our insurance businesses, but through our cyber risk assessment tools, we help clients measure and quantify their cyber risk exposure to better inform decisions about cybersecurity, risk mitigation and transfer strategies. We also help clients with incident response before, during and after events as well as part of our broader efforts to help clients build resilience in the face of a constantly evolving threat landscape. A second defining challenge of our time is climate change. Climate and the broader topic of ESG are complex multidimensional challenges, virtually all companies face. The threats to the changing time may present obvious questions for companies touching everything from strategy to resilience to their workforce and how they communicate. Even if climate change is a long-term threat, the issue is proximate and has immediate consequences as firms deal with calls for action, strategies to respond and more input from various stakeholders. Led by Nick Studer, we are bringing together our businesses to help our clients anticipate climate risks and opportunities. For example, Oliver Wyman is working with our insurance businesses to support clients in the transition to a low-carbon economy and manage climate risk. We are assisting clients with the development of carbon-light business models and to derisk investment in sustainable technologies. At Marsh and Guy Carpenter, we are helping to develop innovative climate solutions to bridge protection gaps.

We assist clients with stress testing models, outline the impact of climate change, and providing risk management and insurance services to protect against climate impacts. And Mercer's responsible investment business helps steward the fiduciaries of investment pools understand how a change in climate could impact investment returns in the future and anticipate them today. Overall, we are uniquely positioned to help our clients with their most pressing challenges. Let me spend a moment on current P&C insurance market conditions. The second quarter marks the 15th consecutive quarter of rate increases in the commercial P&C insurance marketplace. The Marsh Global Insurance Market Index showed price increases of 13% year-over-year versus 18% in the first quarter. The pace of price increases continue to moderate but still remains high, reflecting elevated loss activity and concerns about inflation and low interest rates. Global property insurance was up 12% and global financial and professional lines were up 34%, driven in part by steep cyber increases, while global casualty rates are up 6% on average and U.S. workers' compensation rates declined modestly in the quarter. Keep in mind, our index skews to large account business. However, U.S. small middle market insurance pricing continues to rise as well, although the magnitude of price increases is less with the large complex accounts. Turning to Reinsurance. Guy Carpenter's global property catastrophe rate online index increased 6% at midyear. In the second quarter, the market was more orderly and balanced than a year ago, reflecting adequate capital and an increased willingness to deploy capacity.

Measured and moderate single-digit rate increases were typical after two years of double-digit rate increases. However, programs that had significant losses saw higher increases and capacity remains constrained on certain lines of business, most notably, cyber. Concerns remain around inflation, losses in certain lines, extreme weather events and the beginning of a new hurricane season. It is in times like these where our expertise and capabilities shine. We are working hard to help our clients navigate the current environment. Now let me turn to our fantastic second quarter financial performance. We generated adjusted EPS of $1.75, which is up 33% versus a year ago, driven by strong top line growth and continued low levels of T&E. Total revenue increased 20% versus a year ago and rose 13% on an underlying basis, the highest quarterly growth in two decades. Underlying revenue grew 13% in RIS and 12% in consulting. Marsh grew 14% in the quarter on an underlying basis, the highest quarterly underlying growth in nearly two decades and benefited from stronger business and renewal growth. Guy Carpenter grew 12% on an underlying basis in the quarter, continuing its string of excellent results. Mercer underlying revenue grew 6% in the quarter, the highest in almost a decade. Oliver Wyman posted record reported underlying revenue growth of 28%. Overall, the second quarter saw adjusted operating income growth of 24%, and our adjusted operating margin expanded 90 basis points year-over-year. As we look out for the rest of 2021, we are well positioned. With 9% underlying revenue growth year-to-date, our full year growth will be strong. We expect favorable market dynamics to persist for at least the remainder of the year. Although the pace of growth could moderate versus the second quarter as year-over-year comparisons become more challenging. We also expect to generate margin expansion for the full year and strong growth in adjusted EPS. With that, let me turn it over to Mark for a more detailed review of our results.

Mark Christopher McGivney -- Chief Executive Officer

Thank you, Dan, and good morning. Our results were excellent with record second quarter revenue to earnings, the best quarterly underlying growth in two decades, meaningful margin expansion, and significant growth in adjusted earnings. Highlights from our second quarter performance included the strongest underlying growth at Marsh since the first quarter of 2003; the strongest at Guy Carpenter in 15 years; solid rebound at 6% at Mercer; and record reported underlying growth at Oliver Wyman. Second quarter growth in adjusted earnings per share was also impressive, rising at the fastest pace of any quarter in more than a decade. Consolidated revenue increased 20% in the second quarter to $5 billion, reflecting underlying growth of 13%. Operating income in the quarter was $1.2 billion, an increase of 39% over the prior year. Adjusted operating income increased 24% to $1.2 billion, and our adjusted operating margin increased 90 basis points to 26.4%. GAAP EPS was $1.50 in the quarter and adjusted EPS increased 33% to $1.75. For the first six months of 2021, underlying revenue growth was 9%, and adjusted operating income grew 22% to $2.6 billion. Our adjusted operating margin increased 170 basis points. Our adjusted EPS increased 26% to $3.74. Looking at Risk Insurance Services. Second quarter revenue was $3.1 billion, up 21% compared with a year ago or 13% on an underlying basis. Operating income increased 37% to $950 million.

Adjusted operating income increased 22% to $927 million, and our adjusted operating margin expanded 30 basis points to 32.4%. For the first six months of the year, revenue was $6.4 billion, with underlying growth of 10%. Adjusted operating income for the first half of the year increased 19% to $2 billion with a margin of 34.5%, up 110 basis points from the same period a year ago. At Marsh, revenue in the quarter was $2.7 billion, up 23% compared with a year ago, 14% on an underlying basis. Even excluding the impact of the revenue adjustment we reported a year ago, underlying revenue at Marsh was up 12%. Growth in the quarter was broad-based and was driven by robust new business growth and solid retention. The U.S. and Canada region delivered another exceptional quarter with underlying revenue growth of 15%, the highest result since we began reporting this segment. In international, underlying growth was 13%, EMEA was up 16%, Asia Pacific was up 10% and Latin America grew 2%. For the first six months of the year, Marsh's revenue was $5 billion, with underlying growth of 11%. U.S. and Canada underlying growth was 12% and international was up 9%. Guy Carpenter's second quarter revenue was $488 million, up 13% compared with a year ago or 12% on an underlying basis. Growth was broad-based across all geographies and specialties. Guy Partner has now achieved 7% or higher underlying growth in six of the last eight quarters. For the first six months of the year, Guy Carpenter generated $1.4 billion of revenue and 8% underlying growth. In the Consulting segment, revenue in the quarter was $1.9 billion, up 17% from a year ago or 12% on an underlying basis. Operating income increased 35% to $344 million.

Adjusted operating income increased 34% to $356 million, and the adjusted operating margin expanded by 220 basis points to 19.5%. Consulting generated revenue of $3.8 billion for the first six months of 2021, representing underlying growth of 8%. Adjusted operating income for the first half of the year increased 31% to $726 million. Mercer's revenue was $1.3 billion in the quarter, up 6% on an underlying basis, representing a meaningful acceleration from the first quarter. Career grew 15% on an underlying basis, reflecting the rebound in the economy and business confidence. Wealth increased 4% on an underlying basis, reflecting strong growth in investment management offset by a modest decline in defined benefit. Our assets under delegated management grew to $393 billion at the end of the second quarter, up 28% year-over-year and 3% sequentially, benefiting from net new inflows and market gains. Health underlying revenue growth was 4% in the quarter, driven by strength internationally. Oliver Wyman's revenue in the quarter was $618 million, an increase of 28% on an underlying basis. The second quarter results represent a sharp rebound from the contraction we saw in the second quarter last year. For the first six months of the year, revenue at Oliver Widen was $1.2 billion, an increase of 19% on an underlying basis. Adjusted corporate expense was $62 million in the second quarter. Foreign exchange was a modest benefit to earnings in the quarter. Assuming exchange rates remain at current levels, we expect FX to have a minimal impact on EPS for the remainder of the year.

However, the net benefit credit was $71 million in the quarter. For the remaining two quarters of the year, we expect our other net benefit credit will be mostly consistent with the level in the second quarter. Investment income was $19 million in the second quarter on a GAAP basis and $18 million on an adjusted basis and mainly reflects gains on our private equity portfolio. Interest expense in the second quarter was $110 million compared to $132 million in the second quarter of 2020, reflecting lower debt levels in the period. Based on our current forecast, we expect approximately $110 million of interest expense in the third quarter. Our adjusted effective tax rate in the second quarter was 24.4% compared with 25% in the second quarter last year. Our tax rate benefited from favorable discrete items, the largest of which was the accounting for share-based compensation. Excluding discrete items, our effective adjusted tax rate was approximately 25.5%. Our GAAP tax rate was 31.6% in the second quarter, up from 26.2% in the second quarter of 2020. The increase reflects a $100 million impact from the revaluation of deferred tax liabilities due to an increase in the U.K. statutory tax rate that goes into effect in 2023. Through the first half of the year, our adjusted effective tax rate was 24.4% compared with 24% last year. Based on the current environment, we continue to expect an adjusted effective tax rate between 25% and 26% for 2021, excluding discrete items. As we currently look out for the balance of the year, we expect our top line growth to remain strong, reflecting the economic rebound and favorable environment. Keep in mind the second quarter faced the most favorable year-over-year comparison for revenue growth. As we progress through the rest of the year, this, combined with continued normalization of expenses will result in more challenging comparisons. However, our businesses have momentum, and we expect positive trends to continue, resulting in strong performance in the second half and a terrific full year. Turning to capital management, our balance sheet. We ended the quarter with $10.8 billion of total debt.

This reflects repayment of $500 million of senior notes in April, which completed our JLT-related deleveraging. Our next scheduled debt maturity is in January of 2022 when $500 million of senior notes mature. We continue to expect to deploy approximately $3.5 billion and possibly more capital in 2021, of which at least $3 billion will be deployed across dividends, acquisitions and share repurchases. The ultimate level of share repurchases will depend on how the M&A pipeline develops. Last week, we raised our dividend 15%, which is the largest increase since the third quarter of 1998. We also repurchased 2.4 million shares of our stock for $322 million in the second quarter. Our cash position at the end of the second quarter was $888 million. Uses of cash in the quarter totaled $993 million and included $241 million for dividends, $322 million for share repurchases and $430 million for acquisitions. For the first six months, uses of cash totaled $1.4 billion and included $478 million for dividend, $434 million for share repurchases and $473 million for acquisitions. Overall, we had an exceptional second quarter, positioning us well to deliver strong growth in both revenue and adjusted earnings in 2021. And with that, I'm happy to turn it back to Dan.

Dan Glaser -- President and Chief Executive Officer

Terrific. Thanks, Mark. And operator, we are ready to begin Q&A.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Elyse Greenspan with Wells Fargo. Your line is open.

Elyse Beth Greenspan -- Wells Fargo Securities -- Analyst

Hi. Thanks. Good morning. My first question is on the organic growth outlook. Recognizing the comps do get a little bit harder in the second half of the year, but the Q3 was still negative last year. So I guess my question is, given what you know now, it sounds like you guys are positive, but a little bit cautious about the economy. Is it possible? It sounds like it's still possible we could see double-digit organic growth over the remaining two quarters of the year?

Dan Glaser -- President and Chief Executive Officer

Yes. So what -- we obviously, as Mark was saying, we've got momentum, and we feel very good about how we're positioned. We're not that fearful about the economy, we are fearful about continuing waves of COVID. But the economies have adjusted somewhat in many parts of the world and are more resilient certainly, than they were in the spring of 2020. And so the impact -- economic impact won't be as severe as what we've seen even with continuing waves of COVID. I mean last quarter, Elyse, we said that 2021 growth would be at the high end of our 3% to 5% range and possibly higher. I think at 9% underlying growth through six months, it's safe to say that we're in the higher category. We feel very good about our position. We're going to have a very good year. And 2021 is just going to set a new base for us. We intend to grow revenues and earnings in 2022 as well. So this is not going to be a one-year wonder.

Elyse Beth Greenspan -- Wells Fargo Securities -- Analyst

Okay. That's helpful. And then my second question was on the margin side. So you guys -- Dan, I think you both said that some T&E has not fully come back, but also the pretty impressive revenue growth helped drive that margin improvement as well. So when you think about the back half of the year and T&E coming back, can you just help us think through the resulting impact on the margins, especially if revenue remains strong, maybe the second half could also see some margin improvement?

Dan Glaser -- President and Chief Executive Officer

Well, I'll start by saying that we absolutely expect margin expansion in the year, and this will be our 14th consecutive year of margin expansion. Margins are an outcome of how we run the business. I mean we grow our revenue every year at a pace that's faster than how we grow our expenses. I think you may be overly optimistic about T&E really roaring back in the back half of this year, I think it's going to be very gradual and slow actually. And I think there's that companies, not just Marsh McLennan, will travel with more purpose, and we'll be more thoughtful about traveling. And I think clients will expect the same of providers like ours. And so we do expect and hope that over time, T&E gets back to kind of 2019 levels, but we may be quite away from that point in time. We were very pleased with our margin expansion in the quarter. And as you said, it was driven by our top line. By that's where it largely came from. And it helped us, that strong top line helped us overcome a comparable, which was a minus 5% expense growth. I mean, look at RIS margins were up 30 bps but that's on top of 430 bps of margin expansion in the second quarter of last year. So we like where we are. We will grow margins for the year. It may not be every quarter. I don't know that right now. But ultimately, we feel good for the year. Next question please.

Operator

Our next question comes from Jimmy Bhullar with JP Morgan. Your line is open.

Jamminder Singh Bhullar -- JPMorgan Chase & Co -- Analyst

Hi. Good morning. So just on organic growth again. Obviously, you mentioned these e-comps. Were there any other tailwinds, such as maybe pent-up demand in certain industries or just the benefit of higher price hikes in P&C that might not repeat to the same extent in future periods?

Dan Glaser -- President and Chief Executive Officer

Yeah. The high levels of growth were not just because of easy comps at all. I mean Guy Carpenter's comp was at nine last year. Marsh was a one. So it was not exactly layoffs in terms of comps. I think that we have real momentum right now. And the U.S. economy is getting stronger, JLT integration is well behind us and the combined organization is emerging from the pandemic stronger than what we went in and focused on our front foot. New business generation was terrific across the businesses, and our growth was broad-based. The retention is strong, pricing is a tailwind and we're benefiting from disruption and flight to quality and stability. So there are a lot of factors that are underpinning our revenue growth, and we feel very good about revenue growth into the future.

Jamminder Singh Bhullar -- JPMorgan Chase & Co -- Analyst

Okay. And then on share buybacks, I think you spent over $300 million in 2Q over $400 million for the first half, and that's a higher pace than you typically did prior to the pandemic. So is it more of a catch-up from not buying back stock last year? Or should we assume that this is going to be more of a run rate going forward?

Dan Glaser -- President and Chief Executive Officer

No, we're not catching up with it every year, every year has its own adventure. And ultimately, as we've said before, we start every period leading in a balanced approach to capital management. Not that we'll spend the same money in each of our three principal buckets of dividend and acquisition and share repurchase, but we don't have an approach that's weighted to one versus the other. And so share repurchase in large part is a function of what our acquisition activity looks like. And every year might not be perfectly balanced, but boy, the first half was pretty balanced. I mean our uses of $470 million of dividends, $434 million of share repurchase and $473 million of acquisitions. So it is a balanced approach. And I think you'll see that from us. I mean, at the end, as Mark was saying, we have $3.5 billion or more to deploy. We are a cash generation type of company. So this is, again, not a one-year wonder. This is in every year, we're going to put money toward our dividend, and we're going to grow our dividend. We're going to acquire high-quality firms, and we're going to buy back our own shares. I mean that's going to be year after year.

Jamminder Singh Bhullar -- JPMorgan Chase & Co -- Analyst

Okay. Thank you.

Operator

Our next question...

Dan Glaser -- President and Chief Executive Officer

Next question, please.

Operator

Our next question comes from David Motemaden with Evercore ISI. Your line is open.

David Kenneth Motemaden -- Evercore ISI -- Analyst

Hi. Thanks. Good morning. I wanted to talk a little bit more about the expenses. Just the other operating expenses were up not as much, as I would have thought. I mean it sounds like T&E continues to be a benefit. That's not going to roar back but still up only 6%, year-over-year despite a pretty favorable -- or a pretty tough comp on the expense side. I'm wondering if there was anything else one-off in there. And relatedly, I guess, are you guys realizing more sustainable expense saves as a result of some of the operational changes due to COVID-19, like real estate expense saves and that sort of thing?

Dan Glaser -- President and Chief Executive Officer

It's a good question, David. And we certainly are going to realize a number of efficiency gains over the next several years. And that's just as you mentioned, real estate, more purposeful T&E, more travel in general and hopefully E as well. Also, we've been undergoing some significant modernization projects on technology and on operations. And so that will benefit us, more in the future, than it's doing right now. The biggest growth in our expenses, frankly, is compensation. And I think that's a good thing. Our variable comp is going up along with our growth. We're in the market, we're hiring. I mean our -- the first six months of this year, our headcount has grown nearly 2,000. Most of that is coming within Marsh, as they're capitalizing on the opportunities they see with their two biggest competitors, having some element of distraction and uncertainties. So, at the end, it's more expense related to headcount, and expense related to compensation that's where the growth of expense is coming from. And we feel pretty good about that over time. But we're in the market right now building our business and building on already the industry-leading pool of talent we already have.

David Kenneth Motemaden -- Evercore ISI -- Analyst

Great, yeah, that's good to hear. I guess maybe just a follow-up on that on that headcount. I mean, I think that's -- the 2,000 headcount growth this year is definitely more than I was thinking or I had thought. How much of a tail does that have? Like is that something that you think can continue through the end of the year? Or is -- is that something that you have like this period of time where the consolidation is sort of in -- there's some uncertainty there. And you guys are capitalizing on that. And then once that's over, it's sort of back to normal course where you guys are still getting talent. It's just not as significant?

Dan Glaser -- President and Chief Executive Officer

I think talent begets talent. People are attracted to working environments with smart, creative, dedicated people. And the more people like that you have, the more talent you attract. I mean, it's clear that the issues of Willis and in particular, in Aeon are creating a short-term opportunity that will on its course one way or the other. I mean, I was just looking at the stats recently our hiring from Willis post the announcement is three times higher on a net basis than it was in the 15 months prior to the announcement. So that's not going to run forever. But ultimately, we're doing our best to continue to build talent and capabilities with our already formidable firm. Next question, please.

Operator

Our next question comes from Meyer Shields with KBW. Your line is open.

Meyer Shields -- Keefe, Bruyette -- Analyst

Thanks. So two questions, I think, related to what you were talking about. First, when you talk about the flight to stability, was that a headwind or a tailwind to margins in the quarter?

Dan Glaser -- President and Chief Executive Officer

Yeah. I think the flight to stability indicates that our account retention levels in our new business are higher than they otherwise would be. And so that would be a benefit to not only revenue, but a benefit to margins, because revenue is higher than it would otherwise be. It's not having an impact on expense.

Meyer Shields -- Keefe, Bruyette -- Analyst

Okay. Perfect. And then, obviously, the reinsurance organic growth has been fantastic for a longtime. There are -- it seems like there are a lot of new companies out there. I was hoping you can give us a little bit more color on what's happening in the competitive environment?

Dan Glaser -- President and Chief Executive Officer

Yeah. Absolutely, we're in very good place with Guy Carpenter's performance over a number of years. But I'll hand off to Peter, so he can dig in a little bit deeper. So Peter, do you want to take that?

Peter Hearn -- Chief Executive Officer

Yeah. Thanks, Dan, and thanks, Meyer. We have. We've enjoyed a terrific run over the past several years. Our model is based on consistent growth over a long period of time. And we've been able to capitalize on that model as a result of a very compelling proposition, discipline around both sales and pipeline that have resulted in new business wins. And as we look at our new business wins over the past several quarters, Meyer, the amount of new business coming from new clients has grown significantly to the extent that in the Q2 2021, that number was 56% of -- our revenue growth from new business came from new, new clients. So we're seeing continued growth based on the model that we've built. Yes, there are a number of new challenger brokers out there, and we have to be mindful. All of our competitors are worthy adversaries. But we believe we have a very compelling proposition that over a long period of time has produced sustained growth and opportunity for us on a continuing basis.

Meyer Shields -- Keefe, Bruyette -- Analyst

Okay, fantastic. Thank you.

Dan Glaser -- President and Chief Executive Officer

All right, thanks, Meyer. Next question, please.

Operator

Our next question comes from Brian Meredith with UBS. Your line is open.

Brian Robert Meredith -- UBS Investment Bank -- Analyst

Yeah. Thanks, just two quick ones here. First one, Dan, I'm wondering if you could break down at Marsh. Just generally speaking, what the impact on organic revenue growth was rate versus, call it, exposure growth versus market share gains, just generally speaking?

Dan Glaser -- President and Chief Executive Officer

Thanks. And if you can speak up just a little bit more. I got the question, but it was a little faint. I'll hand off to -- I'll now hand off to John, but just start by saying how thrilled, we all are with -- in our 150th year anniversary as a company. We could grow the GAAP top line by 20%. And Marsh in particular had its best growth in a couple of decades. This is a phenomenal overall performance. But John, you want to break down the growth a bit?

John Q Doyle -- President, Chief Executive Officer and Vice Chairman.

Sure. Brian thanks for the question. Dan and Mark both mentioned, we certainly benefited from the economic rebound relatively soft primary comp, I was proud of that growth in the second quarter last year during the pandemic. The pricing environment, Dan talked about it a little bit in his remarks earlier, about 50% of our revenue is sensitive to P&C pricing. And while rate increases have come down modestly compared to the fourth quarter of last year and the first quarter of this year, they held really where we're sensitive to pricing to where we get commissioned. But it's probably a number of different areas. But I also want to emphasize that we executed really well in the quarter. Our team has been strong as it's ever been. They're highly engaged to focus on delivering for our clients. And the market remains challenging. It's again, while rates aren't nearly as much as they were before, they are quite difficult. Yeah, I do think, there's been a bit of catch-up, in some markets, there's a fair amount of new, new business in our results, whether it's in transaction risk, in cyber or in construction, there are examples of where that is the case. But again, we're very, very pleased with the results in the quarter. Is that helpful Brian?

Brian Robert Meredith -- UBS Investment Bank -- Analyst

Yeah. That's great. And then, second question is, Dan, can you talk a little bit about kind of the M&A environment here, kind of what it looks like right now? And also, have the issues that Aeon and Willis have kind of run into with some regulatory approvals, does that at all change your kind of strategic view of M&A right now?

Dan Glaser -- President and Chief Executive Officer

No, it's had no impact. Our philosophy in M&A is, basically we like buying firms that are high quality where the leadership team generally remains in place, and have recurring revenue streams, high past generation, low capital requirements and a history of success. That sets it up for us. And then, it's really going to know each other over a long stretch of time and figuring out it's not us buying and it's not them selling. We're deciding to come together. We believe the outcome for our clients and our people will be better together than separate. And that's the approach. Pipeline remains strong for us throughout our businesses. In fact, last year, was the highest acquired revenue within Marsh & McLennan Agency, which as you know, has been more than a decade long in terms of strategy build. And so we feel very good about that. I mean obviously, there's a lot of capital in the world. So multiples are higher than what we would like, and we need to be very selective and very careful in our evaluation of pro forma results because most of the companies we look at are private. But our strategy for a long period of time has been more of a string of pearls, that's something where it's one mega type of acquisition, but it's building the company's capabilities, geographic task, broader, and JLT was an anomaly in some ways and was perhaps our biggest acquisition in history. And we are totally happy with that acquisition because we have been cultivating a broad relationship for a long period of time. We were coming together because we thought the combination was going to be better and higher, and you're seeing a manifestation of that. Growth is better because all of our combination with JLT, particularly in our specialty operations. And so that's kind of where we are. But our thoughts about M&A have not changed.

Brian Robert Meredith -- UBS Investment Bank -- Analyst

Great. Thank you.

Dan Glaser -- President and Chief Executive Officer

Next question, please.

Operator

Our next question comes from Ryan Tunis with Autonomous Research. Your line is open.

Ryan James Tunis -- Autonomous Research LLP -- Analyst

Okay. Thanks. Good morning. I guess just thinking about consulting, a couple of things there. First of all, with Oliver Wyman, the 28 organic. Just any color on I guess, how you're thinking about that? Any visibility on sort of the back half of the year? And I guess just within Mercer, it sounds like there's been some focus on the call about comps becoming more difficult. It's not obvious that the comps get that much more challenging there. So I'm maybe curious if Martine can give us some perspective on sort of how business developed in the three months of the quarter and where we're at now looking in the back half?

Dan Glaser -- President and Chief Executive Officer

And I'm glad, Ryan, that yes, consulting that's a big part of our business and a big part of our performance. And so I'll hand it off to Nick first and then over to Martine, but let me just say a couple of comments first. One, we've mentioned before that Oliver Wyman will tend to be our fastest grower over long stretches of time but with more volatility. And so yes, if you look back to the second quarter of last year, minus 13%. So we love the 28%. But ultimately, you put them together, it's 6% over one of the more difficult periods in recent human history. And so, yes, we ticked the box on that, it has a terrific result. Mercer on the other hand, Mercer is in terrific growth businesses: health, wealth, career. And Martine has done some great underpinning work. And if you go back to the end of 2019, 2% growth, 3% growth and 4% growth in sequential quarters and then 5% growth in the first quarter of 2020, and then got locked by the pandemic as expected in some ways. It held up very well with a minus 3% throughout last year. So Martine and Mercer are going back to a terrific result in the second quarter, sort of getting back to the same pace or getting back to the same processes that existed pre-pandemic. So let's start with Nick, and then we'll go to Martine. Nick?

Nick Studer -- President & Chief Executive Officer

Yes. Thank you very much. Yes. As Dan said, we're thrilled with the performance. And as to where it's coming from, it's been incredibly broad-based -- The growth in the quarter was highest in the regions and the sectors, which have been most adversely affected by the pandemic and Dan referred to the comp.

The Americas, particularly the US, has seen a very sharp rebound in client demand both through the economic conditions and business confidence rising materially. And if you take, for example, the transportation sector, which was the sector that suffered the greatest impact from the pandemic last year, springing back very strongly. While not without size of the Americas, growth in Europe and in the Asia Pacific region were also quite robust. And across our major industry groups, financial services, consumer, industrial, healthcare, all actually growing at remarkably similar rates. And while we do think the outsized growth in Q2 was an outlier, we see business confidence remaining high as global economic conditions improve, and we see some semblance of a return to normality in some of the places we operate. And there's also a tightness in the labor market for the skill set that our consultants possess. So, we have a decent outlook for the business for the rest of the year.

Dan Glaser -- President and Chief Executive Officer

Thanks, Nick. Martine?

Martine Ferland -- Vice Chairman

Yeah, Dan. Thanks Ryan for the question. Similar to Oliver Wyman, the growth in the quarter really came from all lines of business and across the regions. But I think it's worth spending a moment on Career. We have said through the pandemic that this is where we have the most discretionary project a little bit more connected to how Oliver Wyman would be operating, and it's absolutely come back, clients have restarted projects. There's a lot of demand out there. We're helping clients with their post-pandemic workforce. There is a work for talent out there. So, demands will be large, demands for skills and skill set, assessment, engagement, transformation as companies accelerate their forward into digital and newer technology. So that is sustaining our career business. We see strong sales, good momentum for the rest of the year. And I want to spend another moment on our wealth business. I think a 4% growth in the quarter is we have not seen that since Q4 2017. Again, all some sub solutions in our wealth business did well. In particular, our OCIO business, which is the part of the business where we implement asset management for our clients. And you see the slight to strong governance there, deep manager research. And combined with questions and helping clients with ESG and DDI type of investment in modeling, in license. Dan has spoke about this -- to his comments a little bit. And lastly, on wealth, this is the year where the DB part of our portfolio, which we all know is in structural decline has been for some years, actually because at the same time it becomes smaller than investment management solutions that we have in the portfolio, and we can see that this should be providing some tailwinds as we go beyond 2021.

Ryan James Tunis -- Autonomous Research LLP -- Analyst

Thank you. Thanks a lot. And then just a follow-up for Dan and maybe John Doyle as well. Can you just, I guess, give us an update on the strategic importance of using wholesale brokers on the P&C side and maybe how that's evolved over time?

Dan Glaser -- President and Chief Executive Officer

Yeah. I'll take it and hand over to John. It's an interesting question. I think wholesale brokers in a lot of ways likely misnamed in that, they become quite specialists in a lot of different areas with some really good skills. So, it's not exactly what I think back in my career, what wholesale really meant 10 or 20 years ago, I think specialty replacement might be more appropriate. But John, do you want to talk about use of wholesalers?

John Q Doyle -- President, Chief Executive Officer and Vice Chairman.

Sure. That's right and it's largely focused on specialty capabilities. And for the most part, we use wholesalers when we need to access certain markets, certain specialty insurer, E&S insurer in particular, restrict their distribution access to circles of brokers so in that instance we will use wholesale brokers. For the most part, that happens in the United States, almost no utilization for us if we stay in the United States. Risk originates from the United States to some extent and happens in the bond marketplace as well. But we have a preferred relationship with a couple of the specialty wholesalers and focus our efforts to make sure we're delivering the same type of quality outcome for our clients that we can get from utilizing our own teams.

Dan Glaser -- President and Chief Executive Officer

Next question please.

Operator

Thank you. [Operator Instructions] Our next question comes from Paul Newsome with Piper Sandler. Your line is open.

Paul Newsome -- Piper Sandler & Co. -- Analyst

Good morning, and congrats on the quarter. My question is about the potential persistency of some of these market share gains. I'm thinking about back to the JLT acquisition, and it seemed to me that there was a little bit of drag on organic growth for about a year as things sort of moved through the system and the integration happened. Do you think there's a read-through to kind of what's happening for you on a positive sense today that as you hire these new people, it really takes kind of a year for the full revenue impact. And so that's kind of how we should think about the benefit of the flight to quality date. It's kind of a year-by-year kind of effect?

Dan Glaser -- President and Chief Executive Officer

Yeah. I would start, Paul, by saying, we're an awfully big company. So where we make decisions to add to our talent capability and our broad capabilities more generally to build scale of content, etc., as opposed to necessarily saying, "Oh, that person is going to cost us this amount that we expect them to produce this amount over the course of the next couple of years." Your basic premise that when you hire senior people that generally, you take the expense first and then some revenue might come later, the premise is true as they get involved with the firm more broadly. But unlike some more picky firms, it's not just focused on this as a producer, and this is what they think their book of business is and the number of buying that producer. That's just not how we operate. We're much more of a content culture building capabilities. But John, what would be your thoughts on that?

John Q Doyle -- President, Chief Executive Officer and Vice Chairman.

The market share is a hard thing in nature. I've read some estimates that the commercial insurance premiums will grow about 5% this year. So if you use that as a proxy for the market, then yes, we're looking at share. I mentioned earlier, we're picking up some new, new business in cyber, TR construction, primarily. Our win rates are up there too, right, is when I look at the success in RFPs it's up compared to historical levels and the number of offensive RFPs, defensive RFPs is considerably better ratio than it's been in the past. All that I think speaks to the quality of the team. And at the same time, we're investing in talent that's going to drive future growth. And so we're in good place, we have good momentum, and we're excited about what that means for us down the road.

Dan Glaser -- President and Chief Executive Officer

Anything else?

Paul Newsome -- Piper Sandler & Co. -- Analyst

Yeah. Just a little bit more on the market share. It looks like it came everywhere in terms of gains in your businesses. Is that really a fair sense? Or were there some benefit -- businesses you operate that benefit you more?

Dan Glaser -- President and Chief Executive Officer

This is the lowest level of business growth that we've seen, certainly since I've been at the company. And so it is occurring in many different spots. And I would put it down to one of the fundamental growth markets: risk, strategy and people. Companies, whether you're in a large account segment, the middle market segment or the small segment, if you work for our organization or government, you have to focus on those three things there. They're completely relevant to how you approach the business. We've got competitive advantages. It starts with the quality of our people, our culture, and our capabilities that got even further broadened through the acquisitions we've done over the last number of years, most notably JLT, and our global footprint. Those are competitive advantages. We don't have a lot of competitors in any way that can match up to those advantages. And we continue to acquire best-in-class businesses. Our number one focus is on quality and history of success. And so that's particularly in middle market brokerage. And we've got all kinds of opportunities. We spoke about cyber and climate in our script, but digital, small commercial, risk awareness in general is much higher. And so we're -- and I've mentioned before that the pandemic may brought us closer than we ever were before. We're more connected, we're more collaborative than ever before, and we're leveraging our combined strength like never before. So all of those factors come together, and we are a more formidable force in the market and we're going to win business, and that's going to continue.

Paul Newsome -- Piper Sandler & Co. -- Analyst

Thank you. That's great.

Dan Glaser -- President and Chief Executive Officer

Next question.

Operator

Thank you. I would now like to turn the call back over to Dan Glaser, President and CEO of Marsh McLennan for any closing remarks.

Dan Glaser -- President and Chief Executive Officer

Okay. Well, that's a first. Okay. But I appreciate everyone joining us on the call this morning. I want to thank our 78,000 colleagues for their commitment, hard work and dedication to Marsh McLennan, and I look forward to speaking with you next quarter. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 56 minutes

Call participants:

Dan Glaser -- President and Chief Executive Officer

Mark Christopher McGivney -- Chief Executive Officer

Peter Hearn -- Chief Executive Officer

John Q Doyle -- President, Chief Executive Officer and Vice Chairman.

Nick Studer -- President & Chief Executive Officer

Martine Ferland -- Vice Chairman

Elyse Beth Greenspan -- Wells Fargo Securities -- Analyst

Jamminder Singh Bhullar -- JPMorgan Chase & Co -- Analyst

David Kenneth Motemaden -- Evercore ISI -- Analyst

Meyer Shields -- Keefe, Bruyette -- Analyst

Brian Robert Meredith -- UBS Investment Bank -- Analyst

Ryan James Tunis -- Autonomous Research LLP -- Analyst

Paul Newsome -- Piper Sandler & Co. -- Analyst

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