Image source: The Motley Fool.
Marsh & McLennan Companies(NYSE: MMC)
Q2 2024 Earnings Call
Jul 18, 2024, 8:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Welcome to Marsh McLennan's earnings conference call. Today's call is being recorded. Second quarter 2024 financial results and supplemental information were issued earlier this morning. They are available on the company's website at marshmclennan.com.
Please note that remarks made today may include forward-looking statements. 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. [Operator instructions] I'll now turn this over to John Doyle, president and CEO of Marsh McLennan
John Quinlan Doyle -- President and Chief Executive Officer
Good morning, and thank you for joining us to discuss our second quarter results reported earlier today. I'm John Doyle, president and CEO of Marsh McLennan. On the call with me is Mark McGivney, our CFO; and the CEOs of our businesses: Martin South of Marsh, Dean Klisura of Guy Carpenter, Pat Tomlinson of Mercer; and Nick Studer of Oliver Wyman. Also, with us this morning is Sarah Dewitt, head of investor relations.
Before I get into our results, I'd like to comment on the attempted assassination of former U.S. President Donald Trump this past weekend. We're thankful that he is safe, and our hearts go out to the victims and their loved ones. Violence has no place in our politics or our society.
Should you invest $1,000 in Marsh & McLennan Companies right now?
Before you buy stock in Marsh & McLennan Companies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Marsh & McLennan Companies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $722,993!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of July 15, 2024
We condemn it, and affirm our commitment to civil discussion, debate and resolution. Our political process and democracy depend on all candidates having the ability to safely convey their visions for our country. We believe that each of us can help shape peaceful public discourse and advocate for a culture of respect and unity. Now, turning to the second quarter.
Marsh McLennan delivered strong results across our businesses and geographies. We generated 6% underlying revenue growth on top of 11% in the second quarter of last year, reflecting strong execution in both RIS and Consulting. We grew adjusted at our operating income 11% from a year ago. Our adjusted operating margin expanded 130 basis points and adjusted EPS grew 10%.
We also announced a 15% increase to our quarterly dividend to $0.815 and completed $300 million of share repurchases during the quarter. These results highlight our consistent focus on delivering in the near term while investing for sustained growth over the long term. We're benefiting from organic investments we've made in our talent and capabilities, and we also continue to make high-quality acquisitions that build on the scale and breadth of our business. In the second quarter, we announced several significant transactions.
Mercer announced an agreement to acquire Cardano, a long-term saving specialist in the U.K. and Netherlands with approximately $66 billion in AUM. Cardano operates the third largest U.K. master trust platform and serves more than 2 million customers across 27,000 employers.
This transaction builds on our leading position in OCIO, enhances our DC offerings and adds important trading capabilities. Oliver Wyman agreed to acquire Veritas Total Solutions, an advisor in commodity and energy markets. And Marsh McLennan Agency completed three acquisitions in the quarter: Fisher Brown Bottrell, one of the five largest bank affiliated agencies in the United States specializing in commercial P&C insurance and employee benefits. FBB expands our presence across the Southeast.
AC Risk Management builds on our scale in commercial P&C in the Northeast, and Perkins Insurance agencies adds to our commercial P&C business in Texas. Last week, MMA also announced the acquisition of Horton, a top 100 broker with over $100 million in revenue, operating primarily in the Midwest. And we recently announced the acquisitions of AmeriStar, a commercial P&C high net worth, agency based in Minnesota; and Hudson Shore, a public sector employee benefits agency in New Jersey. These acquisitions are great examples of our ability to attract the very best insurance agencies to our company.
And along with high rates of sustained underlying growth, they've helped to make MMA a $3.5 billion annual revenue business. We also continue to help our clients thrive by investing in innovation. Drawing on our expertise, perspective, data and insights, we are creating new solutions for a complex environment. For example, Marsh continues to evolve Blue[i], a digital suite of solutions for insurance strategy decisions that uses our data and analytics to generate insights for clients.
This quarter, we added Blue[i] risk appetite analytics to help clients define the amount and type of risk they're willing to retain. With customizable calculations, our insights help clients navigate a challenging landscape with greater confidence. Guy Carpenter launched CatStop+, a new solution to address the volatility of cyber risk using GC's proprietary analytics. CatStop+ offers clients protection against cyber cat losses.
Mercer launched SelectRx, a technology solution in the U.S. that creates competition among pharmacies for high-cost specialty medications. Leveraging Free Market Health's cloud-based platform SelectRx lowers cost for employers and deliver savings to employees by directing prescriptions to a curated network of specialty pharmacies. Oliver Wyman is helping our clients innovate in their own businesses with the launch of Quotient, which combines our expertise in AI implementation, deployment and strategic advisory with our deep industry knowledge.
Quotient moves clients beyond the hypes around AI to deliver real value and meaningful outcomes. Our approach to balancing near-term performance with investment and innovation delivers significant value to our clients. It also enables us to sustain growth over the long term and drive consistent exceptional performance for shareholders. Shifting to the macro picture.
We continue to see significant opportunity to help clients navigate the complexity they're facing today. Beyond the shocking assassination attempt in the U.S., the geopolitical backdrop is unsettled with ongoing wars and areas of attention across the globe. Uncertainty also remains around the frequency of extreme weather, escalating cyberattacks, and key variables in the economic outlook like the persistence of inflation and the timing of changes to central bank policy. Despite this uncertainty, the environment remains supportive of growth in our business.
In general, we see continued economic growth in most of our major markets. The cost of risk in healthcare continues to rise, and labor markets remain tight. And the consensus probability of a near-term recession for major economies continues to decrease. We have performed well across economic cycles due to the resilience of our business, sustained demand for our advice and solutions and consistent execution for our clients.
Turning to insurance and reinsurance market conditions. The Marsh Global Insurance Market Index was flat overall in the second quarter versus a 1% increase in the first quarter. Generally, rates in the U.S., Europe and Latin America continued to increase in the low to mid-single digits, while the U.K., Asia and Pacific saw low to mid-single-digit decreases. Global property rates were flat versus up 3% in the first quarter.
Casualty increased in the low single digits with U.S. excess casualty up 10% in the quarter, while workers' compensation decreased low single digits. Financial and professional liability rates and cyber pricing were down 5% and 6%, respectively. Midyear reinsurance renewals reflected increased demand for property cat, with easing rates after significant increases in 2023.
The majority of property placements were completed at renewal with adequate capacity. The global property cat reinsurance rates were generally flat to down mid-single digits, with greater decreases for upper layers on accounts without losses. The cat bond market had the most active quarter on record, with over 30 new bonds issued involving approximately $8 billion of limit. Casualty programs face continued underwriting scrutiny, but there is adequate capacity in the market.
Excess of loss programs with U.S. exposure saw upward pricing pressure while quota share ceding commissions were flat to down slightly. As always, we are helping our clients navigate these dynamic market conditions. Now, let me turn to our second quarter financial performance.
We generated adjusted EPS of $2.41, which is up 10% from a year ago. On an underlying basis, revenue grew 6%. Underlying revenue grew 7% in RIS and 4% in Consulting. Marsh was up 7%, Guy Carpenter 11%, Mercer 5% and Oliver Wyman grew 3%.
Overall, the second quarter saw adjusted operating income growth of 11%, and our adjusted operating margin expanded 130 basis points year over year. Turning to our outlook. We are well positioned for another great year in 2024. We continue to expect mid-single-digit or better underlying revenue growth, another year of margin expansion and strong growth in adjusted EPS.
Our outlook assumes current macro conditions persist. However, meaningful uncertainty remains and the economic backdrop could be materially different than our assumptions. Overall, I am proud of our second quarter performance, which demonstrates continued execution on key initiatives and momentum across our business. I'm grateful to our colleagues for their focus and determination and the value they deliver to our clients, shareholders and communities.
With that, let me turn it over to Mark for a more detailed review of our results.
Mark Christopher McGivney -- Chief Financial Officer
Thank you, John, and good morning. Our second quarter results were strong: solid underlying growth, significant margin expansion and 10% growth in adjusted EPS. Our consolidated revenue increased 6% to $6.2 billion, with underlying growth of 6%. Operating income was $1.6 billion, and adjusted operating income was $1.7 billion, up 11%.
Our adjusted operating margin increased 130 basis points to 29%. EPS was $2.27 and adjusted EPS was $2.41. For the first six months of 2024, underlying revenue growth was 8%, our adjusted operating income grew 11% to $3.7 billion, our adjusted operating margin increased 100 basis points and our adjusted EPS increased 12% to $5.30. Looking at Risk and Insurance Services.
Second quarter revenue was $4 billion, up 8% from a year ago or 7% on an underlying basis. This result marks the 14th consecutive quarter of 7% or higher underlying growth in RIS and continues the best stretch of growth in two decades. RIS operating income was $1.3 billion in the second quarter. Adjusted operating income was also $1.3 billion, up 12% over last year, and our adjusted operating margin expanded 110 basis points to 35.3%.
For the first six months of the year, revenue in RIS was $8.3 billion with underlying growth of 8%, adjusted operating income increased 12% to $2.9 billion, and our margin increased 90 basis points to 37.3%. At Marsh, revenue in the quarter was $3.3 billion, up 8% from a year ago or 7% on an underlying basis. This strong growth came on top of 10% growth in the second quarter of last year. Growth in the second quarter reflected strong new business and solid renewals.
In U.S. and Canada, underlying growth was 6% for the quarter. International underlying growth was 7%. EMEA was up 7%.
Asia Pacific grew 7%. And Latin America was up 8%. For the first six months of the year, Marsh's revenue was $6.3 billion with underlying growth of 7%. U.S.
and Canada grew 7% and international was up 8%. Guy Carpenter's revenue was $632 million in the quarter, up 10% or 11% on an underlying basis. This terrific result came on top of 11% growth last year and was driven by double-digit growth across most geographies and specialties. For the first six months of the year, Guy Carpenter generated $1.8 billion of revenue and 9% underlying growth.
In the consulting segment, second quarter revenue was $2.2 billion, up 2% from a year ago or 4% on an underlying basis. Consulting operating income was $410 million, and adjusted operating income was $426 million, up 6%. Our adjusted operating margin in consulting was 19.8% in the second quarter, an increase of 60 basis points. For the first six months of 2024, consulting revenue was $4.4 billion, reflecting underlying growth of 6%.
Adjusted operating income increased 7% to $870 million, and our margin increased 50 basis points to 20.3%. Mercer's revenue was $1.4 billion in the quarter, flat compared to a year ago, but up 5% on an underlying basis. This was Mercer's 13th straight quarter of 5% or higher underlying growth and continues the best run of growth in 15 years. Wealth grew 3%, driven by growth in both Investment Management and DB Consultant.
Our assets under management were $492 billion at the end of the second quarter, up 1% sequentially and up 25% compared to the second quarter of last year. Year-over-year growth was driven by our transaction with Vanguard, impact of capital markets and positive net flows. Health underlying growth remained strong at 9% and reflected growth across all regions. Career revenue increased 2%, continuing the trend of modest growth following a two-year stretch of strong growth in demand.
For the first six months of the year, revenue at Mercer was $2.8 billion with 6% underlying growth. Oliver Wyman's revenue in the quarter was $837 million, an increase of 3% on an underlying basis. This comes on top of 11% growth a year ago. The first six months of the year, revenue at Oliver Wyman was $1.6 billion, an increase of 8% on an underlying basis, up from 6% growth in the first half of last year.
Foreign exchange was a $0.02 headwind in the second quarter. Assuming exchange rates remain at current levels, we expect FX to be a $0.02 headwind in the third quarter and $0.02 in the fourth quarter. Total noteworthy items in the quarter were $73 million. These included $44 million of restructuring costs, mostly related to the program we began in the fourth quarter of 2022, as well as some transaction-related expense.
Our other net benefit credit was $66 million in the quarter. For the full year, we continue to expect our other net benefit credit will be approximately $265 million. Interest expense in the second quarter was $156 million, up from $146 million in the second quarter last year, reflecting higher levels of debt and higher interest rates. Based on our current forecast, we expect approximately $154 million of interest expense in the third quarter and approximately $620 million for the full year.
Our adjusted effective tax rate in the second quarter was 26.2% compared with 24.2% in the second quarter of last year. Our tax rate in both periods benefited from favorable discrete items. Excluding discrete items, our adjusted effective tax rate was approximately 26.5%. When we give forward guidance around our tax rate, we do not project discrete items, which can be positive or negative.
Based on the current environment, we continue to expect an adjusted effective tax rate of between 25.5% and 26.5% for 2024. Turning to capital management and our balance sheet. We ended the quarter with total debt of $13.5 billion. Our next scheduled debt maturity is in the first quarter of 2025 when $500 million of senior notes mature.
We continue to expect to deploy approximately $4.5 billion of capital in 2024 across dividends, acquisitions and share repurchases. The ultimate level of share repurchase will depend on how the M&A pipeline develops. Last week, we announced a 15% increase to our quarterly dividend, making this our 15th consecutive year of dividend growth. This comes on top of a 20% increase a year ago and reflects our strong earnings growth and confidence in our outlook.
Our cash position at the end of the second quarter was $1.7 billion. Uses of cash in the quarter totaled $1.2 billion and included $352 million for dividends, $500 million for acquisitions and $300 million for share repurchases. For the first six months, uses of cash totaled $2.2 billion and included $706 million for dividends, $847 million for acquisitions and $600 million for share repurchases. While there continues to be uncertainty in the outlook for the global economy, we feel good about the momentum in our business and the current environment remains supportive of growth.
Overall, our excellent first half leaves us well positioned for another great year in 2024. Based on our outlook today, for the full year, we continue to expect mid-single-digit or better underlying growth, margin expansion and strong growth in adjusted EPS. And with that, I'm happy to turn it back to John.
John Quinlan Doyle -- President and Chief Executive Officer
Thank you, Mark. Andrew, we are ready to begin Q&A.
Questions & Answers:
Operator
[Operator instructions] And our first question comes from the line of David Motemaden with Evercore ISI.
David Motemaden -- Evercore ISI -- Analyst
Thanks. Good morning. Just had a question on the underlying revenue growth outlook of mid-single digit or greater. You guys just did 8% in the first half of underlying revenue growth, but aren't increasing the range to high single digit.
Could you just help me think through the puts and takes in terms of why you guys aren't increasing the range?
John Quinlan Doyle -- President and Chief Executive Officer
Good morning, David. Sure. So yes, I mean first of all, I'd just say as pleased with our growth in the quarter. It was on top of a very big quarter a year ago at 11%.
Marsh had good solid growth by region and practice on top of a tough comp. Guy Carpenter had an excellent quarter. Market improvements led to increased demand after a pretty volatile reinsurance market in 2023. Mercer again had another solid quarter of growth.
As Mark noted in his comments, best growth -- stretch of growth in a long period of time. Health remains very strong. Wealth growth was solid, and we actually saw an uptick in Career growth from the first quarter. Oliver Wyman had a very tough comp, but had good growth -- has had good growth year-to-date.
And as we pointed out in the past, we'll have more quarter-to-quarter volatility than our other businesses. What I would say is, broadly speaking, the macros continue to be supportive of growth. It's a risky environment we're all operating in, but GDP, inflation, labor markets, the cost -- rising cost of risk, rising cost the healthcare, all supportive, and I feel very, very -- I feel like we're very well positioned. We have the best talent in the markets that we compete in.
And so, we're positive on our outlook for the second half, again, remains a good market for us. And so, we feel good about where we are.
David Motemaden -- Evercore ISI -- Analyst
Got it. Thanks, John. And then, Mark, I think you mentioned on last quarter's call that you guys are expecting greater margin expansion in the second half than in the first half. Is that still the case?
John Quinlan Doyle -- President and Chief Executive Officer
Do you want to go ahead, Mark?
Mark Christopher McGivney -- Chief Financial Officer
Yes. We're really happy with 130 basis points and validated the statements we made about the first quarter margin expansion facing headwinds from several items. So we were good -- we're glad to see the acceleration, and we're on track for solid margin expansion for the year.
John Quinlan Doyle -- President and Chief Executive Officer
Thank you, David. Andrew, next question.
Operator
One moment please for our next question. Our next question comes from the line of Jimmy Bhullar with J.P. Morgan.
Jimmy Bhullar -- Analyst
Hey. Good morning. So first, John, just following up on your comments on Oliver Wyman. The growth this quarter slowed versus what it's been the last few quarters.
How much of that is a function of just tough comps and normal volatility in the business versus maybe a slowdown in the pipeline?
John Quinlan Doyle -- President and Chief Executive Officer
Yes. Jimmy, thanks for the question, and I'll hand it to Nick here. But was it -- I think it's some of both, right? But it was a tough comp for sure, but we feel very good about the year-to-go growth -- year-to-date growth, excuse me, Nick, do you want to add a little bit more depth?
Nick Studer -- President and Chief Executive Officer, Oliver Wyman
Yes. I think John's right. Jimmy, it's a little bit of both. But in the same way that I noted last quarter that our 13% was against a weak 0% comp.
This three is against a tougher 11. About 8% year-to-date, I think, is bang in that zone of mid- to high single-digit growth we expect to average through the cycle. And as you know, our quarters are always somewhat volatile. Mark kindly noted in his comments that the first half actually accelerated versus the first half last year.
To give you a little bit of color on where we are seeing higher growth regionally, both Asia and India, Middle East and Africa regions have continued on strong growth from an industry perspective, our communications, media and technology practice has been our fastest growing year-to-date. But our very strong banking and insurance practices also in positive territory as is our public sector practice. And we have a wide array of capabilities. Our economic research business nearer growing strongly.
Our market-leading finance and risk practice, particularly in financial services, our pricing team, and importantly, our people and organizational performance practice, which really works across our industries to help on the client transformative moment. But the market is a little bit uncertain. While the economy seems to be better, it's still a pressured environment for discretionary spending, some uncertainties, as John and Mark have highlighted. And we do see -- we're sort of working through some pricing pressure due to excess capacity as some of our competitors work through some of their headcount actions.
John Quinlan Doyle -- President and Chief Executive Officer
Thank you, Nick. Jimmy, do you have a follow-up?
Jimmy Bhullar -- Analyst
Yes. Just -- and maybe for Mark on fiduciary investment income. It was -- it's been sort of flattish on a sequential basis. So should we assume given where rates are that going forward, it's going to grow just with growth in the business? Or was the sequential flat results in 2Q more of a function of seasonality and balances of other factors?
John Quinlan Doyle -- President and Chief Executive Officer
Mark?
Mark Christopher McGivney -- Chief Financial Officer
Jimmy, there is seasonality in balances as we've talked about in the past. But I think the biggest driver, I think, from here is just going to be the outlook for rates. As we've talked about and you saw in our balance sheet in the quarter, you've got about $11.5 billion of fiduciary balances. And so, I think just where we go from here is just going to be what the central banks do with short-term interest rates.
And just as you're modeling going forward, keep in mind, our balances do reflect the revenue mix of our business. So it's not just U.S. rates obviously that drive. We've got balances because of the distribution nature of our business all over the world.
So yes, so as I said, the outlook really is going to be mostly a function of what the rate picture looks like.
John Quinlan Doyle -- President and Chief Executive Officer
Thank you, Jimmy. Andrew, next question.
Operator
Our next question comes from the line of Elyse Greenspan with Wells Fargo.
Elyse Greenspan -- Analyst
Hi. Thanks. Good morning. My first question, within RIS, can you give us a sense of how much the expense saves helped your margins in the quarter?
John Quinlan Doyle -- President and Chief Executive Officer
Expense saves, are you -- you -- can you give me a?
Elyse Greenspan -- Analyst
Thinking about program --
John Quinlan Doyle -- President and Chief Executive Officer
OK. Sure. Thanks, Elyse. Mark?
Mark Christopher McGivney -- Chief Financial Officer
Yes. At least, we're definitely seeing the benefit of it. We've stayed away from quantifying specifically how much is going to drop quarter to quarter. But you just even see trend in expense growth quarter to quarter, that was definitely a factor.
Our strong growth and the benefit of savings contributed to that 130 basis points of margin expansion. So we're -- as I said, we haven't quantified the amount that we're seeing each quarter, but we are on track for the level of savings that we talked about, and we're seeing the benefit of it.
John Quinlan Doyle -- President and Chief Executive Officer
Do you have a follow-up, Elyse?
Elyse Greenspan -- Analyst
Yes. And then, my second question, within Marsh, could you just give us a sense of what you're seeing some more color in both the U.S. and internationally within organic growth, both for the Q2 and then how you think about the outlook in the back half of the year? And U.S. or internationally, are you guys more indexed to property in one versus the other?
John Quinlan Doyle -- President and Chief Executive Officer
Yes. I mean, the markets are quite dynamic, right? And so, I just caution you a little bit on pricing, right? I think Guy Carpenter is a good indication of that, right? So we saw a better market lead to increase demand. But as I mentioned earlier, it was a good solid growth by region and by practice again in the second quarter and on top of a tough comp. But Martin, maybe you could share a little bit more color on growth international versus U.S.
and the demand you're seeing?
Martin South -- President and Chief Executive Officer, Marsh
Sure. Just to restate seven in the quarter, which is on top of 10 for the second quarter of '23. Quite balanced growth at international seven and U.S. at six -- U.S.
and Canada at 6%. Our U.S. business MMA able to continue to perform very well. In the U.S., Canada had a weaker quarter.
Some macros there affected that pulled down a little bit. But across the international region, international was a seven on top of 10 in '23. Asia Pacific accelerated from seven on top of six in '23. Latin America did eight on top of 17 in the second quarter of '23.
And EMEA did seven on top of 11 in '23. The performance was driven really by -- a very strong performance internationally and in the benefits business. Construction, energy and power, all came off strong double-digit growth as well, repeating what happened last year. We're beginning to see some revitalization in the U.S.
capital markets, which has been a headwind for new business growth going back to '21. Renewal base growth was strong and solid, as is new business in both U.S. and Canada and international. And our loss business improved slightly as we continue to build stickier relationships with clients as we engage more deeply and we aspire to be the risk advisor of the future, talking to them well beyond conventional risk.
We feel very well positioned. Overall, the mix of premium in the U.S. will be more weighted to casualty in its broad terms, and probably more balanced in international for property and casualty time -- it's a to answer your question.
John Quinlan Doyle -- President and Chief Executive Officer
Yes, reflection of the liability environment in the U.S. for sure. Thank you, Elyse, and thanks, Martin. Andrew, next question.
Operator
Our next question comes from the line of Scott Heleniak with RBC Capital Markets.
Scott Heleniak -- RBC Capital Markets -- Analyst
Good morning. Just a quick question. Given the M&A pace has been pretty strong over past few quarters and certainly for the year. Just wondering if we should assume kind of a deceleration in the run rate for share buybacks in the second half versus the first half? Just how are you thinking about that? And how is your M&A tracking versus kind of what you thought going into the year?
John Quinlan Doyle -- President and Chief Executive Officer
Yes. Sure, Scott. Thanks for the question. No change to our philosophy.
We continue to take a balanced approach to capital management. We have about $4.5 billion to deploy during the course of the year. Broadly speaking, we favor attractive investments in our business, whether it's organic or inorganic, over buybacks, but we're not going to let cash build up on the balance sheet either. As I noted earlier, we increased our dividend beginning in this quarter.
We aspire to raise our dividend every year. We bought back $300 million of shares in the second quarter. We're pleased with what we've seen in the M&A market. As I said, it was an active quarter.
We announced a couple of deals really at the at the start here of the second quarter just after the 1st of July. And so, we're excited about those deals, and we'll continue to be active in the market. But ultimately, the amount of share repurchase will depend on what's obviously a volatile M&A, you never know what the ultimate outcome will be in M&A. But we're seeing some good opportunities to invest in our business.
Do you have a follow-up?
Scott Heleniak -- RBC Capital Markets -- Analyst
Yes. Just one quick one, too. Just generally on Mercer, the Health organic growth really strong again and 9% has been strong for quite a while. And Career & Wealth, I guess, is a little bit slower compared to Health, but just wondering if you can just kind of flesh out what you're seeing there, the strength in Health versus the other areas, if there's anything kind of hold those back those areas besides just the kind of difficult comps?
John Quinlan Doyle -- President and Chief Executive Officer
Yes. Thanks, Scott, and I'll ask Pat to comment in a second. But I mentioned rising healthcare costs in my opening remarks. It's a big pressure point for our clients in this economy.
And so -- and particularly given the tight labor markets in most major economies around the world. So -- it's really a terrific value we're delivering to our clients in a very tough marketplace there. Wealth is going to have some volatility as well Career quarter to quarter, but Pat, maybe you could talk a little bit about what we're seeing in the marketplace.
Pat Tomlinson -- President and Chief Executive Officer, Mercer
Sure. Thanks, and thanks so much for the question. First off, we're pleased with the Q2 underlying growth of 5%. As Mark highlighted, our 13th consecutive quarter with 5% or more growth and that all the practices are contributing to growth.
Certainly, Health has been contributing at a higher rate. Quickly to kind of go through the practices and what we're seeing. Health, as you highlighted, had that impressive quarter with 9% growth. The strong performance was broad-based, right? So there was double-digit growth across most regions.
It comes predominantly from investments in hiring new talent, investments in thought leadership, including our health on-demand survey, new digital tools and a focus on client segmentation that's really designed to match our clients' healthcare needs with our innovative and tailored solutions. We benefited from renewal and some new business growth, some insurer revenue and has been highlighted a couple of times so called medical cost inflation, certainly. We continue to see strong demand for digital solutions and innovative benefits underscoring really the value of -- and the breadth of advice and solutions we bring to clients. Little less growth in Wealth and Career.
So let me quickly go through them. Wealth, we grew the 3% in Q2. That was balanced between DD&A and IMS? So DB plans funding status continue to benefit from elevated interest rates. It's driving an increase in project work, predominantly revolving around risk transfers, as well as certain regulatory requirements that are out in some of the jurisdictions around the world.
We head in the volatile capital markets, it's been driving some strong demand for actuarial and the investment solutions. John had highlighted in we did benefit from the transaction with Vanguard. We had some net new inflows and capital markets also provided a revenue lift. It's important to note that on IMS, from a business perspective, it's a portfolio of solutions, right, that includes some advisory work and some DC administration in addition to OCIO.
So a lot of times, it's typically looked at as OCIO. And only our OCIO business is directly impacted by AUM. So as we've seen a market run up, really, we only have a subset of that business that's directly impacted by AUM. And our AUM is a diversified portfolio where equities only make up about half of our exposure, right? Because we have a lot of clients that have heavy fixed income exposure.
So while the markets can drive some volatility for us, the impact of equity markets is a bit more muted in IMS growth. And then, on Career, which had the most modest growth of 2%, which was up sequentially over quarter. It is following a long period of growth after the pandemic. We saw good growth momentum from a couple of our practices, talent and transformation.
Rewards was a bit more muted. And I think that's predominantly reflecting the impact of lower wage inflation and reduced employee turnover, which is driving some slightly lower demand for our clients at rewards projects. But I think it's also important to note here that while the growth rates fell down has been flat even over the last couple of quarters, it's been a bit more modest. The overall size of our Career practice is nearly 20% larger than it was pre-pandemic.
So that's -- so we feel very strong about that that we've been able to maintain those levels in a predominantly project-based business. So overall, I think the conditions have us very positive about the outlook
John Quinlan Doyle -- President and Chief Executive Officer
Thank you, Pat. Scott, thank you for your questions. Andrew, next question?
Operator
And our next question comes from the line of Michael Zaremski with BMO Capital Markets.
Michael Zaremski -- Analyst
Hey. Great. Good morning. Focusing on the property cat pricing environment, I guess, competitive environment.
John, I believe you said the Marsh index dissolved again to zero from one. Just curious, given Marsh does have a lot more small to mid-account business now too, it feels like there's like two different tales of different stories going on between the large accounts and the mid accounts. I don't know if you'd agree with that. And if yes, any color you can offer kind of why we're seeing two different trends there on pricing?
John Quinlan Doyle -- President and Chief Executive Officer
Sure, Mike. Thanks for the question. I'll share some high-level thoughts, and then maybe I'll ask both Martin and Andy to talk about some market observations. I would note, Mike, just right out of the gate here that typically, larger account pricing has more volatility attached to it.
If you look back on historical cycles, that's been the case. Mid-market pricing has historically been more stable or more consistent, I guess, and have less volatility from cycle to cycle. And our index is weighted toward large accounts to be clear, where we have the best data. But insurance and reinsurance markets continue to settle in the quarter after what's been many years of increases.
It's not just middle versus large. It's a collection of markets and while as I pointed out in my prepared remarks, cyber and FinPro, maybe the best example, prices continue to moderate. Some segments of the market are showing some -- what might be early signs of stress. U.S.
excess casualty, for example, prices were up 10%, and loss cost inflation there remains quite challenging. But overall, right now, market is providing an opportunity for our clients to revisit some decisions they've made about financing risk and that tighter market conditions led them to make uncertain decisions. So it's a welcome moment for many of our clients to revisit some of those decisions, and Guy Carpenter, as I mentioned earlier, it led to greater demand in the second quarter as evidenced by our strong growth. But Martin, maybe you could share a little bit more color on what we're seeing in the pricing market?
Martin South -- President and Chief Executive Officer, Marsh
Sure. Just reminding ourselves 26 quarters of rate increases, which just turned flat now. And as John noted, the -- our index is geared much more toward the larger account segment of our business. And obviously, the mid-market business in the smaller end has less volatility in pricing.
But just by line of business, casualty in the U.S. is up 3%, which, as John said, is really dominated by the 10% increase in the umbrella book, which we talked about in earlier calls about the volatility in claims inflation there. Property is flat in most regions, except for the Middle East and India, where we're still seeing some increases in property, maybe as a result of some of the activity in the Middle East in this past quarter. Core FinPro contracting at 5%, with rate decline pretty much across the world, and cyber contracting 6% which is mostly consistent with what we saw in Q1.
The pricing trends consistent with recent quarters, we're seeing some slight increases in geographies, but rate contraction is more than normal. And so, those are the key issues really that I would comment on now. But of course, as far as our business is concerned, we -- a lot of our business is fee-based or controlled commission basis, and exposure growth has been significant over the last few years as well, which is a counterweight to that.
John Quinlan Doyle -- President and Chief Executive Officer
Thanks, Martin. Dean, maybe you could just quickly cover the reinsurance market?
Dean Klisura -- President and Chief Executive Officer, Guy Carpenter
Yes. Thanks, John. And Mike, just a couple of headlines about the property cat reinsurance market, which certainly is connected to the underlying property market that that Martin is describing. As John noted, it's a much more predictable and smooth market than we experienced last year in the 2023 hard market for property cat.
Placements have been completed on time. There's been adequate capacity in the marketplace for our clients. There's an increased reinsurer appetite in the market, and we know why, right? They're driving 20% plus ROEs in this market given the rate increases of last year and the higher attachment points, our clients have been forced to absorb with greater volatility. We're seeing very strong ILS activity in the market.
John noted, record cat bond issuance in the quarter, 34 discrete cat bonds, some $8 billion of limit in the quarter. And I think that we're seeing moderating cat rates in the market compared to 2023. But I would say that if you look at year over year premium spend for property cat and our rate online index, it's still up 1% year over year. It has not gone negative in the market.
And really, as John noted, Mike, I think the headline, the key takeaway is significant increased client demand for additional property cat limit. In the first half of the year, two thirds of our U.S. clients bought more property cat coverage across an additional $10 billion of limit, which is truly significant in the marketplace. We're also seeing clients reinsure by more retrocession coverage with improved pricing, market dynamics, improved appetite by sellers, both rated and ILS vehicles in the market.
And I think the last headline for you is there's caution in the property market. There's $50 billion plus of insured losses in the first half of the year. When you think about severe convective storms in the U.S. and Japan, Taiwanese earthquake, floods in Germany, the UAE, Baltimore bridge collapse, Hurricane I mean we could be on track for another $100 billion a year of insured losses.
So there's caution in the market around property and property debt.
John Quinlan Doyle -- President and Chief Executive Officer
Thanks, Dean. So Mike, not a big shift from the first quarter, but a modest evolving market more in favor of buyers. And so, that obviously factors into the advice we give to our clients and help them navigate what's a world where, again, the cost of risk continues to escalate. Do you have a follow-up?
Michael Zaremski -- Analyst
Yes. Very quick follow-up. Just not to nitpick, but if I'm just looking at total revenue growth and I guess, ultimately, EBITDA adjusted, I think divestitures and maybe a little FX is what, I think, us and maybe the consensus was off on a little bit. And I just want to make sure there's nothing missing, it's still a net acquirer in terms of M&A, but is there chunky divestitures? Is there anything I should be thinking about in the very near term that -- in terms of that impact?
John Quinlan Doyle -- President and Chief Executive Officer
No, no. I mean, at Mercer, we sold two admin businesses, one in the U.S., one in the U.K. to Aptia. The reason we sold them is they're relatively low growth in lower margin businesses.
And again, on a relative basis, they were capital-intensive. And so, we think they have a better owner now, and so we feel good about that decision. Thank you, Mike. Andrew, next question please.
Operator
Our next question comes from the line of Gregory Peters with Raymond James.
Gregory Peters -- Raymond James -- Analyst
Good morning. I guess I'd like to just go back to some comments you made in your prepared remarks. You mentioned Blue[i]. I was wondering if you could provide some more specific data around that.
It's a data analytics business, just provide some scope of how big it is inside the business because you called it out in the call?
John Quinlan Doyle -- President and Chief Executive Officer
Yes. It's not a business. It's part of really how we advise our clients at Marsh. And so, Blue[i] is kind the brand, if you will, for our suite of analytics.
And Martin, maybe you could just share some insight on the range of types of tools that we use that help our clients think about how they manage and finance risk.
Martin South -- President and Chief Executive Officer, Marsh
Sure. So as you said, John, this is a suite of analytics tools that we use to help our clients across different product lines, assess what risks to retain, what risk they could transfer, the economic cost of that. We pay them across multiple lines to give them exposure and total cost of risk scenarios. We help them analyze claims and the analytics tools in that are able to help our clients who self-insure a lot of losses to identify which losses they need to get at early and has it settled those.
So it's a range of real-time analytics and built really, and it's one of the unique things about our business is that we have an enormous lake of data, and we think that's one of the big moats that we have to support our business. And some of these analytics tools that we use, we call them generically Blue[i]. We deploy on plants that actually done even by insurance. They tend to be some of our biggest clients in the U.S.
So we'll continue to invest in that. And as we announced in the call last year, we added to that with supply chain capability and -- so it's the way clients expect to be engaged, and that's the tool that we use.
John Quinlan Doyle -- President and Chief Executive Officer
So we use these tools to help -- and it's really mostly upfront, to help them understand our clients understand those risks, strategies to manage and mitigate those risks. We spend most of our time on these calls for good reasons, talking about the financing of risk when we go to market, but it's an important part of our value proposition. It's another example of where we can bring scale benefits to the market, given the unique data set that we have and the range of proprietary analytics we use. And while it operates under a different brand, the same will be said for the way we approach our clients in the market at Guy Carpenter.
Do you have a follow-up, Greg?
Gregory Peters -- Raymond James -- Analyst
I sure do. Thanks for the color on that. Just going to the operating cash flow and the free cash flow for the six months, down a little bit. It looks like it's changes in working capital.
Wondering if you could just provide some additional color on the operating cash flow for the quarter and the year on a six-month basis?
John Quinlan Doyle -- President and Chief Executive Officer
Sure, Greg. Yes, it's going to be volatile from quarter to quarter. But Mark, maybe you can --
Mark Christopher McGivney -- Chief Financial Officer
Yes, Greg. Thanks. Well, we always -- we'll always caution against focusing too much on a quarter's results, and that's certainly true when it comes to cash flows and free cash flow. They tend to be volatile, not only quarter to quarter, but year-to-year because of timing of balance sheet items as you -- so when you look at the six months, we are seeing a decline of course, given the significant bonus payouts that we have in the first quarter, you have a little bit of a denominator -- small denominator issue.
And so, you have to be cautious. But two big factors just in the first six months are the higher comp payouts that we had in the first quarter and then receivables are up because of the growth in the business. But we've got a, as you know, a long track record of double-digit growth in free cash flow that has stacked up well against our growth in earnings, and that's what you'd expect in a capital-light business like ours.
John Quinlan Doyle -- President and Chief Executive Officer
Thank you, Mark, and thanks Greg for the questions. Andrew, next question please.
Operator
Our next question comes from the line of Yaron Kinar with Jefferies.
Yaron Kinar -- Analyst
Thank you. Good morning. I just had a follow-up on an earlier question on margins. So I think last quarter, you had said that you expected the margin to accelerate, particularly in the second half of the year.
Sounded like from the response this morning that maybe that's no longer the case. So I guess just to be very clear, if we look at the 100 basis points or so of margin expansion in the first half of this year, would you expect that to be better in the second half or not? And I guess the second part of the question, will be -- if there was a bit of a change, is it because the margin expansion in the second quarter was greater than you initially expected? Or are you all expecting some softening relative to your guidance for the second half of the year?
John Quinlan Doyle -- President and Chief Executive Officer
No. We expect margin expansion in the second half to be better than the first half. Sorry, if we created any confusion earlier, but that's what we continue to expect. And maybe I can just share a little bit of color and just remind everybody, too, margins and outcome, right? This will be a year of 17th consecutive year of margin expansion, and so we feel terrific about that.
But margin is an outcome of the way we run the business. We manage investments and costs within the revenue growth of the business. It's not going to happen in every business and every single quarter, but it's the way we approach our business. We're going to continue to make attractive investments to support medium to long-term growth.
But we see opportunities. As I've mentioned in the past, we've got workflow and automation efforts since of Marsh, Mercer and Guy Carpenter. We're testing AI at scale. So that value creation is not a meaningful 2024 or probably 2025 event.
But as technologies emerge, we'll continue to challenge ourselves to get better. But again, we do expect second half margin expansion to be better than first half. Do you have a follow-up?
Yaron Kinar -- Analyst
Thanks so much for the color and clarification. I asked some two-part question, so I'll turn it back to you.
John Quinlan Doyle -- President and Chief Executive Officer
Got it. Thank you. Andrew, next question please.
Operator
One moment, please. Our next question comes from the line of Meyer Shields with KBW.
Meyer Shields -- Analyst
Great. Thanks. Good morning, all. I guess to start, can you talk about how you're advising both insurance and reinsurance clients to think about their exposure to casualty lines following the overturning of the Chevron doctrine?
John Quinlan Doyle -- President and Chief Executive Officer
Well, I'm not sure I see a direct line between that particular case and the overall environment. But what I would say to you is that -- and what we've talked about on this call historically -- or I shouldn't say historically, but over the course of the last couple of years is just troubling signs of loss cost inflation, particularly here in the United States. And the amount of large or mega judgments and settlements is quite challenging. And so, we spend a lot of time, and Martin talked briefly about the suite of analytics we use.
It's inside of that suite of analytics, we help our clients think about a range of outcomes, what type of limits they should consider buying, how they might benchmark anonymously against others in their industry as an example. But that's -- those are all important inputs and ultimately our clients make decisions and judgments and some have the ability to finance more risk or choose to finance more risk on their own. And others we'll look to finance risk on the balance sheets of insurance companies or in certain cases to capital markets as well. So I hope that's helpful there.
Meyer Shields -- Analyst
It is very good big picture. This is more of a small picture issue. But when we look at, let's say, the two-year stacked organic growth in Career, that's grew dramatically from the first quarter, I guess, you had 12 plus one at 13 in this quarter six plus two, to eight. Is your outlook for Career based on the items or the issue that you identified earlier, is that slowing compared to maybe what you thought at the end of the first quarter?
John Quinlan Doyle -- President and Chief Executive Officer
No, I don't think there's a real change from the first quarter. As Pat mentioned some of the dynamics of less active labor markets from a turnover point of view, lower comp and ben so it's -- we didn't have expectations of higher growth in that business during the course of 2024. We haven't seen anything through six months that changes that outlook.
Meyer Shields -- Analyst
Fantastic. Thank you very much.
John Quinlan Doyle -- President and Chief Executive Officer
Thank you. Andrew, time for maybe one more.
Operator
Certainly. And our final question comes from the line of Rob Cox with Goldman Sachs.
Rob Cox -- Goldman Sachs -- Analyst
Hey. Thanks for fitting me in. John, I want to go back to something you said last quarter, which was that Marsh access most of its E&S market solutions directly today. I'm curious how that's split between the percentage of premiums placed directly in E&S versus through a third-party wholesaler? How has trended over recent years? And how you think that might trend going forward?
John Quinlan Doyle -- President and Chief Executive Officer
Yes. Again, just to be clear, we're not looking to build a third-party wholesale business. We want to bring the best solutions to our clients. The E&S markets moved quite a bit over the course of the last several years.
That's really a reflection of the high-risk environment that I've talked about where insurers have, broadly speaking, more freedom to change rate, to get off risk, to change price -- or to change terms and conditions as well. And so, just broadly speaking, we want to manage our clients' outcomes and experiences directly as possible. and not outsource what's an important part of the value proposition. It's not to say that wholesalers don't do a nice job for us, they do and we'll continue to access them where it makes sense.
But -- but we -- most of the -- majority of the wholesale premium, we actually access directly today or E&S markets, we do that directly today. But there's been more growth in intermediated wholesale premium over the course of the last couple of years. And so, our efforts are to try to get as much access to market as we can. Do you have a follow-up, Robert?
Rob Cox -- Goldman Sachs -- Analyst
Yes. Thank you. That's great color. Second question was just on sort of the different economics, Guy Carpenter gets from cap bonds versus traditional reinsurance placement.
And if you could help us think about how much that record cap on quarter contributed to organic growth?
John Quinlan Doyle -- President and Chief Executive Officer
Yes. The economics can be different, of course, and they're different from treaty to treaty as well. We work with our insurance company clients. As we talked about when the market was particularly tight last year, while commission is a factor and growing price was a factor in many respects, really what we do with our large insurance company costs.
The big wholesale relationships where effectively we work on, what amounts to a fee. Thank you. Go ahead Andrew.
Operator
I would now like to turn the call back over to John Doyle, president and CEO of Marsh McLennan for any closing remarks.
John Quinlan Doyle -- President and Chief Executive Officer
Thanks, Andrew, and thank you all for joining us on the call this morning. In closing, I want to thank our colleagues for their hard work and dedication. I also want to thank our clients for their continued support. Thank you all very much, and we look forward to speaking to you again next quarter.
Duration: 0 minutes
Call participants:
John Quinlan Doyle -- President and Chief Executive Officer
Mark Christopher McGivney -- Chief Financial Officer
John Doyle -- President and Chief Executive Officer
David Motemaden -- Evercore ISI -- Analyst
Mark McGivney -- Chief Financial Officer
Jimmy Bhullar -- Analyst
Nick Studer -- President and Chief Executive Officer, Oliver Wyman
Elyse Greenspan -- Analyst
Martin South -- President and Chief Executive Officer, Marsh
Scott Heleniak -- RBC Capital Markets -- Analyst
Pat Tomlinson -- President and Chief Executive Officer, Mercer
Michael Zaremski -- Analyst
Dean Klisura -- President and Chief Executive Officer, Guy Carpenter
Gregory Peters -- Raymond James -- Analyst
Yaron Kinar -- Analyst
Meyer Shields -- Analyst
Rob Cox -- Goldman Sachs -- Analyst
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
