Can Marsh's AI Strategy Offset Softer Insurance Pricing?
Marsh & McLennan Companies, Inc. MRSH faces a tough insurance pricing environment as artificial intelligence becomes an increasingly important part of its growth strategy. AI could help support growth as pricing pressure builds. Primary commercial insurance rates fell 6% in the second quarter, following a 5% decline in the previous quarter. Global property rates fell 12%. Softer pricing can weigh on premium-linked revenues, making it harder for Marsh to rely on market conditions to drive growth.
MRSH is responding by using its data, technology and client relationships to build AI-enabled products and improve productivity. Its Risk Companion platform uses AI-powered analytics to help clients assess exposures and evaluate risk-mitigation options. The company is also developing AI applications across sales, claims, reinsurance and consulting.
Marsh expects AI to automate processes, support employees and improve efficiency. Its Business and Client Services unit is central to this effort, bringing operations and technology together to accelerate automation. This strategy is gaining importance as the company works through a softer market. In the second quarter, Marsh delivered 5% underlying revenue growth, 9% adjusted EPS growth and a 29.3% adjusted operating margin, showing that it can maintain profitability despite pricing headwinds.
If Marsh converts its proprietary data and AI capabilities into scalable products, the technology could become a meaningful contributor to growth and margins rather than simply another efficiency initiative. As MRSH expands AI platforms like Risk Companion and Atlas, it could also open new revenue opportunities from its data and analytics.
How Are MRSH’s Peers Placed?
Peers like Aon plc AON and Willis Towers Watson Public Limited Company WTW are also using technology to support growth and efficiency. Aon’s organic revenues increased 5% in the second quarter, while its adjusted operating margin rose 70 basis points to 28.9%. Aon continues to invest in technology through its Aon United strategy. Willis Towers Watson also reported 5% organic revenue growth, with adjusted operating margin improving 100 basis points to 19.5%. WTW launched Propel to expand AI and automation, targeting about $400 million in run-rate savings and a 30% adjusted operating margin by 2028.
MRSH’s Price Performance, Valuation and Estimates
Shares of Marsh have lost 4.7% year to date, outperforming the broader industry’s 15.7% decline.
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From a valuation standpoint, Marsh trades at a forward price-to-earnings ratio of 15.91X, up from the industry average of 13.61X. MRSH currently carries a Value Score of C.
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The Zacks Consensus Estimate for 2026 earnings implies a 7.1% rise year over year, followed by 9% growth next year.
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The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
