Home > Comparison > Financial Services > MMC vs AJG
The strategic rivalry between Marsh & McLennan Companies, Inc. and Arthur J. Gallagher & Co. shapes the insurance brokerage industry’s evolution. Marsh & McLennan operates a dual-segment model blending risk services with consulting, while Gallagher focuses on brokerage and risk management across diverse geographies. This head-to-head highlights a contest between integrated advisory services and specialized brokerage scale. This analysis aims to identify which business model offers superior risk-adjusted returns for a diversified portfolio.
Table of contents
Companies Overview
Marsh & McLennan and Arthur J. Gallagher dominate the global insurance brokerage landscape with extensive client networks.
Marsh & McLennan Companies, Inc.: Global Risk and Consulting Leader
Marsh & McLennan commands the insurance brokerage and consulting sectors with a dual-segment model. Its Risk and Insurance Services deliver risk management, insurance broking, and advisory solutions worldwide. The Consulting arm focuses on health, wealth, career, and specialized management consulting. In 2026, the company emphasizes integrated risk and advisory services to deepen client relationships and expand market share.
Arthur J. Gallagher & Co.: Specialist in Insurance Brokerage and Risk Management
Arthur J. Gallagher operates through Brokerage and Risk Management segments, providing insurance brokerage, consulting, and claims administration services globally. It specializes in hard-to-place insurance and acts as a managing general agent and underwriter. The firm focuses on expanding its network of correspondent brokers and enhancing risk management solutions to serve diverse commercial and public clients in 2026.
Strategic Collision: Similarities & Divergences
Both firms prioritize insurance brokerage but diverge in approach. Marsh & McLennan leverages a broad consulting platform, while Gallagher focuses on specialized insurance placement and claims services. Their primary battleground is risk advisory services to commercial and public entities. Marsh & McLennan appeals through integrated consulting breadth, whereas Gallagher offers nimble, niche expertise, shaping distinct risk-return profiles for investors.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | Marsh & McLennan Companies, Inc. (MMC) | Arthur J. Gallagher & Co. (AJG) |
|---|---|---|
| Revenue | 27B | 13.9B |
| Cost of Revenue | 0 | 6.3B |
| Operating Expenses | 20.8B | 5.1B |
| Gross Profit | 0 | 7.6B |
| EBITDA | 910M | 3.7B |
| EBIT | 0 | 2.5B |
| Interest Expense | 960M | 639M |
| Net Income | 4.2B | 1.5B |
| EPS | 8.48 | 5.83 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals which company operates its business more efficiently and delivers stronger profitability trends.
Marsh & McLennan Companies, Inc. Analysis
Marsh & McLennan grows revenue steadily from 19.8B in 2021 to 27B in 2025, with net income rising from 3.14B to 4.16B. Despite a 0% gross margin reported in 2025, the net margin holds firm around 15.4%, reflecting solid bottom-line efficiency. However, the drop in gross profit growth signals some margin pressure.
Arthur J. Gallagher & Co. Analysis
Arthur J. Gallagher expands revenue robustly from 8.2B in 2021 to 13.9B in 2025, with net income climbing from 907M to 1.49B. Gross margin stays strong at 54.7%, and EBIT margin at 18.2%, showing healthy operational control. Yet, a 15.3% decline in net margin over the last year hints at emerging profitability challenges.
Margin Strength vs. Growth Velocity
Marsh & McLennan boasts higher absolute net income and a more stable net margin despite reported gross margin inconsistencies. Arthur J. Gallagher delivers stronger revenue growth and superior gross and EBIT margins but faces recent net margin erosion. For investors, MMC’s consistent profitability appeals to stability seekers, while AJG’s margin profile suits those prioritizing growth momentum.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies compared below:
| Ratios | Marsh & McLennan Companies, Inc. (MMC) | Arthur J. Gallagher & Co. (AJG) |
|---|---|---|
| ROE | 30.4% (2024) | 7.3% (2024) |
| ROIC | 11.6% (2024) | 5.1% (2024) |
| P/E | 25.7 (2024) | 42.8 (2024) |
| P/B | 7.83 (2024) | 3.11 (2024) |
| Current Ratio | 1.13 (2024) | 1.51 (2024) |
| Quick Ratio | 1.13 (2024) | 1.51 (2024) |
| D/E | 1.64 (2024) | 0.67 (2024) |
| Debt-to-Assets | 0.39 (2024) | 0.21 (2024) |
| Interest Coverage | 8.31 (2024) | 6.00 (2024) |
| Asset Turnover | 0.43 (2024) | 0.18 (2024) |
| Fixed Asset Turnover | 10.38 (2024) | 11.24 (2024) |
| Payout ratio | 37.3% (2024) | 35.9% (2024) |
| Dividend yield | 1.45% (2024) | 0.84% (2024) |
| Fiscal Year | 2024 | 2024 |
Efficiency & Valuation Duel: The Vital Signs
Ratios serve as a company’s DNA, exposing hidden risks and operational strengths critical for investment analysis.
Marsh & McLennan Companies, Inc.
Marsh & McLennan displays strong profitability with a 30.4% ROE and solid margins, indicating operational efficiency. Its valuation looks stretched, with a 2024 EV/Sales at 5.07 and EV/EBITDA near 17.9. Despite negative free cash flow to equity, the firm invests strategically in intangible assets, signaling a growth-oriented reinvestment policy over dividends.
Arthur J. Gallagher & Co.
Arthur J. Gallagher shows modest profitability with a 7.3% ROE and a favorable net margin of 10.7%. The stock trades at a high P/E of 45.1, suggesting an expensive valuation. Its free cash flow yield is moderate, and it maintains a 1% dividend yield, balancing shareholder returns with steady operational cash generation despite some unfavorable asset turnover ratios.
Premium Valuation vs. Operational Safety
Marsh & McLennan offers stronger profitability and reinvestment capabilities but trades at stretched multiples. Arthur J. Gallagher presents a safer valuation profile with dividends, though profitability metrics lag. Investors seeking growth may prefer Marsh’s profile, while those favoring income and stability might lean toward Arthur J. Gallagher.
Which one offers the Superior Shareholder Reward?
I compare Marsh & McLennan Companies, Inc. (MMC) and Arthur J. Gallagher & Co. (AJG) on distribution strategies, dividend yields, payout ratios, and buybacks. MMC yields 1.87% with a 41% payout ratio and strong FCF coverage, supporting a sustainable 3.46 dividend per share. MMC also runs consistent buybacks, enhancing shareholder returns. AJG pays a lower 1.00% yield with a 45% payout ratio and similarly sustainable dividends but lacks clear buyback data, limiting total return potential. I see MMC’s balanced dividend and robust buyback program offering superior total shareholder rewards in 2026.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of Marsh & McLennan Companies, Inc. and Arthur J. Gallagher & Co., highlighting their core strengths and vulnerabilities:
Arthur J. Gallagher shows strength in discounted cash flow, asset efficiency, and low leverage, scoring 4 in these areas. However, its valuation metrics (PE/PB) are weak, scoring 1, indicating possible overvaluation or market skepticism. Marsh & McLennan’s scores are unavailable, so Gallagher’s profile appears more balanced but with a valuation risk concentrated on pricing metrics.
Bankruptcy Risk: Solvency Showdown
Arthur J. Gallagher’s Altman Z-Score of 1.28 places it in the distress zone, signaling a heightened bankruptcy risk in a challenging cycle. Marsh & McLennan’s higher score of 2.10 sits in the grey zone, indicating moderate risk but better solvency prospects:
Financial Health: Quality of Operations
Both firms share an identical Piotroski F-Score of 5, reflecting average financial health. Neither demonstrates peak operational strength nor severe red flags, suggesting caution but no immediate distress:
How are the two companies positioned?
This section dissects the operational DNA of MMC and AJG by comparing their revenue distribution by segment alongside their internal strengths and weaknesses. The final goal is to confront their economic moats to reveal which business model delivers the most resilient and sustainable competitive advantage today.
Revenue Segmentation: The Strategic Mix
This visual comparison dissects how Marsh & McLennan Companies, Inc. and Arthur J. Gallagher & Co. diversify their income streams and where their primary sector bets lie:
Marsh & McLennan anchors its revenue in two major segments: Risk and Insurance Services at $15.4B and Consulting at $9.1B in 2024, showing a balanced portfolio. Arthur J. Gallagher relies heavily on its Brokerage Segment, generating $3.6B, complemented by $6.7B in Commissions and smaller streams, indicating moderate diversification. MMC’s dual-segment strength suggests robust ecosystem lock-in, while AJG’s reliance on Brokerage and Commissions raises concentration risk.
Strengths and Weaknesses Comparison
This table compares the Strengths and Weaknesses of Marsh & McLennan Companies, Inc. (MMC) and Arthur J. Gallagher & Co. (AJG):
MMC Strengths
- Strong diversification with Risk and Insurance plus Consulting segments
- Solid global revenue with significant US, UK, and other international markets
- Consistent revenue growth in core segments
AJG Strengths
- Favorable net margin at 10.72%
- Favorable debt-to-equity and debt-to-assets ratios
- Diversified revenue streams including Brokerage, Risk Management, and Corporate segments
MMC Weaknesses
- Missing detailed financial ratios and profitability metrics
- Lack of specific innovation or market share data
AJG Weaknesses
- Unfavorable return on equity and invested capital
- Unfavorable liquidity ratios including current and quick ratios
- High P/E ratio suggests valuation risk
- Unfavorable asset turnover metrics
MMC’s strengths lie in its broad service diversification and global footprint. AJG shows solid profitability and capital structure but faces challenges in returns and liquidity, impacting operational efficiency and valuation perspectives.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat is the only reliable shield protecting long-term profits from relentless competition erosion. Let’s dissect how Marsh & McLennan and Arthur J. Gallagher defend their turf:
Marsh & McLennan Companies, Inc.: Diversified Consulting & Risk Expertise
Marsh & McLennan’s moat hinges on intangible assets and deep client relationships. This manifests in stable net margins near 15%, despite revenue growth challenges. Expansion into consulting could strengthen its moat in 2026.
Arthur J. Gallagher & Co.: Specialty Brokerage & Global Network
Gallagher’s moat stems from a broad geographic footprint and specialized insurance brokerage. It delivers superior gross margins above 54% and robust revenue growth over 20% annually. Its expanding global reach deepens competitive advantage.
Intangible Assets vs. Geographic Breadth: Who Holds the Moat Edge?
Marsh & McLennan’s intangible asset base offers a durable but narrower moat. Gallagher’s scalable global network drives wider reach and higher margins. Gallagher appears better positioned to defend and grow market share in 2026.
Which stock offers better returns?
Over the past 12 months, both Marsh & McLennan Companies, Inc. and Arthur J. Gallagher & Co. experienced bearish trends with notable price declines, alongside accelerating downward momentum in their stock prices.
Trend Comparison
Marsh & McLennan’s stock declined 10.48% over the past year, showing an accelerating bearish trend with a high volatility level (15.83 std deviation) and price range between 178.15 and 242.39.
Arthur J. Gallagher’s stock fell 0.92% over 12 months, also bearish with accelerating downside, but far higher volatility (29.81 std deviation) and a wider price range from 234.11 to 347.44.
Marsh & McLennan posted the larger negative return, despite lower volatility, indicating a weaker market performance compared to Arthur J. Gallagher’s smaller decline.
Target Prices
Analysts provide a clear consensus on target prices for Marsh & McLennan Companies, Inc. and Arthur J. Gallagher & Co.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| Marsh & McLennan Companies, Inc. | 190 | 257 | 211.1 |
| Arthur J. Gallagher & Co. | 247 | 334 | 282.38 |
Both companies show upside potential versus current prices: MMC trades near 183, well below its 211 consensus, while AJG trades around 249, considerably below its 282 consensus. This suggests analyst confidence in growth and value appreciation.
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How do institutions grade them?
Institutional analysts provide their latest grades for Marsh & McLennan Companies, Inc. and Arthur J. Gallagher & Co. as follows:
Marsh & McLennan Companies, Inc. Grades
The table summarizes recent institutional grades for Marsh & McLennan Companies, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Cantor Fitzgerald | maintain | Overweight | 2026-01-14 |
| Wells Fargo | maintain | Equal Weight | 2026-01-13 |
| Barclays | maintain | Overweight | 2026-01-08 |
| Evercore ISI Group | maintain | Outperform | 2026-01-07 |
| JP Morgan | maintain | Overweight | 2026-01-07 |
| Keefe, Bruyette & Woods | maintain | Market Perform | 2026-01-06 |
| Citigroup | maintain | Neutral | 2025-12-04 |
| Barclays | upgrade | Overweight | 2025-11-20 |
| B of A Securities | downgrade | Underperform | 2025-11-03 |
| TD Cowen | maintain | Hold | 2025-11-03 |
Arthur J. Gallagher & Co. Grades
The table summarizes recent institutional grades for Arthur J. Gallagher & Co.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Piper Sandler | maintain | Neutral | 2026-01-30 |
| Wells Fargo | maintain | Overweight | 2026-01-30 |
| Keefe, Bruyette & Woods | maintain | Market Perform | 2026-01-30 |
| Cantor Fitzgerald | downgrade | Neutral | 2026-01-14 |
| Wells Fargo | maintain | Overweight | 2026-01-13 |
| BMO Capital | downgrade | Market Perform | 2026-01-13 |
| Barclays | maintain | Underweight | 2026-01-08 |
| Piper Sandler | downgrade | Neutral | 2026-01-07 |
| Keefe, Bruyette & Woods | maintain | Market Perform | 2026-01-06 |
| Wells Fargo | maintain | Overweight | 2025-12-23 |
Which company has the best grades?
Marsh & McLennan Companies, Inc. consistently earns overweight and outperform ratings from multiple reputable firms. Arthur J. Gallagher & Co. shows a more mixed profile with several neutral and downgrades. Investors might interpret MMC’s stronger grades as signaling more institutional confidence.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
Marsh & McLennan Companies, Inc.
- Large scale and diversified consulting and risk services build resilience against competition.
Arthur J. Gallagher & Co.
- Strong presence in retail and wholesale brokerage segments but faces pricing pressure from specialized insurers.
2. Capital Structure & Debt
Marsh & McLennan Companies, Inc.
- In the grey zone on Altman Z-score (2.10), indicating moderate financial risk. Debt profile data missing, limiting full assessment.
Arthur J. Gallagher & Co.
- Favorable debt-to-equity score and moderate interest coverage (3.97x) suggest manageable leverage and financial stability.
3. Stock Volatility
Marsh & McLennan Companies, Inc.
- Beta of 0.75 indicates moderate volatility, less sensitive to market swings than the broader S&P 500.
Arthur J. Gallagher & Co.
- Beta of 0.68 shows slightly lower volatility, offering steadier price behavior relative to the sector.
4. Regulatory & Legal
Marsh & McLennan Companies, Inc.
- Exposure to global regulatory changes in insurance and consulting markets poses compliance risks.
Arthur J. Gallagher & Co.
- Multi-jurisdictional operations increase complexity and legal risk but experience in claims management provides mitigation.
5. Supply Chain & Operations
Marsh & McLennan Companies, Inc.
- Dependence on talent and intellectual capital requires ongoing investment in workforce and technology.
Arthur J. Gallagher & Co.
- Operational reliance on broker networks may cause disruptions if partnerships weaken or technology integration falters.
6. ESG & Climate Transition
Marsh & McLennan Companies, Inc.
- Increasing client demand for climate risk advisory offers growth but requires adaptation and investment.
Arthur J. Gallagher & Co.
- ESG integration in insurance products is advancing but still nascent, posing transitional risks and opportunities.
7. Geopolitical Exposure
Marsh & McLennan Companies, Inc.
- Global footprint exposes MMC to geopolitical tensions and regulatory shifts in key markets.
Arthur J. Gallagher & Co.
- International operations in volatile regions elevate exposure to geopolitical shocks and currency fluctuations.
Which company shows a better risk-adjusted profile?
Arthur J. Gallagher’s favorable debt metrics and lower volatility contribute to a more stable risk profile. However, its Altman Z-score in the distress zone (1.28) signals elevated bankruptcy risk. Marsh & McLennan’s moderate financial risk in the grey zone combined with diversified services offers balanced resilience. The most impactful risk for MMC lies in regulatory complexity, while AJG’s greatest threat is financial distress. Recent data showing AJG’s weak Altman Z-score justifies caution despite strong leverage control. Overall, MMC presents a marginally better risk-adjusted profile given its broader service mix and moderate financial health.
Final Verdict: Which stock to choose?
Marsh & McLennan Companies (MMC) shines as a cash-generating powerhouse with strong revenue and net income growth. Its efficiency in capital allocation stands out. Yet, I see a point of vigilance in its elevated net debt and working capital challenges. MMC suits aggressive growth portfolios willing to weather near-term volatility.
Arthur J. Gallagher (AJG) boasts a strategic moat in recurring revenue streams and robust income quality. Its balance sheet appears healthier, offering more stability than MMC. While growth is steadier and margins solid, valuation multiples suggest a premium. AJG fits well within GARP portfolios targeting steady, quality growth.
If you prioritize dynamic growth with a tolerance for balance sheet risks, MMC is the compelling choice due to its superior capital returns and growth trajectory. However, if you seek more stability and a durable income profile, AJG offers better downside protection and a resilient strategic position. Both present distinct analytical scenarios depending on your investment strategy.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Marsh & McLennan Companies, Inc. and Arthur J. Gallagher & Co. to enhance your investment decisions:
