Published: 2022-07-21 00:00:00 ET

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Marsh & McLennan Companies, Inc. (the "Company"), a global professional services firm, is organized based on the different services that it offers. Under this structure, the Company’s two business segments are Risk and Insurance Services and Consulting.

The Risk and Insurance Services segment ("RIS") provides risk management solutions (risk advice, risk transfer and risk control and mitigation) as well as insurance and reinsurance broking and services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Company conducts business in this segment through Marsh and Guy Carpenter. Marsh provides data-driven risk advisory services and solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and identify and capitalize on emerging opportunities.

The Company conducts business in its Consulting segment through Mercer and Oliver Wyman Group. Mercer delivers advice and solutions that help organizations create a dynamic world of work, shape retirement and investment outcomes, and unlock health and well being for a changing workforce. Oliver Wyman Group serves as critical strategic, economic and brand advisor to private sector and governmental clients.

Deconsolidation of Russia

On February 24, 2022, Russian forces launched a military invasion of Ukraine. In response, the United States, the European Union, United Kingdom and other governments have imposed significant economic sanctions on Russia, and Russia has responded with counter-sanctions. The war in Ukraine has disrupted international commerce and the global economy.

In June 2022, as previously announced in the first quarter, the Company entered into a definitive agreement to exit its businesses in Russia and transfer ownership to local management pending regulatory approvals.

In the first quarter of 2022, the Company also concluded that it does not meet the accounting criteria for control over its wholly-owned Russian businesses due to the evolving trade and economic sanctions, and recorded a loss of $52 million on the deconsolidation of the Russian businesses and other related charges. Refer to Note 8, Acquisitions and Dispositions, for additional information on the deconsolidation of the Russian businesses.

The Company continues to monitor the ongoing situation and its potential impact on our business, financial condition, results of operations and cash flows.

Business Update Related To COVID-19

The Company prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. For interim filings, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The Company believes that the information and disclosures presented are adequate to make such information and disclosures not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K").

The financial information contained herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial statements as of and for the six months ended June 30, 2022 and 2021.

Estimates: The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period.

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On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The estimates are based on historical experience and on various other assumptions that the Company believes are reasonable.

Such matters include:

•estimates of revenue;

•impairment assessments and charges;

•recoverability of long-lived assets;

•liabilities for errors and omissions;

•deferred tax assets, uncertain tax positions and income tax expense;

•share-based and incentive compensation expense;

•the allowance for current expected credit losses on receivables;

•useful lives assigned to long-lived assets, and depreciation and amortization; and

•fair value estimates of contingent consideration receivable or payable related to acquisitions or dispositions.

The Company believes these estimates are reasonable based on information currently available at the time they are made. The Company also considered the potential impact of macro economic factors including COVID-19 and the war in Ukraine to its customer base in various industries and geographies. Insurance exposures subject to variable factors are subject to mid-term and end of term adjustments, as well as policy audits, which may reduce premiums and corresponding commissions. Estimates were updated based on internal and industry specific economic data. The ultimate extent to which COVID-19 will directly or indirectly impact the Company’s businesses, results of operations and financial condition will depend on numerous evolving factors and future developments that it is not able to predict. Actual results may differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of certificates of deposit and time deposits, with original maturities of three months or less, and money market funds. The estimated fair value of the Company's cash and cash equivalents approximates their carrying value. The Company is required to maintain operating funds primarily related to regulatory requirements outside of the United States or as collateral under captive insurance arrangements. At June 30, 2022, the Company maintained $302 million compared to $303 million at December 31, 2021 related to these regulatory requirements.

Allowance for Credit Losses on Accounts Receivable

The Company’s policy for providing an allowance for credit losses on its accounts receivable is based on a combination of factors, including historical write-offs, aging of balances, and other qualitative and quantitative analyses. The charge related to expected credit losses was immaterial to the consolidated statements of income for the three and six months ended June 30, 2022 and 2021, respectively.

Investments

The caption "Investment income" in the consolidated statements of income comprises realized and unrealized gains and losses from investments recognized in earnings. It includes, when applicable, other than temporary declines in the value of securities, mark-to-market increases or decreases in equity investments with readily determinable fair values and equity method gains or losses on the Company's investments in private equity funds.

The Company holds investments in certain private equity funds. Investments in private equity funds are accounted for in accordance with the equity method of accounting using a consistently applied three-month lag period adjusted for any known significant changes from the lag period to the reporting date of the Company. The underlying private equity funds follow investment company accounting, where investments within the fund are carried at fair value. Investment gains or losses for its proportionate share of the change in fair value of the funds are recorded in earnings. Investments using the equity method of accounting are included in "other assets" in the consolidated balance sheets.

The Company recorded investment income of $2 million and $28 million for the three and six months ended June 30, 2022, respectively, compared to investment income of $19 million and $30 million for the same periods in the prior year. The decrease in 2022 is primarily driven by lower mark-to-market gains in the Company's private equity investments compared to the corresponding periods in the prior year.

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Income Taxes

The Company's effective tax rate for the three months ended June 30, 2022 was 25.5% compared with 31.6% for the corresponding quarter of 2021. The effective tax rates for the six months ended June 30, 2022 and 2021 were 24.6% and 27.9%, respectively.

The tax rates in both periods reflect the impact of discrete tax matters such as excess tax benefits related to share-based compensation, enacted tax legislation, changes in uncertain tax positions, deferred tax adjustments and nontaxable adjustments related to contingent consideration for acquisitions.

The excess tax benefit related to share-based payments is the most significant discrete item for the three and six months ended June 30, 2022, reducing the effective tax rate by 0.8% and 1.3%, respectively. The respective reductions for the three and six months ended June 30, 2021 were 0.6% and 0.9%, respectively. The rate in 2022 also reflects tax benefits from planning implemented through June 30, 2022 that postponed the utilization of current year losses in the U.K. to a future year when the tax rate will be 25%.

The rate in the second quarter of 2021 reflects the charge of re-measuring the Company’s U.K. deferred tax assets and liabilities upon the enactment of legislation increasing the U.K. corporate income tax rate from 19% to 25%, effective April 1, 2023. The Company recorded a net charge of $100 million in the second quarter of 2021, which reflected the re-measurement of the Company's U.K. deferred tax assets and liabilities upon enactment of the legislation.

The Company's tax rate reflects its income, statutory tax rates, and tax planning in the various jurisdictions in which it operates. Significant judgment is required in determining the annual effective tax rate and in evaluating uncertain tax positions.

Losses in one jurisdiction, generally, cannot offset earnings in another, and within certain jurisdictions profits and losses may not offset between entities. Consequently, losses in certain jurisdictions may require valuation allowances affecting the effective tax rate, depending on estimates of the realizability of associated deferred tax assets. The tax rate is also sensitive to changes in unrecognized tax benefits, including the impact of settled tax audits and expired statutes of limitation.

Changes in tax laws or tax rulings may have a significant impact on our effective tax rate. The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in tax returns. The Company's gross unrecognized tax benefits were $102 million at June 30, 2022 and $94 million December 31, 2021. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and approximately $48 million within the next twelve months due to settlements of audits and expirations of statutes of limitation.

Integration and Restructuring Charges

Severance and related costs are recognized based on amounts due under established severance plans or estimates of one-time benefits that will be provided. Typically, severance benefits are recognized when the impacted colleagues are notified of their expected termination and such termination is expected to occur within the legally required notification period. These costs are included in compensation and benefits in the consolidated statements of income.

Costs for real estate consolidation are recognized based on the type of cost, and the expected future use of the facility. For locations where the Company does not expect to sub-lease the property, the amortization of any Right-of-use ("ROU") asset is accelerated from the decision date to the cease use date. For locations where the Company expects to sub-lease the properties subsequent to its vacating the property, the ROU asset is reviewed for potential impairment at the earlier of the cease use date or the date a sub-lease is signed. To determine the amount of impairment, the fair value of the ROU asset is determined based on the present value of the estimated net cash flows related to the property. Contractual costs outside of the ROU asset are recognized based on the net present value of expected future cash outflows for which the Company will not receive any benefit. Such amounts are reliant on estimates of future sub-lease income to be received and future contractual costs to be incurred. These costs are included in other operating expenses in the consolidated statements of income.

Other costs related to integration and restructuring, such as moving, legal or consulting costs are recognized as incurred. These costs are included in other operating expenses in the consolidated statements of income.

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To achieve this principle, the entity applies the following steps: identify the contract(s) with the customer, identify the performance obligations in the contract(s), determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In accordance with accounting guidance, a performance obligation is satisfied either at a “point in time” or “over time” depending on the nature of the product or service provided, and the specific terms of the contract with customers.

Other revenue included in the consolidated statements of income that is not from contracts with customers is less than 2% of total revenue, and therefore, is not presented as a separate line item.

The Company's revenue recognition guidance is provided in more detail in Note 2, Revenue, in the Form 10-K for the year ended December 31, 2021.

The following table disaggregates components of the Company's revenue:

						Three Months Ended June 30,									Six Months Ended June 30,
(In millions)						2022			2021						2022			2021
Marsh:
EMEA						$	745		$	796					$	1,587		$	1,633
Asia Pacific						382			347						703			621
Latin America						118			103						222			193
Total International						1,245			1,246						2,512			2,447
U.S./Canada						1,533			1,404						2,812			2,528
Total Marsh						2,778			2,650						5,324			4,975
Guy Carpenter						522			488						1,521			1,383
Subtotal						3,300			3,138						6,845			6,358
Fiduciary interest income						13			3						17			8
Total Risk and Insurance Services						$	3,313		$	3,141					$	6,862		$	6,366
Mercer:
Wealth						$	597		$	625					$	1,214		$	1,248
Health						587			462						1,111			949
Career						205			187						407			365
Total Mercer						1,389			1,274						2,732			2,562
Oliver Wyman Group						695			618						1,362			1,203
Total Consulting						$	2,084		$	1,892					$	4,094		$	3,765

The Company recognizes commission revenue for a significant portion of its brokerage arrangements at a point in time on the effective date of the underlying policy. Commission revenue is estimated using historical information about the risks to be covered over the policy period, some of which are dependent on variable factors such as number of employees covered, covered payroll, airline passenger miles flown, shipped tonnage of marine cargo and others.

The following table provides contract assets and contract liabilities information from contracts with customers:

(In millions)						June 30, 2022						December 31, 2021
Contract assets						$	381					$	290
Contract liabilities						$	831					$	776

The Company records accounts receivable when the right to consideration is unconditional, subject only to the passage of time. Contract assets primarily relate to quota share reinsurance brokerage and contingent insurer revenue. The Company does not have the right to bill and collect revenue for quota share brokerage until the underlying policies written by the ceding insurer attach to the treaty. Estimated contingent insurer revenue related to achievement of volume or loss ratio metrics cannot be billed or collected until all related policy placements are completed and the contingency is resolved. Contract assets are included in other current assets in the Company's consolidated balance sheets. Contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities are included in current liabilities in the Company's consolidated balance sheets. Revenue recognized in the three and six months ended June 30, 2022 that was included in the contract liability

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balance at the beginning of each of those periods was $174 million and $454 million, respectively, compared to revenue recognized of $142 million and $380 million for the same periods in the prior year.

The amount of revenue recognized in the three and six months ended June 30, 2022 from performance obligations satisfied in previous periods, mainly due to variable consideration from contracts with insurers, quota share business and consulting contracts previously considered constrained was $37 million and $61 million, respectively, and $38 million and $72 million for the three and six months ended June 30, 2021, respectively.

The Company applies the practical expedient and does not disclose the value of unsatisfied performance obligations for (1) contracts with original contract terms of one year or less and (2) contracts where the Company has the right to invoice for services performed. The revenue expected to be recognized in future periods during the non-cancellable term of existing contracts greater than one year that is related to performance obligations that are unsatisfied or partially satisfied at the end of the reporting period is approximately $185 million, primarily related to Mercer. The Company expects revenue in 2023, 2024, 2025, 2026 and 2027 and beyond of $80 million, $55 million, $28 million, $15 million and $7 million, respectively, related to these performance obligations.

In its capacity as an insurance broker or agent, generally the Company collects premiums from insureds and after deducting its commissions, remits the premiums to the respective insurance underwriters. The Company also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held by the Company in a fiduciary capacity. The Company's fiduciary assets primarily include bank or short term time deposits and liquid money market funds, and are classified as cash and cash equivalents. Risk and Insurance Services revenue includes interest on fiduciary funds of $13 million and $17 million for the three and six months ended June 30, 2022, respectively, and $3 million and $8 million for the three and six months ended June 30, 2021, respectively. Since cash and cash equivalents held in a fiduciary capacity are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities.

Net uncollected premiums and claims and the related payables amounted to $14.5 billion at June 30, 2022 and $13.0 billion at December 31, 2021. The Company is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Accordingly, net uncollected premiums and claims and the related payables are not assets and liabilities of the Company and are not included in the accompanying consolidated balance sheets.

In certain instances, the Company advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. These advances are made from corporate funds and are reflected in the accompanying consolidated balance sheets as receivables.

The Company, through its Mercer subsidiary, manages assets in trusts or funds for which Mercer’s management or trustee fee is not considered a variable interest, since the fees are commensurate with the level of effort required to provide those services. Mercer is not the primary beneficiary of these trusts or funds. Mercer’s maximum exposure to loss of its interests is, therefore, limited to collection of its fees.

Basic net income per share attributable to the Company is calculated by dividing the after-tax income attributable to the Company by the weighted average number of outstanding shares of the Company’s common stock.

Diluted net income per share attributable to the Company is calculated by dividing the after-tax income attributable to the Company by the weighted average number of outstanding shares of the Company’s common stock, which have been adjusted for the dilutive effect of potentially issuable common shares.

Basic and Diluted EPS Calculation			Three Months Ended June 30,												Six Months Ended June 30,
(In millions, except per share data)			2022						2021						2022						2021
Net income before non-controlling interests			$	978					$	827					$	2,064					$	1,825
Less: Net income attributable to non-controlling interests			11						7						26						22
Net income attributable to the Company			$	967					$	820					$	2,038					$	1,803
Basic weighted average common shares outstanding			501						508						502						508
Dilutive effect of potentially issuable common shares			5						5						6						6
Diluted weighted average common shares outstanding			506						513						508						514
Average stock price used to calculate common stock equivalents			$	160.43					$	134.04					$	158.96					$	124.50

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The following table provides additional information concerning acquisitions, interest and income taxes paid for the six month periods ended June 30, 2022 and 2021.

(In millions)			2022						2021
Assets acquired, excluding cash and cash and cash equivalents held in a fiduciary capacity			$	164					$	561
Acquisition-related deposit			24						—
Fiduciary liabilities assumed			(2)						(13)
Liabilities assumed			(24)						(60)
Contingent/deferred purchase consideration			(11)						(138)
Net cash outflow for acquisitions			$	151					$	350

(In millions)			2022						2021
Interest paid			$	215					$	234
Income taxes paid, net of refunds			$	437					$	403

The classification of contingent consideration in the consolidated statements of cash flows is dependent upon whether the receipt, payment or adjustment was part of the initial liability established on the acquisition date (financing) or an adjustment to the acquisition date liability (operating).

The following amounts are included in the consolidated statements of cash flows as operating and financing activities:

For the Six Months Ended June 30,
(In millions)			2022						2021
Operating:
Contingent consideration payments for prior year acquisitions			$	(18)					$	(4)
Receipt of contingent consideration for dispositions			—						18
Acquisition/disposition related net charges (credits) for adjustments			27						(7)
Adjustments and payments related to contingent consideration			$	9					$	7
Financing:
Contingent consideration for prior year acquisitions			$	(16)					$	(13)
Deferred consideration related to prior year acquisitions			(76)						(84)
Payments of deferred and contingent consideration for acquisitions			$	(92)					$	(97)
Receipt of contingent consideration for dispositions			$	3					$	71

The Company had non-cash issuances of common stock under its share-based payment plan of $337 million and $228 million for the six months ended June 30, 2022 and 2021, respectively. The Company recorded share-based compensation expense related to restricted stock units, performance stock units and stock options of $89 million and $194 million for the three and six months ended June 30, 2022, respectively, and $98 million and $176 million for the three and six months ended June 30, 2021, respectively.

Statement of Cash Flows Reclassifications

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The changes, net of tax, in the balances of each component of Accumulated Other Comprehensive Income ("AOCI") for the three and six months ended June 30, 2022 and 2021, including amounts reclassified out of AOCI, are as follows:

(In millions)									Pension/Post-Retirement Plans Gains (Losses)						Foreign Currency Translation Adjustments						Total
Balance as of April 1, 2022									$	(3,137)					$	(1,542)					$	(4,679)
Other comprehensive income (loss) before reclassifications									154						(864)						(710)
Amounts reclassified from accumulated other comprehensive loss									26						—						26
Net current period other comprehensive income (loss)									180						(864)						(684)
Balance as of June 30, 2022									$	(2,957)					$	(2,406)					$	(5,363)

(In millions)									Pension/Post-Retirement Plans Gains (Losses)						Foreign Currency Translation Adjustments						Total
Balance as of April 1, 2021									$	(4,122)					$	(1,075)					$	(5,197)
Other comprehensive (loss) income before reclassifications									(16)						24						8
Amounts reclassified from accumulated other comprehensive loss									36						—						36
Net current period other comprehensive income									20						24						44
Balance as of June 30, 2021									$	(4,102)					$	(1,051)					$	(5,153)

(In millions)									Pension/Post-Retirement Plans Gains (Losses)						Foreign Currency Translation Adjustments						Total
Balance as of December 31, 2021									$	(3,202)					$	(1,373)					$	(4,575)
Other comprehensive income (loss) before reclassifications									189						(1,033)						(844)
Amounts reclassified from accumulated other comprehensive loss									56						—						56
Net current period other comprehensive income (loss)									245						(1,033)						(788)
Balance as of June 30, 2022									$	(2,957)					$	(2,406)					$	(5,363)

(In millions)									Pension/Post-Retirement Plans Gains (Losses)						Foreign Currency Translation Adjustments						Total
Balance as of December 31, 2020									$	(4,126)					$	(984)					$	(5,110)
Other comprehensive loss before reclassifications									(52)						(67)						(119)
Amounts reclassified from accumulated other comprehensive loss									76						—						76
Net current period other comprehensive income (loss)									24						(67)						(43)
Balance as of June 30, 2021									$	(4,102)					$	(1,051)					$	(5,153)

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The components of other comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended June 30,						2022												2021
(In millions)						Pre-Tax			Tax (Credit)			Net of Tax						Pre-Tax			Tax (Credit)			Net of Tax
Foreign currency translation adjustments						$	(864)		$	—		$	(864)					$	24		$	—		$	24
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)						(1)			—			(1)						(1)			—			(1)
Net actuarial losses (a)						38			11			27						52			15			37
Subtotal						37			11			26						51			15			36
Foreign currency translation adjustments						187			44			143						(44)			(12)			(32)
Effect of remeasurement						10			1			9						15			1			14
Effect of settlement						2			—			2						2			—			2
Pension/post-retirement plans gains						236			56			180						24			4			20
Other comprehensive (loss) income						$	(628)		$	56		$	(684)					$	48		$	4		$	44
(a) Included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.

Six Months Ended June 30,						2022												2021
(In millions)						Pre-Tax			Tax (Credit)			Net of Tax						Pre-Tax			Tax (Credit)			Net of Tax
Foreign currency translation adjustments						$	(1,033)		$	—		$	(1,033)					$	(67)		$	—		$	(67)
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)						(1)			—			(1)						(1)			—			(1)
Net actuarial losses (a)						77			20			57						104			27			77
Subtotal						76			20			56						103			27			76
Foreign currency translation adjustments						252			60			192						(81)			(20)			(61)
Effect of remeasurement						10			1			9						13			1			12
Effect of settlement						2			—			2						2			—			2
Other adjustments						(18)			(4)			(14)						(7)			(2)			(5)
Pension/post-retirement plans gains						322			77			245						30			6			24
Other comprehensive (loss) income						$	(711)		$	77		$	(788)					$	(37)		$	6		$	(43)
(a) Included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.

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The Risk and Insurance Services segment completed three acquisitions during the six months ended June 30, 2022:

•January – Marsh McLennan Agency ("MMA") acquired Heil & Kay Insurance Agency Inc., an Illinois-based full-service broker providing business insurance, employee health benefits services and personal lines insurance.

•April – Marsh acquired the business of Regional Treaty Services Corporation, a Rhode Island-based managing general underwriter, which manages reinsurance facilities for small to midsize US-based insurers primarily writing personal lines, small agriculture, and main street commercial business.

•June – MMA acquired Clark Insurance, a Maine-based, full-service broker providing business insurance, employee health and benefits and private client services to businesses and individuals across the region.

The Consulting segment completed two acquisitions during the six months ended June 30, 2022:

•February – Oliver Wyman acquired Azure Consulting, an Australia-based management consulting firm with expertise in strategy development, organizational design and operations in the industrials, energy and natural resources sectors.

•March – Mercer acquired GeFi Assurances, a France-based brokerage and consulting firm specializing in collective corporate social protection.

Total purchase consideration for acquisitions made during the six months ended June 30, 2022 was $158 million, which consisted of cash paid of $147 million and deferred purchase consideration and estimated contingent consideration of $11 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. During the six months ended June 30, 2022, the Company also paid $76 million of deferred purchase consideration and $34 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment until purchase accounting is finalized.

The following table presents the preliminary allocation of purchase consideration to the assets acquired and liabilities assumed during 2022 based on the estimated fair values for the acquisitions as of their respective acquisition dates:

Acquisitions through June 30, 2022
(In millions)
Cash			$	147
Estimated fair value of deferred/contingent consideration			11
Total consideration			$	158
Allocation of purchase price:
Cash and cash equivalents			$	18
Cash and cash equivalents held in a fiduciary capacity			2
Net receivables			2
Goodwill			104
Other intangible assets			57
Fixed assets, net			1
Total assets acquired			184
Current liabilities			22
Fiduciary liabilities			2
Other liabilities			2
Total liabilities assumed			26
Net assets acquired			$	158

The purchase price allocation for assets acquired and liabilities assumed is based on estimates that are preliminary in nature and subject to adjustments, which could be material. Any necessary adjustments must be finalized during the measurement period, which for a particular asset, liability, or non-controlling interest ends once the acquirer determines that either (1) the necessary information has been obtained or (2) the information is not available. However, the measurement period for all items is limited to one year from the acquisition date.

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Items subject to change include:

•amounts of intangible assets, fixed assets, capitalized software assets and right-of-use assets, subject to finalization of valuation efforts;

•amounts for contingencies, pending the finalization of the Company’s assessment of the portfolio of contingencies;

•amounts for deferred tax assets and liabilities, pending the finalization of valuations of the assets acquired, liabilities assumed and associated goodwill discussed below; and

•amounts for income tax assets, receivables and liabilities, pending the filing of the acquired companies' pre-acquisition income tax returns and receipt of information from taxing authorities which may change certain estimates and assumptions used.

The estimation of fair value requires numerous judgments, assumptions and estimates about future events and uncertainties, which could materially impact these values, and the related amortization, where applicable, in the Company’s results of operations.

The following table provides information about intangible assets acquired during 2022:

Intangible assets through June 30, 2022 (In millions)

Amount

Weighted Average Amortization Period

Client relationships

$

53

12.5 years

Other

4

4.5 years

Total intangibles

$

57

The consolidated statements of income include the results of operations of acquired companies since their respective acquisition dates. The consolidated statements of income for both the three and six month periods ended June 30, 2022 includes revenue of approximately $6 million and operating loss of $1 million for acquisitions made in 2022. The consolidated statements of income for both the three and six month periods ended June 30, 2021 includes revenue of approximately $35 million and operating income of $2 million for acquisitions made in 2021.

Dispositions

In April 2022, Mercer sold its U.S. affinity business that provided insurance marketing, brokerage and administration to association and affinity groups for cash proceeds of approximately $140 million and recorded a net gain of $112 million which is included in revenue in the consolidated statements of income.

In addition, during the first six months of 2022, the Company made certain other dispositions, the most significant of which was Mercer's sale of its retirement plan administration and call center operations in Brazil for cash proceeds of approximately $3 million.

Prior-Year Acquisitions

The Risk and Insurance Services segment completed eight acquisitions during 2021:

•April – MMA acquired PayneWest Insurance, Inc., a Montana-based full-service broker providing business insurance, surety, employee benefits and personal insurance services to companies and individuals, and The Pryor Group, LLC, a Texas-based full-service broker providing business insurance with a specialty in quick service restaurants and the personal lines of franchise owners.

•September – MMA acquired Vaaler Insurance, Inc., a North Dakota-based insurance broker providing business insurance, employee health and benefits, and personal lines solutions, with specialized expertise in the construction, education, and healthcare industries.

•November – MMA acquired Pelnik Insurance, a North Carolina-based full-service broker providing business insurance, employee health and benefits, and private client services to midsize businesses and individuals throughout the Mid-Atlantic, Southwest Truck Insurance Agency, Inc., a Texas-based broker providing business insurance for the trucking industry, serving clients in the U.S., and Mexico and InSource Insurance Group LLC, a Texas-based full-service broker providing business insurance, employee health and benefits, private client and surety services to the oil and gas, construction, manufacturing, and transportation industries.

•December – Marsh acquired Services Assurance Monétique ("SAM"), a France-based affinity insurance broker specializing in bank and retail insurance markets and increased its ownership interest in Marsh India Insurance Broker Private Limited ("Marsh India") from 49% to 92%.

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The Consulting segment completed one acquisition during 2021:

•November – Oliver Wyman Group acquired Huron Consulting Group’s life sciences strategy consulting practice in the U.S. and the U.K., which assists clients in addressing their most important commercial strategy, marketing, pricing, market access and research and development challenges.

Total purchase consideration for acquisitions made during the six months ended June 30, 2021 was approximately $505 million, which consisted of cash paid of $367 million and deferred purchase and estimated contingent consideration of $138 million. Contingent consideration arrangements are based primarily on EBITDA or revenue targets over a period of two to four years. For the first six months of 2021, the Company also paid $84 million of deferred purchase consideration and $17 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized.

Prior year dispositions

During the first six months of 2021, the Company sold certain businesses in the U.S. and the U.K. for cash proceeds of approximately $81 million and recognized a net gain of approximately $50 million, primarily related to the commercial networks business in the U.K that provided broking and back-office solutions for small independent brokers.

Deconsolidation of Russia

In the first quarter of 2022, the Company concluded that it does not meet the accounting criteria for control over its wholly-owned Russian subsidiaries due to the evolving trade and economic sanctions against Russia and the related Russian counter sanctions. These sanctions included restrictions on payments to and from Russian companies and reduced currency access through official exchange markets that have significantly impacted the Company's ability to effectively manage and operate its Russian businesses.

As a result, the Company deconsolidated its Russian businesses effective as of the end of the first quarter, and recorded a loss of $39 million included in revenue in the consolidated statements of income. The loss consisted of the reclassification of cumulative translation losses from accumulated other comprehensive income and a charge for the write-off of the Russia businesses' net assets.

In June 2022, as previously announced in the first quarter, the Company entered into a definitive agreement to exit its businesses in Russia and transfer ownership to local management pending regulatory approvals.

Pro-Forma Information

The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company during 2022 and 2021. In accordance with accounting guidance related to pro-forma disclosures, the information presented for acquisitions made in 2022 is as if they occurred on January 1, 2021 and reflects acquisitions made in 2021 as if they occurred on January 1, 2020. The unaudited pro-forma information includes the effects of amortization of acquired intangibles in all years. The unaudited pro-forma financial data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if such acquisitions had occurred on the dates indicated, nor is it necessarily indicative of future consolidated results.

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions, except per share data)			2022						2021						2022						2021
Revenue			$	5,384					$	5,071					$	10,946					$	10,238
Net income attributable to the Company			$	968					$	827					$	2,044					$	1,817
Basic net income per share attributable to the Company			$	1.93					$	1.63					$	4.07					$	3.57
Diluted net income per share attributable to the Company			$	1.91					$	1.61					$	4.03					$	3.54

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The Company is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs the annual impairment assessment for each of its reporting units during the third quarter of each year. In accordance with applicable accounting guidance, a company can assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, the Company may elect to proceed directly to the quantitative goodwill impairment test. In 2021, the Company elected to perform a qualitative impairment assessment. As part of its assessment, the Company considered numerous factors, including:

•that the fair value of each reporting unit exceeds its carrying value by a substantial margin based on its most recent quantitative assessment in 2019;

•whether significant acquisitions or dispositions occurred which might alter the fair value of its reporting units;

•macroeconomic conditions and their potential impact on reporting unit fair values;

•actual performance compared with budget and prior projections used in its estimation of reporting unit fair values;

•industry and market conditions; and

•the year-over-year change in the Company’s share price.

The Company completed its qualitative assessment in the third quarter of 2021 and concluded that goodwill was not impaired.

Other intangible assets that are not deemed to have an indefinite life are amortized over their estimated lives and assessed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. Based on its assessment, the Company concluded that other intangible assets were not impaired. The Company does not have any indefinite lived intangible assets.

Changes in the carrying amount of goodwill are as follows:

June 30,
(In millions)			2022						2021
Balance as of January 1,			$	16,317					$	15,517
Goodwill acquired			104						338
Other adjustments(a)			(458)						(80)
Balance at June 30,			$	15,963					$	15,775

(a) Primarily reflects the impact of foreign exchange.

The goodwill arising from acquisitions in 2022 and 2021 consists largely of the synergies and economies of scale expected from combining the operations of the Company and the acquired entities and the trained and assembled workforce acquired.

The goodwill acquired in 2022 was $104 million, of which approximately $85 million is deductible for tax purposes, and is primarily related to the Risk and Insurance Services segment.

Goodwill allocable to the Company’s reportable segments at June 30, 2022 is as follows: Risk and Insurance Services, $12.3 billion and Consulting, $3.7 billion.

The gross cost and accumulated amortization of identified intangible assets at June 30, 2022 and December 31, 2021 are as follows:

			June 30, 2022																		December 31, 2021
(In millions)			Gross Cost						Accumulated Amortization						Net Carrying Amount						Gross Cost						Accumulated Amortization						Net Carrying Amount
Client relationships			$	3,887					$	1,412					$	2,475					$	4,066					$	1,334					$	2,732
Other (a)			357						294						63						365						287						78
Amortized intangibles			$	4,244					$	1,706					$	2,538					$	4,431					$	1,621					$	2,810

(a) Primarily non-compete agreements, trade names and developed technology.

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Aggregate amortization expense was $83 million and $174 million for the three and six months ended June 30, 2022, compared to $89 million and $189 million for the corresponding periods in the prior year. The estimated future aggregate amortization expense is as follows:

For the Years Ending December 31,
(In millions)			Estimated Expense
2022 (excludes amortization through June 30, 2022)			$	163
2023			315
2024			295
2025			258
2026			237
Subsequent years			1,270
Total future amortization			$	2,538

Fair Value Hierarchy

The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by the FASB. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, for disclosure purposes, is determined based on the lowest level input that is significant to the fair value measurement. Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on the inputs in the valuation techniques as follows:

Level 1.Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market (examples include active exchange-traded equity securities and exchange-traded money market mutual funds).

Assets and liabilities measured using Level 1 inputs include exchange-traded equity securities, exchange-traded mutual funds and money market funds.

Level 2.Assets and liabilities whose values are based on the following:

a)quoted prices for similar assets or liabilities in active markets;

b)quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);

c)pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and

d)pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full asset or liability (for example, certain mortgage loans).

Assets and liabilities using Level 2 inputs are related to an equity security.

Level 3.Assets and liabilities whose values are based on prices, or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

Assets and liabilities measured using Level 3 inputs relate to assets and liabilities for contingent purchase consideration.

Valuation Techniques

Equity Securities, Money Market Mutual Funds and Mutual Funds – Level 1

Investments for which market quotations are readily available are valued at the sale price on their principal exchange or, for certain markets, official closing bid price. Money market funds are valued at a readily determinable price.

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Contingent Purchase Consideration Assets and Liabilities – Level 3

Purchase consideration for some acquisitions and dispositions made by the Company include contingent consideration arrangements. Contingent consideration arrangements are based primarily on EBITDA or revenue targets over a period of two to four years. The fair value of the contingent purchase consideration asset and liability is estimated as the present value of future cash flows to be paid, based on projections of revenue and earnings and related targets of the acquired and disposed entities.

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021:

			Identical Assets (Level 1)												Observable Inputs (Level 2)												Unobservable Inputs (Level 3)												Total
(In millions)			06/30/22						12/31/21						06/30/22						12/31/21						06/30/22						12/31/21						06/30/22						12/31/21
Assets:
Financial instruments owned:
Exchange traded equity securities (a)			$	64					$	61					$	—					$	—					$	—					$	—					$	64					$	61
Mutual funds (a)			157						192						—						—						—						—						157						192
Money market funds (b)			84						425						—						—						—						—						84						425
Other equity investment (a)			—						—						—						8						—						—						—						8
Contingent purchase consideration assets (c)			—						—						—						—						2						5						2						5
Total assets measured at fair value			$	305					$	678					$	—					$	8					$	2					$	5					$	307					$	691
Fiduciary Assets:
U.S. treasury bills (e)			$	—					$	55					$	—					$	—					$	—					$	—					$	—					$	55
Money market funds			171						527						—						—						—						—						171						527
Total fiduciary assets measured at fair value			$	171					$	582					$	—					$	—					$	—					$	—					$	171					$	582
Liabilities:
Contingent purchase consideration liability (d)			$	—					$	—					$	—					$	—					$	345					$	352					$	345					$	352
Total liabilities measured at fair value			$	—					$	—					$	—					$	—					$	345					$	352					$	345					$	352

(a) Included in other assets in the consolidated balance sheets.

(b) Included in cash and cash equivalents in the consolidated balance sheets.

(c) Included in other receivables in the consolidated balance sheets.

(d) Included in accounts payable and accrued liabilities and other liabilities in the consolidated balance sheets.

(e) Maturity dates of three months or less.

The Level 3 assets in the table reflect contingent purchase consideration from the sale of businesses. The change in the contingent purchase consideration assets from December 31, 2021 is driven by cash receipts of approximately $3 million.

During the six months ended June 30, 2022, there were no assets or liabilities that were transferred between levels.

The following table sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities for the three and six months ended June 30, 2022 and 2021:

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions)			2022						2021						2022			2021
Balance at beginning of period			$	358					$	233					$	352		$	243
Net additions			—						97						—			97
Payments			(30)						(6)						(34)			(17)
Revaluation impact			17						16						27			17
Balance at June 30,			$	345					$	340					$	345		$	340

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Long-Term Investments

The Company holds investments in public and private companies as well as certain private equity investments that are accounted for using the equity method of accounting. The carrying value of these investments was $233 million and $207 million at June 30, 2022 and December 31, 2021, respectively.

Investments in Public and Private Companies

The Company has investments in private insurance and consulting companies with a carrying value of $56 million and $58 million at June 30, 2022 and December 31, 2021, respectively. These investments are accounted for using the equity method of accounting, the results of which are included in revenue in the consolidated statements of income and the carrying value of which is included in other assets in the consolidated balance sheets. The Company records its share of income or loss on its equity method investments, some of which are on a one quarter lag basis. In December 2021, the Company increased its ownership in Marsh India from 49% to 92%. Prior to the increase in ownership, the Company accounted for the investment under the equity method of accounting.

Private Equity Investments

The Company's investments in private equity funds were $177 million and $149 million at June 30, 2022 and December 31, 2021, respectively. The carrying values of these private equity investments approximate fair value. The underlying private equity funds follow investment company accounting, where investments within the fund are carried at fair value. The Company records in earnings its proportionate share of the change in fair value of the funds on the investment income line in the consolidated statements of income. These investments are included in other assets in the consolidated balance sheets. The Company recorded net investment gains of $2 million and $19 million for the three and six months ended June 30, 2022, respectively, and net investment gains of $17 million and $27 million from these investments for the same periods in 2021.

Other Investments

Net Investment Hedge

The Company has investments in various subsidiaries with Euro functional currencies. As a result, the Company is exposed to the risk of fluctuations between the Euro and U.S. dollar exchange rates. The Company designated its €1.1 billion senior note debt instruments ("Euro notes") as a net investment hedge (the "hedge") of its Euro denominated subsidiaries. The hedge effectiveness is re-assessed each quarter to confirm that the designated equity balance at the beginning of each period continues to equal or exceed 80% of the outstanding balance of the Euro debt instrument and that all the critical terms of the hedging instrument and the hedged net investment continue to match. If the Company concludes that the hedge is highly effective, the change in the debt balance related to foreign exchange fluctuations is recorded in foreign currency translation gains (losses) in the consolidated balance sheets.

The Company concluded that the hedge continues to be highly effective as of June 30, 2022. The U.S. dollar value of the Euro notes decreased $92 million through June 30, 2022 due to the impact of foreign exchange rates, with a corresponding decrease to accumulated other comprehensive loss.

The Company leases office facilities under non-cancelable operating leases with terms generally ranging between 10 and 25 years. The Company utilizes these leased office facilities for use by its employees in countries in which the Company conducts its business. None of the Company’s leases restrict the payment of dividends or the incurrence of debt or additional lease obligations, or contain significant purchase options.

Operating leases are recognized on the balance sheet as ROU assets and operating lease liabilities based on the present value of the remaining future minimum payments over the lease term at commencement date of the lease.

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The following table provides additional information about the Company’s property leases:

			Three Months Ended June 30,									Six Months Ended June 30,
(In millions)			2022			2021						2022			2021
Lease Cost:
Operating lease cost (a)			$	88		$	95					$	178		$	189
Short-term lease cost			1			2						2			3
Variable lease cost			30			26						64			63
Sublease income			(4)			(5)						(9)			(13)
Net lease cost			$	115		$	118					$	235		$	242
Other information:
Operating cash outflows from operating leases												$	194		$	204
Right of use assets obtained in exchange for new operating lease liabilities												$	114		$	251
Weighted-average remaining lease term – real estate												8.6 years			9.1 years
Weighted-average discount rate – real estate leases												2.75%			2.76%

(a) Excludes ROU asset impairment charges.

Future minimum lease payments for the Company’s operating leases as of June 30, 2022 are as follows:

Payment Dates (In millions)			Real Estate Leases
Remainder of 2022			$	187
2023			352
2024			311
2025			280
2026			257
2027			222
Subsequent years			714
Total future lease payments			2,323
Less: Imputed interest			(257)
Total			$	2,066
Current lease liabilities			$	314
Long-term lease liabilities			1,752
Total lease liabilities			$	2,066

Note: The table excludes obligations for leases with original terms of 12 months or less which have not been recognized as a ROU asset or liability in the consolidated balance sheets.

As of June 30, 2022, the Company had additional operating real estate leases that had not yet commenced of $38 million. These operating leases will commence over the next 12 months.

The Company maintains qualified and non-qualified defined benefit pension plans for its U.S. and non-U.S. eligible employees. The Company’s policy for funding its tax-qualified defined benefit pension plans is to contribute amounts at least sufficient to meet the funding requirements set forth by U.S. law and the laws of the non-U.S. jurisdictions in which the Company offers defined benefit plans.

The target asset allocation for the U.S. plans is 60% equities and equity alternatives and 40% fixed income. At June 30, 2022, the actual allocation for the U.S. plans was 62% equities and equity alternatives and 38% fixed income. The target allocation for the U.K. plans at June 30, 2022 is 16% equities and equity alternatives and 84% fixed income. At June 30, 2022, the actual allocation for the U.K. plans was 19% equities and equity alternatives and 81% fixed income. The Company's U.K. plans comprised approximately 81% of non-U.S. plan assets at December 31, 2021. The assets of the Company's defined benefit plans are diversified and are managed in accordance with applicable laws and with the goal of maximizing the plans' real return within acceptable risk

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parameters. The Company generally uses threshold-based portfolio re-balancing to ensure the actual portfolio remains consistent with target asset allocation ranges.

The net periodic cost of the Company's defined benefit plans is measured on an actuarial basis using various methods and assumptions. The components of the net periodic benefit cost for defined benefit plans are as follows:

Combined U.S. and significant non-U.S. Plans			Pension Benefits
For the Three Months Ended June 30,
(In millions)			2022						2021
Service cost			$	7					$	10
Interest cost			99						86
Expected return on plan assets			(197)						(211)
Recognized actuarial loss			37						51
Net periodic credit			$	(54)					$	(64)
Settlement loss			2						2
Total credit			$	(52)					$	(62)
Combined U.S. and significant non-U.S. Plans			Pension Benefits
For the Six Months Ended June 30,
(In millions)			2022						2021
Service cost			$	15					$	20
Interest cost			199						171
Expected return on plan assets			(399)						(419)
Recognized actuarial loss			76						103
Net periodic benefit credit			$	(109)					$	(125)
Settlement loss			2						2
Total credit			$	(107)					$	(123)

Amounts Recorded in the Consolidated Statements of Income
Combined U.S. and significant non-U.S. Plans			Pension Benefits
For the Three Months Ended June 30,
(In millions)			2022						2021
Compensation and benefits expense			$	7					$	10
Other net benefit credit			(59)						(72)
Total credit			$	(52)					$	(62)

Amounts Recorded in the Consolidated Statements of Income
Combined U.S. and significant non-U.S. Plans			Pension Benefits
For the Six Months Ended June 30,
(In millions)			2022						2021
Compensation and benefits expense			$	15					$	20
Other net benefit credit			(122)						(143)
Total credit			$	(107)					$	(123)

U.S. Plans only			Pension Benefits
For the Three Months Ended June 30,
(In millions)			2022						2021
Interest cost			$	49					$	46
Expected return on plan assets			(84)						(81)
Recognized actuarial loss			18						22
Net periodic credit			$	(17)					$	(13)

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U.S. Plans only			Pension Benefits
For the Six Months Ended June 30,
(In millions)			2022						2021
Interest cost			$	97					$	92
Expected return on plan assets			(168)						(163)
Recognized actuarial loss			37						45
Net periodic credit			$	(34)					$	(26)

Significant non-U.S. Plans only			Pension Benefits
For the Three Months Ended June 30,
(In millions)			2022						2021
Service cost			$	7					$	10
Interest cost			50						40
Expected return on plan assets			(113)						(130)
Recognized actuarial loss			19						29
Net periodic credit			$	(37)					$	(51)
Settlement loss			2						2
Total credit			$	(35)					$	(49)

Significant non-U.S. Plans only			Pension Benefits
For the Six Months Ended June 30,
(In millions)			2022						2021
Service cost			$	15					$	20
Interest cost			102						79
Expected return on plan assets			(231)						(256)
Recognized actuarial loss			39						58
Net periodic credit			$	(75)					$	(99)
Settlement loss			2						2
Total credit			$	(73)					$	(97)

The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:

Combined U.S. and significant non-U.S. Plans			Pension Benefits
June 30,			2022						2021
Weighted average assumptions:
Expected return on plan assets			4.56		%				4.72		%
Discount rate			2.28		%				1.92		%
Rate of compensation increase			2.16		%				1.85		%

The Company made contributions to its U.S. and non-U.S. defined benefit pension plans for the three and six months ended June 30, 2022 of approximately $45 million and $113 million, respectively, compared to contributions of $28 million and $57 million for the corresponding periods in the prior year. The Company expects to contribute approximately $63 million to its U.S. and non-U.S. defined benefit pension plans during the remainder of 2022.

Defined Contribution Plans

The Company maintains certain defined contribution plans ("DC Plans") for its employees, the most significant being in the U.S. and the U.K. The cost of the U.S. DC Plans for the three and six months ended June 30, 2022 was $40 million and $83 million, respectively, and $39 million and $78 million for the corresponding periods in the prior year. The cost of the U.K. DC Plans for the three and six months ended June 30, 2022 was $33 million and $77 million, respectively, and $34 million and $73 million for the corresponding periods in the prior year.

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The Company’s outstanding debt is as follows:

(In millions)			June 30, 2022						December 31, 2021
Short-term:
Commercial paper			$	944					$	—
Current portion of long-term debt			367						17
			1,311						17
Long-term:
Senior notes – 3.30% due 2023			350						349
Senior notes – 4.05% due 2023			250						249
Senior notes – 3.50% due 2024			599						599
Senior notes – 3.875% due 2024			997						997
Senior notes – 3.50% due 2025			498						498
Senior notes – 1.349% due 2026			581						629
Senior notes – 3.75% due 2026			598						598
Senior notes – 4.375% due 2029			1,499						1,499
Senior notes – 1.979% due 2030			571						614
Senior notes – 2.250% due 2030			739						739
Senior notes – 2.375% due 2031			397						397
Senior notes – 5.875% due 2033			298						298
Senior notes – 4.75% due 2039			495						495
Senior notes – 4.35% due 2047			493						493
Senior notes – 4.20% due 2048			593						593
Senior notes – 4.90% due 2049			1,238						1,238
Senior notes – 2.90% due 2051			346						346
Mortgage – 5.70% due 2035			308						316
Other			4						3
			10,854						10,950
Less current portion			367						17
			$	10,487					$	10,933

The senior notes in the table above are registered by the Company with the Securities and Exchange Commission and are not guaranteed.

On April 9, 2021, the Company increased its short-term commercial paper financing program to $2.0 billion from $1.5 billion. The Company had $944 million of commercial paper outstanding at June 30, 2022 at an average effective interest rate of 1.94%.

Credit Facilities

The Company has a multi-currency unsecured $2.8 billion five-year revolving credit facility (the "Credit Facility"). The interest rate on the Credit Facility is based on LIBOR plus a fixed margin which varies with the Company’s credit ratings. The Credit Facility expires in April 2026 and requires the Company to maintain certain coverage and leverage ratios which are tested quarterly. The Credit Facility includes provisions for determining a LIBOR successor rate in the event LIBOR reference rates are no longer available or in certain other circumstances which are determined to make using an alternative rate desirable. As of June 30, 2022, the Company had no borrowings under this facility.

On May 31, 2022, the Company secured a $250 million uncommitted revolving credit facility. The facility expires in May 2023 and has similar coverage and leverage ratios as the Credit Facility. The Company had no borrowings outstanding under this facility at June 30, 2022.

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Additional credit facilities, guarantees and letters of credit are maintained with various banks aggregating $504 million at June 30, 2022 and $508 million at December 31, 2021. There were no outstanding borrowings under these facilities at June 30, 2022 and December 31, 2021.

Senior Notes

In December 2021, the Company issued $400 million of 2.375% senior notes due 2031 and $350 million of 2.90% senior notes due 2051. The Company used the net proceeds from these issuances for general corporate purposes, and repaid $500 million of 2.75% senior notes with an original maturity date of January 2022 in December 2021.

On April 15, 2021, the Company repaid $500 million of senior notes maturing in July 2021.

Fair Value of Short-term and Long-term Debt

The estimated fair value of the Company's short-term and long-term debt is provided below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or need to dispose of the financial instrument.

			June 30, 2022												December 31, 2021
(In millions)			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Short-term debt			$	1,311					$	1,312					$	17					$	17
Long-term debt			$	10,487					$	10,195					$	10,933					$	12,466

The fair value of the Company's short-term debt consists primarily of commercial paper and term debt maturing within the next year and its fair value approximates its carrying value. The estimated fair value of a primary portion of the Company's long-term debt is based on discounted future cash flows using current interest rates available for debt with similar terms and remaining maturities. Short-term and long-term debt would be classified as Level 2 in the fair value hierarchy.

Restructuring costs include Company initiated actions related to improving and streamlining the Company's global information technology and HR functions, JLT integration costs, improving efficiencies and client services related to the Marsh operational excellence program, and real estate related costs for exiting leased facilities.

For the three and six months ended June 30, 2022 , the Company incurred costs of $28 million and $58 million, respectively, reflecting $11 million and $26 million in RIS, $4 million and $11 million in Consulting, and $13 million and $21 million in Corporate related to these initiatives.

Details of the restructuring activity from January 1, 2021 through June 30, 2022, are as follows:

(In millions)			Severance						Real Estate Related Costs (a)						Information Technology						Consulting and Other Outside Services						Total
Liability at 1/1/21			$	52					$	51					$	2					$	1					$	106
2021 charges			38						31						23						71						163
Cash payments			(55)						(26)						(25)						(72)						(178)
Non-cash charges			—						(22)						—						—						(22)
Liability at 12/31/21			$	35					$	34					$	—					$	—					$	69
2022 charges			2						9						6						41						58
Cash payments			(29)						(12)						(4)						(35)						(80)
Non-cash charges			—						(4)						(2)						—						(6)
Liability at 6/30/22			$	8					$	27					$	—					$	6					$	41

(a) Includes ROU and fixed asset impairments and other real estate related costs.

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On March 23, 2022, the Board of Directors of the Company authorized an additional $5 billion in share repurchases. This is in addition to the Company's existing share repurchase program, which had approximately $1.3 billion of remaining authorization as of December 31, 2021.

During the first six months of 2022, the Company repurchased 7.0 million shares of its common stock for $1.1 billion. As of June 30, 2022, the Company remained authorized to repurchase up to approximately $5.2 billion in shares of its common stock. There is no time limit on the authorization.

During the first six months of 2021, the Company repurchased 3.4 million shares of its common stock for $445 million, of which approximately $434 million was paid through June 30, 2021.

The Company issued approximately 2.7 million and 2.6 million shares related to stock compensation and employee stock purchase plans during the first six months of 2022 and 2021, respectively.

Acquisition of Jardine Lloyd Thompson Group plc

On April 1, 2019, the Company completed its previously announced acquisition of all of the outstanding shares of JLT. Upon the consummation of the acquisition of JLT, the Company assumed the legal liabilities and became responsible for JLT’s litigation and regulatory exposures as of April 1, 2019.

Nature of Contingencies

The Company and its subsidiaries are subject to a significant number of claims, lawsuits and proceedings in the course of our business. Such claims and lawsuits consist principally of alleged errors and omissions in connection with the performance of professional services, including the placement of insurance, the provision of actuarial services for corporate and public sector clients, the provision of investment advice and investment management services to pension plans, the provision of advice relating to pension buy-out transactions and the provision of consulting services relating to the drafting and interpretation of trust deeds and other documentation governing pension plans. These claims often seek damages, including punitive and treble damages, in amounts that could be significant. In establishing liabilities for errors and omissions claims in accordance with FASB guidance on Contingencies - Loss Contingencies, the Company uses case level reviews by inside and outside counsel, and internal actuarial analysis by Oliver Wyman, a subsidiary of the Company, and other methods to estimate potential losses. A liability is established when a loss is both probable and reasonably estimable. The liability is reviewed quarterly and adjusted as developments warrant. In many cases, the Company has not recorded a liability, other than for legal fees to defend the claim, because we are unable, at the present time, to make a determination that a loss is both probable and reasonably estimable. To the extent that expected losses exceed our deductible in any policy year, the Company also records an asset for the amount that we expect to recover under any available third-party insurance programs. The Company has varying levels of third-party insurance coverage, with policy limits and coverage terms varying significantly by policy year.

Our activities are regulated under the laws of the United States and its various states, United Kingdom, the European Union and its member states, and the many other jurisdictions in which the Company operates. The Company also receives subpoenas in the ordinary course of business, and, from time to time, requests for information in connection with government investigations.

Current Matters

Risk and Insurance Services Segment

•In January 2019, the Company received a notice that the Administrative Council for Economic Defense anti-trust agency in Brazil had commenced an administrative proceeding against a number of insurance brokers, including both Marsh and JLT, and insurers “to investigate an alleged sharing of sensitive commercial and competitive confidential information" in the aviation insurance and reinsurance sector.

•In 2017, JLT identified payments to a third-party introducer that had been directed to unapproved bank accounts. These payments related to reinsurance placements made on behalf of an Ecuadorian state-owned insurer between 2014 and 2017. In early 2018, JLT voluntarily reported this matter to law enforcement authorities. In February and March 2020, money laundering charges were filed in the United States against a former employee of JLT, the principals of the third-party introducer and a former official of

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the state-owned insurer. These individuals, including the former JLT employee, have since pleaded guilty to criminal charges.

In March 2022, the U.S. Department of Justice (DOJ) issued a declination letter, declining to pursue any charges against any JLT entity and seeking disgorgement of $29 million in alleged gross profits on this account. As previously disclosed, the Company recorded a charge for this amount in the fourth quarter of 2021. In addition, in March 2022, the Colombian Superintendecia de Sociedades (SS) concluded its investigation of this matter and notified JLT of its intention to seek $2 million in civil penalties which was recorded in the first quarter of 2022.The SS issued its final resolution in May 2022. In June 2022, JLT reached an agreement to settle the investigation by the U.K. Financial Conduct Authority (FCA) for £7.9 million (or $11 million) in civil penalties which concluded the FCA’s investigation into this matter, and the Company recorded a charge for this amount in the second quarter of 2022.

•From 2014, Marsh Ltd. was engaged by Greensill Capital (UK) Limited as its insurance broker. Marsh Ltd. placed a number of trade credit insurance policies for Greensill. On March 1, 2021, Greensill filed an action against certain of its trade credit insurers in Australia seeking a mandatory injunction compelling these insurers to renew coverage under expiring policies. Later that day, the Australian court denied Greensill’s application. Since then, a number of Greensill entities have filed for, or been subject to, insolvency proceedings, and several litigations and investigations have been commenced in the U.K., Australia, Germany, Switzerland and the U.S.

Consulting Segment

•In 2014, the FCA conducted an industry-wide review of the suitability of financial advice provided to individuals by a number of companies, including JLT, relating to enhanced transfer value ("ETV") defined benefit pension transfers. In January 2015, the FCA notified JLT that it was commissioning a Skilled Person review of ETV pension transfer advice given by JLT and a business acquired by JLT in 2012. Following the Skilled Person review which took place between 2015 and 2018, JLT engaged a compliance consulting firm to conduct an analysis of approximately 14,000 individual files to assess the suitability of the advice provided and, where appropriate, the amount of redress to be paid. In February 2019, prior to the completion of its acquisition by the Company, JLT recorded a gross liability of £59 million (or $77 million). This preliminary estimate by JLT, reflected projected redress amounts based on the limited number of files examined as part of the Skilled person review and report. Thereafter, the FCA expanded the scope of the review. As of December 31, 2020, the updated redress liability, including the projected costs of completing the review, increased to £155 million (or $210 million) resulting from the expansion in the scope of the review, and the significant progress made in completing the individual suitability reviews. Payments of redress and expenses during 2021 and the first half of 2022 reduced the recorded liability to £6 million (or $8 million) as of June 30, 2022. The suitability review and calculation of redress for affected customers is now substantially complete, and the vast majority of redress payments have been made. Subject to customer engagement, we expect the remaining redress payments to be made by the end of the third quarter of 2022. This gross liability has been, and we anticipate will continue to be, partially offset by a contractual indemnity obligation and insurance recoveries from third-party E&O insurers.

At this time, we are unable to predict the likely timing, outcome or ultimate impact of the foregoing matters. Adverse determinations in one or more of these matters could have a material impact on the Company's consolidated results of operations, financial condition or cash flows in a future period.

Other Contingencies-Guarantees

In connection with its acquisition of U.K.-based Sedgwick Group in 1998, the Company acquired several insurance underwriting businesses that were already in run-off, including River Thames Insurance Company Limited ("River Thames"), which the Company sold in 2001. Sedgwick guaranteed payment of claims on certain policies underwritten through the Institute of London Underwriters (the "ILU") by River Thames. The policies covered by this guarantee are partly reinsured by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by funds withheld by River Thames from the reinsurer. To the extent River Thames or the reinsurer is unable to meet its obligations under those policies, a claimant may seek to recover from the Company under the guarantee.

From 1980 to 1983, the Company owned indirectly the English & American Insurance Company ("E&A"), which was a member of the ILU. The ILU required the Company to guarantee a portion of E&A's obligations. After E&A became insolvent in 1993, the ILU agreed to discharge the guarantee in exchange for the Company's agreement to post an evergreen letter of credit that is available to pay claims by policyholders on certain E&A policies issued through the

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ILU and incepting between July 3, 1980 and October 6, 1983. Certain claims have been paid under the letter of credit and the Company anticipates that additional claimants may seek to recover against the letter of credit.

* * * *

The pending proceedings described above and other matters not explicitly described in this Note 17 on Claims, Lawsuits and Other Contingencies may expose the Company or its subsidiaries to liability for significant monetary damages, fines, penalties or other forms of relief. Where a loss is both probable and reasonably estimable, the Company establishes liabilities in accordance with FASB guidance on Contingencies - Loss Contingencies.

Except as described above, the Company is not able at this time to provide a reasonable estimate of the range of possible loss attributable to these matters or the impact they may have on the Company's consolidated results of operations, financial position or cash flows. This is primarily because these matters are still developing and involve complex issues subject to inherent uncertainty. Adverse determinations in one or more of these matters could have a material impact on the Company's consolidated results of operations, financial condition or cash flows in a future period.

The Company is organized based on the types of services provided. Under this structure, the Company’s segments are:

•Risk and Insurance Services, comprising insurance services (Marsh) and reinsurance services (Guy Carpenter); and

•Consulting, comprising Mercer and Oliver Wyman Group.

The accounting policies of the segments are the same as those utilized for the consolidated financial statements described in Note 1, Summary of Significant Accounting Policies, in the Company’s 2021 Form 10-K. Segment performance is evaluated based on segment operating income, which includes directly related expenses, and charges or credits related to integration and restructuring but not the Company’s corporate-level expenses. Revenues are attributed to geographic areas on the basis of where the services are performed.

Selected information about the Company’s operating segments for the three and six months ended June 30, 2022 and 2021 is as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions)			Revenue						Operating Income (Loss)						Revenue						Operating Income (Loss)
2022–
Risk and Insurance Services			$	3,313		(a)			$	967					$	6,862		(c)			$	2,088
Consulting			2,084			(b)			475						4,094			(d)			867
Total Operating Segments			5,397						1,442						10,956						2,955
Corporate/Eliminations			(18)						(78)						(28)						(146)
Total Consolidated			$	5,379					$	1,364					$	10,928					$	2,809
2021–
Risk and Insurance Services			$	3,141		(a)			$	950					$	6,366		(c)			$	2,010
Consulting			1,892			(b)			344						3,765			(d)			705
Total Operating Segments			5,033						1,294						10,131						2,715
Corporate/Eliminations			(16)						(66)						(31)						(129)
Total Consolidated			$	5,017					$	1,228					$	10,100					$	2,586

(a) Includes inter-segment revenue of $5 million and $4 million in 2022 and 2021, respectively, interest income on fiduciary funds of $13 million and $3 million in 2022 and 2021, respectively, and equity method income of $7 million and $14 million in 2022 and 2021, respectively. Revenue for 2021 also includes $51 million primarily from the gain on the sale of the U.K. commercial networks business.

(b) Includes inter-segment revenue of $13 million and $12 million in 2022 and 2021, respectively. Revenue for 2022 also includes a gain on the sale of the Mercer U.S. affinity business of $112 million.

(c) Includes inter-segment revenue of $5 million and $4 million in 2022 and 2021, respectively, interest income on fiduciary funds of $17 million and $8 million in 2022 and 2021, respectively, and equity method income of $8 million and $17 million in 2022 and 2021, respectively. Revenue for 2022 also includes the loss on deconsolidation of the Russian businesses of $27 million. Revenue for 2021 also includes $53 million primarily from the gain on the sale of the U.K. commercial networks business.

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(d) Includes inter-segment revenue of $23 million and $27 million in 2022 and 2021, respectively. Revenue for 2022 also includes a gain on the sale of the Mercer U.S. affinity business of $112 million, partly offset by the loss on deconsolidation of the Russian businesses of $12 million.

Details of operating segment revenue for the three and six months ended June 30, 2022 and 2021 are as follows:

			Three Months Ended June 30,												Six Months Ended June 30,
(In millions)			2022						2021						2022						2021
Risk and Insurance Services
Marsh			$	2,787					$	2,652					$	5,336					$	4,981
Guy Carpenter			526						489						1,526						1,385
Total Risk and Insurance Services			3,313						3,141						6,862						6,366
Consulting
Mercer			1,389						1,274						2,732						2,562
Oliver Wyman Group			695						618						1,362						1,203
Total Consulting			2,084						1,892						4,094						3,765
Total Operating Segments			5,397						5,033						10,956						10,131
Corporate Eliminations			(18)						(16)						(28)						(31)
Total			$	5,379					$	5,017					$	10,928					$	10,100

New Accounting Pronouncement Adopted Effective January 1, 2022:

In October 2021, the FASB issued new guidance for measuring contract assets and contract liabilities acquired in a business combination. In accordance with the new guidance, contract assets and contract liabilities should be measured in accordance with the guidance for revenue from contracts with customers as opposed to the guidance for business combinations. The guidance must be applied on a prospective basis, and is effective for fiscal years beginning after December 15, 2022, including interim periods therein. Early adoption is permitted. The Company elected to adopt this new standard effective January 1, 2022. Adoption of this guidance did not have a material impact on the Company's financial position or results of operations.    

New Accounting Pronouncements Adopted Effective January 1, 2021:

In January 2020, the FASB issued guidance that addresses accounting for the transition into and out of the equity method and measuring certain purchased options and forward contracts to acquire investments. The standard takes effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company’s financial position or its results of operations.

In December 2019, the FASB issued guidance related to the accounting for income taxes. The standard removes specific exceptions in the current rules and eliminates the need for an organization to analyze whether the following apply in a given period: (a) exception to the incremental approach for intraperiod tax allocation; (b) exceptions to accounting for basis differences when there are ownership changes in foreign investments and (c) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The standard also is designed to improve financial statement preparers’ application of income tax-related guidance and simplify GAAP for (a) franchise taxes that are partially based on income; (b) transactions with a government that result in a step-up in the tax basis of goodwill; (c) separate financial statements of legal entities that are not subject to tax and (d) enacted changes in tax laws in interim periods. The standard takes effect for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The adoption of this standard did not have a material impact on the Company’s financial position or its results of operations.

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