LEADING
WITH PURPOSE
2021 Annual Report
we are
marsh
mclennan
We are 80,000+ colleagues in four global businesses united by a
common purpose—to make a difference in the moments that matter.
4 Marsh McLennan
Three commitments unite us as we strive to live our purpose:
SUCCEEDING
TOGETHER.
We are in business to
expand what’s possible
for our clients and each other.
ACCELERATING
IMPACT.
We embrace change and
create enduring client value.
ADVANCING
GOOD.
We strive to serve
the greater good.
Risk & Insurance Services
Consulting
Marsh
Insurance Broking
& Risk Management
Guy Carpenter
Reinsurance
& Capital Strategies
Mercer
Health, Wealth
& Career Consulting
Oliver Wyman
Strategy, Economic
& Brand Consulting
Marsh McLennan
1
Change is our
work. For us,
it’s always
about what
comes next.
Dan Glaser
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2 Marsh McLennan 2021 Annual Report
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To Our Shareholders,
Colleagues and Clients,
2021 was our company’s 150th year, and by almost
any measure the most successful in our history.
Marsh McLennan’s role has always been to advise clients
in times of change and challenge—times like these, as
the world continues to grapple with COVID-19 and its
cascading economic and societal effects.
Change is our work. For us, it’s always about what
comes next. Today our clients have new challenges that
are increasingly complex, transcending institutional
experience, business units and competitive arenas.
Every organization wants to build greater resilience to
potential shocks and the agility to shape its own future.
With expertise spanning risk, strategy and people, Marsh
McLennan’s daily participation in virtually every industry
and every market provides us with unique insight into
what’s changing in and around the ecosystems that
affect each of our clients.
As we continue to help our clients act decisively across
more dimensions of their business, we’re growing at the
highest rate in a generation. Our unique value comes
from having the talent, the scope and the scale to change
what is possible, and more than 80,000 colleagues who
are champions for their clients and for each other. It all
begins with people, and we are investing as never before
to support our clients.
Our organization is more dynamic and more cohesive
than it was just a few years ago: one Marsh McLennan,
poised for great things. I’d like to introduce you to three
leaders who are taking on new roles to help unlock the
potential that we have created.
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Marsh McLennan. John is an indispensable partner and
essential part of our company’s success, and he will work
even more closely with me and our business CEOs on
enterprise initiatives that will shape our future.
Taking over as President and CEO of Marsh is Martin
South, who has run most of the business’s largest
regions during his exemplary 27-year career at Marsh.
Dean Klisura, a 30-year company veteran who served in
executive leadership roles at Marsh before joining Guy
Carpenter last year as President, is now President and
CEO. Dean succeeds Peter Hearn, who continues as a
Vice Chair of Marsh McLennan, focusing on sales and
colleague development. I’m grateful to Peter for his
stellar leadership during his tenure at Guy Carpenter
and looking forward to his ongoing contributions.
John, Martin and Dean are change-makers. Along with
the other exceptional leaders on our Executive Committee,
they make Marsh McLennan better, not just more
successful. They are the right individuals in the right
positions as we embark on the next phase of our growth.
These leadership moves are further examples of the
deep bench of talent we’ve developed at Marsh McLennan
and the seamless process we’ve built to manage
orderly succession.
This is an extraordinary moment for Marsh McLennan
and the world. In addition to the ongoing pandemic and
escalating geopolitical tensions, the risk landscape is
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strengthening climate action, to enhancing digital
security, to supporting livelihoods and societal cohesion.
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our purpose has never been clearer: we exist to make a
difference in the moments that matter—to our clients, to
our colleagues, and to the communities we serve
around the globe.
I am excited to bring you up to date on what has been
an outstanding year.
Marsh McLennan 2021 Annual Report 3
SUCCEEDING TOGETHER:
A BANNER YEAR
Marsh McLennan has experienced tremendous growth
over the past few years, becoming a stronger and more
dynamic company. Growth doesn’t just happen—it
takes a clear vision, alignment, commitment and
consistent execution.
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talent, technology and unifying our enterprise—and we
continued to invest meaningfully in these areas to secure
our future.
Among the many performance highlights from the year
was our total revenue growth of 15%, our highest annual
growth rate in more than two decades, including 2019,
when we acquired JLT, the largest acquisition in our history.
Marsh and Guy Carpenter together produced the highest
underlying revenue growth in nearly two decades for our
risk and insurance services segment, while Mercer and Oliver
Wyman delivered their best growth in 13 years and 17 years,
respectively, for our consulting segment. Both segments
posted double-digit net operating income (NOI) growth.
Our bottom-line performance was just as impressive. We
delivered 24% adjusted earnings per share (EPS) growth,1
the highest in more than 20 years, and 2021 was the 14th
consecutive year we reported margin expansion.
Since the closing of our JLT acquisition in 2019, we’ve grown
our total consolidated revenue by 32%, our adjusted EPS by
37% and our colleague base by 24%.
We are comfortable with the tension between delivering
short-term results and investing for long-term growth, and
we consistently manage that balance well. We continue to
invest boldly in what comes next. In 2021, strategic hiring
propelled growth of 8% in our headcount globally, while
ongoing investments in technology and digital capabilities
further enhanced our client and colleague experience. We
pursued inorganic growth opportunities, highlighted by
Marsh McLennan Agency’s (MMA’s) acquisition of PayneWest
Insurance in the key US middle market segment, Oliver
Wyman’s acquisition of Huron’s life sciences business
and the increase in our ownership of Marsh India from
49% to 92%.
Along with reinvesting in our business, we continued
our portfolio optimization efforts throughout the year,
including the sale of Marsh’s UK Networks business and
Mercer’s Pension Administration business in Brazil. Across
our organization, we also took steps to further improve
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Operational Excellence program and the buildout of
centers of excellence in India and other regions.
We have substantial momentum in each of our four global
businesses. When we consider factors such as the ongoing
demand for our expertise, the outlook for above-average
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our recent organic investments, we continue to see a
strong runway for growth in 2022.
1 For a reconciliation of non-GAAP results to GAAP results, as related to all
non-GAAP references presented in this letter, please refer to the Company’s
Form 8-K, dated January 27, 2022, available on the Company’s website at
marshmclennan.com.
4 Marsh McLennan 2021 Annual Report
Delivering Through
the Decades
Generating impressive results is something we’ve
done throughout our 150-year history. Since going
public in 1962, we have grown:
Revenue from $52 MILLION to nearly
$20 billion
Adjusted EPS from 2 CENTS PER SHARE to over
$6 per share*
* Split adjusted
Headcount from 3,000 COLLEAGUES to
83,000
This translates to an average of 11%
revenue growth, 10% adjusted EPS growth
and 6% headcount growth each year over
this six-decade period.
Our sustained performance is a testament to the
value that Marsh McLennan delivers for clients,
colleagues and shareholders.
Marsh McLennan 2021 Annual Report 5
Investing in Our Future
Remaining relevant for 150 years (and counting)
requires constant innovation and investment. Here
are a few recent examples of how we’re carrying this
legacy forward:
The Marsh McLennan Cyber Risk Analytics
Center brings together cyber risk data and analytics
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a comprehensive assessment of their cyber threats,
existing and future controls, and the potential
economic impact.
Oliver Wyman’s Climate Action Navigator helps
public- and private-sector leaders plot a path through
climate science by identifying emissions at the industry
and regional levels, and quantifying the effects of
different carbon-reduction technologies and actions.
These tools help business and government leaders to
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enable the transition to low-carbon, climate-resilient
investment in the corporate sector.
Mercer’s Skills-Edge is an innovative platform that
allows employers to determine the most important
skills for their future—and design a talent strategy to
assess, acquire and retain them. Skills-Edge provides
quantitative insight into the demand and value of skills,
and supports both employees and organizations in
rapidly reskilling for the future of work.
6 Marsh McLennan 2021 Annual Report
ACCELERATING IMPACT
Today we’re living in an age of rapid change, with urgency on issues ranging from
climate change and racial justice to the COVID-19 pandemic, which has affected
businesses, industries and economies in vastly different ways.
With expertise that spans virtually every industry and an unmatched breadth of capabilities,
Marsh McLennan is strongly positioned to help our clients navigate the complexities of the
“new normal.” Whether it’s advising employers on how to meet the evolving needs of their
workforce, helping build more resilient supply chains, accelerating digital health programs
or mitigating business interruption risks, myriad issues heightened by the pandemic continue
to drive demand for our services. Our work extends far beyond these areas, however.
Take cyber risk, for example. More and more, we’re working across our businesses to
harness our collective expertise, data insights and relationships with public and private
partners to help clients become more resilient. Our growth and participation in cyber extends
well beyond the placement of insurance; in October, we launched the Marsh McLennan Cyber
Risk Analytics Center to provide clients with a comprehensive view of everything from their
cyber threats to the economic impact of their exposure.
We’re also drawing on the best of Marsh McLennan to help our clients anticipate climate
risks and opportunities. At Marsh and Guy Carpenter, we’re assisting clients with stress-
testing models, quantifying the impact of climate change, and providing risk management
and insurance services to protect against climate impacts. Mercer’s Sustainable Investment
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changing climate could impact investment returns. And, in addition to working with our
insurance businesses to support clients in their transition to a low-carbon economy, Oliver
Wyman has partnered with S&P Global Market Intelligence to launch Climate Credit
Analytics, a suite of tools that helps companies evaluate the impact of different climate-
related scenarios on their counterparties and investments.
As we work side by side to address climate and cyber issues, we’re also working with public
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to close protection gaps created by acute events and chronic trends. And we’re focused on
improving health, well-being and resilience by addressing risk, strategy and people issues
faced by society, businesses and the healthcare sector. The world’s challenges are our
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priority for John Doyle in his new role.
Marsh McLennan 2021 Annual Report 7
We are comfortable with the
tension between delivering
short-term results and investing
for long-term growth.
Annual revenue of
$19.8
billion
Record
high
Adjusted operating
income of $4.3 billion
Closed transactions
totaling more than
$16
billion
across 220+ acquisitions
and investments since 2009
8 Marsh McLennan 2021 Annual Report
23.9%
Consolidated adjusted
margin—an increase
of 1,510 basis points
since 2008
14
Consecutive
Years
of adjusted EPS growth
12
Consecutive
Years
of underlying revenue growth
and dividend increases
Marsh McLennan 2021 Annual Report 9
ADVANCING GOOD
Marsh McLennan is a company of ideas and ideals.
Our work enables innovation and investment, and
helps leaders shape their industries to the future.
We help organizations align their efforts around new
goals, build compelling cultures and help their people
be their best.
We have the immense privilege of doing work that
matters—and work that serves the greater good, touching
lives directly. This made for some standout moments
last year, from Marsh’s partnership on an innovative
risk structure that’s helping Gavi, the Vaccine Alliance,
expedite delivery of COVAX vaccines around the globe,
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a UN-sponsored entity that’s safeguarding the world’s
crop diversity for future food security, to Oliver Wyman’s
work with UNHCR, the UN Refugee Agency, to reduce the
environmental impacts of refugee situations—and design
a sustainable fund that will provide lasting protection
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In 2021 our company achieved CarbonNeutral®
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This is an example of our philosophy of earning trust by
doing the right thing and aligning our own actions with
the advice we give to our clients. Environmental, social
and governance (ESG) considerations have been central
to our decision-making since 2008. We advocate for ESG
principles in our client work and publish an annual report
on our own progress.
Our colleagues act out of purpose that extends beyond
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support directly to organizations that need them. Last year,
they gave 136,000 volunteer hours to the communities we
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to causes they care about matched by the company—and
double-matched for organizations committed to advancing
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of the 20th(cid:2362)(cid:44)(cid:57)(cid:57)(cid:52)(cid:65)(cid:48)(cid:61)(cid:62)(cid:44)(cid:61)(cid:68)(cid:2362)(cid:58)(cid:49)(cid:2362)(cid:3004)(cid:2994)(cid:2996)(cid:2996)(cid:2991)(cid:2362)(cid:44)(cid:2362)(cid:59)(cid:61)(cid:58)(cid:50)(cid:61)(cid:44)(cid:56)(cid:2362)(cid:63)(cid:51)(cid:44)(cid:63)(cid:2362)(cid:45)(cid:48)(cid:57)(cid:48)(cid:529)(cid:63)(cid:48)(cid:47)(cid:2362)
(cid:56)(cid:58)(cid:61)(cid:48)(cid:2362)(cid:63)(cid:51)(cid:44)(cid:57)(cid:2362)(cid:2998)(cid:2995)(cid:2995)(cid:2362)(cid:57)(cid:58)(cid:57)(cid:2992)(cid:59)(cid:61)(cid:58)(cid:529)(cid:63)(cid:62)(cid:2362)(cid:44)(cid:61)(cid:58)(cid:64)(cid:57)(cid:47)(cid:2362)(cid:63)(cid:51)(cid:48)(cid:2362)(cid:66)(cid:58)(cid:61)(cid:55)(cid:47)(cid:2993)
10 Marsh McLennan 2021 Annual Report
We can do more for our clients and communities because
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more for each other. For all its disruptions, COVID-19
showed what extraordinary professionals can achieve.
Since the beginning of the pandemic, we’ve hired more
than 26,000 people, many of whom have never met
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performance has never been better. That’s a testament
to our individual colleagues and also to the power of
our culture.
I like to say we are a “brains business.” We don’t
manufacture things, we put ideas together—which come
from putting people together. The most important single
thing we can do as an organization is to foster a sense
of belonging among our colleagues, so every individual
feels that they belong at Marsh McLennan and that their
ideas matter.
We continue to build on our efforts to foster greater
inclusion and diversity within our company and social
justice in the societies around us. In 2021, we completed
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efforts aimed at developing leaders from within our
ranks and creating a more diverse and representative
talent pipeline. We also expanded the reach of LGBT Pride
resource groups for colleagues in Latin America and
South Africa, and rallied our UK businesses in pursuit of
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(cid:50)(cid:48)(cid:57)(cid:48)(cid:61)(cid:44)(cid:63)(cid:52)(cid:58)(cid:57)(cid:2362)(cid:58)(cid:49)(cid:2362)(cid:17)(cid:55)(cid:44)(cid:46)(cid:54)(cid:2362)(cid:48)(cid:67)(cid:48)(cid:46)(cid:64)(cid:63)(cid:52)(cid:65)(cid:48)(cid:62)(cid:2362)(cid:66)(cid:51)(cid:58)(cid:2362)(cid:66)(cid:52)(cid:55)(cid:55)(cid:2362)(cid:45)(cid:48)(cid:2362)(cid:530)(cid:64)(cid:48)(cid:57)(cid:63)(cid:2362)(cid:52)(cid:57)(cid:2362)(cid:63)(cid:51)(cid:48)(cid:2362)
intersection of business and social justice, we established a
fellowship program, RISE, with partners Fisk University and
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organizations for long-term partnerships for advancing
equity for the Black community in the US and UK.
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leadership looks like—and feels like to others—and
consider elements such as displaying humility and
unlocking people’s full potential to be as important as
driving growth and delivering results. At Marsh McLennan,
leadership is a mindset, not a title; we expect all of our
colleagues to lead.
Read more about our ESG advocacy and inclusion and diversity
efforts in our 2021 ESG report on marshmclennan.com.
Read more about our ESG advocacy and inclusion and diversity
Our colleagues
act out of
purpose that
extends beyond
commercial
success.
RECOGNITIONS
For the fourteenth time, Marsh McLennan earned a perfect score on the Human Rights Campaign’s Corporate Equality Index. Marsh
(cid:48)(cid:70)(cid:47)(cid:72)(cid:81)(cid:81)(cid:68)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:564)(cid:72)(cid:71)(cid:3)CarbonNeutral® company as of September 2021. For the fourth year in a row, Marsh McLennan has been named
to the Bloomberg Gender-Equality Index. Marsh McLennan was also recognized as one of the 2022 World’s Most Ethical Companies®
“World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC.
Marsh McLennan 2021 Annual Report 11
Clients seek
us out because
they need holistic
approaches to
realize what
comes next.
12 Marsh McLennan 2021 Annual Report
LOOKING AHEAD
This is an uncertain time. The catalog of the world’s most present perils in The Global Risks
Report 2022 is a somber one. The annual report, which Marsh McLennan helps produce
alongside the World Economic Forum, found that 84% of risk experts and business leaders
surveyed are either concerned or worried about the outlook for the world.
They are not wrong. The question for leaders is: What are we going to do about it? The
outlook may be uncertain but the status quo is not an option. Leadership is always about what
comes next. We need to look past uncertainty to the possibilities beyond, and act decisively in
our sphere.
Risk is a reality in all facets of life. It doesn’t have to be a barrier. Our company has spent the last
150 years learning to anticipate, mitigate and manage risks of every kind. Almost all of the risks
that our company grew up with—environmental, political, cyber, terrorism, trade credit, to name
just a few—have since become routine parts of business and life. They are still there, but we’ve
learned how to manage them so that progress can continue.
Today, Marsh McLennan also advises clients on strategy, and helps them align their operations
and their people to new opportunities as well as unfamiliar challenges. No competitor can match
the scope and the depth of expertise that we have now built at our company.
Clients seek us out because they need holistic approaches to realize what comes next, and we
have reach across institutions, industries and borders.
Our outstanding performance in 2021, our ongoing investments in our business and the
purposeful evolution of our leadership all bolster our industry-leading position—and our ability
to bring the best of our businesses together to help our clients and our communities meet new
challenges and create new possibilities. We believe demand for our solutions will remain strong,
given rising levels of complexity, volatility and uncertainty across the economic landscape,
supporting growth in 2022 and beyond.
I would like to thank Marsh McLennan’s Board of Directors and its independent Chair, Ed
Hanway. Our sustained level of investment in talent and other critical aspects of our business
would not be possible without their guidance and wisdom.
Thank you to our clients for the opportunity to earn their trust every day, and to our colleagues
for their commitment, hard work and dedication. Finally, I thank our investors around the world
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Building on the momentum of our 150th anniversary and our 2021 results, we look forward to
writing the next chapter of Marsh McLennan’s growth.
Best regards,
Dan Glaser
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Marsh McLennan
February 16, 2022
Marsh McLennan 2021 Annual Report 13
Our Board of Directors
Anthony K. Anderson
Former Vice Chair and
Midwest Area Managing Partner,
Ernst & Young LLP
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Former President and Co-CEO,
First Republic Bank
Oscar Fanjul
Vice Chairman, Omega Capital
Founding Chairman and Former
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Repsol
Daniel S. Glaser
President and
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Marsh McLennan
H. Edward Hanway
Former Chairman and
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CIGNA Corporation
Deborah C. Hopkins
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of Citi Ventures and
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Citigroup
Tamara Ingram
Former Global Chairman,
Wunderman Thompson
14 Marsh McLennan 2021 Annual Report
Jane Lute
Strategic Director,
SICPA North America
Steven A. Mills
Former Executive Vice President,
Software & Systems,
International Business
Machines Corporation (IBM)
Bruce P. Nolop
Former Executive Vice President
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E*TRADE Financial Corporation
Marc D. Oken
Chairman,
Falfurrias Capital Partners
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Bank of America Corporation
Morton O. Schapiro
President and
Professor of Economics,
Northwestern University
Lloyd M. Yates
President and
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NiSource Inc.
R. David Yost
Former President and
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AmerisourceBergen
Our Executive Committee
Daniel S. Glaser
President and
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Marsh McLennan
Paul Beswick
Senior Vice President and
(cid:18)(cid:51)(cid:52)(cid:48)(cid:49)(cid:2362)(cid:24)(cid:57)(cid:49)(cid:58)(cid:61)(cid:56)(cid:44)(cid:63)(cid:52)(cid:58)(cid:57)(cid:2362)(cid:30)(cid:562)(cid:46)(cid:48)(cid:61)(cid:2991)
Marsh McLennan
Kate Brennan
Senior Vice President and
General Counsel,
Marsh McLennan
John Q. Doyle
Group President,
(cid:18)(cid:51)(cid:52)(cid:48)(cid:49)(cid:2362)(cid:30)(cid:59)(cid:48)(cid:61)(cid:44)(cid:63)(cid:52)(cid:57)(cid:50)(cid:2362)(cid:30)(cid:562)(cid:46)(cid:48)(cid:61)(cid:2362)(cid:44)(cid:57)(cid:47)(cid:2362)
Vice Chair, Marsh McLennan
Martine Ferland
President & CEO, Mercer
Vice Chair, Marsh McLennan
Carmen Fernandez
Senior Vice President and
(cid:18)(cid:51)(cid:52)(cid:48)(cid:49)(cid:2362)(cid:31)(cid:48)(cid:58)(cid:59)(cid:55)(cid:48)(cid:2362)(cid:30)(cid:562)(cid:46)(cid:48)(cid:61)(cid:2991)
Marsh McLennan
Dean Klisura
President & CEO,
Guy Carpenter
Vice Chair, Marsh McLennan
Mark McGivney
(cid:18)(cid:51)(cid:52)(cid:48)(cid:49)(cid:2362)(cid:21)(cid:52)(cid:57)(cid:44)(cid:57)(cid:46)(cid:52)(cid:44)(cid:55)(cid:2362)(cid:30)(cid:562)(cid:46)(cid:48)(cid:61)(cid:2991)
Marsh McLennan
Martin South
President & CEO, Marsh
Vice Chair, Marsh McLennan
Nick Studer
President & CEO,
Oliver Wyman Group
Vice Chair, Marsh McLennan
Marsh McLennan 2021 Annual Report 15
Companies like ours have enormous power to shape the future through
investment, expertise and the advice that we provide to a world of clients.
Here are some of the principles that we try to live by as a public entity.
WE RESPECT
the dignity and worth of
every person. We work to
advance human rights and
social and workplace
equality everywhere we
do business.
WE CHAMPION
liberal democracy and the
power of free enterprise to
change what is possible. We
embrace globalization and
cooperative action to address
the world’s great challenges
and create new opportunities
for its citizens.
WE BELIEVE
that the best solutions haven’t
been invented yet. Investment
and policy decisions should look
forward, not backward; outward,
not inward; and they should be
based on objective evidence.
WE SUPPORT
the rule of law, sustained
alliances based on shared
values, and keeping
commitments.
WE STAND FOR
enabling enterprise around
the world and a better future
for all.
WE REJECT
racism, bigotry, homophobia
and xenophobia, and
condemn any stance that
limits people’s possibilities
because of who they are
or the circumstances that
surround them.
16 Marsh McLennan 2021 Annual Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________
FORM 10-K
_____________________________________________
(Mark One)
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2021
OR
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File No. 1-5998
_____________________________________________
Marsh & McLennan Companies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
36-2668272
(I.R.S. Employer Identification No.)
1166 Avenue of the Americas
New York, New York 10036-2774
(Address of principal executive offices; Zip Code)
(212) 345-5000
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $1.00 per share
Trading symbol(s)
MMC
Name of each exchange on which registered
New York Stock Exchange
Chicago Stock Exchange
London Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting Company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting Company" in Rule 12b-2 of
the Exchange Act. (Check one):
Large Accelerated Filer
Non-Accelerated Filer
☒
☐
Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
As of June 30, 2021, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was
approximately 53,818,358,381 computed by reference to the closing price of such stock as reported on the New York Stock Exchange
on June 30, 2021.
As of February 10, 2022, there were outstanding 502,765,629 shares of common stock, par value $1.00 per share, of the registrant.
Yes ☒ No ¨
Yes ☐ No ý
Auditor Name:
Deloitte & Touche LLP Auditor Location: New York, New York Auditor Firm ID:
34
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Marsh & McLennan Companies, Inc.’s Notice of Annual Meeting and Proxy Statement for the 2022 Annual Meeting of
Stockholders (the "2022 Proxy Statement") are incorporated by reference in Part III of this Form 10-K.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains "forward-looking statements," as defined in the Private Securities
Litigation Reform Act of 1995. These statements, which express management's current views concerning future
events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend,"
"plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should,"
"will" and "would".
Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to
differ materially from those expressed or implied in our forward-looking statements. Factors that could
materially affect our future results include, among other things:
•
•
•
•
•
•
•
•
•
•
the impact from lawsuits or investigations arising from errors and omissions, breaches of fiduciary duty
or other claims against us in our capacity as a broker or investment advisor;
the increasing prevalence of ransomware, supply chain and other forms of cyber attacks, and their
potential to disrupt our operations and result in the disclosure of confidential client or company
information;
the financial and operational impact of complying with laws and regulations including anti-corruption
laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act and cybersecurity and data
privacy regulations, in an environment of increased regulatory activity and enforcement;
our ability to attract, retain and fully develop industry leading talent;
the impact of and uncertainty around COVID-19;
the impact of macroeconomic, political or market conditions on us, our clients and the industries in
which we operate, including from inflation, foreign exchange and interest rate fluctuations;
our ability to compete effectively and adapt to changes in the competitive environment, including to
respond to technological change, disintermediation, digital disruption and other types of innovation;
our ability to manage risks associated with our investment management and related services business,
particularly in the context of uncertain equity markets, including our ability to execute timely trades in
light of increased trading volume and to manage potential conflicts of interest;
the impact of changes in tax laws, guidance and interpretations, or disagreements with tax authorities;
and
the regulatory, contractual and reputational risks that arise based on insurance placement activities
and insurer revenue streams.
The factors identified above are not exhaustive. Further information concerning Marsh McLennan and its
businesses, including information about factors that could materially affect our results of operations and
financial condition, is contained in the Company's filings with the Securities and Exchange Commission,
including the "Risk Factors" section in Part I, Item 1A of this report and the "Management’s Discussion and
Analysis of Financial Condition and Results of Operations" section in Part II, Item 7 of this report. Marsh
McLennan and its subsidiaries operate in a dynamic business environment in which new risks emerge
frequently. Accordingly, we caution readers not to place undue reliance on any forward-looking statements,
which are based only on information currently available to us and speak only as of the dates on which they are
made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect
events or circumstances arising after the date on which it is made.
i
TABLE OF CONTENTS
Information Concerning Forward-Looking Statements
PART I
Item 1 —
Item 1A —
Item 1B —
Item 2 —
Item 3 —
Item 4 —
PART II
Item 5 —
Item 6 —
Item 7 —
Item 7A —
Item 8 —
Item 9 —
Item 9A —
Item 9B —
PART III
Item 10 —
Item 11 —
Item 12 —
Item 13 —
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for the Company’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director
Independence
Item 14 —
Principal Accountant Fees and Services
PART IV
Item 15 —
Item 16 —
Signatures
Exhibits and Financial Statement Schedules
Form 10-K Summary
i
1
14
33
33
34
34
35
36
37
55
57
117
117
119
120
120
120
120
120
121
134
135
ii
Item 1. Business.
PART I
References in this report to "we", "us" and "our" are to Marsh & McLennan Companies, Inc. and its
consolidated subsidiaries (the "Company" or "Marsh McLennan"), unless the context otherwise requires.
GENERAL
Marsh McLennan is the world's leading professional services firm in the areas of risk, strategy and
people. The Company's 83,000 colleagues advise clients in over 130 countries. With annual revenue of
nearly $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex
environment through four market-leading businesses. Marsh provides data-driven risk advisory services
and insurance 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. Mercer delivers advice and technology-driven solutions that help organizations redefine the
world of work, reshape retirement and investment outcomes, and unlock health and well being for a
changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private
sector and governmental clients.
The Company conducts business through two segments:
•
•
Risk and Insurance Services includes risk management activities (risk advice, risk transfer and
risk control and mitigation solutions) as well as insurance and reinsurance broking and services.
The Company conducts business in this segment through Marsh and Guy Carpenter.
Consulting includes health, wealth and career services and products, and specialized
management, economic and brand consulting services. The Company conducts business in this
segment through Mercer and Oliver Wyman Group.
We describe our current segments in further detail below. We provide financial information about our
segments in our consolidated financial statements included under Part II, Item 8 of this report.
OUR BUSINESSES
RISK AND INSURANCE SERVICES
The Risk and Insurance Services segment generated approximately 61% of the Company's total revenue
in 2021 and employs approximately 48,800 colleagues worldwide. The Company conducts business in
this segment through Marsh and Guy Carpenter.
MARSH
Marsh is the world's leading insurance broker and risk advisor, serving companies, institutions and
individuals. From its founding in 1871 to the present day, Marsh has demonstrated a commitment to
thought leadership, innovation and insurance expertise to meet its clients’ needs. Marsh’s pioneering
contributions include introducing the practice of client representation through brokerage, the discipline of
risk management, the globalization of risk management services and the development of service
platforms that identify, quantify, mitigate and transfer risk.
Currently, approximately 45,400 Marsh colleagues provide risk management, insurance broking,
insurance program management, risk consulting, analytical modeling and alternative risk financing
services to a wide range of businesses, government entities, professional service organizations and
individuals in more than 130 countries. Marsh generated approximately 52% of the Company's total
revenue in 2021.
Insurance Broking and Risk Advisory
In its core insurance broking and risk advisory business, Marsh employs a team approach to identify,
quantify and address clients' risk management and insurance needs. Marsh’s product and service
offerings include risk analysis, insurance program design and placement, insurance program support and
administration, claims support and advocacy, alternative risk strategies and a wide array of risk analysis
and risk management consulting services. Clients benefit from Marsh’s advanced analytics, deep
technical expertise, specialty and industry knowledge, collaborative global culture and the ability to
1
develop innovative solutions and products. The firm’s resources also include nearly three dozen specialty
and industry practices, including cyber, marine, renewable energy, healthcare, and financial and
professional service practices, along with ESG products such as our D&O insurance initiative recognizing
U.S. based clients with superior ESG frameworks, and an established employee health & benefits
business.
Marsh provides services to clients of all sizes, including large multinational companies ("Risk
Management"), high growth middle-market businesses ("Corporate"), small commercial enterprises and
high net-worth private clients, and affinity group members ("Commercial & Consumer"). Marsh's
segments are designed to build stronger value propositions and operating models to optimize solutions
and services for clients depending on their needs.
Risk Management. Marsh has an extensive global footprint and market-leading advisory and placement
services that benefit large domestic and international companies and institutions facing complex risk
exposures. These clients are also supported by Marsh’s robust analytics and a growing digital experience.
In addition, Marsh’s largest global clients are serviced by Marsh Multinational, a dedicated team of
colleagues from around the world focused on delivering service excellence and insurance solutions to
clients wherever they are located. Marsh is digitizing the client experience through tools such as LINQ,
Marsh’s account and service application; Blue[i], a suite of analytics tools for clients; and Bluestream, a
digital brokerage platform that enables clients to provide insurance to their customers or suppliers in a
B2B2C distribution model. Marsh provides global expertise and an intimate knowledge of local markets,
helping clients navigate local regulatory environments to address the worldwide risk issues that confront
them.
• Marsh Specialty. Marsh Specialty is a leading global specialty broker. This unit offers leading
expertise, global service and data-driven insights to clients across seven global specialties:
aviation; credit specialties; financial & professional services; private equity & mergers &
acquisitions; construction; energy & power; and marine & cargo. These teams of specialist
experts are globally committed to delivering consulting, placement, account management and
claims solutions to clients who require specialist advice and support.
Corporate. Middle market clients are served by Marsh’s brokerage operations globally; the Corporate
segment constitutes a substantial majority of clients served by Marsh & McLennan Agency (MMA) in the
United States, and a large portion of Marsh’s international business.
• MMA offers a broad range of commercial property and casualty products and services, as well as
solutions for employee health and benefits, retirement and administration needs and a growing
personal lines business in the United States and Canada. Since its first acquisition in 2009, MMA
has acquired 94 agencies. MMA provides advice on insurance program structure and market
dynamics, along with industry expertise and transactional capability.
Commercial & Consumer. Clients in this market segment typically face less complex risks and are
served by Marsh’s innovative product and placement offerings and growing capabilities in digitally
enabled distribution.
•
Victor Insurance Holdings (Victor) is one of the largest underwriting managers of professional
liability and specialty insurance programs worldwide. In the United States, Victor Insurance
Managers (US) and ICAT Managers deliver risk management and insurance solutions to insureds
through a national third-party distribution network of licensed brokers. Through Dovetail Managing
General Agency, a small business platform, Victor deploys cloud-based technology to enable
independent insurance agents, on behalf of their small business clients, to obtain online quotes
from multiple insurance providers and bind property and casualty and workers compensation
insurance policies in real time. Victor Insurance Managers (Canada), a leading managing general
agent in Canada, delivers professional liability and construction insurance and administers group
and retiree benefits programs and claims handling operations for individuals, organizations and
businesses. Victor also has a business in the UK and in Europe, where businesses have been
launched in the Netherlands, Italy and Germany. In addition, Victor manages Torrent
Technologies, a service provider to Write Your Own (WYO) insurers participating in the National
2
Flood Insurance Program (NFIP) in the United States. Torrent offers both NFIP and private and
excess flood insurance products and services to WYO companies and agents.
• Marsh Affinity focuses on insurance programs sold to insureds or vendors through a corporate
sponsor using an affinity distribution model.
•
High Net Worth (HNW). Individual high net worth clients and family offices are serviced by MMA
and other Marsh personal lines businesses globally. These businesses provide a single-source
solution for high net worth clients and are dedicated to sourcing protections across a broad
spectrum of risk. Using a consultative approach, Marsh's HNW practices analyze exposures and
customize programs to cover individual clients with complex asset portfolios.
Additional Services and Adjacent Businesses
In addition to insurance broking, Marsh provides certain other specialist advisory or placement services:
Marsh Advisory is a global practice comprising specialists who use data and analytics, including through
Marsh’s Blue[i] digital analytics platform, to advise clients about exposures, critical business activities, and
risk practices and strategies. Marsh Advisory provides client services in four main areas: Consulting
Solutions, Analytics Solutions, Claims Solutions, and Captive Solutions.
Marsh Captive Solutions, a prominent part of the Marsh Advisory practice, provides services to captive
facilities, including single-parent captives, reinsurance pools and risk retention groups. The Captive
Solutions practice operates in captive domiciles across the globe and leverages the consulting expertise
within Marsh’s brokerage offices worldwide. The practice includes the Captive Advisory Group, a
consulting arm that performs captive feasibility studies and helps to structure and implement captive
solutions; the Captive Management Group, an industry leader in managing captive facilities and in
providing administrative, consultative and insurance-related services; and the Actuarial Services Group,
which is comprised of credentialed actuaries and supporting actuarial analysts.
Bowring Marsh is an international placement broker primarily for property and casualty risks. Bowring
Marsh uses placement expertise in major international insurance market hubs, including Bermuda, China,
United Arab Emirates, Ireland, Spain, United Kingdom, the United States, Singapore, Japan and
Switzerland, and an integrated global network to secure advantageous terms and conditions for its clients
throughout the world.
Mercer Marsh Benefits provides health benefits brokerage services and consulting to clients of all sizes
in numerous countries across the globe, outside of the United States. As described below, Mercer and
Marsh go to market together to provide strategic advice and services to minimize risk, optimize benefits
structure, and maximize employee engagement.
Services for Insurers
Insurer Consulting Group provides services to insurance carriers. Through Marsh's patented electronic
platform, MarketConnect, and sophisticated data analysis, Marsh provides insurers with individualized
preference setting and risk identification capabilities, as well as detailed performance data and metrics.
Insurer consulting teams review performance metrics and preferences with insurers and provide
customized consulting services to insurers designed to improve business planning and strategy
implementation. Marsh's Insurer Consulting services are designed to improve the product offerings
available to clients, assist insurers in identifying new opportunities and enhance insurers’ operational
efficiency. The scope and nature of the services vary by insurer and by geography.
3
GUY CARPENTER
Guy Carpenter, the Company’s reinsurance intermediary and advisor, generated approximately 9% of the
Company's total revenue in 2021. Currently, approximately 3,400 Guy Carpenter colleagues provide
clients with a combination of specialized reinsurance broking expertise, strategic advisory services and
analytics solutions. Guy Carpenter creates and executes reinsurance and risk management solutions for
clients worldwide through risk assessment analytics, actuarial services, highly-specialized product
knowledge and trading relationships with reinsurance markets. Client services also include contract and
claims management and fiduciary accounting.
Acting as a broker or intermediary on all classes of reinsurance, Guy Carpenter places two main types of
property casualty and life / health reinsurance: treaty reinsurance, which involves the transfer of a
portfolio of risks; and facultative reinsurance, which involves the transfer of part or all of the coverage
provided by a single insurance policy.
Guy Carpenter provides reinsurance services in a broad range of centers of excellence and segments,
including: Automobile / Motor, Aviation, Captives, Crop/Agriculture, Cyber, D&O/Non-Medical
Professional, Engineering / Construction, Environmental, Financial Lines, Health, InsurTech, Life, Marine
and Energy, Medical Professional, Personal Lines, Mortgage, Political Risk & Trade Credit, Primary &
Excess Casualty, Program Manager Solutions, Property, Public Sector, Regional / Mutual, Retrocessional
Reinsurance, Surety, Terror, and Workers Compensation / Employer Liability.
Guy Carpenter also offers clients alternatives to traditional reinsurance, including industry loss warranties
and, through its licensed affiliates, capital markets alternatives such as transferring catastrophe risk
through the issuance of risk-linked securities. GC Securities, the Guy Carpenter division of MMC
Securities LLC and MMC Securities (Europe) Limited, offers corporate finance solutions, including
mergers & acquisitions advice and private debt and equity capital raising, and capital markets-based risk
transfer solutions that complement Guy Carpenter's strong industry relationships, analytical capabilities
and reinsurance expertise.
Guy Carpenter also provides its clients with reinsurance-related services, including actuarial, enterprise
risk management, financial and regulatory consulting, portfolio analysis and advice on the efficient use of
capital. Guy Carpenter's Global Strategic Advisory ("GSA") unit helps clients better understand and
quantify the uncertainties inherent in their businesses. Working in close partnership with Guy Carpenter
account executives, GSA specialists help support clients' critical decisions in numerous areas, including
reinsurance utilization, catastrophe exposure portfolio management, new product and market
development, rating agency, regulatory and account impacts, loss reserve risk, capital adequacy and
return on capital.
Compensation for Services in Risk and Insurance Services
Marsh and Guy Carpenter are compensated for brokerage and consulting services through commissions
and fees. Commission rates and fees vary in amount and can depend on a number of factors, including
the type of insurance or reinsurance coverage provided, the particular insurer or reinsurer selected, and
the capacity in which the broker acts and negotiates with clients. In addition to compensation from its
clients, Marsh also receives other compensation, separate from retail fees and commissions, from
insurance companies. This other compensation includes, among other things, payments for consulting
and analytics services provided to insurers; compensation for administrative and other services (including
fees for underwriting services and services provided to or on behalf of insurers relating to the
administration and management of quota shares, panels and other facilities in which insurers participate);
and contingent commissions, which are paid by insurers based on factors such as volume or profitability
of Marsh's placements, primarily driven by MMA and parts of Marsh's international operations.
Marsh and Guy Carpenter receive interest income on certain funds (such as premiums and claims
proceeds) held in a fiduciary capacity for others. For a more detailed discussion of revenue sources and
factors affecting revenue in our Risk and Insurance Services segment, see Part II, Item 7 ("Management's
Discussion and Analysis of Financial Condition and Results of Operations") of this report.
4
CONSULTING
The Company's Consulting segment generated approximately 39% of the Company's total revenue in
2021 and employs approximately 31,200 colleagues worldwide. The Company conducts business in this
segment through Mercer and Oliver Wyman Group.
MERCER
Mercer delivers advice and solutions that help organizations meet the health, wealth and career needs of
a changing workforce. Mercer has approximately 25,700 colleagues based in 48 countries. Clients include
a majority of the companies in the Fortune 1000 and FTSE 100, as well as medium- and small-market
organizations, public sector entities and individual customers. Mercer generated approximately 26% of
the Company's total revenue in 2021.
Mercer operates in the following areas:
Health. Mercer assists public and private sector employers in the design and management of employee
health care and welfare programs; administer health benefits and flexible benefits programs, including
benefits outsourcing; engage employees with their health benefits through a digital experience; and
comply with local benefits-related regulations. Mercer provides a range of advice and solutions to clients,
which, depending on the engagement, may include: total health and wellness management strategies;
global health brokerage solutions; vendor performance and audit; life and disability management; and
measurement of healthcare provider performance. These services are provided through traditional fee-
based consulting as well as commission-based brokerage services in connection with the selection of
insurance companies and healthcare providers. Mercer provides solutions for private active and retiree
exchanges in the United States.
Mercer also provides consulting and actuarial services to U.S. state governments to support the purchase
of healthcare through state Medicaid programs.
Outside of the U.S., Mercer and Marsh go to market together for Health benefits brokerage and consulting
under the Mercer Marsh BenefitsSM (MMB) brand. Among other services, Mercer provides consulting
services to insurance carriers through the MMB brand to assist them with improving product offerings
available to clients, identifying new opportunities and enhancing insurers’ operational efficiency. The
scope and nature of the services vary by insurer and geography. Mercer offers clients tools to enhance
employee engagement with their health benefits through its DarwinSM platform.
Wealth. Through its Wealth business, Mercer assists clients worldwide in the design, governance and risk
management of defined benefit, defined contribution and hybrid retirement plans and with investment of
those assets. Mercer provides actuarial consulting, investment consulting, investment management and
related services to the sponsors and trustees of pension plans, master trusts, foundations, endowments,
sovereign wealth funds, insurance companies and family offices. Mercer also provides wealth
management services to financial intermediary firms and individuals. Mercer provides retirement plan
outsourcing, including administration and delivery of defined benefit and defined contribution retirement
benefits.
Mercer's investment consulting and investment management services (investment management services
may also be referred to as “investment solutions,” “delegated solutions,” “fiduciary management” or
“outsourced Chief Investment Officer (OCIO) services”) cover a range of stages of the investment
process, from strategy, asset allocation and implementation of investment strategies to ongoing portfolio
management services. Mercer provides these services primarily to institutional and other sophisticated
investors including retirement plans (e.g., defined benefit and defined contribution), master trusts,
endowments and foundations sovereign wealth funds, insurance companies and family offices, as well as
wealth managers and other financial intermediary firms, primarily through manager of manager funds
sponsored and managed by Mercer. Mercer’s clients invest in both traditional asset classes (e.g.,
equities, fixed income and cash equivalents) and alternative or private market strategies (e.g., private
equity, private debt, real estate, other real assets and hedge funds). As of December 31, 2021, Mercer
and its global affiliates had assets under management of approximately $415 billion worldwide.
Mercer also provides services to individual retail clients, including financial planning, high net worth risk
solutions and other discretionary investment services.
5
Career. Mercer advises organizations on the engagement, skill assessment, management and reward of
employees; the design of executive remuneration programs; people strategies during business
transformation; improvement of human resource (HR) effectiveness; and the implementation of digital and
cloud-based Human Resource Information Systems. In addition, through proprietary survey data and
decision support tools, Mercer provides clients with human capital information and analytical capabilities
to improve strategic human capital decision making. Mercer helps clients plan and implement HR
programs and other organizational changes designed to maximize employee engagement.
Mercer also provides advice relating to people and benefits-related issues to buyers and sellers in a
variety of types of M&A transactions.
OLIVER WYMAN GROUP
With more than 5,500 professionals and offices in 32 countries, Oliver Wyman Group delivers advisory
services to clients through three operating units, each of which is a leader in its field: Oliver Wyman,
Lippincott and NERA Economic Consulting. Oliver Wyman Group generated approximately 13% of the
Company's total revenue in 2021.
Oliver Wyman is a global leader in management consulting. Oliver Wyman combines deep industry
knowledge with specialized expertise in strategy, operations, risk management and organization
transformation. Industry groups include:
• Automotive
• Aviation, Aerospace & Defense
• Business Services
• Communications, Media & Technology
• Distribution & Wholesale
• Education
• Energy
• Financial Services (including corporate and institutional banking, insurance, wealth and asset
management, public policy, and retail and business banking)
• Health & Life Sciences
•
Industrial Products
• Public Sector
• Retail & Consumer Products
• Surface Transportation
• Travel & Leisure
Oliver Wyman overlays its industry knowledge with expertise in the following functional specializations:
• Actuarial. Oliver Wyman’s Actuarial Practice uses mathematical and statistical modeling skills and
qualitative assessment methodologies to assist clients in evaluating and addressing risk.
• Climate and Sustainability. Oliver Wyman assists clients in cutting through complex climate
systems and solving for operational efficiencies. Oliver Wyman helps clients discover new
business opportunities, create new pathways, and respond to climate risk, to make needed
changes commercially compelling.
• Corporate Finance & Restructuring. Oliver Wyman provides an array of capabilities to support
investment decision making by private equity funds, hedge funds, sovereign wealth funds,
investment banks, commercial banks, arrangers, strategic investors and insurers.
• Digital. Oliver Wyman partners with clients to address their digital challenges, blending the power
of digital with deep industry expertise. By building strong capabilities and culture, Oliver Wyman
accelerates and embeds digital transformation, working collaboratively with clients’ leaders,
employees, stakeholders, and customers to jointly define, design, and achieve lasting results.
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• Operations. Oliver Wyman helps organizations leverage their operations for a competitive
advantage using a comprehensive set of capabilities, including performance improvement, digital
operations strategy, and risk management.
• Organizational Effectiveness. Oliver Wyman's Organizational Effectiveness capability brings
together deep functional expertise and industry knowledge to enable the whole organization to
work in service of its strategic vision and to address the most pressing organizational, people,
and change issues.
• Payments. Oliver Wyman draws on years of industry-shaping work in the Financial Services and
Retail industries, deep digital expertise, and renowned research partners in its Celent® business,
to help clients - from banks/issuers, to payments providers, to retailers - to build growth
strategies, form effective partnerships, optimize costs, and manage risk.
• Pricing, Sales, and Marketing. Oliver Wyman helps organizations drive top-line and margin
growth through outstanding strategy and decision making on pricing, marketing optimization, and
best practices on sales effectiveness.
• Risk Management. Oliver Wyman works with chief financial officers, chief risk officers, and other
senior finance and risk management executives of corporations and financial institutions on risk
management solutions. Oliver Wyman provides effective, customized solutions to the challenges
presented by the evolving roles, needs and priorities of these individuals and organizations.
• Strategy. Oliver Wyman is a leading provider of corporate strategy advice and solutions in the
areas of growth strategy and corporate portfolio; non-organic growth and M&A; performance
improvement; business design and innovation; corporate center and shared services; and
strategic planning.
Lippincott is a creative consultancy specializing in brand and innovation that shapes recognized brands
and experiences for clients globally. Lippincott's designers have helped create some of the world's most
recognized brands.
NERA Economic Consulting provides economic analysis and advice to public and private entities to
achieve practical solutions to highly complex business and legal issues arising from competition,
regulation, public policy, strategy, finance and litigation. NERA professionals operate worldwide assisting
clients including corporations, governments, law firms, regulatory agencies, trade associations, and
international agencies. NERA's specialized practice areas include: antitrust; securities; complex
commercial litigation; energy; environmental economics; network industries; intellectual property; product
liability and mass torts; and transfer pricing.
Compensation for Services in Consulting
Oliver Wyman Group is compensated for advice and services primarily through fees paid by clients.
Mercer is compensated for advice and services through fees paid by clients, commissions and fees based
on assets or members. In the majority of cases, Mercer's Health business is compensated through
commissions for the placement of insurance contracts and supplemental compensation from insurers
based on such factors as volume, growth of accounts, and total retention of accounts placed by Mercer.
Mercer may receive commissions in other parts of its business, such as its Private Client Services
business and certain financial advice businesses. Mercer's investments business and certain of Mercer's
administration services are compensated typically through fees based on assets under administration or
management or fee per member. For a majority of the Mercer-managed investment funds, revenue
received from Mercer's investment management clients as sub-advisor fees is reported in accordance
with U.S. GAAP, on a gross basis rather than a net basis. For a more detailed discussion of revenue
sources and factors affecting revenue in the Consulting segment, see Part II, Item 7 ("Management's
Discussion and Analysis of Financial Condition and Results of Operations") of this report.
REGULATION
The Company's activities are subject to licensing requirements and extensive regulation under U.S.
federal and state laws, as well as laws of other countries in which the Company's subsidiaries operate.
Across most jurisdictions, we are also subject to various data privacy laws and regulations that apply to
personal information belonging to our clients, their employees and third parties, as well as our own
7
colleagues. In addition, we are subject to various financial crime laws and regulations through our
activities, activities of associated persons, the products and services we provide and our business and
client relationships. Such laws and regulations relate to, among other areas, sanctions and export control,
anti-bribery, anti-corruption, anti-money-laundering and counter-terrorist financing. In certain
circumstances, we are also required to maintain operating funds primarily related to regulatory
requirements outside the U.S. See Part I, Item 1A ("Risk Factors") below for a discussion of how actions
by regulatory authorities or changes in legislation and regulation in the jurisdictions in which we operate
may have an adverse effect on our businesses.
Risk and Insurance Services. While laws and regulations vary from location to location, every state of
the United States and most foreign jurisdictions require insurance market intermediaries and related
service providers (such as insurance brokers, agents and consultants, reinsurance brokers and managing
general agents) to hold an individual or company license from a government agency or self-regulatory
organization. Some jurisdictions issue licenses only to individual residents or locally-owned business
entities; in those instances, if the Company has no licensed subsidiary, it may maintain arrangements with
residents or business entities licensed to act in such jurisdiction. Such arrangements are subject to an
internal review and approval process. Licensing of reinsurance intermediaries is generally less rigorous
compared to that of insurance brokers, and most jurisdictions require only corporate reinsurance
intermediary licenses.
In 2005, the Insurance Mediation Directive which, as from October 1, 2018 has been superseded by the
Insurance Distribution Directive, was adopted by the United Kingdom and 27 other European Union
Member States. Its implementation gave powers to the Financial Services Authority ("FSA"), the United
Kingdom regulator at the time, to expand its responsibilities in line with the Financial Services and
Markets Act (2000), the result of which was the regulation of insurance and reinsurance intermediaries.
The enhanced regulatory regime implemented in the United Kingdom created a licensing system based
on an assessment of factors which included professional competence, financial capacity and the
requirement to hold professional indemnity insurance. In April 2013, the FSA was superseded by the
Financial Conduct Authority ("FCA"). In April 2014, the FCA’s responsibilities were expanded further to
include the regulation of credit activities for consumers. This included the broking of premium finance to
consumers who wished to spread the cost of their insurance. In April 2015, the FCA obtained concurrent
competition powers enabling it to enforce prohibitions on anti-competitive behavior in relation to financial
services.
Insurance authorities in the United States and certain other jurisdictions in which the Company's
subsidiaries do business, including the FCA in the United Kingdom, also have enacted laws and
regulations governing the investment of funds, such as premiums and claims proceeds, held in a fiduciary
capacity for others. These laws and regulations typically provide for segregation of these fiduciary funds
and limit the types of investments that may be made with them, and generally apply to both the insurance
and reinsurance business.
Certain of the Company's Risk and Insurance Services activities are governed by other regulatory bodies,
such as investment, securities and futures licensing authorities. In the United States, Marsh and Guy
Carpenter use the services of MMC Securities LLC, a SEC registered broker-dealer and introducing
broker in the United States. MMC Securities LLC is a member of the Financial Industry Regulatory
Authority ("FINRA"), the National Futures Association and the Securities Investor Protection Corporation
("SIPC"), primarily in connection with capital markets and other investment banking-related services
relating to insurance-linked and alternative risk financing transactions. Also in the United States, Marsh
uses the services of MMA Securities LLC, a SEC registered broker-dealer, investment adviser and
member of FINRA, SIPC and the Municipal Securities Rulemaking Board ("MSRB"), JSL Securities, Inc.,
a SEC registered broker-dealer and member of FINRA, SIPC, MSRB and MMA Asset Management LLC,
a SEC registered investment adviser, primarily in connection with retirement, executive compensation and
benefits consulting and advisory services to qualified and non-qualified benefits plans, companies and
executives and personal wealth management. In the United Kingdom, Marsh and Guy Carpenter use the
expertise of MMC Securities Limited, which is authorized and regulated by the FCA to provide advice on
securities and investments, including mergers & acquisitions in the United Kingdom. In the European
Union, Guy Carpenter uses MMC Securities (Ireland) Limited, which is authorized and regulated by the
Central Bank of Ireland to place certain securities and investments in the European Union. MMC
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Securities LLC, MMC Securities Limited, MMC Securities (Ireland) Limited, MMA Securities LLC, JSL
Securities, Inc. and MMA Asset Management LLC are indirect, wholly-owned subsidiaries of Marsh &
McLennan Companies, Inc.
Consulting. Mercer's retirement-related consulting and investment services are subject to pension law
and financial regulation in many countries. Depending on the country, Mercer may rely on licensed
colleagues or registered legal entities to engage in these services, or may utilize other Marsh McLennan
entities or third parties. In addition, trustee services, investment services (including advice to persons,
institutions and other entities on the investment of pension assets and assumption of discretionary
investment management responsibilities) and retirement and employee benefit program administrative
services provided by Mercer and its subsidiaries and affiliates may also be subject to investment and
securities regulations in various jurisdictions, including (but not limited to) regulations imposed or enforced
by the SEC and the Department of Labor in the United States, the FCA in the United Kingdom, the
Central Bank of Ireland and the Australian Prudential Regulation Authority and the Australian Securities
and Investments Commission. In the United States, Mercer provides investment services through Mercer
Investments LLC, (formerly Mercer Investment Management, Inc.), an SEC-registered investment adviser,
which consolidated the activities of each of Mercer’s affiliated investment adviser entities in the United
States (including Mercer Investment Consulting LLC and Pavilion Advisory Group) in 2019. Mercer Trust
Company, a limited purpose New Hampshire chartered trust bank, may also provide services for certain
clients of Mercer’s investment management business in the United States. The benefits insurance
consulting and brokerage services provided by Mercer and its subsidiaries and affiliates are subject to the
same licensing requirements and regulatory oversight as the insurance market intermediaries described
above regarding our Risk and Insurance Services businesses. Depending on the nature of the client and
services performed, Mercer may also be subject to direct oversight by the Departments of Health and
Human Services and other federal agencies in the U.S. Mercer provides annuity buy-out support that is
subject to regulations (for example, in the U.S., state insurance licensing regulations and ERISA). Mercer
uses the services of MMC Securities LLC to provide certain services, including executive benefit and
compensation services and securities dealing services.
FATCA. Regulations promulgated by the U.S. Treasury Department pursuant to the Foreign Account Tax
Compliance Act and related legislation (FATCA) require the Company to take various measures relating to
non-U.S. funds, transactions and accounts. The regulations impose on Mercer and MMA certain client
financial account obligations relating to non-U.S. financial institution and insurance clients.
COMPETITIVE CONDITIONS
The Company faces significant competition in all of its businesses from providers of similar products and
services, including competition with regard to identifying and pursuing acquisition candidates. The
Company also encounters strong competition throughout its businesses from both public corporations and
private firms in attracting and retaining qualified employees. As the Company has clients across various
geographies, industries and sizes, the competitive landscape is complex and varies across numerous
markets. In addition to the discussion below, see "Risks Relating to the Company Generally —
Competitive Risks," in Part I, Item 1A of this report.
Risk and Insurance Services. The Company's combined insurance and reinsurance services
businesses are global in scope. Our insurance and reinsurance businesses compete principally on the
sophistication, range, quality and cost of the services and products they offer to clients. The Company
encounters strong competition from other insurance and reinsurance brokerage firms that operate on a
global, regional, national or local scale in every geography in which it operates, from insurance and
reinsurance companies that market, distribute and service their insurance and reinsurance products
without the assistance of brokers and from other businesses, including commercial and investment banks,
accounting firms, consultants and online platforms, that provide risk-related services and products or
alternatives to traditional insurance brokerage services. In addition, third party capital providers have
entered the insurance and reinsurance risk transfer market offering products and capital directly to the
Company’s clients. Their presence in the market increases the competitive pressures that the Company
faces.
Certain insureds and groups of insureds have established programs of self-insurance as a supplement or
alternative to purchasing traditional third-party insurance, thereby reducing in some cases their need for
9
third-party insurance placements. Certain insureds also obtain coverage directly from insurance
providers. There are also many other providers of managing general agency, affinity programs and private
client services that compete with the Company's offerings.
Consulting. The Company's consulting businesses face strong competition from other privately and
publicly held worldwide and national companies, as well as regional and local firms. These businesses
generally compete on the basis of the range, quality and cost of the services and products they provide to
clients. Competitors include independent consulting, broking and outsourcing firms, as well as consulting,
broking and outsourcing operations affiliated with larger accounting, information systems, technology and
financial services firms. Mercer's investments business faces competition from many sources, including
investment consulting firms (many of which offer delegated services), investment management firms and
other financial institutions. In some cases, clients have the option of handling the services provided by
Mercer and Oliver Wyman Group internally, without assistance from outside advisors.
Segmentation of Activity by Type of Service and Geographic Area of Operation.
Financial information relating to the types of services provided by the Company and the geographic areas
of its operations is incorporated herein by reference to Note 17, Segment Information, in the notes to the
consolidated financial statements included under Part II, Item 8 of this report.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
Since 2008, Marsh McLennan has had a framework for overseeing and managing the company’s
corporate responsibility initiatives at the Board and senior management levels. Consistent with our ESG
philosophy, we believe our commitment to sustainability starts at home. We also believe that Marsh
McLennan is well positioned to help our clients tackle the challenges of climate resilience. We are
committed to developing innovative solutions to help move the world towards a more sustainable future.
Our ESG Report discloses against aspects of the Task Force on Climate-related Financial Disclosures,
Sustainability Accounting Standards Board and Global Reporting Initiative standards and describes the
six UN Sustainable Development Goals we have prioritized that most relate to our business. Our ESG
Report, Pay Equity Statement, statement on Human Rights and related information is available on our
website at marshmclennan.com/about/esg.html. These reports and our website are not deemed part of
this report and are not incorporated by reference.
HUMAN CAPITAL
As a professional services firm, we believe the health of our business relies on the strength of our
workforce. Our shared purpose is to make a difference in moments that matter, helping clients meet the
challenges of our time. Measurement of our talent outcomes are, therefore, not just a human capital
priority, but a business imperative.
For detailed information regarding our human capital management, we encourage investors to visit
https://www.marshmclennan.com/about/esg.html for our consolidated ESG Report. The information on
this website, and in the ESG report, does not constitute, and should not be viewed as, incorporation by
reference of the information contained on, or available through, the website or the report and does not
form part of this Form 10-K.
Our People. As of December 31, 2021, the Company and its consolidated subsidiaries employed 83,000
colleagues worldwide, including approximately 48,800 in Risk and Insurance Services and 31,200 in
Consulting. Two-thirds of our global workforce are located in either North America or Europe. While these
remain our largest work regions, we have also grown our presence in Asia-Pacific, Latin America and the
Middle East over the last several years. Women comprise more than half of our global enterprise
workforce, and approximately 32% of our senior leaders are women. In the United States, where we have
the most complete data through workforce self-identification of race and ethnicity, approximately 1 in 4
U.S. colleagues and 16% of U.S. senior leaders identify as non-White.
Our Governance. The Chief People Officer is responsible for developing and executing our enterprise
people strategy. This includes the attraction, recruitment, hiring, development and engagement of talent to
deliver on our strategy and the design of colleague total rewards programs. The Chief People Officer and
the Chief Inclusion & Diversity Officer are responsible for developing and integrating our inclusion and
diversity approach into our strategy.
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Our ESG Committee and Compensation Committee of the board of directors have oversight of these
initiatives. The Compensation Committee has responsibility to review certain key human resource
strategic activities, including those relating to diversity, training and recruitment. The Compensation
Committee coordinates with the ESG Committee on diversity initiatives, and both committees receive
reports at least annually on inclusion and diversity from the Company’s Chief People Officer. The Chief
Executive Officer and Chief People Officer regularly update our board of directors, the ESG Committee
and the Compensation Committee on the Company’s human capital trends and activities.
Inclusion & Diversity. Our Company’s greatest strength is the collective talent of our people. We believe
the more diverse our backgrounds and experiences, the more we can achieve together working side by
side. We seek capable, creative and fair-minded people who can help us enable client success, find
smarter ways to do things and live our Code of Conduct, The Greater Good. We believe that inclusion
means more than acceptance—it means belonging. We have a Race Advisory Council to advise our
Executive Committee and help amplify diverse perspectives in decision-making. Other initiatives included
learning and sponsorship programs to help underrepresented colleagues strengthen leadership skills, as
well as the creation of various forums and networks to promote ongoing candid conversations within the
organization.
Talent Development. We strive to create an environment where individuals and teams can perform to
their highest potential and where career growth and mobility are encouraged and supported. We are
committed to helping colleagues perform at their best by encouraging regular discussions about their
goals, performance, career aspirations and development opportunities. We also recognize the importance
of our 14,000 people managers to our talent pipeline and have given them increased support and
opportunities for promoting the growth of their teams. In 2021 we offered nearly 400 live learning sessions
in addition to more than 32,000 individual learning courses to help our colleagues grow and develop. We
also launched an updated People Manager Hub, a one-stop source for people managers globally.
Through the Hub, people managers have access to suggested learning, webinars and resources to
support development and provide guidance for leading with clarity and inclusion.
Colleague Engagement. Each year we ask our colleagues to share their views on working at Marsh
McLennan through a company-wide engagement survey. Developed internally by our Global Talent
Development team, the survey methodology has been consistent since 2011, with updates to specific
questions as necessary. In 2021, we expanded questions on health and well-being, inclusion and
diversity, and ethics and integrity. A third-party administers our survey in order to maintain confidentiality
of responses. Collective survey outcomes allow us to identify opportunities and monitor the evolution of
our culture over time.
Health and Wellbeing. As a company, our success depends on the health and wellbeing of our
colleagues—we want to support our colleagues with resources, protection and peace of mind to live
healthy lives. We offer comprehensive health insurance, including medical coverage and other core health
benefits based on the market. We also prioritize our colleagues’ mental wellness, including 24/7 access to
an Employee Assistance Program for confidential counselling on personal issues for over 80% of our
colleagues and their eligible family members, and critical incident support in countries where a disaster
has occurred. In addition, we offer competitive time-off benefits, including a paid day off each year to
volunteer. Supporting our colleagues as they navigate changing circumstances—health and economic
challenges, new technologies and social inequities—has been our priority in 2021.
Total Rewards. We recognize how important it is to be financially secure through employment, so we
offer competitive rewards to help build colleagues’ personal wealth and improve their financial wellbeing.
Base pay is just the start. Through our annual bonus program, we encourage performance that aligns with
the Company’s interests by providing eligible colleagues with discretionary awards. We also offer various
incentives in certain circumstances, such as sales incentives and long-term incentives to people in roles
that have a significant impact on our long-term performance and success. Our offerings also include
retirement benefits, savings and stock investment plans in certain jurisdictions.
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EXECUTIVE OFFICERS OF THE COMPANY
The executive officers and executive officer appointees of the Company are appointed annually by the
Company’s Board of Directors. The following individuals are the executive officers of the Company:
Peter J. Beshar, age 60, is Executive Vice President and General Counsel of Marsh McLennan. In
addition to managing the Company’s Legal, Compliance & Public Affairs groups, Mr. Beshar also
oversees the Company’s Risk Management department. Before joining Marsh McLennan in November
2004, Mr. Beshar was a Litigation Partner in the law firm of Gibson, Dunn & Crutcher LLP. Mr. Beshar
joined Gibson, Dunn & Crutcher in 1995 after serving as the Assistant Attorney General in charge of the
New York Attorney General's Task Force on Illegal Firearms and as the Special Assistant to former U.S.
Secretary of State Cyrus Vance in connection with the peace negotiations in the former Yugoslavia.
Paul Beswick, age 47, is Senior Vice President and Global Chief Information Officer (CIO) of Marsh
McLennan. In this role, he manages over 5,000 technologists supporting Marsh McLennan’s global
businesses. Prior to his appointment as Marsh McLennan CIO in January 2021, Mr. Beswick was a
Partner and Global Head of Oliver Wyman Labs and the Digital Practice at Oliver Wyman. During more
than two decades with Oliver Wyman, he worked in various sectors, including retail, transportation,
telecom, and consumer goods. Before this, Mr. Beswick headed Oliver Wyman's North American Retail
Practice. Mr. Beswick holds an MA (first class) in chemical engineering from Cambridge University.
John Q. Doyle, age 58, is Group President, Chief Operating Officer and Vice Chair of Marsh McLennan.
In this role, he works closely with Marsh McLennan President and CEO Dan Glaser to realize the
enterprise’s overall strategic business and operational objectives. Prior to starting his current role in
January 2022, Mr. Doyle served as President and Chief Executive Officer of Marsh from 2017 to 2021,
and President of Marsh from 2016 to 2017. An industry veteran with over 30 years of management
experience in commercial insurance underwriting and brokerage, Mr. Doyle began his career at AIG. He
held executive positions at AIG, including Chief Executive Officer of AIG Commercial Insurance, President
and CEO of AIG Property and Casualty in the U.S., President of National Union Fire Insurance Company,
and President of American Home Assurance Company.
Martine Ferland, Martine Ferland, age 60, is President and Chief Executive Officer of Mercer. She also
serves as Vice Chair of Marsh McLennan. Prior to assuming her current role in March 2019, she was
Mercer’s Group President, responsible for leading the firm’s regions and Global Business Solutions. She
joined Mercer in 2011 as Retirement Business Leader for the Europe and Pacific region, and has served
as Europe and Pacific Region President and Co-President, Global Health. Ms. Ferland began her career
as a pension actuary and consultant at Willis Towers Watson, where she spent 25 years and held various
leadership positions in Montreal and New York. Ms. Ferland is a Fellow of the Society of Actuaries and of
the Canadian Institute of Actuaries.
Carmen Fernandez, age 48, is Senior Vice President and Chief People Officer for Marsh McLennan.
Prior to her appointment as Chief People Officer in January 2021, Ms. Fernandez held positions within
Marsh McLennan for 15 years, most recently Deputy CHRO, CHRO of Guy Carpenter, and HR leadership
roles at Mercer, including North America HR Leader, Global HR Leader for the Career business and Chief
of Staff in the Office of the CEO. Before joining Marsh McLennan, Ms. Fernandez worked in investment
banking at Bank of America and Goldman Sachs. She began her career as a consultant with
PricewaterhouseCoopers.
Daniel S. Glaser, age 61, is President and Chief Executive Officer of Marsh McLennan. Prior to starting
his current role in January 2013, Mr. Glaser served as Group President and Chief Operating Officer of the
Company. He rejoined Marsh McLennan in December 2007 as Chairman and Chief Executive Officer of
Marsh, returning to the firm where he had begun his career right out of university in 1982. Mr. Glaser is an
insurance industry veteran who has held senior positions in commercial insurance and insurance
brokerage, working in the United States, Europe and the Middle East. Mr. Glaser serves as the Chairman
of the U.S. Federal Advisory Committee on Insurance (FACI). He is a member of the Board of Trustees for
The Institutes and the Board of Directors for the Partnership for New York City. He is also Co-Chair of the
International Advisory Board for BritishAmerican Business.
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Dean Klisura, age 58, is President and Chief Executive Officer of Guy Carpenter and serves as Vice
Chair of Marsh McLennan. Prior to assuming this role in January 2022, he was President of Guy
Carpenter, overseeing the North America, International, Specialty and Global Strategic Advisory business
units. Prior to joining Guy Carpenter, Mr. Klisura was President of Marsh Global Placement and Advisory
Services, leading property and casualty placement activities globally, as well as leading Bowring Marsh,
the Insurer Consulting Group, and Marsh Advisory. He joined Marsh in 1993 and held several key global
leadership roles including President of Global Specialties.
Mark McGivney, age 54, is Chief Financial Officer of Marsh McLennan. Prior to assuming this role in
January 2016, Mr. McGivney held a number of senior financial management positions since joining the
Company in 2007. Most recently he was Senior Vice President, Corporate Finance of Marsh McLennan,
and was responsible for leading and directing the Company’s Corporate Development, Treasury and
Investor Relations functions from 2014 until 2016. Prior to that, he served as Chief Financial Officer of
Marsh, and Chief Financial Officer and Chief Operating Officer of Mercer. His prior experience includes
senior positions at The Hanover Insurance Group, including serving as Senior Vice President of Finance,
Treasurer, and Chief Financial Officer of the Property & Casualty business, as well as positions with
Merrill Lynch and PriceWaterhouseCoopers.
Martin South, age 57, is President and Chief Executive Officer of Marsh, a position he assumed in
January 2022, and oversees all of Marsh’s businesses and operations globally. He also serves as Vice
Chair of Marsh McLennan. With more than 30 years in the insurance industry, Mr. South joined Marsh for
the first time in 1985 with Bowring Marsh, a Marsh McLennan broking unit. His industry experience
includes senior leadership roles at Zurich Financial Services, where he was a member of the Group
Management Board, responsible for all of Zurich’s operations outside of North America and Europe, and
CEO of Zurich’s London operations. Since rejoining Marsh in 2007, Mr. South has served as CEO of
Marsh’s Asia-Pacific region, CEO of Marsh UK and Ireland, CEO of Marsh Europe and CEO of Marsh US
and Canada.
Nicholas Studer, age 48, is Chief Executive Officer of Oliver Wyman, a role he assumed in July of 2021.
He also serves as Vice Chair of Marsh McLennan. From 2017 to 2021, Mr. Studer was the Head
Managing Partner of the Consumer, Industrial and Services Practice Group, before becoming Managing
Partner of Oliver Wyman in 2021. He has held many senior positions at Oliver Wyman including Head of
the European Finance and Risk Practice. He has over 20 years of experience consulting in the UK,
Continental Europe, and North America.
The Company is subject to the information reporting requirements of the Securities Exchange Act of 1934.
In accordance with the Exchange Act, the Company files with, or furnishes to, the SEC its annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statement for its
annual shareholders' meeting. The Company makes these reports and any amendments to these reports
available free of charge through its website, www.marshmclennan.com, as soon as reasonably
practicable after they are filed with or furnished to the SEC. The SEC also maintains a website at
www.sec.gov that contains reports, proxy and information statements and other information regarding
issuers, like the Company, that file electronically with the SEC.
The Company also posts on its website certain governance and other information for investors.
The Company encourages investors to visit these websites from time to time, as information is updated
and new information is posted. Website references in this report are provided as a convenience and do
not constitute, and should not be viewed as, incorporation by reference of the information contained on, or
available through, the websites. Therefore, such information should not be considered part of this report.
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Item 1A. Risk Factors.
You should consider the risks described below in conjunction with the other information presented in this
report. These risks have the potential to materially adversely affect the Company's business, results of
operations or financial condition.
SUMMARY RISK FACTORS
Some of the factors that could materially and adversely affect our business, financial condition, results of
operations or prospects, include the following:
• We could incur significant liability or our reputation could be damaged if our information systems
are breached or we otherwise fail to protect client or Company data or information systems;
•
The costs to comply with, or our failure to comply with, U.S. and foreign laws related to privacy,
data security and data protection, such as the E.U. General Data Protection Regulation (GDPR)
and the California Consumer Privacy Act (CCPA), could adversely affect our financial condition,
operating results and our reputation;
• Our business performance and growth plans could be negatively affected if we are not able to
develop and implement improvements in technology or respond effectively to the threat of digital
disruption and other technological change;
• We are subject to significant uninsured exposures arising from errors and omissions, breach of
fiduciary duty and other claims;
• We cannot guarantee that we are or will be in compliance with all current and potentially
applicable U.S. federal and state or foreign laws and regulations, and actions by regulatory
authorities or changes in legislation and regulation in the jurisdictions in which we operate could
have a material adverse effect on our business;
• Our business or reputation could be harmed by our reliance on third-party providers or
introducers;
•
•
•
The loss of members of our senior management team or other key colleagues, or our efforts to
attract and retain talent, could have a material adverse effect on our business;
Failure to maintain our corporate culture, particularly in a hybrid work environment, could damage
our reputation;
Increasing scrutiny and changing expectations from investors, clients and our colleagues with
respect to our environmental, social and governance (ESG) practices may impose additional
costs on us or expose us to new or additional risks;
• We face significant competitive pressures in each of our businesses, including from
disintermediation, as our competitive landscape continues to evolve;
• We rely on a large number of vendors and other third parties to perform key functions of our
business operations and to provide services to our clients. These vendors and third parties may
act or fail to act in ways that could harm our business;
•
The COVID-19 pandemic has impacted how we work, and the extent to which it will continue to
do so and its impact on our future financial results are uncertain;
• Our results of operations and investments could be adversely affected by macroeconomic
conditions, political events and market conditions;
• Our inability to successfully recover should we experience a disaster or other business continuity
or data recovery problem could cause material financial loss, loss of human capital, regulatory
actions, reputational harm or legal liability;
• We face risks when we acquire businesses;
•
If we are unable to collect our receivables, our results of operations and cash flows could be
adversely affected;
• We may not be able to obtain sufficient financing on favorable terms;
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• Our defined benefit pension plan obligations could cause the Company's financial position,
earnings and cash flows to fluctuate;
• Our significant non-U.S. operations expose us to exchange rate fluctuations and various risks and
uncertainties that could impact our business;
• Our quarterly revenues and profitability may fluctuate significantly;
•
Credit rating downgrades would increase our financing costs and could subject us to operational
risk;
• Our current debt level could adversely affect our financial flexibility;
•
The current U.S. tax regime makes our results more difficult to predict;
• We are exposed to multiple risks associated with the global nature of our operations;
•
•
•
Results in our Risk and Insurance Services segment may be adversely affected by a general
decline in economic activity;
Volatility or declines in premiums and other market trends may significantly impede our ability to
grow revenues and profitability;
Adverse legal developments and future regulations concerning how intermediaries are
compensated by insurers or clients, as well as allegations of anti-competitive behavior or conflicts
of interest more broadly, could have a material adverse effect on Marsh’s business, results of
operations and financial condition;
• Mercer’s Investments business is subject to a number of risks, including risks related to market
fluctuations, third-party investment managers, operational and technology risks, conflicts of
interest, asset performance and regulatory compliance, that, if realized, could result in significant
damage to our business;
•
•
•
Revenues for the services provided by our Consulting segment may decline for various reasons,
including as a result of changes in economic conditions, the value of equity, debt and other asset
classes, our clients’ or an industry's financial condition or government regulation or an
accelerated trend away from actively managed investments to passively managed investments;
Factors affecting defined benefit pension plans and the services we provide relating to those
plans could adversely affect Mercer; and
The profitability of our Consulting segment may decline if we are unable to achieve or maintain
adequate utilization and pricing rates for our consultants.
RISKS RELATING TO THE COMPANY GENERALLY
Cybersecurity, Data Protection and Technology Risks
We could incur significant liability or our reputation could be damaged if our information systems
are breached or we otherwise fail to protect client or Company data or information systems.
In operating our business and providing services and solutions to clients, we collect, use, store, transmit
and otherwise process certain electronic information, including personal, confidential, proprietary and
sensitive data such as information related to financial records, health care, mergers and acquisitions and
personal data of our clients, colleagues and vendors. We rely on the efficient, uninterrupted and secure
operation of complex information technology systems and networks to operate our business and securely
process, transmit and store electronic information. In the normal course of business, we also share
electronic information with our vendors and other third parties. This electronic information comprises
sensitive and confidential data, including information related to financial records, health care, mergers and
acquisitions and clients’ personal data. Our information technology systems and safety control systems,
and those of our numerous third-party providers, as well as the control systems of critical infrastructure
they rely on, such as power grids, are potentially vulnerable to unauthorized access, damage or
interruption from a variety of external threats, including cyberattacks, computer viruses and other
malware, ransomware and other types of data and systems-related modes of attack. Our systems are
also subject to compromise from internal threats such as improper action by employees, vendors and
other third parties with otherwise legitimate access to our systems. Moreover, we face the ongoing
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challenge of managing access controls in a complex environment. The latency of a compromise is often
measured in months but could be years, and we may not be able to detect a compromise in a timely
manner. We could experience significant financial and reputational harm if our information systems are
breached, sensitive client or Company data are compromised, surreptitiously modified, rendered
inaccessible for any period of time or maliciously made public, or if we fail to make adequate or timely
disclosures to the public or law enforcement agencies following any such event, whether due to delayed
discovery or a failure to follow existing protocols.
Cyberattacks are increasing in frequency and evolving in nature. We are at risk of attack by a variety of
adversaries, including state-sponsored organizations, organized crime, hackers, through use of
increasingly sophisticated methods of attack, including the deployment of artificial intelligence to find and
exploit vulnerabilities, such as “deep fakes”, long-term, persistent attacks referred to as advanced
persistent threats and the use of the IT supply chain to introduce malware through software updates or
compromised suppliers accounts or hardware. In particular, we are at increased risk of a cyberattack
when geopolitical tensions are high, as diplomatic events and economic policies may trigger espionage or
retaliatory cyber incidents.
The techniques used to obtain unauthorized access or sabotage systems include, among other things,
computer viruses, malicious or destructive code, ransomware, social engineering attacks (including
phishing and impersonation), hacking and denial-of-service attacks. Because these techniques change
frequently and new techniques may not be identified until they are launched against a target, we may be
unable to anticipate these techniques or implement adequate preventative measures, resulting in
potential data loss, data unavailability, data corruption or other damage to information technology
systems. In addition, remote work arrangements in response to COVID-19 have increased the risk of
phishing and other cybersecurity attacks or unauthorized dissemination of personal, confidential,
proprietary or sensitive data.
As the breadth and complexity of the technologies we use and the software and platforms we develop
continue to grow, including as a result of the use of mobile devices, cloud services, "open source"
software, social media and the increased reliance on devices connected to the Internet (known as the
"Internet of Things"), the potential risk of security breaches and cyber-attacks also increases. Despite
ongoing efforts to improve our ability to protect data from compromise, we may not be able to protect all
of our data across our diverse systems. Our efforts to improve and protect data from compromise may
also identify previously undiscovered instances of security breaches or other cyber incidents. Our policies,
employee training (including phishing prevention training), procedures and technical safeguards may also
be insufficient to prevent or detect improper access to confidential, personal or proprietary information. In
addition, the competition for talent in the data privacy and cybersecurity space is intense, and we may
also be unable to hire, develop or retain suitable talent capable of adequately detecting, mitigating or
remediating these risks.
Should an attacker gain access to our network using compromised credentials of an authorized user, we
are at risk that the attacker might successfully leverage that access to compromise additional systems
and data. Certain measures that could increase the security of our systems, such as data encryption
(including encryption of data at rest), heightened monitoring and logging, scanning for source code errors
or deployment of multi-factor authentication, take significant time and resources to deploy broadly, and
such measures may not be deployed in a timely manner or be effective against an attack. The inability to
implement, maintain and upgrade adequate safeguards could have a material adverse effect on our
business.
Our information systems must be continually updated, patched, and upgraded to protect against known
vulnerabilities. The volume of new software vulnerabilities has increased markedly, as has the criticality of
patches and other remedial measures. In addition to remediating newly identified vulnerabilities,
previously identified vulnerabilities must also be continuously addressed. Accordingly, we are at risk that
cyberattackers exploit these known vulnerabilities before they have been communicated by vendors or
addressed. Due to the large number and age of the systems and platforms that we operate, the increased
frequency at which vendors are issuing security patches to their products, the need to test patches and, in
some cases coordinate with clients and vendors, before they can be deployed, we perpetually face the
substantial risk that we cannot deploy patches in a timely manner. We are also dependent on third party
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vendors to keep their systems patched and secure in order to protect our data. Any failure related to these
activities could have a material adverse effect on our business.
We have numerous vendors and other third parties who receive personal information from us in
connection with the services we offer our clients. We also use hundreds of IT vendors and software
providers to maintain and secure our global information systems infrastructure. In addition, we have
migrated certain data, and may increasingly migrate data, to the cloud hosted by third-party providers.
Some of these vendors and third parties also have direct access to our systems. We are at risk of a
cyberattack involving a vendor or other third party, which could result in a breakdown of such third party’s
data protection processes or the cyberattackers gaining access to our infrastructure through a supply
chain attack. Highly publicized data security breaches, such as the December 2020 large-scale attack on
SolarWinds that created security vulnerabilities for public and private organizations around the world may
embolden malicious actors to target the IT supply chain and providers of business software. While we do
not believe our operations were affected by the SolarWinds attack, other similar supply chain
compromises could have a significant negative impact on our systems and operations.
We have a history of making acquisitions and investments, including the acquisition of JLT in 2019. The
process of integrating the information systems of any businesses we acquire is complex and exposes us
to additional risk. For instance, we may not adequately identify weaknesses and vulnerabilities in an
acquired entity’s information systems, either before or after the acquisition, which could affect the value
we are able to derive from the acquisition, expose us to unexpected liabilities or make our own systems
more vulnerable to a cyberattack. In addition, if we discover a historical compromise, security breach or
other cyber incident related to the target’s information systems following the close of the acquisition, we
may be liable and exposed to significant costs and other unforeseen liabilities. We may also be unable to
integrate the systems of the businesses we acquire into our environment in a timely manner, which could
further increase these risks until such integration takes place.
We have experienced data incidents and cybersecurity breaches, such as malware incursions (including
computer viruses and ransomware), vulnerabilities in the software on which we rely, users exceeding their
data access authorization, employee misconduct and incidents resulting from human error, such as loss
of portable and other data storage devices or misconfiguration of software or hardware resulting in
inadvertent exposure of personal, sensitive, confidential or proprietary information. In April 2021, an
unauthorized actor leveraged a vulnerability in a third party's software and gained access to a limited set
of data in our environment. Like many companies, we are also subject to social engineering attacks such
as WhatsApp scams and regular phishing email campaigns directed at our employees that can result in
malware infections, fraud and data loss. Although these incidents have resulted in data loss and other
damages, to date, they have not had a material adverse effect on our business or operations. In the
future, these types of incidents could result in personal, sensitive, confidential or proprietary information
being lost or stolen, surreptitiously modified, rendered inaccessible for any period of time, or maliciously
made public, including client, employee or Company data, which could have a material adverse effect on
our business. In the event of a cyberattack, we might have to take our systems offline, which could
interfere with services to our clients or damage our reputation. A cyber attack may also result in systems
or data being encrypted or otherwise unavailable due to ransomware or other malware. We also may be
unable to detect an incident, assess its severity or impact, or appropriately respond in a timely manner. In
addition, our liability insurance, which includes cyber insurance, may not be sufficient in type or amount to
cover us against claims related to security breaches, cyberattacks and other related data and system
incidents.
The costs to comply with, or our failure to comply with, U.S. and foreign laws related to privacy,
data security and data protection, such as the E.U. General Data Protection Regulation (GDPR)
and the California Consumer Privacy Act (CCPA), could adversely affect our financial condition,
operating results and our reputation.
Improper collection, use disclosure, cross border transfer, and retention of confidential, personal, or
proprietary data could result in regulatory scrutiny, legal and financial liability, or harm to our reputation. In
operating our business and providing services and solutions to clients, we store and transfer sensitive
employee and client data, including personal data, in and across multiple jurisdictions. We collect data
from client and individuals located all over the world and leverage systems and teams to process it. As a
result, we are subject to a variety of laws and regulations in the United States, Europe and around the
world regarding privacy, data protection, data security and cyber-security. These laws and regulations are
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continuously evolving and developing. Some of these laws and regulations are increasing the level of
data handling restrictions, including rules on data localization, all of which could affect our operations and
result in regulatory liability and high fines. In particular, high-profile security breaches at major companies
continue to be disclosed regularly, which is leading to even greater regulatory scrutiny and fines at the
highest levels they have ever been.
The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may
be conflicting. For example, the GDPR, which became effective in May 2018, greatly increased the
European Commission’s jurisdictional reach of its laws and added a broad array of requirements for
handling personal data, such as the public disclosure of data breaches, privacy impact assessments, data
portability and the appointment of data protection officers in some cases. In the U.S., the CCPA came into
effect in January 2019 and introduced several new concepts to local privacy requirements, including
increased transparency and rights such as access and deletion and an ability to opt out of the “sale” of
personal information. Despite a proliferation of regulatory guidance papers, much remains unclear with
respect to how to interpret and implement the GDPR and the CCPA, and that lack of clarity could result in
potential liability for our failure to meet our obligations under the GDPR and the CCPA. Given the breadth
and depth of changes in data protection obligations, including classifying data and committing to a range
of administrative, technical and physical controls to protect data and enable data transfers outside of the
E.U., our compliance with laws such as the GDPR and the CCPA will continue to require time, resources
and review of the technology and systems we use. Further, the European Union Court of Justice's
"Schrems II" decision and Brexit have created uncertainty with regard to the future of the flow of personal
information between the U.S. and E.U and between the United Kingdom and the E.U., and that
uncertainty may impair our ability to offer our existing and planned products and services or increase our
cost of doing business.
Following the implementation of the GDPR, other jurisdictions have sought to amend, or propose
legislation to amend, their existing data protection laws to align with the requirements of the GDPR with
the aim of obtaining an adequate level of data protection to facilitate the transfer of personal data to most
jurisdictions from the E.U. Accordingly, the challenges we face in the E.U. will likely also apply to other
jurisdictions that adopt laws similar to the GDPR or regulatory frameworks of equivalent complexity. For
example, Brazil has enacted its general data protection law, the Lei Geral de Proteção de Dados
Pessoais, which came into effect in August 2020, China has enacted the Personal Information Protection
Law a new comprehensive privacy law, India is considering a new privacy law, Canada is proposing
significant changes to its federal privacy law and Japan has adopted sweeping changes to its privacy law.
In some cases, including China and India, the laws include data localization elements that will require that
certain personal data stay within their borders.
In the U.S. following the passage of the CCPA, California approved a ballot measure that enacts the
California Privacy Rights Act, which makes extensive modifications to the CCPA. Additionally, several
other states have introduced privacy bills, some more comprehensive than or divergent in key respects
from the CCPA. There is also continued legislative interest in passing a federal privacy law.
In addition to data protection laws, countries and states in the U.S. are enacting cybersecurity laws and
regulations. For example, the New York State Department of Financial Services issued in 2017
cybersecurity regulations which imposed an array of detailed security measures on covered entities.
These requirements were phased in and the last of them came into effect on March 1, 2019. A number of
states have also adopted laws covering data collected by insurance licensees that include security and
breach notification requirements. All of these evolving compliance and operational requirements impose
significant costs that are likely to increase over time, may divert resources from other initiatives and
projects and could restrict the way services involving data are offered, all of which may adversely affect
our results of operations.
Many statutory requirements, both in the United States and abroad, include obligations for companies to
notify individuals of security breaches involving certain personal information, which could result from
breaches experienced by us or our vendors. In addition to government regulation, privacy advocates and
industry groups have and may in the future propose self-regulatory standards from time to time. These
and other industry standards may legally or contractually apply to us, or we may elect to comply with such
standards. We expect that there will continue to be new proposed laws and regulations concerning data
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privacy and security, and we cannot yet determine the impact such future laws, regulations and standards
may have on our business.
Furthermore, enforcement actions and investigations by regulatory authorities related to data security
incidents and privacy violations, including a recent focus on website “cookies” compliance in some
countries, continue to increase. Privacy violations, including unauthorized use disclosure or transfer of
sensitive or confidential client or Company data, whether through systems failure, employee negligence,
fraud or misappropriation, by the Company, our vendors or other parties with whom we do business (if
they fail to meet the standards we impose) could damage our reputation and subject us to significant
litigation, monetary damages, regulatory enforcement actions, fines and criminal prosecution in one or
more jurisdictions. Given the complexity of operationalizing the various privacy laws such as the GDPR
and the CCPA, the maturity level of proposed compliance frameworks and the continued lack of clarity on
how to implement their requirements, we and our clients are at risk of enforcement actions taken by E.U.
and other data protection authorities or litigation from consumer advocacy groups acting on behalf of data
subjects. We may not be able to respond quickly or effectively to regulatory, legislative and other
developments, and these changes may in turn impair our ability to offer our existing or planned products
and services and increase our cost of doing business.
Our business performance and growth plans could be negatively affected if we are not able to
develop and implement improvements in technology or respond effectively to the threat of digital
disruption and other technological change.
We depend in large part on our technology systems for conducting business, as well as for providing the
data and analytics we use to manage our business. As a result, our business success is dependent on
maintaining the effectiveness of existing technology systems and on continuing to develop and enhance
technology systems that support our business processes and strategic initiatives in a cost and resource
efficient manner, particularly as our business processes become more digital. We have a number of
strategic initiatives involving investments in or partnerships with technology companies as part of our
growth strategy, as well as investments in technology and infrastructure to support our own systems.
These investments may be costly and require significant capital expenditures, may not be profitable or
may be less profitable than what we have experienced historically. In addition, investments in technology
systems may not deliver the benefits or perform as expected, or may be replaced or become obsolete
more quickly than expected, which could result in operational difficulties or additional costs. In some
cases, we also depend on key vendors and partners to provide technology and other support for our
strategic initiatives. If these vendors or partners fail to perform their obligations or otherwise cease to work
with us, our ability to execute on our strategic initiatives could be adversely affected. If we do not keep up
with technological changes or execute effectively on our strategic initiatives, our business and results of
operations could be adversely impacted.
In addition, to remain competitive in many of our business areas, we must anticipate and respond
effectively to the threat of digital disruption and other technological change. The threat comes from
traditional players, such as insurers, through disintermediation as well as from new entrants, such as
technology companies, "Insurtech" start-up companies and others. In the past few years, there has been
a substantial increase in private equity investments into these Insurtech companies. These players are
focused on using technology and innovation, including artificial intelligence (AI), digital platforms, data
analytics, robotics and blockchain, to simplify and improve the client experience, increase efficiencies,
alter business models and effect other potentially disruptive changes in the industries in which we
operate.
Legal and Regulatory Risks
We are subject to significant uninsured exposures arising from errors and omissions, breach of
fiduciary duty and other claims.
Our businesses provide numerous professional services, including the placement of insurance and the
provision of consulting, investment advisory, investment management and actuarial services, to clients
around the world. As a result, the Company and its subsidiaries are subject to a significant number of
errors and omissions, breach of fiduciary duty and similar claims, which we refer to collectively as "E&O
claims." In our Risk and Insurance Services segment, such claims include allegations of damages arising
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from our failure to assess clients’ risks, advise clients, place coverage, or notify insurers of potential
claims on behalf of clients in accordance with our obligations to them. For example, these claims may
include allegations related to losses incurred by policyholders arising from the COVID-19 pandemic, or
losses from cyberattacks associated with policies where cyber risk was not specifically included or
excluded in policies, commonly referred to as “silent cyber.” In our Consulting segment, where we
increasingly act in a fiduciary capacity through our investments business, such claims could include
allegations of damages arising from the provision of consulting, investments, actuarial, pension
administration and other services. We may also be exposed to claims related to assets or solutions
offered by the Consulting segment in complement to its traditional consulting services. These Consulting
segment services frequently involve complex calculations and other analysis, including (i) making
assumptions about, and preparing estimates concerning, contingent future events, (ii) drafting and
interpreting complex documentation governing pension plans, (iii) calculating benefits within complex
pension structures, (iv) providing individual financial planning advice including investment advice and
advice relating to cashing out of defined benefit pension plans, (v) providing investment advice, including
guidance on asset allocation and investment strategy, and (vi) managing client assets, including the
selection of investment managers and implementation of the client’s investment policy. We provide these
services to a broad client base, including clients in the public sector for our investment services. Matters
often relate to services provided by the Company dating back many years. Such claims may subject us to
significant liability for monetary damages, including punitive and treble damages, negative publicity and
reputational harm, and may divert personnel and management resources. We may be unable to
effectively limit our potential liability in certain jurisdictions, including through insurance, or in connection
with certain types of claims, particularly those concerning claims of a breach of fiduciary duty.
In establishing liabilities for E&O claims under U.S. generally accepted accounting principles ("U.S.
GAAP"), the Company uses case level reviews by inside and outside counsel, 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 assessed 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. Given the judgment involved in
estimating and establishing liabilities in accordance with U.S. GAAP, as well as the unpredictability of
E&O claims and the litigation that can flow from them, it is possible that an adverse outcome in a
particular matter could have a material adverse effect on the Company's business, results of operations or
financial condition.
We cannot guarantee that we are or will be in compliance with all current and potentially
applicable U.S. federal and state or foreign laws and regulations, and actions by regulatory
authorities or changes in legislation and regulation in the jurisdictions in which we operate could
have a material adverse effect on our business.
Our activities are subject to extensive regulation under the laws of the United States and its various
states, the United Kingdom, the European Union and its member states, and the other jurisdictions in
which we operate. For example, we are subject to regulation by agencies such as the Securities and
Exchange Commission, FINRA and state insurance regulators in the United States, the FCA and the
Competition and Markets Authority (CMA) in the United Kingdom, and the European Commission in the
European Union, as further described above under Part I, Item 1 - Business (Regulation) of this report.
We are also subject to trade sanctions laws relating to countries such as Belarus, Cuba, Crimea, Iran,
Myanmar, North Korea, Russia, Syria and Venezuela, and anti-corruption laws such as the U.S. Foreign
Corrupt Practices Act and the U.K. Anti-Bribery Act. We are subject to numerous other laws on matters as
diverse as internal control over financial reporting and disclosure controls and procedures, securities
regulation, data privacy and protection, cybersecurity, taxation, anti-trust and competition, immigration,
wage-and-hour standards and employment and labor relations.
The U.S. and foreign laws and regulations that apply to our operations are complex and may change
rapidly, and our efforts to comply and keep up with them require significant resources. In some cases,
these laws and regulations may decrease the need for our services, increase our costs, negatively impact
our revenues or impose operational limitations on our business, including on the products and services
we may offer or on the amount or type of compensation we may collect. In addition, the financial and
operational impact of complying with laws and regulations has increased in the current environment of
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increased regulatory activity and enforcement. Changes with respect to the applicable laws and
regulations may impose additional and unforeseen costs on us or pose new or previously immaterial risks
to us. There can be no assurance that current and future government regulations will not adversely affect
our business, and we cannot predict new regulatory priorities, the form, content or timing of regulatory
actions, and their impact on our business and operations.
While we attempt to comply with applicable laws and regulations, there can be no assurance that we, our
employees, our consultants and our contractors and other agents are in full compliance with such laws
and regulations or interpretations at all times, or that we will be able to comply with any future laws or
regulations. If we fail to comply or are accused of failing to comply with applicable laws and regulations,
including those referred to above, we may become subject to investigations, criminal penalties, civil
remedies or other consequences, including fines, injunctions, loss of an operating license or approval,
increased scrutiny or oversight by regulatory authorities, the suspension of individual employees,
limitations on engaging in a particular business or redress to clients or other parties, and we may become
exposed to negative publicity or reputational damage. Moreover, our failure to comply with laws or
regulations in one jurisdiction may result in increased regulatory scrutiny by other regulatory agencies in
that jurisdiction or regulatory agencies in other jurisdictions. These inquiries consume significant
management attention, and the cost of compliance and the consequences of failing to be in compliance
could therefore have a material adverse effect on our business, results of operations and financial
condition.
In addition, we may be responsible for the legal and regulatory liabilities of companies that we acquire. In
particular, 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. Additional
information regarding certain ongoing investigations and certain other legal and regulatory proceedings is
set forth in Note 16, Claims, Lawsuits and Other Contingencies, in the notes to the consolidated financial
statements included under Part II, Item 8 of this report.
In most jurisdictions, government regulatory authorities have the power to interpret and amend or repeal
applicable laws and regulations, and have discretion to grant, renew and revoke the various licenses and
approvals we need to conduct our activities. Such authorities may require the Company to incur
substantial costs in order to comply with such laws and regulations. In some areas of our businesses, we
act on the basis of our own or the industry's interpretations of applicable laws or regulations, which may
conflict from state to state or country to country. In the event those interpretations eventually prove
different from the interpretations of regulatory authorities, we may be penalized or precluded from carrying
on our previous activities. Moreover, the laws and regulations to which we are subject may conflict among
the various jurisdictions and countries in which we operate, which increases the likelihood of our
businesses being non-compliant in one or more jurisdictions.
Our business or reputation could be harmed by our reliance on third-party providers or
introducers.
We currently utilize the services of hundreds of third-party providers to meet the needs of our clients
around the world.
There is a risk that our third-party providers or introducers engage in business practices that are
prohibited by our internal policies or violate applicable laws and regulations, such as the U.S. Foreign
Corrupt Practices Act and the U.K. Anti-Bribery Act.
Competitive Risks
The loss of members of our senior management team or other key colleagues, or our efforts to
attract and retain talent, could have a material adverse effect on our business.
We rely upon the contributions of our senior management team to establish and implement our business
strategy and to manage the future growth of our business. We may be unable to retain them, particularly if
we do not offer employment terms that are competitive with the rest of the labor market. The loss of any of
the senior management team could limit our ability to successfully execute our business strategy or
adversely affect our ability to retain existing and attract new clients. Moreover, we could be adversely
affected if we fail to adequately plan for the succession of members of our senior management team.
Across all of our businesses, our colleagues are critical to developing and retaining client relationships as
well as performing the services on which our revenues are earned. It is therefore important for us to
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attract, incentivize and retain significant revenue-producing employees and the key managerial and other
professionals who support them. We face numerous challenges in this regard, including the intense
competition for talent, which has accelerated through the pandemic. Such challenges include the general
mobility of colleagues that has increased as a result of the COVID-19 pandemic as companies
experiment with more flexible working models, market dislocation resulting from proposed and actual
combinations in the industry, and fostering an inclusive and diverse workplace.
Losing colleagues who manage or support substantial client relationships or possess substantial
experience or expertise could adversely affect our ability to secure and complete client engagements,
which could adversely affect our results of operations. If a key employee were to join an existing
competitor or form a competing company, some of our clients could choose to use the services of that
competitor instead of our services. If a colleague joins us from a competitor and is subject to enforceable
restrictive covenants, we may not be able to secure client engagements or maximize the colleague's
potential.
Over the course of 2021, we hired on a net basis more than 6,000 colleagues across our company. As a
result, our expenses have increased.
Failure to maintain our corporate culture, particularly in a hybrid work environment, could damage
our reputation.
We strive to foster a culture in which our colleagues act with integrity and feel comfortable speaking up
about potential misconduct. We are a people business, and our ability to attract and retain colleagues and
clients is dependent upon our commitment to an inclusive and diverse workplace, trustworthiness, ethical
business practices and other qualities. Our colleagues are the cornerstone of this culture, and acts of
misconduct by any colleague, and particularly by senior management, could erode trust and confidence
and damage our reputation among existing and potential clients and other stakeholders. Remote and
hybrid work arrangement as a result of the COVID-19 pandemic may also negatively impact our ability to
maintain and promote our culture, as we believe being together is integral to promoting our culture.
Increasing scrutiny and changing expectations from investors, clients and our colleagues with
respect to our environmental, social and governance (ESG) practices may impose additional costs
on us or expose us to new or additional risks.
There is increased focus, including from governmental organizations, investors, colleagues and clients,
on ESG issues such as environmental stewardship, climate change, inclusion and diversity, racial justice,
pay equity, workplace conduct, cybersecurity and data privacy. Negative public perception, adverse
publicity or negative comments in social media could damage our reputation if we do not, or are not
perceived to, adequately address these issues. Any harm to our reputation could impact colleague
engagement and retention and the willingness of clients and our partners to do business with us.
Moreover, as we work to align with the recommendations of the Financial Stability Board's Task Force on
Climate-related Financial Disclosures, (TCFD), the Sustainability Accounting Standards Board (SASB),
and our own ESG assessments and priorities, we expect to expand our public disclosures in these areas,
including providing additional metrics. These metrics, whether it be the standards we set for ourselves or
a failure to meet these metrics, and any failure accurately report or to achieve progress on our metrics on
a timely basis, or at all, may negatively impact our reputation and our business.
In addition, organizations that provide information to investors on corporate governance and related
matters have developed ratings processes for evaluating companies on their approach to ESG matters,
and unfavorable ratings of our company or our industries may lead to negative investor sentiment and the
diversion of investment to other companies or industries, exclusion of our stock from ESG-oriented
indices or investment funds or harm our relationships with regulators and the communities in which we
operate.
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We face significant competitive pressures in each of our businesses, including from
disintermediation, as our competitive landscape continues to evolve.
As a global professional services firm, the Company faces competition in each of its businesses, and the
competitive landscape continues to change and evolve. Our ability to compete successfully depends on a
variety of factors, including the quality and expertise of our colleagues, our geographic reach, the
sophistication and quality of our services, our pricing relative to competitors, our clients’ ability to self-
insure or use internal resources instead of consultants, and our ability to respond to changes in client
demand and industry conditions. Some of our competitors may have greater financial resources, or may
be better positioned to respond to technological and other changes in the industries we serve, and they
may be able to compete more effectively. Additionally, the competition for talent has only accelerated with
the COVID-19 pandemic and recent dislocation in the market resulting from proposed and actual
combinations among our competitors. If we are unable to attract, retain and fully develop industry leading
talent, or if we are unable to respond successfully to the changing conditions we face, our businesses,
results of operations and financial condition will be adversely impacted.
Across our Risk and Insurance Services segment, we operate in a variety of markets and face different
competitive landscapes. In addition to the challenges posed by capital market alternatives to traditional
insurance and reinsurance, we compete against a wide range of other insurance and reinsurance
brokerage and risk advisory firms that operate on a global, regional, national or local scale for both client
business and employee talent. In recent years, private equity sponsors have invested tens of billions of
dollars into the insurance brokerage sector, transforming existing players and creating new ones to
compete with large brokers. We also compete with insurance and reinsurance companies that market and
service their insurance products directly to consumers and without the assistance of brokers or other
market intermediaries, and with various other companies that provide risk-related services or alternatives
to traditional brokerage services, including those that rely almost exclusively on technological solutions or
platforms. This competition is intensified by an often "syndicated" or "distributed" approach to the
purchase of insurance and reinsurance brokerage services, where a client engages multiple brokers to
service different portions of the client's account. In addition, third party capital providers have entered the
insurance and reinsurance risk transfer market offering products and capital directly to our clients that
serve as substitutes for traditional insurance.
In our Consulting segment, we compete for business with numerous consulting firms and similar
organizations, many of which also provide, or are affiliated with firms that provide, accounting, information
systems, technology and financial services. Such competitors may be able to offer more comprehensive
products and services to potential clients, which may give them a competitive advantage. In certain sub-
segments, we compete in highly fragmented markets or with start-ups that may be able to offer solutions
at a lower price or on more favorable conditions.
In addition, companies in the industries that we serve may seek to achieve economies of scale and other
synergies by combining with or acquiring other companies. If two or more of our current clients merge, or
consolidate or combine their operations, it may decrease the amount of work that we perform for these
clients.
We rely on a large number of vendors and other third parties to perform key functions of our
business operations and to provide services to our clients. These vendors and third parties may
act in ways that could harm our business.
We rely on a large number of vendors and other third parties, and in some cases subcontractors, to
provide services, data and information such as technology, information security, funds transfers, business
process management, and administration and support functions that are critical to the operations of our
business. These third parties include correspondents, agents and other brokers and intermediaries,
insurance markets, data providers, plan trustees, payroll service providers, software and system vendors,
health plan providers, investment managers, risk modeling providers, and providers of human resource
functions, such as recruiters. Many of these providers are located outside the U.S., which exposes us to
business disruptions and political risks inherent when conducting business outside of the U.S. As we do
not control many of the actions of these third parties, we are subject to the risk that their decisions or
operations may adversely impact us and replacing these service providers could create significant delay
in services or operations and additional expense.
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A failure by the third parties to (i) comply with service level agreements in a high quality and timely
manner, particularly during periods of our peak demand for their services, (ii) maintain adequate internal
controls that may impact our own financial reporting, or (iii) adequately maintain the confidentiality of any
of our data or trade secrets or adequately protect or properly use other intellectual property to which they
may have access, could result in economic and reputational harm to us. These third parties also face their
own technology, operating, business and economic risks, and any significant failures by them, including
the improper use or disclosure of our confidential client, employee, or Company information or failure to
comply with applicable law, could cause harm to our reputation or otherwise expose us to liability. An
interruption in or the cessation of service by any service provider as a result of systems failures, capacity
constraints, non-compliance with legal, regulatory or contractual obligations, financial difficulties or for any
other reason could disrupt our operations, impact our ability to offer certain products and services, and
result in contractual or regulatory penalties, liability claims from clients or employees, damage to our
reputation and harm to our business.
Macroeconomic Risks
The COVID-19 pandemic has impacted how we work, and the extent to which it will continue to do
so and its impact on our future financial results are uncertain.
Global health concerns relating to the ongoing COVID-19 pandemic and related government actions
taken to reduce the spread of the virus impacted our workforce and operations and the operations of our
clients, third-party vendors and business partners. The spread of COVID-19 has caused us to modify our
business practices (including continuing to operate in a largely remote model as the pandemic has
persisted across the globe, introducing vaccine mandates for certain U.S. colleagues or visitors to be on
premises where legally viable to do so, and re-calibrating return-to-office plans with evolving health and
safety standards). We will continue to evolve our business practices as we adopt hybrid working
arrangements and evaluate further implementing employee vaccine requirements and other health and
safety protocols, as may be required by government authorities or as we determine are in the best
interests of our colleagues, clients and business partners. There is no certainty how long such policies will
remain in effect, or that such measures will be sufficient in creating an effective and productive working
environment comparable to pre-pandemic conditions for our colleagues. In addition, our implementation
of employee vaccination requirements may also result in attrition, including of critically skilled colleagues.
Our results of operations and investments could be adversely affected by macroeconomic
conditions, political events and market conditions.
Macroeconomic conditions, including inflation, supply chain challenges, pandemics, a general slowdown
in economic growth, political volatility and other market conditions around the world affect our clients'
businesses and the markets they serve. These conditions, including inflationary expense pressure with
our clients, may reduce demand for our services or depress pricing for those services, which could have a
material adverse effect on our results of operations. For example, in 2020 the COVID-19 pandemic
adversely impacted the Company’s revenue growth, primarily in our businesses that are discretionary in
nature. Changes in macroeconomic and political conditions could also shift demand to services for which
we do not have a competitive advantage, and this could negatively affect the amount of business that we
are able to obtain.
In addition, the United Kingdom’s withdrawal from the European Union, referred to as "Brexit," continues
to create political and economic uncertainty, particularly in the United Kingdom and the European Union.
As the terms of the withdrawal did not contain resolutions related to financial services and there has not
yet been such an agreement, there remains uncertainty on the effect of Brexit on financial services.
We have significant operations and a substantial workforce in the U.K. With 12,500 colleagues and
approximately 16% of our revenue from the U.K., the uncertainty surrounding the implementation and
effect of Brexit may cause increased economic volatility or disrupt markets we serve, affecting our
operations and business or causing us to lose clients and colleagues. In addition, Brexit could lead to
legal uncertainty and potentially divergent national laws and regulations as the U.K. determines which
E.U. laws to replace or replicate. These developments may have a material adverse effect on global
economic conditions and the stability of financial markets, both in the U.K. and globally. Furthermore,
currency exchange rates in GBP and the Euro with respect to each other and the U.S. dollar have already
been adversely affected by these developments. Should this foreign exchange volatility continue, it could
cause volatility in our quarterly financial results.
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More generally, our investments, including our minority investments in other companies as well as our
cash investments and those held in a fiduciary capacity, are subject to general credit, liquidity,
counterparty, foreign exchange, market and interest rate risks. These risks may be exacerbated by global
macroeconomic conditions, market volatility and regulatory, financial and other difficulties affecting the
companies in which we have invested or that may be faced by financial institution counterparties. During
times of stress in the banking industry, counterparty risk can quickly escalate, potentially resulting in
substantial trading and investment losses for corporate and other investors. In addition, we may incur
investment losses as a result of unusual and unpredictable market developments, and we may continue
to experience reduced investment earnings if the yields on investments deemed to be low risk remain at
or near their current low levels. If the banking system or the fixed income, interest rate, credit or equity
markets deteriorate, the value and liquidity of our investments could be adversely affected. Finally, the
value of the Company's assets held in other jurisdictions, including cash holdings, may decline due to
foreign exchange fluctuations.
Business Resiliency Risks
Our inability to successfully recover should we experience a disaster or other business continuity
or data recovery problem could cause material financial loss, loss of human capital, regulatory
actions, reputational harm or legal liability.
If we experience a local or regional disaster or other business continuity event, such as an earthquake,
hurricane, flood, terrorist attack, pandemic, protests or riots, security breach, cyberattack (including
manipulating the control systems of critical infrastructure), power loss or telecommunications failure, our
ability to operate will depend, in part, on the continued availability of our personnel, our office facilities and
the proper functioning of our computer, telecommunication and other related systems and operations. In
such an event, we could experience operational challenges that could have a material adverse effect on
our business. The risk of business disruption is more pronounced in certain geographic areas, including
major metropolitan centers, like New York or London, where we have significant operations and
approximately 3,300 and 5,300 colleagues in those respective locations, and in certain countries and
regions in which we operate that are subject to higher potential threat of terrorist attacks or military
conflicts.
Global health concerns relating to the ongoing COVID-19 pandemic and related government actions
taken to reduce the spread of the virus have impacted our workforce and operations and the operations of
our clients, third-party vendors and business partners, and could in the future materially adversely impact
our business, operations and financial results. The spread of COVID-19 has caused us to take a number
of steps to safeguard our business and colleagues from COVID-19, including implementing travel
restrictions, arranging work from home capabilities and transitioning to a hybrid work environment. While
the Company expects it will continue to service clients effectively in a remote or hybrid work environment,
the extent to which the COVID-19 outbreak continues to impact our business, results of operations and
financial condition will depend on future developments, which remain highly uncertain and are difficult to
predict, including the duration and spread of the outbreak, its severity and that of new variants, the
availability and efficacy of treatments and vaccines, and how quickly and to what extent pre-pandemic
economic and operating conditions resume. In addition, as we prepare to return our workforce in more
locations back to the office in 2022, we may experience increased costs as we prepare our facilities for a
safe return to work environment and experiment with hybrid work models.
Our operations depend in particular upon our ability to protect our technology infrastructure against
damage. If a business continuity event occurs, we could lose client or Company data or experience
interruptions to our operations or delivery of services to our clients, which could have a material adverse
effect. Such risks have increased significantly due to extended remote work accommodations as a result
of COVID-19. A cyberattack or other business continuity event affecting us or a key vendor or other third
party could result in a significant and extended disruption in the functioning of our information technology
systems or operations or our ability to recover data, requiring us to incur significant expense to address
and remediate or otherwise resolve such issues. For example, hackers have increasingly targeted
companies by attacking internet-connected industrial control and safety control systems. An extended
outage could result in the loss of clients and a decline in our revenues. In the worst case, any
manipulation of the control systems of critical infrastructure may even result in the loss of life.
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We regularly assess and take steps to improve our existing business continuity, disaster recovery and
data recovery plans and key management succession. However, a disaster or other continuity event on a
significant scale or affecting certain of our key operating areas within or across regions, or our inability to
successfully recover from such an event, could materially interrupt our business operations and result in
material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client
relationships and legal liability. Our business disruption insurance may also not fully cover, in type or
amount, the cost of a successful recovery in the event of such a disruption.
Acquisitions and Dispositions Risks
We face risks when we acquire businesses.
We have a history of making acquisitions and investments, including a total of 84 in the period from 2016
to 2021. We may not be able to successfully integrate the businesses that we acquire into our own
business, or achieve any expected cost savings or synergies from the integration of such businesses.
Subject to standard contractual protections, we may also be responsible for legacy liabilities of companies
that we acquire. For example, 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.
In addition, if in the future the performance of our reporting units or an acquired business varies from our
projections or assumptions, or estimates about future profitability of our reporting units or an acquired
business change, the estimated fair value of our reporting units or an acquired business could change
materially and could result in an impairment of goodwill and other acquisition-related intangible assets
recorded on our balance sheet or in adjustments in contingent payment amounts. Given the significant
size of the Company's goodwill and intangible assets, an impairment could have a material adverse effect
on our results of operations in any given period.
We expect that acquisitions will continue to be a key part of our business strategy. Our success in this
regard will depend on our ability to identify and compete for appropriate acquisition candidates and to
finance and complete the transactions we decide to pursue on favorable terms with positive results.
When we dispose of businesses, we may continue to be subject to certain liabilities of that business after
its disposition relating to the prior period of our ownership and may not be able to negotiate for limitations
on those liabilities. We are also subject to the risk that the sales price is less than the amount reflected on
our balance sheet.
Financial Risks
If we are unable to collect our receivables, our results of operations and cash flows could be
adversely affected.
Our business depends on our ability to obtain payment from our clients of the amounts they owe us for
the work we perform. As of December 31, 2021, our receivables for our commissions and fees were
approximately $5.1 billion, or approximately one-quarter of our total annual revenues, and portions of our
receivables are increasingly concentrated in certain businesses and geographies.
Macroeconomic or political conditions, such as the impact from COVID-19, inflationary pressures or
supply chain challenges, could result in financial difficulties for our clients, which could cause clients to
delay payments to us, request modifications to their payment arrangements that could increase our
receivables balance or default on their payment obligations to us.
We may not be able to obtain sufficient financing on favorable terms.
The maintenance and growth of our business, including our ability to finance acquisitions, the payment of
dividends and our ability to make share repurchases rely on our access to capital, which depends in large
part on cash flow generated by our business and the availability of equity and debt financing. Certain of
our businesses such as GC Securities, a division of MMC Securities, LLC and MMC Securities (Europe)
Limited also rely on financings by the Company to fund the underwriting of their client's debt and equity
capital raising transactions. There can be no assurance that our operations will generate sufficient
positive cash flow to finance all of our capital needs or that we will be able to obtain equity or debt
financing on favorable terms. In addition, our ability to obtain financing will depend in part upon prevailing
conditions in credit and capital markets, which are beyond our control.
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Our defined benefit pension plan obligations could cause the Company's financial position,
earnings and cash flows to fluctuate.
Our defined benefit pension obligations and the assets set aside to fund those obligations are sensitive to
certain changes in the financial markets. Any such changes may result in increased pension expense or
additional cash payments to fund these plans.
The Company has significant defined benefit pension obligations to its current and former employees,
totaling approximately $18.7 billion, and related plan assets of approximately $19.4 billion, at
December 31, 2021 on a U.S. GAAP basis. The Company's policy for funding its defined benefit pension
plans is to contribute amounts at least sufficient to meet the funding requirements set forth by law. In the
United States, contributions to these plans are based on ERISA guidelines. Outside the United States,
contributions are generally based on statutory requirements and local funding practices, which may differ
from measurements under U.S. GAAP. In the U.K., for example, the assumptions used to determine
pension contributions are the result of legally-prescribed negotiations between the Company and the plan
trustees. Currently, the use of these assumptions results in a lower funded status than determined under
U.S. GAAP and may result in contributions irrespective of the U.S. GAAP funded status.
The financial calculations relating to our defined benefit pension plans are complex. Pension plan assets
could decrease as the result of poor future asset performance. In addition, the estimated return on plan
assets would likely be impacted by changes in the interest rate environment and other factors, including
equity valuations, since these factors reflect the starting point used in the Company’s projection models.
For example, a reduction in interest rates may result in a reduction in the estimated return on plan assets.
Also, pension plan liabilities, periodic pension expense and future funding amounts could increase as a
result of a decline in the interest rates we use to discount our pension liabilities, longer lifespans than
those reflected in our mortality assumptions, changes in investment markets that result in lower expected
returns on assets, actual investment return that is less than the expected return on assets, adverse
changes in laws or regulations and other variables.
While we have taken steps to mitigate the impact of pension volatility on our earnings and cash funding
requirements, these strategies may not be successful. Accordingly, given the magnitude of our worldwide
pension plans, variations in or reassessment of the preceding or other factors or potential miscalculations
relating to our defined benefit pension plans could cause significant fluctuation from year to year in our
earnings and cash flow, as well as our pension plan assets and liabilities, and may result in increased
levels of contributions to our pension plans.
Our significant non-U.S. operations expose us to exchange rate fluctuations and various risks that
could impact our business.
Approximately 53% of our total revenue reported in 2021 was from business outside of the United States.
We are subject to exchange rate movement because we must translate the financial results of our foreign
subsidiaries into U.S. dollars and also because some of our subsidiaries receive revenue other than in
their functional currencies. Exchange rate movements may change over time, and they could have a
material adverse impact on our financial results and cash flows reported in U.S. dollars. For additional
discussion, see "Market Risk and Credit Risk-Foreign Currency Risk" in Part II, Item 7A ("Quantitative and
Qualitative Disclosures about Market Risk") of this report.
Our quarterly revenues and profitability may fluctuate significantly.
Quarterly variations in revenues and operating results may occur due to several factors. These include:
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the number of client engagements during a quarter;
the possibility that clients may decide to delay or terminate a current or anticipated project as a
result of factors unrelated to our work product or progress;
fluctuations in capacity and utilization rates and clients' ability to terminate engagements without
penalty;
our net colleague hires and related compensation and benefits expense;
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potential limitations on the clients or industries we serve resulting from increased regulation or
changing stakeholder expectations on ESG issues;
the impact of changes in accounting standards or in our accounting estimates or assumptions;
the impact on us or our clients of changes in legislation, regulation and legal guidance or
interpretations in the jurisdictions in which we operate, in particular as a result of increased
regulatory activity and enforcement;
seasonality due to the impact of regulatory deadlines, policy renewals and other timing factors to
which our clients are subject;
the success of our acquisitions or investments;
• macroeconomic factors such as changes in foreign exchange rates, interest rates and global
securities markets, particularly in the case of Mercer, where fees in its investments business and
certain other business lines are derived from the value of assets under management, advisement
or administration; and
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general economic conditions, including factors beyond our control affecting economic conditions
such as COVID-19 and other global health crises or pandemics, severe weather, climate change,
geopolitical unrest such as protests and riots or other catastrophic events, since our results of
operations are directly affected by the levels of business activity of our clients, which in turn are
affected by the level of economic activity in the industries and markets that they serve.
A significant portion of our total operating expenses is relatively fixed in the short term. Therefore, a
variation in the number of client assignments or in the timing of the initiation or the completion of client
assignments can cause significant variations in quarterly operating results for these businesses.
Credit rating downgrades would increase our financing costs and could subject us to operational
risk.
Currently, the Company's senior debt is rated A- by S&P and Baa1 by Moody's. The Company carries a
Stable outlook with both S&P and Moody's.
If we need to raise capital in the future (for example, in order to maintain adequate liquidity, fund maturing
debt obligations or finance acquisitions or other initiatives), credit rating downgrades would increase our
financing costs, and could limit our access to financing sources. A downgrade to a rating below
investment-grade could result in greater operational risks through increased operating costs and
increased competitive pressures.
Our current debt level could adversely affect our financial flexibility.
As of December 31, 2021, we had total consolidated debt outstanding of approximately $11.0 billion.
The level of debt outstanding could adversely affect our financial flexibility by reducing our cash flows and
our ability to use cash from operations for other purposes, including working capital, dividends to
shareholders, share repurchases, acquisitions, capital expenditures and general corporate purposes. In
addition, we are subject to risks that, at the time any of our outstanding debt matures, we will not be able
to retire or refinance the debt on terms that are acceptable to us.
The current U.S. tax regime makes our results more difficult to predict.
Our effective tax rate may fluctuate in the future as a result of the current U.S. tax regime and the
continuing issuance of interpretive guidance related to the operations of U.S.-based multinational
corporations. These include significant changes in U.S. income tax law that has a meaningful impact on
our provision for income taxes and requires significant judgments and estimates in interpretation and
calculations. The enacted tax legislation included, among other provisions, limitations on the deductibility
of net interest expense, a tax on Global Intangible Low-Taxed Income ("GILTI"), and the Base Erosion and
Anti-Abuse Tax ("BEAT"). Given the significant complexity of the rules, and the potential for additional
guidance from U.S. Treasury, the Securities and Exchange Commission, the Financial Accounting
Standards Board or other regulatory authorities, recognized impacts in future periods could be
significantly different from our current estimates. Such uncertainty may also result in increased scrutiny
from, or disagreements with, tax authorities. In addition, changes under consideration to the current U.S.
tax regime, including to the GILTI minimum tax, further limitations on interest expense deductibility, and a
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book minimum tax, could increase the impact of the provision on our results. As a U.S.-domiciled
company, any such increases would have a disproportionate impact on us compared to our foreign-based
competitors.
Global Operations
We are exposed to multiple risks associated with the global nature of our operations.
We conduct business globally. In 2021, approximately 53% of the Company's total revenue was
generated from operations outside the United States, and over one-half of our employees were located
outside the United States. In addition, we conduct our operations through four separate businesses.
Potential conflicts of interest may arise across our businesses given the significant volume of our
engagements.
The geographic breadth of our activities also subjects us to significant legal, economic, operational,
market, compliance and reputational risks. These include, among others, risks relating to:
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economic and political conditions in the countries in which we operate;
client concentration in certain high-growth countries in which we operate;
the length of payment cycles and potential difficulties in collecting accounts receivable;
unexpected increases in taxes or changes in U.S. or foreign tax laws, rulings, policies or related
legal and regulatory interpretations, including upcoming changes to the U.K. statutory rate and
international initiatives to require multinational enterprises, like ours, to calculate and report
profitability on a country-by-country basis, which could increase scrutiny by, or cause
disagreements with, foreign tax authorities and the uncertainty around the implementation of the
new global minimum tax the framework of which was agreed by the members of the Organization
for Economic Cooperation and Development in late 2021;
potential transfer pricing-related tax exposures that may result from the flow of funds among our
subsidiaries and affiliates in the various jurisdictions in which we operate;
permanent establishments created due to colleagues traveling to and doing work in countries
where the company has no presence, or living in such countries and working remotely post-
pandemic, which are not properly compensated through transfer pricing;
our ability to obtain dividends or repatriate funds from our non-U.S. subsidiaries, including as a
result of the imposition of currency controls and other government restrictions on repatriation in
the jurisdictions in which our subsidiaries operate, fluctuations in foreign exchange rates and the
imposition of withholding and other taxes on such payments;
international hostilities, international trade disputes, geopolitical tensions in countries in which we
operate, terrorist activities, natural disasters, pandemics, and infrastructure disruptions;
local investment or other financial restrictions that foreign governments may impose;
potential lawsuits, investigations, market studies, reviews or other activity by foreign regulatory or
law enforcement authorities or legislatively appointed commissions, which may result in potential
modifications to our businesses, related private litigation or increased scrutiny from U.S. or other
regulators;
potential costs and difficulties in complying with a wide variety of foreign laws and regulations
(including tax systems) administered by foreign government agencies, some of which may conflict
with U.S. or other sources of law;
potential costs and difficulties in complying, or monitoring compliance, with foreign and U.S. laws
and regulations that are applicable to our operations abroad, including trade sanctions laws
relating to countries such as Belarus, Cuba, Crimea, Iran, Myanmar, North Korea, Russia, Syria
and Venezuela and anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the
U.K. Bribery Act 2010;
limitations or restrictions that foreign or U.S. governments and regulators may impose on the
products or services we sell, the methods by which we sell our products and services and the
manner in which and the amounts we are compensated;
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potential limitations or difficulties in protecting our intellectual property in various foreign
jurisdictions;
limitations that foreign governments may impose on the conversion of currency or the payment of
dividends or other remittances to us from our non-U.S. subsidiaries;
engaging and relying on third parties to perform services on behalf of the Company; and
potential difficulties in monitoring employees in geographically dispersed locations.
RISKS RELATING TO OUR RISK AND INSURANCE SERVICES SEGMENT
Our Risk and Insurance Services segment, conducted through Marsh and Guy Carpenter, represented
61% of the Company's total revenue in 2021. Our business in this segment is subject to particular risks.
Results in our Risk and Insurance Services segment may be adversely affected by a general
decline in economic activity.
Demand for many types of insurance and reinsurance generally rises or falls as economic growth
expands or slows. This dynamic affects the level of commissions and fees generated by Marsh and Guy
Carpenter. To the extent our clients become adversely affected by declining business conditions, they
may choose to limit their purchases of insurance and reinsurance coverage, as applicable, which would
inhibit our ability to generate commission revenue and other revenue based on premiums placed by us.
Also, the insurance they seek to obtain through us may be impacted by changes in their assets, property
values, sales or number of employees, which may reduce our commission revenue, and they may decide
not to purchase our risk advisory or other services, which would inhibit our ability to generate fee revenue.
Moreover, insolvencies and combinations associated with an economic downturn, especially insolvencies
and combinations in the insurance industry, could adversely affect our brokerage business through the
loss of clients or by limiting our ability to place insurance and reinsurance business, as well as our
revenues from insurers. Guy Carpenter is especially susceptible to this risk given the limited number of
insurance company clients and reinsurers in the marketplace.
Volatility or declines in premiums and other market trends may significantly impede our ability to
grow revenues and profitability.
A significant portion of our Risk and Insurance Services revenue consists of commissions paid to us out of
the premiums that insurers and reinsurers charge our clients for coverage. We do not determine the
insurance premiums on which our commissions are generally based. Our revenues and profitability are
subject to change to the extent that premium rates fluctuate or trend in a particular direction. The potential
for changes in premium rates is significant, due to the normal cycles of pricing in the commercial
insurance and reinsurance markets.
As traditional insurance companies continue to rely on non-affiliated brokers or agents to generate
premium, those insurance companies may seek to reduce their expenses by lowering their commission
rates. The reduction of these commission rates, along with general volatility or declines in premiums, may
significantly affect our revenue and profitability. Because we do not determine the timing or extent of
premium pricing changes, it is difficult to accurately forecast our commission revenues, including whether
they will significantly decline. As a result, we may have to adjust our plans for future acquisitions, capital
expenditures, dividend payments, loan repayments and other expenditures to account for unexpected
changes in revenues, and any decreases in premium rates may adversely affect the results of our
operations.
In addition to movements in premium rates, our ability to generate premium-based commission revenue
may be challenged by disintermediation and the growing availability of alternative methods for clients to
meet their risk-protection needs. This trend includes a greater willingness on the part of corporations to
self-insure, the use of captive insurers, and the presence of capital markets-based solutions for traditional
insurance and reinsurance needs. Further, the profitability of our Risk and Insurance Services segment
depends in part on our ability to be compensated for the analytical services and other advice that we
provide, including the consulting and analytics services that we provide to insurers. If we are unable to
achieve and maintain adequate billing rates for all of our services, our margins and profitability could
decline.
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Adverse legal developments and future regulations concerning how intermediaries are
compensated by insurers or clients, as well as allegations of anti-competitive behavior or conflicts
of interest more broadly, could have a material adverse effect on our business, results of
operations and financial condition.
The ways in which insurance intermediaries are compensated receive scrutiny from regulators in part
because of the potential for anti-competitive behavior and conflicts of interest. The vast majority of the
compensation that Marsh receives is in the form of retail fees and commissions that are paid by the client
or paid from premium that is paid by the client. The amount of other compensation that we receive from
insurance companies, separate from retail fees and commissions, has increased in the last several years,
both on an underlying basis and through acquisition and represented approximately 6% of Marsh's
revenue in 2021. This other compensation includes payment for (i) consulting and analytics services
provided to insurers; (ii) administrative and other services provided to insurers (including underwriting
services and services relating to the administration and management of quota shares, panels and other
facilities); and (iii) contingent commissions, primarily at MMA and outside the U.S., paid by insurers based
on factors such as volume or profitability. These other revenue streams present potential regulatory,
litigation and reputational risks that may arise from alleged anti-competitive behavior or conflicts of
interest, (including those arising from Guy Carpenter’s role as intermediary and advisor for insurance
companies), and future changes in the regulatory environment may impact our ability to collect such
revenue. Adverse regulatory, legal or other developments could have a material adverse effect on our
business and expose the Company to negative publicity and reputational harm.
RISKS RELATING TO OUR CONSULTING SEGMENT
Our Consulting segment, conducted through Mercer and Oliver Wyman Group, represented 39% of our
total revenue in 2021. Our businesses in this segment are subject to particular risks.
Mercer’s Investments business is subject to a number of risks, including risks related to market
fluctuations, third-party asset managers, operational and technology risks, conflicts of interest,
asset performance and regulatory compliance, that, if realized, could result in significant damage
to our business.
Mercer’s Investments business provides clients with digital tools, investment consulting and investment
management services. As of December 31, 2021, Mercer and its global affiliates had assets under
management of approximately $415 billion worldwide. In the investment consulting business, clients make
and implement their own investment decisions based upon research prepared or advice provided by
Mercer. In its investment management business, Mercer implements the client’s investment policy by
engaging, overseeing and making changes to the third-party asset managers who determine which
investments to buy and sell. To effect implementation of a client’s investment policy, Mercer may utilize its
"manager of managers" investment funds.
Mercer’s Investments business is subject to a number of risks, including risks related to litigation,
(particularly as we increasingly act in a fiduciary capacity), liquidity and market volatility, third-parties, our
operations and technology, conflicts of interest, asset performance and regulatory compliance and
scrutiny, which could arise in connection with these offerings. For example, Mercer’s manager research or
due diligence on an asset manager may fail to uncover material deficiencies or fraud that could result in
investment losses to a client. There is a risk that Mercer will fail to properly or timely implement a client’s
investment policy or direction, which could cause an incorrect or untimely allocation of client assets
among asset classes, asset managers, or strategies. Mercer may also be perceived as recommending
certain asset managers to clients, or offering delegated solutions to an investment consulting client, solely
to enhance its own compensation or due to other perceived conflicts of interest. Asset classes may
perform poorly, or asset managers may underperform their benchmarks, due to poor market performance,
a downturn in the global markets, negligence or other reasons, resulting in poor returns or loss of client
assets. Changes in the value of equity, debt, currency real estate, commodities, alternatives or other
asset classes, in particular as a result of a downturn in the global markets, could cause the value of our
assets under management or advisement, and the fees earned by Mercer to decline. These risks, if
realized, could result in significant liability and damage our business.
31
Revenues for the services provided by our Consulting segment may decline for various reasons,
including as a result of changes in economic conditions, the value of equity, debt and other asset
classes, our clients’ or an industry's financial condition or government regulation or an
accelerated trend away from actively managed investments to passively managed investments.
Global economic conditions, particularly the impact of COVID-19, may negatively impact businesses and
financial institutions. Many of our clients, including financial institutions, corporations, government entities
and pension plans, have reduced expenses, including amounts spent on consulting services, and used
internal resources instead of consultants during difficult economic periods. The evolving needs and
financial circumstances of our clients may reduce demand for our consulting services and could adversely
affect our revenues and profitability. If the economy or markets in which we operate experience weakness
or deteriorate, our business, financial condition and results of operations could be materially and
adversely affected.
In addition, some of Mercer's Investments business generate fees based upon the value of the clients’
assets under management or advisement. Changes in the value of equity, debt, currency, real estate,
commodities, alternatives or other asset classes could cause the value of assets under management or
advisement, and the fees received by Mercer, to decline. Such changes could also cause clients to
withdraw funds from Mercer’s Investments business in favor of other investment service providers. In
either case, our business, financial condition and results of operations could be materially and adversely
affected. Mercer’s Investments business also could be adversely affected by an accelerated shift away
from actively managed investments to passively managed investments with associated lower fees.
Further, revenue received by Mercer as investment manager to the majority of the Mercer-managed
investment funds is reported in accordance with U.S. GAAP on a gross basis rather than a net basis, with
sub-advisor fees reflected as an expense. Therefore, the reported revenue for these offerings does not
fully reflect the amount of net revenue ultimately attributable to Mercer.
Demand for many of Mercer's benefits services is affected by government regulation and tax laws,
rulings, policies and interpretations, which drive our clients' needs for benefits-related services. Significant
changes in government regulations affecting the value, use or delivery of benefits and human resources
programs, including changes in regulations relating to health and welfare plans, defined contribution plans
or defined benefit plans, may adversely affect the demand for or profitability of Mercer's services.
Factors affecting defined benefit pension plans and the services we provide relating to those
plans could adversely affect Mercer.
Mercer currently provides plan sponsors, plan trustees, multi-employer and public entity clients with
actuarial, consulting and administration services relating to defined benefit pension plans. The nature of
our work is complex. Many clients, particularly in the public sector, have sizeable pension deficits and are
subject to impact from volatility in the global markets and interest rate fluctuations. A number of Mercer's
clients have frozen or curtailed their defined benefit plans and have moved to defined contribution plans
resulting in reduced revenue for Mercer's retirement business. These developments, fee compression
pressures, and a continued or accelerated rate of decline in revenues for our defined benefit pension
plans business could adversely affect Mercer's business and operating results. In addition, our actuarial
services involve numerous assumptions and estimates regarding future and contingent events, including
interest rates used to discount future liabilities, estimated rates of return for a plan's assets, healthcare
cost trends, salary projections and participants' life expectancies. Mercer's consulting services involve the
drafting and interpretation of trust deeds and other complex documentation governing pension plans.
Mercer's administration services include calculating benefits within complicated pension plan structures.
Mercer's investments services include investment advice and management relating to defined benefit
pension plan assets intended to fund present and future benefit obligations. Clients dissatisfied with our
services have brought, and may bring, significant claims against us, particularly in the United States and
the United Kingdom.
The profitability of our Consulting segment may decline if we are unable to achieve or maintain
adequate utilization and pricing rates for our consultants.
The profitability of our Consulting businesses depends in part on ensuring that our consultants maintain
adequate utilization rates (i.e., the percentage of our consultants' working hours devoted to billable
activities). Our utilization rates are affected by a number of factors, including:
32
•
•
•
•
•
•
•
•
•
our ability to transition consultants promptly from completed projects to new assignments, and to
engage newly-hired consultants quickly in revenue-generating activities;
our ability to continually secure new business engagements, particularly because a portion of our
work is project-based rather than recurring in nature;
our ability to forecast demand for our services and thereby maintain appropriate headcount in
each of our geographies and workforces;
our ability to retain key colleagues and consulting professionals;
unanticipated changes in the scope of client engagements;
the potential for conflicts of interest that might require us to decline client engagements that we
otherwise would have accepted;
our need to devote time and resources to sales, training, professional development and other
non-billable activities;
the potential disruptive impact of acquisitions and dispositions; and
general economic conditions.
If the utilization rate for our consulting professionals declines, our revenues, profit margin and profitability
could decline.
In addition, the profitability of our Consulting businesses depends in part on the prices we are able to
charge for our services. The prices we charge are affected by a number of factors, including:
•
clients' perception of our ability to add value through our services;
• market demand for the services we provide;
•
•
•
•
our ability to develop new services and the introduction of new services by competitors;
the pricing policies of our competitors;
the extent to which our clients develop in-house or other capabilities to perform the services that
they might otherwise purchase from us; and
general economic conditions.
If we are unable to achieve and maintain adequate billing rates for our services, our profit margin and
profitability could decline.
Item 1B. Unresolved Staff Comments.
There are no unresolved comments to be reported pursuant to Item 1B.
Item 2. Properties.
The Company maintains its corporate headquarters in New York City. We also maintain other offices
around the world, primarily in leased space. In certain circumstances we may have space that we sublet
to third parties, depending upon our needs in particular locations.
The Company and certain of its subsidiaries own, directly and indirectly through special purpose
subsidiaries, a 58% condominium interest covering approximately 900,000 square feet of office space in a
44 story condominium in New York City. This real estate serves as the Company's headquarters and is
occupied primarily by the Company and its subsidiaries for general corporate use. The condominium
interests are financed by a 30-year mortgage loan that is non-recourse to the Company unless the
Company (i) is downgraded below B (stable outlook) by S&P or Fitch or B2 (stable outlook) by Moody's
and such downgrade is continuing or (ii) an event of default under the mortgage loan has occurred. The
mortgage is secured by a first priority assignment of leases and rents, including the leases which the
Company and certain of its subsidiaries entered into with their affiliated special purpose subsidiaries
which own the mortgaged condominium interests. The net rent due under those leases in effect services
the mortgage debt.
33
Item 3. Legal Proceedings.
We and our subsidiaries are party to a variety of other legal, administrative, regulatory and government
proceedings, claims and inquiries arising in the normal course of business.
Additional information regarding certain legal proceedings and related matters is set forth in Note 16,
Claims, Lawsuits and Other Contingencies, in the notes to the consolidated financial statements
appearing under Part II, Item 8 ("Financial Statements and Supplementary Data") of this report.
Item 4. Mine Safety Disclosures.
Not applicable.
34
PART II
Item 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
The Company’s common stock is listed on the New York, Chicago and London Stock Exchanges. The
following table indicates the high and low prices (NYSE composite quotations) of the Company’s common
stock during 2021 and 2020 and each quarterly period thereof:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
2021
Stock Price Range
Low
High
$106.95
$122.09
$121.31
$141.41
$137.85
$162.26
$151.37
$175.12
$106.95
$175.12
2020
Stock Price Range
Low
High
$74.33
$119.88
$78.95
$111.99
$106.83
$120.97
$102.11
$119.31
$74.33
$120.97
In November 2019, the Board of Directors of the Company authorized the Company to repurchase up to
$2.5 billion in shares of the Company's common stock, which superseded any prior authorizations. The
Company repurchased approximately 7.9 million shares of its common stock for $1.2 billion during 2021.
As of December 31, 2021, the Company remained authorized to repurchase up to approximately $1.3
billion in shares of its common stock. There is no time limit on the authorization.
The Company did not repurchase any of its common stock during 2020.
Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced Plans
or Programs
1,475,602 $
602,124 $
517,573 $
2,595,299 $
Maximum Number
(or Approximate
Dollar Value)
of Shares (or Units)
that May
Yet Be Purchased
Under the Plans or
Programs
1,451,375,478
1,351,988,213
1,263,976,239
1,263,976,239
Period
Oct 1-31, 2021
Nov 1-30, 2021
Dec 1-31, 2021
Total
Total Number
of Shares
(or Units)
Purchased
Average Price
Paid per Share
(or Unit)
1,475,602 $
602,124 $
517,573 $
2,595,299 $
161.0195
165.0611
170.0475
163.7576
As February 10, 2022, there were 4,365 stockholders of record.
35
Item 6. Selected Financial Data.
On November 19, 2020, the SEC adopted amendments to Regulation S-K (the "Amendments”), which
modernize, simplify and enhance certain financial disclosure requirements. The Amendments are effective
for fiscal years ending on or after August 9, 2021. The Company adopted the Amendments to Regulation
S-K for the year-ended December 31, 2021 and elected to exclude Item 6. Selected Financial Data and
the Selected Quarterly Data and Supplemental Information from this annual report on Form 10-K.
36
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
General
Marsh & McLennan Companies, Inc. and its consolidated subsidiaries (the "Company") is a global
professional services firm offering clients advice in the areas of risk, strategy and people. The Company’s
83,000 colleagues advise clients in over 130 countries. With annual revenue of nearly $20 billion, the
Company helps clients navigate an increasingly dynamic and complex environment through four market-
leading businesses. Marsh provides data-driven risk advisory services and insurance 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. 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.
The Company conducts business through two segments:
•
•
Risk and Insurance Services includes risk management activities (risk advice, risk transfer and
risk control and mitigation solutions) as well as insurance and reinsurance broking and services.
The Company conducts business in this segment through Marsh and Guy Carpenter.
Consulting includes health, wealth and career consulting services and products, and specialized
management, economic and brand consulting services. The Company conducts business in this
segment through Mercer and Oliver Wyman Group.
The results of operations in the Management Discussion & Analysis ("MD&A") includes an overview of the
Company’s consolidated 2021 results compared to the 2020 results, and should be read in conjunction
with the consolidated financial statements and notes. This section also includes a discussion of the key
drivers impacting the Company’s financial results of operations both on a consolidated basis and by
reportable segments.
We describe the primary sources of revenue and categories of expense for each segment in the
discussion of segment financial results. A reconciliation of segment operating income to total operating
income is included in Note 17, Segment Information, in the notes to the consolidated financial statements
included in Part II, Item 8 in this report.
For information and comparability of the Company's results of operations and liquidity and capital
resources for fiscal 2019, including the impact from the acquisition of Jardine Lloyd Thompson Group plc
("JLT"), see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations" of our Form 10-K for the fiscal year ended December 31, 2020.
This MD&A contains forward-looking statements as that term is defined in the Private Securities Litigation
Reform Act of 1995. See "Information Concerning Forward-Looking Statements" at the outset of this
report.
37
Financial Highlights
•
•
•
•
•
•
•
•
Consolidated revenue for the year 2021 was $19.8 billion, an increase of 15% compared with
2020, or 10% on an underlying basis.
Consolidated operating income increased $1.2 billion, or 41% to $4.3 billion in 2021 compared to
$3.1 billion in 2020. Net income attributable to the Company was $3.1 billion. Earnings per share
increased 56% to $6.13.
Risk and Insurance Services revenue for the year 2021 was $12.1 billion, an increase of 17%, or
10% on an underlying basis. Operating income was $3.1 billion, compared to $2.3 billion in 2020.
Consulting revenue for the year 2021 was $7.8 billion, an increase of 12%, or 10% on an
underlying basis. Operating income was $1.5 billion, compared with $1.0 billion in 2020.
In 2021, Marsh McLennan Agency ("MMA") completed a number of transactions, including the
acquisition of PayneWest, one of the largest independent agencies in the U.S.
In December 2021, the Company increased its ownership in Marsh India Insurance Brokers Pvt.
Ltd.("Marsh India") from 49% to 92%.
For the year ended December 31, 2021, the Company repurchased 7.9 million shares for $1.2
billion.
In 2021, the Company raised $750 million of senior notes and repaid $500 million of senior notes
in April 2021, and $500 million in December 2021 due in January 2022.
For additional details, refer to the Consolidated Results of Operations and Liquidity and Capital
Resources sections in this MD&A.
Business Update Related To COVID-19
The World Health Organization declared COVID-19 a pandemic in March 2020. For almost two years, the
pandemic has impacted businesses globally including virtually every geography in which the Company
operates. Our businesses have been resilient throughout the pandemic and demand for our advice and
services remains strong as the global economic conditions continue to improve.
Although the majority of our colleagues continue to work remotely, the Company has provided guidelines
on return to the office depending on the level of virus containment and local health and safety regulations
in each geography. The safety and well-being of our colleagues is paramount and the Company expects
to continue to service clients effectively in both the remote and in-office environments.
The Company had strong revenue growth in 2021 and benefited from the continued recovery of the global
economy. However, uncertainty remains in the economic outlook and the ultimate extent of the impact of
COVID-19 to the Company will depend on future developments that it is unable to predict, including new
"waves" of infection from emerging variants of the virus, potential renewed restrictions and mandates by
various governments or agencies, and the distribution and uptake of vaccines and vaccine boosters.
Acquisition of JLT
On April 1, 2019, the Company completed the acquisition (the "Transaction") of all of the outstanding
shares of JLT, a public company organized under the laws of England and Wales. As of December 31,
2021, the Company has substantially integrated JLT into all of its business operations.
After the acquisition of JLT, the Company assumed the legal liabilities of JLT’s litigation and regulatory
exposures as of April 1, 2019. Please see Note 16, Claims, Lawsuits and Other Contingencies, in the
notes to the consolidated financial statements, which discusses certain errors and omission matters
related to the acquisition.
JLT's results of operations for the period April 1, 2019 through December 31, 2019 are included in the
Company’s results of operations for 2019. JLT's results of operations for the period January 1 through
March 31, 2019 are not included in the Company's results of operations and therefore, affect
comparability. The Company’s results for the years ended December 31, 2021, 2020 and 2019 were
impacted by JLT related acquisition restructuring and integration costs as discussed in Note 14,
Integration and Restructuring Costs, in the notes to the consolidated financial statements.
38
Consolidated Results of Operations
For the Years Ended December 31,
(In millions, except per share data)
Revenue
Expense
Compensation and benefits
Other operating expenses
Operating expenses
Operating income
Income before income taxes
Net income before non-controlling interests
Net income attributable to the Company
Net income per share attributable to the Company
– Basic
– Diluted
Average number of shares outstanding
– Basic
– Diluted
Shares outstanding at December 31,
2021
2020
2019
$
19,820 $ 17,224 $
16,652
$
$
$
$
$
$
11,425
4,083
15,508
10,129
4,029
14,158
4,312 $
3,066 $
4,208 $
2,793 $
3,174 $
2,046 $
3,143 $
2,016 $
9,734
4,241
13,975
2,677
2,439
1,773
1,742
6.20 $
3.98 $
6.13 $
3.94 $
507
513
504
506
512
508
3.44
3.41
506
511
504
Consolidated operating income increased $1.2 billion, or 41% to $4.3 billion in 2021 compared to $3.1
billion in 2020, reflecting a 15% increase in revenue and a 10% increase in expenses. Revenue growth
was driven by increases in the Risk and Insurance Services and Consulting segments of 17% and 12%,
respectively, reflecting the strong demand for our advice and services and the improvement in global
economic conditions. The increase in expense is primarily due to increased headcount and higher
incentive compensation. These increases were partially offset by a reduction in JLT integration costs and
the JLT legacy E&O provision recorded in 2020.
Diluted earnings per share increased 56% to $6.13 in 2021 compared with $3.94 in 2020. The increase is
a result of higher operating income, lower interest expense and higher investment gains in 2021
compared to 2020. Results in 2021 also include a net charge of approximately $110 million related to the
re-measurement of deferred tax assets and liabilities due to the enactment of a tax rate increase from
19% to 25% in the U.K. in the second quarter of 2021, offset by no tax impact on the gain from the re-
measurement to fair value upon consolidation of the Company's previously held equity method investment
in India, tax benefits from share-based compensation and planning that included the utilization of foreign
tax credits and postponing the utilization of the losses in the U.K. to a future year when the tax rate will be
25%.
39
The following table summarizes restructuring and other items discussed in more detail below:
(In millions)
Restructuring costs, excluding JLT
Changes in contingent consideration
JLT integration and restructuring costs
JLT acquisition-related costs and other
JLT legacy E&O provision
Legal claims
Gain on consolidation of business
Disposal of businesses
Other
Impact on operating income
For the Years Ended December 31,
2021
2020
2019
$
70 $
89 $
57
93
81
(69)
62
(267)
(49)
—
26
251
54
161
—
—
(8)
5
112
68
335
150
—
—
—
1
8
$
(22) $
578 $
674
In 2021 and 2020, the Company’s results of operations and earnings per share were impacted by the
following items:
•
•
•
•
•
•
Restructuring costs, excluding JLT: Includes severance, adjustments to restructuring liabilities
for future rent under non-cancellable leases and other real estate exit costs, and restructuring
costs related to the integration of recent acquisitions. These costs are discussed in more detail in
Note 14, Integration and Restructuring, in the notes to the consolidated financial statements.
Changes in contingent consideration: Primarily includes the change in fair value of contingent
consideration related to acquisitions and dispositions as measured each quarter.
JLT integration and restructuring costs: Includes severance, real estate and technology
rationalization, process management consulting fees, and legal fees for the rationalization of legal
entity structures. The Company has incurred JLT integration and restructuring costs of $679
million through 2021 and expects to incur the remaining $46 million in 2022, primarily related to
real estate and technology, of which approximately $42 million will be cash expenditures. The
Company has realized at least $425 million of annualized savings. These costs are discussed in
more detail in Note 14, Integration and Restructuring, in the notes to the consolidated financial
statements. The Company expects to complete the integration of JLT during 2022.
JLT acquisition-related costs and other: Includes retention and legal charges related to the
acquisition of JLT.
JLT legacy E&O provision: In 2021, the Company recorded a $36 million reduction in the
liability as well as $33 million of recoveries under indemnities for a legacy JLT Errors and
Omissions ("E&O") provision relating to suitability of financial advice provided to individuals for
defined benefit pension transfers. The reduction in liability primarily reflects lower redress
payments than previously estimated, partly offset by higher costs to review and calculate redress.
In 2020, the Company recorded an increase in the liability of $161 million related to this matter.
See Note 16, Claims, Lawsuits and Other Contingencies, in the notes to the consolidated
financial statements.
Legal claims: The Company recorded settlement charges and legal costs related to strategic
recruiting.
• Gain on consolidation of business: 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. In connection with the increased
investment in Marsh India, the Company recorded a gain of $267 million, related to the re-
measurement of its previously held investment to fair value.
40
•
Disposal of businesses: During 2021, the Company disposed of certain businesses 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. Results in 2020 include a contingent gain adjustment from the U.S. large market health
and defined benefit administration business disposed in 2019.
Consolidated Revenue and Expense
Revenue - Components of Change
The Company conducts business in 130 countries. As a result, foreign exchange rate movements may
impact period-to-period comparisons of revenue. Similarly, certain other items such as the revenue impact
of acquisitions and dispositions, including transfers among businesses, may impact period-to-period
comparisons of revenue. Underlying revenue measures the change in revenue from one period to another
by isolating these impacts.
The impact of foreign currency exchange fluctuations, acquisitions and dispositions, including transfers
among businesses, on the Company’s operating revenues by segment are as follows:
(In millions, except
percentages)
Risk and Insurance
Services
Marsh
Guy Carpenter
Subtotal
Fiduciary Interest Income
Total Risk and Insurance
Services
Consulting
Mercer
Oliver Wyman Group
Total Consulting
Corporate Eliminations
Year Ended
December 31,
2021
2020
%
Change
GAAP
Revenue
Components of Revenue Change*
Currency
Impact
Acquisitions/
Dispositions/
Other Impact
Underlying
Revenue
$ 10,203 $ 8,595
1,696
10,291
46
1,867
12,070
15
19 %
10 %
17 %
12,085
10,337
17 %
5,254
2,535
7,789
(54)
4,928
2,048
6,976
(89)
7 %
24 %
12 %
2 %
1 %
2 %
2 %
3 %
2 %
3 %
6 %
—
5 %
11 %
9 %
11 %
5 %
10 %
(1)%
—
—
5 %
21 %
10 %
Total Revenue
$ 19,820 $ 17,224
15 %
2 %
3 %
10 %
* Components of revenue change may not add due to rounding.
41
The following table provides more detailed revenue information for certain of the components presented
above:
(In millions, except percentages)
Marsh:
EMEA
Asia Pacific
Latin America
Total International
U.S./Canada
Total Marsh
Mercer:
Wealth
Health
Career
Total Mercer
Year Ended
December 31,
2021
2020
$ 2,946 $2,575
1,059
424
4,058
4,537
$10,203 $8,595
1,462
453
4,861
5,342
2,509
1,855
890
2,348
1,793
787
$ 5,254 $4,928
%
Change
GAAP
Revenue
14 %
38 %
7 %
20 %
18 %
19 %
7 %
3 %
13 %
7 %
* Components of revenue change may not add due to rounding.
Consolidated Revenue
Components of Revenue Change*
Acquisitions/
Dispositions/
Other Impact
Underlying
Revenue
Currency
Impact
4 %
4 %
(2)%
4 %
1 %
2 %
4 %
1 %
2 %
3 %
1 %
25 %
—
7 %
4 %
6 %
(1)%
(1)%
—
(1)%
9 %
9 %
9 %
9 %
13 %
11 %
4 %
3 %
12 %
5 %
Consolidated revenue increased $2.6 billion, or 15%, to $19.8 billion in 2021, compared to $17.2 billion in
2020. Consolidated revenue increased 10% on an underlying basis, 2% from the impact of foreign
currency translation and 3% from acquisitions. On an underlying basis, revenue increased 10% for the
year ended December 31, 2021 in both the Risk and Insurance Services and Consulting segments.
Underlying growth in the Risk and Insurance Services and Consulting segments was driven by the strong
demand for our advice and services and the improvement in global economic conditions.
Consolidated Operating Expense
Consolidated operating expenses increased $1.3 billion, or 10%, to $15.5 billion in 2021 compared to
$14.2 billion in 2020, reflecting increases of 6% on an underlying basis, 2% from the impact of foreign
currency translation and 1% from acquisitions. On an underlying basis, expenses increased 8% and 3%
in 2021 in the Risk and Insurance Services and Consulting segments, respectively. Underlying expenses
in 2021 is primarily due to increased headcount and higher incentive compensation.
Risk and Insurance Services
In the Risk and Insurance Services segment, the Company’s subsidiaries and other affiliated entities act
as brokers, agents or consultants for insureds, insurance underwriters and other brokers in the areas of
risk management, insurance broking and insurance program management services, primarily under the
name of Marsh, and engage in reinsurance broking, catastrophe and financial modeling services and
related advisory functions, primarily under the name of Guy Carpenter.
Marsh and Guy Carpenter are compensated for brokerage and consulting services through commissions
and fees. Commission rates and fees vary in amount and can depend on a number of factors, including
the type of insurance or reinsurance coverage provided, the particular insurer or reinsurer selected, and
the capacity in which the broker acts and negotiates with clients. Revenues can be affected by premium
rate levels in the insurance/reinsurance markets, the amount of risk retained by insurance and
reinsurance clients and by the value of the risks that have been insured since commission-based
compensation is frequently related to the premiums paid by insureds and reinsureds. In many cases, fee
compensation may be negotiated in advance, based on the type of risk, coverage required and service
provided by the Company and ultimately, the extent of the risk placed into the insurance market or
retained by the client. The trends and comparisons of revenue from one period to the next can be affected
by changes in premium rate levels, fluctuations in client risk retention and increases or decreases in the
42
value of risks that have been insured, as well as new and lost business, and the volume of business from
new and existing clients.
In addition to compensation from its clients, Marsh also receives other compensation, separate from retail
fees and commissions, from insurance companies. This other compensation includes, among other
things, payment for consulting and analytics services provided to insurers; compensation for
administrative and other services (including fees for underwriting services and services provided to or on
behalf of insurers relating to the administration and management of quota shares, panels and other
facilities in which insurers participate); and contingent commissions, which are paid by insurers based on
factors such as volume or profitability of Marsh's placements, primarily driven by MMA and parts of
Marsh's international operations. Marsh and Guy Carpenter receive interest income on certain funds
(such as premiums and claims proceeds) held in a fiduciary capacity for others. The investment of
fiduciary funds is regulated by state and other insurance authorities. These regulations typically require
segregation of fiduciary funds and limit the types of investments that may be made with them. Interest
income from these investments varies depending on the amount of funds invested and applicable interest
rates, both of which vary from time to time. For presentation purposes, fiduciary interest is segregated
from the other revenues of Marsh and Guy Carpenter and separately presented within the segment, as
shown in the previous revenue by segments tables.
The results of operations for the Risk and Insurance Services segment are presented below:
(In millions, except percentages)
Revenue
Compensation and benefits
Other operating expenses
Operating expenses
Operating income
Operating income margin
Revenue
2021
$ 12,085
6,506
2,499
9,005
3,080
$
2020
$ 10,337
5,690
2,301
7,991
2,346
$
2019
9,599
5,370
2,396
7,766
1,833
$
$
25.5 %
22.7 %
19.1 %
Revenue in the Risk and Insurance Services segment increased $1.7 billion, or 17%, to $12.1 billion in
2021 compared with $10.3 billion in 2020. Revenue grew 10% on an underlying basis, 5% from the
impact of acquisitions, and 2% related to the impact of foreign currency translation. The increase in
underlying revenue was primarily due to strong growth in new business, solid retention, and benefits from
pricing in the marketplace.
In Marsh, revenue increased $1.6 billion, or 19%, to $10.2 billion in 2021 compared to $8.6 billion in 2020.
This reflects increases of 11% on an underlying basis, 6% from the impact of acquisitions, and 2% from
the impact of foreign currency translation. In 2021, the increase in revenue from acquisitions reflects the
gain of $267 million related to the re-measurement of the previously held equity method investment in
Marsh India. On an underlying basis, U.S./Canada rose 13%. Total International operations, which
includes Asia Pacific, Latin America and EMEA each produced underlying revenue growth of 9%
compared to prior year.
At Guy Carpenter, revenue increased $171 million, or 10%, to $1.9 billion in 2021 compared with $1.7
billion in 2020. On an underlying basis, revenue increased 9%.
The Risk and Insurance Services segment completed eight acquisitions during 2021. Information
regarding those acquisitions is included in Note 5, Acquisitions and Dispositions, in the notes to the
consolidated financial statements.
Operating Expense
Expense in the Risk and Insurance Services segment increased $1.0 billion, or 13%, to $9.0 billion in
2021 compared with $8.0 billion in 2020. This reflects increases of 8% on an underlying basis, 2% from
the impact of foreign currency, and 2% from acquisitions. The increase in underlying expense reflects
increased headcount and higher incentive compensation, partly offset by lower JLT integration and
restructuring costs.
43
Consulting
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 serves as critical strategic, economic and brand advisor to private sector and governmental
clients.
The major component of revenue in the Consulting business is fees paid by clients for advice and
services. Mercer, principally through its health line of business, also earns revenue in the form of
commissions received from insurance companies for the placement of group (and occasionally individual)
insurance contracts, primarily life, health and accident coverages. Revenue for Mercer’s investment
management business and certain of Mercer’s defined contribution administration services consists
principally of fees based on assets under management or administration. For a majority of the Mercer
managed investment funds, revenue is recorded on a gross basis with sub-advisor fees included in other
operating expenses.
Revenue in the Consulting segment is affected by, among other things, global economic conditions,
including changes in clients’ particular industries and markets. Revenue is also affected by competition
due to the introduction of new products and services, broad trends in employee demographics, including
levels of employment, the effect of government policies and regulations, and fluctuations in interest and
foreign exchange rates. Revenues from investment management services and retirement trust and
administrative services are significantly affected by the level of assets under management or
administration, which is impacted by securities market performance.
The results of operations for the Consulting segment are presented below:
(In millions, except percentages)
Revenue
Compensation and benefits
Other operating expenses
Operating expenses
Operating income
Operating income margin
Revenue
2021
7,789
4,435
1,850
6,285
1,504
$
$
19.3 %
$
$
2020
6,976
3,995
1,987
5,982
994
14.3 %
$
$
2019
7,143
3,934
1,999
5,933
1,210
16.9 %
Consulting revenue increased $813 million, or 12%, to $7.8 billion in 2021 compared with $7.0 billion in
2020. This reflects increases of 10% on an underlying basis and 3% from the impact of foreign currency
translation.
Mercer's revenue increased $326 million, or 7%, to $5.3 billion in 2021 compared to $4.9 billion in 2020,
or 5% on an underlying basis. Revenue also reflects an increase of 3% from the impact of foreign
currency translation offset by a decrease of 1% from disposition of businesses. On an underlying basis,
revenue for Career, Wealth and Health increased 12%, 4% and 3%, respectively. The increase in
underlying revenue at Mercer for the year ended December 31, 2021 was due to higher investment
management fees from growth in assets under management and increased demand and retention for
Health and Career products and services.
Oliver Wyman Group's revenue increased $487 million, or 24%, to $2.5 billion in 2021 compared with
$2.0 billion in 2020, reflecting an increase of 21% on an underlying basis and 2% from the impact of
foreign currency translation. The increase in underlying revenue at Oliver Wyman for the year ended
December 31, 2021 primarily reflects the impact of increased demand for project-based services across
all industries.
The Consulting segment completed one acquisition during 2021. Information regarding the acquisition is
included in Note 5, Acquisitions and Dispositions, in the notes to the consolidated financial statements.
44
Operating Expense
Consulting expenses increased $303 million, or 5%, to $6.3 billion in 2021 compared to $6.0 billion in
2020. This reflects an increase of 3% on an underlying basis and 2% from the impact of foreign currency
translation. The increase in underlying expense in the Consulting segment in 2021 is primarily due to
increased headcount and higher incentive compensation. This is partially offset by a $69 million reduction
in the legacy JLT E&O provision including recoveries under indemnities. In 2020, the Company recorded
an increase in the liability of $161 million for the same matter.
Corporate and Other
Corporate expense in 2021 was $272 million compared with $274 million in 2020. Expenses decreased
1% on an underlying basis due to lower integration and restructuring costs primarily related to the JLT
Transaction and savings realized from the completion of integration efforts to date, partly offset by higher
headcount and incentive compensation.
Other Corporate Items
Interest
Interest expense decreased $71 million to $444 million in 2021 compared to $515 million in 2020 due to
lower average debt levels in 2021 compared to the prior year.
Investment Income (Loss)
The caption "Investment income (loss)" in the consolidated statements of income comprises realized and
unrealized gains and losses from investments. 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 its investments in private equity funds. The
Company's investments may include direct investments in insurance, consulting or other strategically
linked companies, and private equity funds.
The Company recorded net investment income of $61 million in 2021 compared to a net investment loss
of $22 million in 2020. The income in 2021 is primarily driven by gains in the Company's private equity
investments. The loss in 2020 was primarily due to a loss from the sale of shares of Alexander Forbes
("AF").
Income Taxes
The Company's consolidated effective tax rate was 24.6% and 26.7% in 2021 and 2020, respectively. The
rates in all periods reflect the effects of tax planning and the impact of regulatory and other guidance as it
became available.
The rate for the year ended December 31, 2021 reflects:
•
•
•
The charge for re-measuring the Company’s U.K. deferred tax assets and liabilities upon the
enactment of legislation on June 10, 2021, commonly referred to as the "Finance Act 2021." The
legislation increased the U.K. corporate income tax rate from 19% to 25% effective April 1, 2023.
This is the most significant discrete item in the year-to-date period, increasing the Company’s
effective tax rate by 2.6% for the year ended December 31, 2021.
The tax effect of the gain from the fair value re-measurement of the Company’s previously held
equity method investment in Marsh India upon the Company increasing its ownership interest
from 49% to 92%. The Company has indefinitely reinvested this gain, as it has no intent to
dispose of the business, and did not record tax on the gain. This decreased the Company’s
effective tax rate by 1.5% for the year ended December 31, 2021.
Tax benefits from planning implemented in the period that postponed the utilization of losses in
the U.K. to a future year when the tax rate will be 25%.
The tax rate in 2020 includes a valuation allowance for certain tax credits, the impact of uncertain tax
positions, and certain tax planning benefits. The rate in 2020 also reflects costs of re-measuring the
Company’s U.K. deferred tax assets and liabilities upon the enactment of legislation that cancelled a 2%
reduction in the U.K. corporate income tax rate, partially offset by tax benefits for the implementation of a
new international funding structure to facilitate global staffing and contracting.
45
The tax rates in all 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 non-taxable adjustments to contingent acquisition consideration.
The effective tax rate may vary significantly from period to period for the foreseeable future. The effective
tax rate is sensitive to the geographic mix of earnings and repatriation of the Company's earnings, which
may result in higher or lower tax rates. In 2021, pre-tax income in the U.K., Barbados, Canada, Ireland,
Bermuda, and Australia accounted for approximately 60% of the Company's total non-U.S. pre-tax
income, with effective rates in those countries of 21% (excluding the non-cash deferred tax impact of U.K.
tax legislation enacted in 2021), 1%, 27%, 17%, 0.3% and 16%, respectively.
In addition, losses in certain jurisdictions cannot be offset by earnings from other operations, and may
require valuation allowances that affect the rate, depending on estimates of the value of associated
deferred tax assets which can be realized. A valuation allowance was recorded to reduce deferred tax
assets to the amount that the Company believes is more likely than not to be realized. Details are
provided in Note 7, Income Taxes, in the notes to the consolidated financial statements. The effective 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, rulings, policies or related legal and regulatory interpretations occur frequently and
may also have significant favorable or adverse impacts on our effective tax rate.
As a U.S. domiciled parent holding company, the Company is the issuer of essentially all of the
Company's external indebtedness, and incurs the related interest expense in the U.S. The Company’s
interest expense deductions are not currently limited. Further, most senior executive and oversight
functions are conducted in the U.S. and the associated costs are incurred primarily in the U.S. Some of
these expenses may not be deductible in the U.S., which may impact the effective tax rate.
The quasi-territorial tax regime provides an opportunity for the Company to repatriate foreign earnings
more tax efficiently and there is less incentive for permanent reinvestment of these earnings. However,
permanent reinvestment continues to be a component of the Company’s global capital strategy. The
Company continues to evaluate its global investment and repatriation strategy in light of our capital
requirements and potential costs of repatriation.
The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was signed into law on March
27, 2020. The CARES Act provided over $2 trillion in economic relief to individuals, governmental
agencies and companies, to deal with the public health and economic impacts of COVID-19. Pursuant to
the CARES Act, the Company deferred payroll taxes due from March 27, 2020 through December 31,
2020 and paid 50% in 2021 and will pay the remaining 50% in 2022.
Liquidity and Capital Resources
The Company is organized as a legal entity separate and distinct from its operating subsidiaries. As the
Company does not have significant operations of its own, the Company is dependent upon dividends and
other payments from its operating subsidiaries to pay principal and interest on its outstanding debt
obligations, pay dividends to stockholders, repurchase its shares and pay corporate expenses. The
Company can also provide financial support to its operating subsidiaries for acquisitions, investments and
certain parts of their business that require liquidity, such as the capital markets business of Guy
Carpenter. Other sources of liquidity include borrowing facilities in financing cash flows.
The Company derives a significant portion of its revenue and operating profit from operating subsidiaries
located outside of the U.S. Funds from those operating subsidiaries are regularly repatriated to the U.S.
out of annual earnings. At December 31, 2021, the Company had approximately $737 million of cash and
cash equivalents in its foreign operations, which includes $280 million of operating funds required to be
maintained for regulatory requirements or as collateral under certain captive insurance arrangements.
The Company expects to continue its practice of repatriating available funds from its non-U.S. operating
subsidiaries out of current annual earnings. Where appropriate, a portion of the current year earnings will
continue to be permanently reinvested.
During 2021, the Company recorded foreign currency translation adjustments which decreased net equity
by $389 million. Continued weakening of the U.S. dollar against foreign currencies would further increase
the translated U.S. dollar value of the Company’s net investments in its non-U.S. subsidiaries, as well as
46
the translated U.S. dollar value of cash repatriations from those subsidiaries. Conversely, strengthening of
the U.S. dollar against foreign currencies would decrease the translated U.S. dollar value of the
Company’s net investments in its non-U.S. subsidiaries, as well as the translated U.S. dollar value of cash
repatriations from those subsidiaries.
Cash and cash equivalents on our consolidated balance sheets includes funds available for general
corporate purposes. Funds held on behalf of clients in a fiduciary capacity are segregated and shown
separately in the consolidated balance sheets as an offset to fiduciary liabilities. Fiduciary funds cannot
be used for general corporate purposes, and should not be considered as a source of liquidity for the
Company.
Operating Cash Flows
The Company generated $3.5 billion of cash from operations in 2021 and $3.4 billion in 2020. These
amounts reflect the net income of the Company during those periods, excluding gains or losses from
investments, adjusted for non-cash charges and changes in working capital which relate primarily to the
timing of payments of accrued liabilities or receipts of assets and pension contributions.
Pension-Related Items
Contributions
During 2021, the Company contributed $35 million to its U.S. pension plans and $95 million to non-U.S.
pension plans compared to contributions of $65 million to U.S. plans and $78 million to non-U.S. plans in
2020.
In the U.S., contributions to the tax-qualified defined benefit plans are based on ERISA guidelines and the
Company generally expects to maintain a funded status of 80% or more of the liability determined in
accordance with the ERISA guidelines. In 2021, the Company made $30 million of contributions to non-
qualified plans and $5 million to its qualified plans. The Company expects to contribute approximately $31
million to its non-qualified U.S. pension plans in 2022. The Company is not required to make any
contributions to its U.S. qualified plan in 2022.
Outside the U.S., the Company has a large number of non-U.S. defined benefit pension plans, the largest
of which are in the U.K., which comprise approximately 81% of non-U.S. plan assets at December 31,
2021. Contribution rates for non-U.S. plans are generally based on local funding practices and statutory
requirements, which may differ significantly from measurements under U.S. GAAP.
The Company contributed $55 million to its U.K. plans in 2021. The Company's contributions to its U.K.
plans in 2022 are expected to be approximately $124 million.
In the U.K., the assumptions used to determine pension contributions are the result of legally-prescribed
negotiations between the Company and the plans' trustee that typically occur every three years in
conjunction with the actuarial valuation of the plans. Currently, this results in a lower funded status
compared to U.S. GAAP and may result in contributions irrespective of the U.S. GAAP funded status.
During 2021, the JLT Pension Scheme was merged into the MMC U.K. Pension Fund with a new
segregated JLT section created. The Company made deficit contributions of $38 million to the JLT section
in 2021 and is expected to make contributions totaling approximately $112 million in 2022. The funding
level of the JLT section will be reassessed during 2022 to determine contributions in 2023 and onwards.
For the MMC U.K. Pension Fund, excluding the JLT section, an agreement was reached with the trustee
in fourth quarter of 2019 based on the surplus funding position at December 31, 2018. In accordance with
the agreement, no deficit funding is required until 2023. The funding level will be re-assessed during 2022
as part of the December 31, 2021 actuarial valuation to determine if contributions are required in 2023. As
part of a long-term strategy which depends on having greater influence over asset allocation and overall
investment decisions, in November 2019, the Company renewed its agreement to support annual deficit
contributions by the U.K. operating companies under certain circumstances, up to £450 million over a
seven-year period.
In the aggregate, the Company expects to contribute approximately $147 million to its non-U.S. defined
benefit plans in 2022, comprising approximately $124 million to the U.K. plans and $23 million to plans
outside of the U.K.
47
Changes in Funded Status and Expense
The year-over-year change in the funded status of the Company's pension plans is impacted by the
difference between actual and assumed results, particularly with regard to return on assets, and changes
in the discount rate, as well as the amount of Company contributions, if any. Unrecognized actuarial
losses were approximately $1.8 billion and $2.9 billion at December 31, 2021 for the U.S. plans and non-
U.S. plans, respectively, compared with losses of $2.4 billion and $3.5 billion at December 31, 2020. The
decreases in both the U.S. and non-U.S. plans were primarily due to an increase in the discount rate used
to measure plan liabilities and an increase in asset values. In the past several years, the amount of
unamortized losses has been significantly impacted, both positively and negatively, by actual asset
performance and changes in discount rates. The discount rate used to measure plan liabilities in 2021
increased in the U.S. and U.K., the Company's largest plans, following decreases in 2020 and 2019. An
increase in the discount rate decreases the measured plan benefit obligation, resulting in actuarial gains,
while a decrease in the discount rate increases the measured plan obligation, resulting in actuarial losses.
During 2021, the Company's defined benefit pension plan assets had gains of 13.2% and 1.9% in the
U.S. and U.K., respectively, as compared to gains of 13.1% and 12.0% in the U.S. and U.K., respectively,
in 2020.
Overall, based on the measurement at December 31, 2021, net benefit credits related to the Company’s
defined benefit plans are expected to decrease in 2022 by approximately $23 million compared to 2021,
reflecting a decrease in non-U.S. plans of approximately $40 million, offset by an increase in U.S. plans of
$17 million.
The Company’s accounting policies for its defined benefit pension plans, including the selection of and
sensitivity to assumptions, are discussed in Management’s Discussion of Critical Accounting Policies. For
additional information regarding the Company’s retirement plans, see Note 1, Summary of Significant
Accounting Policies, and Note 8, Retirement Benefits, in the notes to the consolidated financial
statements.
Financing Cash Flows
Net cash used for financing activities was $1.3 billion in 2021 compared with $925 million used by
financing activities in 2020.
Credit Facilities
On April 2, 2021, the Company entered into an amended and restated multi-currency unsecured $2.8
billion five-year revolving credit facility ("New Facility"). The interest rate on the New Facility is based on
LIBOR plus a fixed margin which varies with the Company’s credit ratings. The New Facility expires in
April 2026 and requires the Company to maintain certain coverage and leverage ratios which are tested
quarterly. The New 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 December 31, 2021, the Company had no borrowings
under this facility. In connection with the New Facility, the Company terminated its previous multicurrency
unsecured $1.8 billion five-year revolving credit facility and its unsecured $1.0 billion 364-day unsecured
revolving credit facility.
In January 2020, the Company entered into two new term loan facilities: a $500 million one-year facility
and a $500 million two-year facility. During 2020, the Company borrowed and repaid $1.0 billion against
these facilities. These two facilities were terminated as of December 31, 2020 after repayment of the
initial draw down.
The Company also maintains other credit facilities, guarantees and letters of credit with various banks,
aggregating $508 million at December 31, 2021 and $573 million at December 31, 2020. There were no
outstanding borrowings under these facilities as of December 31, 2021 or as of December 31, 2020.
Debt
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 no commercial paper outstanding at December 31, 2021.
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
48
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.
In December 2020, the Company repaid $700 million of maturing senior notes and $300 million of floating
rate notes with an original maturity of December 2021.
In May 2020, the Company issued $750 million of 2.250% senior notes due 2030. The Company used the
net proceeds from this offering to pay outstanding borrowings under the revolving credit facility.
In March 2020, the Company repaid $500 million of maturing senior notes.
The Company's senior debt is currently rated A- by Standard & Poor's and Baa1 by Moody's. The
Company's short-term debt is currently rated A-2 by Standard & Poor's and P-2 by Moody's. The
Company carries a Stable outlook with both Standard & Poor's and Moody's.
Share Repurchases
In November 2019, the Board of Directors authorized an increase in the Company’s share repurchase
program, which supersedes any prior authorization, allowing management to buy back up to $2.5 billion of
the Company’s common stock. During 2021, the Company repurchased 7.9 million shares of its common
stock for total consideration of approximately $1.2 billion. As of December 31, 2021, the Company
remained authorized to purchase shares of its common stock up to a value of approximately $1.3 billion.
There is no time limit on this authorization.
The Company did not repurchase any of its common stock during 2020.
Dividends
The Company paid total dividends of $1.0 billion in 2021 ($2.00 per share) and $943 million in 2020
($1.84 per share).
Contingent Payments Related To Acquisitions
The classification of contingent consideration payments in the consolidated statement 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 Years Ended December 31,
(In millions)
Operating:
Contingent consideration payments
Prior years' dispositions cash received
Acquisition related net charge for adjustments
Adjustments and payments related to contingent consideration
Financing:
Contingent purchase consideration
Deferred purchase consideration related to prior years' acquisitions
Payments of deferred and contingent consideration for acquisitions
2021
2020
2019
$
(49) $
(48) $
(41)
19
57
—
26
27 $
(22) $
(28) $
(54) $
(89)
(68)
(117) $
(122) $
$
$
$
—
68
27
(22)
(43)
(65)
Receipt of contingent consideration related to prior years' dispositions $
71 $
— $
—
49
Derivatives
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. As part
of its risk management program to fund the JLT acquisition, the Company issued €1.1 billion Senior
Notes, and designated the debt instruments as a net investment hedge of its Euro denominated
subsidiaries. The hedge 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 hedge is highly effective, the change in the debt balance related to foreign
exchange fluctuations will be recorded in foreign currency translation gains (losses) in the consolidated
balance sheet. The U.S. dollar value of the Euro notes decreased by $100 million during 2021 related to
the change in foreign exchange rates. The Company concluded that the hedge was highly effective and
recorded a decrease to accumulated other comprehensive loss for the year ended December 31, 2021.
Fiduciary Liabilities
Since cash and cash equivalents held in a fiduciary capacity are not available for corporate use, they are
shown in the consolidated balance sheet as an offset to fiduciary liabilities. Financing cash flows reflect
an increase of $1.2 billion and $955 million in 2021 and 2020, respectively, related to the increase in
fiduciary liabilities.
Investing Cash Flows
Net cash used for investing activities amounted to $1.2 billion in 2021 compared with $793 million used
for investing activities in 2020.
The Company paid $859 million and $647 million, net of cash, cash equivalents and cash and cash
equivalents held in a fiduciary capacity acquired, for acquisitions it made during 2021 and 2020,
respectively, including the Company's increased ownership interest in Marsh India from 49% to 92% in
December 2021.
During 2021 and 2020, the Company sold certain businesses, primarily in the U.S. and U.K., for cash
proceeds of approximately $84 million and $98 million, respectively.
The Company sold 242 million shares of the common stock of AF during 2020.
The Company’s additions to fixed assets and capitalized software, which amounted to $406 million in
2021 and $348 million in 2020, primarily related to computer equipment purchases, the refurbishing and
modernizing of office facilities, and software development costs.
The Company has commitments for potential future investments of approximately $52 million in six
private equity funds that invest primarily in financial services companies.
Commitments and Obligations
The following sets forth the Company’s future contractual obligations by the types identified in the table
below as of December 31, 2021:
Contractual Obligations
(In millions)
Current portion of long-term debt
Long-term debt
Interest on long-term debt
Net operating leases
Service agreements
Other long-term obligations
Total
Total
$
17 $
11,002
5,222
2,499
325
631
$ 19,696 $
50
Payment due by Period
1-3
Years
4-5
Years
Within
1 Year
After 5
Years
17 $
—
412
389
209
209
1,236 $
— $
2,236
763
657
84
402
4,142 $
— $
1,762
616
529
26
18
—
7,004
3,431
924
6
2
2,951 $ 11,367
The above table does not include the liability for unrecognized tax benefits of $94 million as the Company
is unable to reasonably predict the timing of settlement of these liabilities, other than approximately $34
million that may become payable during 2022.
The above does not include the remaining transitional tax payments related to the Tax Cuts and Jobs Act
("TCJA") of $62 million, which will be paid in installments beginning in 2023 through 2026.
Management’s Discussion of Critical Accounting Policies and Estimates
Management makes estimates and judgments that affect reported amounts of assets, liabilities, revenue
and expenses, and disclosure of contingent assets and liabilities. Management considers the policies
discussed below to be critical to understanding the Company’s financial statements because their
application places the most significant demands on management’s judgment, and requires management
to make estimates about the effect of matters that are inherently uncertain. Actual results may differ from
those estimates.
Revenue Recognition
In the Risk and Insurance Services segment, judgments related to the amount of variable revenue
consideration to ultimately be received on placement of quota share reinsurance treaties and contingent
commission from insurers, which was previously recognized when the contingency was resolved, now
requires significant judgments and estimates.
Management also makes significant judgments and estimates to measure the progress toward completing
performance obligations and realization rates for consideration related to contracts as well as potential
performance-based fees in the Consulting segment.
The Company capitalizes the incremental costs to obtain contracts primarily related to commissions or
sales bonus payments. These deferred costs are amortized over the expected life of the underlying
customer relationships. The Company also capitalizes certain pre-placement costs that are considered
fulfillment costs that are amortized at a point in time when the associated revenue is recognized.
See Note 2, Revenue, in the notes to the consolidated financial statements for additional information.
Legal and Other Loss Contingencies
The Company and its subsidiaries are subject to numerous claims, lawsuits and proceedings including
claims for errors and omissions ("E&O"). The Company records a liability when a loss is both probable
and reasonably estimable which requires significant management judgment. The Company utilizes case
level reviews by inside and outside counsel, an internal actuarial analysis by Oliver Wyman, a subsidiary
of the Company, and other methods to estimate potential losses. 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. Given the unpredictability of E&O claims and of
litigation that could arise from such claims, it is possible that an adverse outcome in a particular matter
could have a material adverse effect on the Company’s businesses, results of operations, financial
condition or cash flow in a given quarterly or annual period.
In addition, to the extent that insurance coverage is available, significant management judgment is
required to determine the amount of recoveries that are probable of collection under the Company’s
various insurance programs.
Retirement Benefits
The Company maintains qualified and non-qualified defined benefit pension and defined contribution
plans for its eligible U.S. employees and a variety of defined benefit and defined contribution plans for its
eligible non-U.S. employees. The Company’s policy for funding its tax-qualified defined benefit retirement
plans is to contribute amounts at least sufficient to meet the funding requirements set forth in U.S. and
applicable foreign laws.
The Company recognizes the funded status of its over-funded defined benefit pension and retiree medical
plans as a net benefit plan asset and its unfunded and underfunded plans as a net benefit plan liability.
The gains or losses and prior service costs or credits that have not been recognized as components of
net periodic costs are recorded as a component of Accumulated Other Comprehensive Income ("AOCI"),
51
net of tax, in the Company’s consolidated balance sheets. The gains and losses that exceed specified
corridors, 10% of the greater of the projected benefit obligation or the market-related value of plan assets,
are amortized prospectively out of AOCI over a period that approximates the remaining life expectancy of
participants in plans where substantially all participants are inactive or the average remaining service
period of active participants for plans with active participants. The vast majority of unrecognized losses
relate to inactive plans and are amortized over the remaining life expectancy of the participants.
The determination of net periodic pension cost is based on a number of assumptions, including an
expected long-term rate of return on plan assets, the discount rate, mortality and assumed rate of salary
increase. The assumptions used in the calculation of net periodic pension costs and pension liabilities are
disclosed in Note 8, Retirement Benefits, in the notes to the consolidated financial statements.
The long-term rate of return on plan assets assumption is determined for each plan based on the facts
and circumstances that exist as of the measurement date, and the specific portfolio mix of each plan’s
assets. The Company utilizes a model developed by Mercer, a subsidiary of the Company, to assist in the
determination of this assumption. The model takes into account several factors, including: target portfolio
allocation; investment, administrative and trading expenses incurred directly by the plan trust; historical
portfolio performance; relevant forward-looking economic analysis; and expected returns, variances and
correlations for different asset classes. These measures are used to determine probabilities using
standard statistical techniques to calculate a range of expected returns on the portfolio.
The target asset allocation for the U.S. plans is 60% equities and equity alternatives and 40% fixed
income. At the end of 2021, the actual allocation for the U.S. plans was 65% equities and equity
alternatives and 35% fixed income. The target asset allocation for the U.K. plans, which comprise
approximately 81% of non-U.S. plan assets, is 26% equities and equity alternatives and 74% fixed
income. At the end of 2021, the actual allocation for the U.K. plans was 28% equities and equity
alternatives and 72% fixed income.
The discount rate selected for each U.S. plan is based on a model bond portfolio with coupons and
redemptions that closely match the expected liability cash flows from the plan. Discount rates for non-U.S.
plans are based on appropriate bond indices adjusted for duration; in the U.K., the plan duration is
reflected using the Mercer yield curve.
The following table shows the weighted average assumed rate of return and the discount rate at the
December 31, 2021 measurement date used to measure pension expense in 2022 for the total Company,
the U.S. and the Rest of World ("ROW").
Assumed rate of return on plan assets
Discount rate
Total Company
4.56 %
2.28 %
U.S.
6.88 %
3.00 %
ROW
3.64 %
1.89 %
Holding all other assumptions constant, a half-percentage point change in the rate of return on plan
assets and discount rate assumptions would affect net periodic pension cost for the U.S. and U.K. plans,
which together comprise approximately 86% of total pension plan liabilities, as follows:
(In millions)
Assumed rate of return on plan assets
Discount Rate
0.5 Percentage
Point Increase
0.5 Percentage
Point Decrease
U.S.
(24) $
$
3
U.K.
(54) $
$
3
U.S.
24
$
(4) $
U.K.
54
(4)
$
$
The impact of discount rate changes relates to the increase or decrease in actuarial gains or losses being
amortized through net periodic pension cost, as well as the increase or decrease in interest expense, with
all other facts and assumptions held constant. It does not contemplate nor include potential future impacts
a change in the interest rate environment and discount rates might cause, such as the impact on the
market value of the plans’ assets. In addition, the assumed return on plan assets would likely be impacted
by changes in the interest rate environment and other factors, including equity valuations, since these
factors reflect the starting point used in the Company’s projection models. For example, a reduction in
interest rates may result in a reduction in the assumed return on plan assets. Changing the discount rate
52
and leaving the other assumptions constant also may not be representative of the impact on expense,
because the long-term rates of inflation and salary increases are often correlated with the discount rate.
Changes in these assumptions will not necessarily have a linear impact on the net periodic pension cost.
The Company contributes to certain health care and life insurance benefits provided to its retired
employees. The cost of these post-retirement benefits for employees in the U.S. is accrued during the
period up to the date employees are eligible to retire but is funded by the Company as incurred. The key
assumptions and sensitivity to changes in the assumed health care cost trend rate are discussed in Note
8, Retirement Benefits, in the notes to the consolidated financial statements.
Income Taxes
Significant judgment is required in determining the annual effective tax rate and in evaluating uncertain
tax positions. The Company reports a liability for unrecognized tax benefits resulting from uncertain tax
positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step
process:
•
•
First, the Company determines whether it is more-likely-than-not a tax position will be sustained
upon tax examination, including resolution of any related appeals or litigation, based on only the
technical merits of the position. If a tax position does not meet the more-likely-than-not
recognition threshold, the benefit of that position is not recognized in the financial statements.
The second step is measurement. A tax position that meets the more-likely-than-not recognition
threshold is measured to determine the amount of benefit to recognize in the financial statements.
The tax position is measured as the largest amount of benefit that is greater than 50-percent
likely of being realized upon ultimate resolution with a taxing authority. Uncertain tax positions are
evaluated based upon the facts and circumstances that exist at each reporting period and involve
significant management judgment. Subsequent changes in judgment based upon new information
may lead to changes in recognition, de-recognition, and measurement. Adjustments may result,
for example, upon resolution of an issue with the taxing authorities, or expiration of a statute of
limitations barring an assessment for an issue.
The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax
expense. The Company’s accounting policy follows the portfolio approach that leaves stranded income
tax effects in AOCI.
Certain items are included in the Company's tax returns at different times than the items are reflected in
the financial statements. As a result, the annual tax expense reflected in the consolidated statements of
income is different than that reported in the tax returns. Some of these differences are permanent, such
as non-deductible expenses, and some differences are temporary and reverse over time, such as
depreciation expense. Temporary differences create deferred tax assets and liabilities, which are
measured at existing tax rates. Deferred tax liabilities generally represent tax expense recognized in the
financial statements for which payment has been deferred, or expense for which a deduction has been
taken already in the tax return but the expense has not yet been recognized in the financial statements.
Deferred tax assets generally represent items that can be used as a tax deduction or credit in tax returns
in future years for which a benefit has already been recorded in the financial statements. The Company
evaluates all significant available positive and negative evidence, including the existence of losses in
recent years and its forecast of future taxable income by jurisdiction, in assessing the need for a valuation
allowance. The Company also considers tax planning strategies that would result in realization of deferred
tax assets, and the presence of taxable income in prior period tax filings in jurisdictions that allow for the
carry back of tax attributes pursuant to the applicable tax law. The underlying assumptions the Company
uses in forecasting future taxable income require significant judgment and take into account the
Company's recent performance. The ultimate realization of deferred tax assets is dependent on the
generation of future taxable income during the periods in which temporary differences or carry-forwards
are deductible or creditable. Valuation allowances are established for deferred tax assets when it is
estimated that it is more-likely-than-not that future taxable income will be insufficient to fully use a
deduction or credit in that jurisdiction.
53
Fair Value Determinations
Goodwill Impairment Testing – 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. 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 a
quantitative goodwill impairment test was not required in 2021 and that goodwill was not impaired.
Purchase Price Allocation
Assets acquired and liabilities assumed, including contingent consideration, as part of a business
acquisition are generally recorded at their fair value at the date of acquisition. The excess of purchase
price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining
fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management
to make estimates, which are based on all available information and in some cases assumptions with
respect to the timing and amount of future revenues and expenses associated with an asset. These
estimates directly impact the amount of identified intangible assets recognized and the related
amortization expense in future periods.
New Accounting Pronouncements
Note 1, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements
contains a summary of the Company’s significant accounting policies, including a discussion of recently
issued accounting pronouncements and their impact or potential future impact on the Company’s financial
results, if determinable, under the sub-heading "New Accounting Pronouncements."
54
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Market Risk and Credit Risk
Certain of the Company’s revenues, expenses, assets and liabilities are exposed to the impact of interest
rate changes and fluctuations in foreign currency exchange rates and equity markets.
Interest Rate Risk and Credit Risk
Interest income generated from the Company’s cash, cash equivalents, and cash and cash equivalents
held in a fiduciary capacity will vary with the general level of interest rates.
The Company had the following investments subject to variable interest rates:
(In millions)
Cash and cash equivalents
Cash and cash equivalents held in a fiduciary capacity
December 31, 2021
$
$
1,752
9,622
Based on the above balances, if short-term interest rates increased or decreased by 10%, or 1 basis
point, over the course of the year, annual interest income, including interest earned on cash and cash
equivalents held in a fiduciary capacity, would increase or decrease by approximately $1 million.
In addition to interest rate risk, our cash investments and fiduciary cash investments are subject to
potential loss of value due to counter-party credit risk. To minimize this risk, the Company and its
subsidiaries invest pursuant to a Board approved investment policy. The policy mandates the preservation
of principal and liquidity and requires broad diversification with counter-party limits assigned based
primarily on credit rating and type of investment. The Company carefully monitors its cash, cash
equivalents, and cash and cash equivalents held in a fiduciary capacity, and will further restrict the
portfolio as appropriate to market conditions. The majority of cash, cash equivalents and cash and cash
equivalents held in a fiduciary capacity are invested in short-term bank deposits and liquid money market
funds.
Foreign Currency Risk
The translated values of revenue and expense from the Company’s international operations are subject to
fluctuations due to changes in currency exchange rates. The non-U.S. based revenue that is exposed to
foreign exchange fluctuations is approximately 53% of total revenue. We periodically use forward
contracts and options to limit foreign currency exchange rate exposure on net income and cash flows for
specific, clearly defined transactions arising in the ordinary course of business. Although the Company
has significant revenue generated in foreign locations which is subject to foreign exchange rate
fluctuations, in most cases both the foreign currency revenue and expenses are in the functional currency
of the foreign location. As such, under normal circumstances, the U.S. dollar translation of both the
revenues and expenses, as well as the potentially offsetting movements of various currencies against the
U.S. dollar, generally tend to mitigate the impact on net operating income of foreign currency risk.
However, there have been periods where the impact was not mitigated due to external market factors,
and external macroeconomic events may result in greater foreign exchange rate fluctuations in the future.
If foreign exchange rates of major currencies (Euro, Sterling, Australian dollar and Canadian dollar)
moved 10% in the same direction against the U.S. dollar compared with the foreign exchange rates in
2021, the Company estimates net operating income would increase or decrease by approximately $57
million. The Company has exposure to approximately 80 foreign currencies overall. In Continental
Europe, the largest amount of revenue from renewals for the Risk and Insurance Services segment
occurs in the first quarter.
Equity Price Risk
The Company holds investments in both public and private companies as well as private equity funds,
including investments of approximately $75 million that are valued using readily determinable fair values
and approximately $36 million of investments without readily determinable fair values. The Company also
has investments of approximately $207 million that are accounted for using the equity method. The
investments are subject to risk of decline in market value, which, if determined to be other than temporary
for assets without readily determinable fair values, could result in realized impairment losses. The
55
Company periodically reviews the carrying value of such investments to determine if any valuation
adjustments are appropriate under the applicable accounting pronouncements.
At December 31, 2021, the Company owns approximately 14% of the common stock of Alexander Forbes
("AF"), a South African company listed on the Johannesburg Stock Exchange. The investment in AF is
accounted at fair value, with unrealized gains and losses recorded as investment income (loss) in the
consolidated statement of income. The fair value of this investment at December 31, 2021 was
approximately $57 million.
Other
A number of lawsuits and regulatory proceedings are pending. See Note 16, Claims, Lawsuits and Other
Contingencies, in the notes to the consolidated financial statements included in this report.
56
Item 8. Financial Statements and Supplementary Data.
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31,
(In millions, except per share data)
Revenue
Expense:
Compensation and benefits
Other operating expenses
Operating expenses
Operating income
Other net benefits credits
Interest income
Interest expense
Cost of extinguishment of debt
Investment income (loss)
Acquisition related derivative contracts
Income before income taxes
Income tax expense
Net income before non-controlling interests
Less: Net income attributable to non-controlling interests
Net income attributable to the Company
Net income per share attributable to the Company
– Basic
– Diluted
Average number of shares outstanding
– Basic
– Diluted
Shares outstanding at December 31,
2021
2020
2019
$ 19,820 $ 17,224 $ 16,652
11,425
4,083
15,508
4,312
277
2
(444)
—
61
—
4,208
1,034
3,174
31
10,129
4,029
14,158
3,066
257
7
(515)
—
(22)
—
2,793
747
2,046
30
9,734
4,241
13,975
2,677
265
39
(524)
(32)
22
(8)
2,439
666
1,773
31
$
$
$
3,143 $
2,016 $
1,742
6.20 $
6.13 $
3.98 $
3.94 $
3.44
3.41
507
513
504
506
512
508
506
511
504
The accompanying notes are an integral part of these consolidated statements.
57
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31,
(In millions)
Net income before non-controlling interests
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments
Gain (loss) related to pension and post-retirement plans
Other comprehensive income (loss), before tax
Income tax expense (credit) on other comprehensive loss
Other comprehensive income (loss), net of tax
Comprehensive income
Less: Comprehensive income attributable to non-controlling
interests
2021
2020
2019
$ 3,174 $ 2,046
$ 1,773
(389)
1,229
840
305
535
559
(784)
(225)
(170)
(55)
148
(702)
(554)
(146)
(408)
3,709
1,991
1,365
31
30
31
Comprehensive income attributable to the Company
$ 3,678 $ 1,961
$ 1,334
The accompanying notes are an integral part of these consolidated statements.
58
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(In millions, except share data)
ASSETS
Current assets:
Cash and cash equivalents
Receivables
Commissions and fees
Advanced premiums and claims
Other
Less-allowance for credit losses
Net receivables
Other current assets
Total current assets
Goodwill
Other intangible assets
Fixed assets, net
Pension related assets
Right of use assets
Deferred tax assets
Other assets
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt
Accounts payable and accrued liabilities
Accrued compensation and employee benefits
Current lease liabilities
Accrued income taxes
Total current liabilities
Fiduciary liabilities
Less - cash and cash equivalents held in a fiduciary capacity
Long-term debt
Pension, postretirement and postemployment benefits
Long-term lease liabilities
Liability for errors and omissions
Other liabilities
Commitments and contingencies
Equity:
Preferred stock, $1 par value, authorized 6,000,000 shares, none issued
Common stock, $1 par value, authorized 1,600,000,000 shares,
issued 560,641,640 shares at December 31, 2021 and 2020
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Non-controlling interests
Less – treasury shares, at cost, 57,105,619 shares at December 31, 2021 and 52,914,550 shares
at December 31, 2020
Total equity
$
The accompanying notes are an integral part of these consolidated statements.
59
2021
2020
$
1,752
$
2,089
5,093
136
523
5,752
(166)
5,586
926
8,264
16,317
2,810
847
2,270
1,868
551
1,461
4,679
112
677
5,468
(142)
5,326
740
8,155
15,517
2,699
856
1,768
1,894
702
1,458
$
34,388
$
33,049
$
17
$
3,165
2,942
332
198
6,654
9,622
(9,622)
—
10,933
1,632
1,880
355
1,712
—
—
561
1,112
18,389
(4,575)
213
15,700
(4,478)
11,222
34,388
517
3,050
2,400
342
247
6,556
8,585
(8,585)
—
10,796
2,662
1,924
366
1,485
—
—
561
943
16,272
(5,110)
156
12,822
(3,562)
9,260
$
33,049
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
(In millions)
Operating cash flows:
Net income before non-controlling interests
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization of fixed assets and capitalized software
Amortization of intangible assets
Non cash lease expense
Adjustments and payments related to contingent consideration assets and liabilities
Gain on consolidation of entity
Charge for early extinguishment of debt
(Benefit) provision for deferred income taxes
Net (gain) loss on investments
Net (gain) loss on disposition of assets
Share-based compensation expense
Change in fair value of acquisition-related derivative contracts
Changes in assets and liabilities:
Net receivables
Other current assets
Other assets
Accounts payable and accrued liabilities
Accrued compensation and employee benefits
Accrued income taxes
Contributions to pension and other benefit plans in excess of current year credit
Other liabilities
Operating lease liabilities
Effect of exchange rate changes
Net cash provided by operations
Financing cash flows:
Purchase of treasury shares
Borrowings from term-loan and credit facilities
Proceeds from issuance of debt
Repayments of debt
Payments for early extinguishment of debt
Purchase of non-controlling interests
Acquisition-related derivative payments
Shares withheld for taxes on vested units – treasury shares
Issuance of common stock from treasury shares
Payments of deferred and contingent consideration for acquisitions
Receipts of contingent consideration for dispositions
Distributions of non-controlling interests
Dividends paid
Change in fiduciary liabilities
Net cash (used for) provided by financing activities
Investing cash flows:
Capital expenditures
Net sales (purchases) of long-term investments
Purchase of equity investment
Dispositions
Acquisitions, net of cash and cash held in a fiduciary capacity acquired
Other, net
Net cash used for investing activities
2021
2020
2019
$
3,174
$
2,046
$
1,773
382
365
327
27
(267)
—
(63)
(61)
(33)
348
—
(252)
(166)
(215)
225
527
(45)
(372)
2
(349)
(38)
3,516
(1,159)
—
743
(1,016)
—
—
—
(101)
161
(117)
71
(36)
(1,026)
1,183
(1,297)
(406)
18
(5)
84
(859)
4
(1,164)
390
351
355
(22)
—
—
40
22
24
290
—
(75)
(66)
86
241
207
60
(356)
108
(351)
32
3,382
—
1,000
737
(2,515)
—
(3)
—
(132)
132
(122)
—
(34)
(943)
955
(925)
(348)
107
—
98
(647)
(3)
(793)
333
314
315
27
—
32
84
(22)
56
252
8
(130)
(13)
(1)
120
154
42
(369)
(172)
(327)
(115)
2,361
(485)
300
6,459
(1,064)
(585)
(80)
(337)
(89)
158
(65)
—
(16)
(890)
1,025
4,331
(421)
183
(91)
229
(4,229)
(66)
(4,395)
135
2,432
6,067
8,499
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a
fiduciary capacity
Increase in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of year
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of year
$
(355)
700
10,674
11,374
$
511
2,175
8,499
10,674
$
Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets
For the Years Ended December 31,
(In millions)
Cash and cash equivalents
Cash and cash equivalents held in a fiduciary capacity
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
The accompanying notes are an integral part of these consolidated statements.
2021
2020
2019
$
$
1,752
9,622
11,374
$
$
2,089
8,585
10,674
$
$
1,155
7,344
8,499
60
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
For the Years Ended December 31,
(In millions, except per share data)
COMMON STOCK
Balance, beginning and end of year
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year
$
$
Change in accrued stock compensation costs
Issuance of shares under stock compensation plans and employee stock
purchase plans
Other
Balance, end of year
RETAINED EARNINGS
Balance, beginning of year
Net income attributable to the Company
Dividend equivalents declared and paid - (per share amounts: $2.00 in
2021, $1.84 in 2020, and $1.74 in 2019)
Dividends declared and paid – (per share amounts: $2.00 in 2021, $1.84
in 2020, and $1.74 in 2019)
Balance, end of year
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of year
Other comprehensive income (loss), net of tax
Balance, end of year
TREASURY SHARES
Balance, beginning of year
Issuance of shares under stock compensation plans and employee stock
purchase plans
Purchase of treasury shares
Balance, end of year
NON-CONTROLLING INTERESTS
Balance, beginning of year
Net income attributable to non-controlling interests
Distributions and other changes
Net non-controlling interests acquired
Balance, end of year
TOTAL EQUITY
2021
2020
2019
561 $
561 $
561
943 $
862 $
124
45
—
75
7
(1)
$ 1,112 $
943 $
817
89
(44)
—
862
$ 16,272 $ 15,199 $ 14,347
3,143
2,016
1,742
(12)
(11)
(10)
(1,014)
(932)
(880)
$ 18,389 $ 16,272 $ 15,199
$ (5,110) $ (5,055) $ (4,647)
535
(55)
(408)
$ (4,575) $ (5,110) $ (5,055)
$ (3,562) $ (3,774) $ (3,567)
243
(1,159)
212
—
278
(485)
$ (4,478) $ (3,562) $ (3,774)
$
156 $
150 $
31
(38)
64
30
(21)
(3)
$
213 $
156 $
73
31
(27)
73
150
$ 11,222 $ 9,260 $ 7,943
The accompanying notes are an integral part of these consolidated statements.
61
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Nature of Operations: 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.
Business Update Related To COVID-19
The World Health Organization declared COVID-19 a pandemic in March 2020. For almost two years, the
pandemic has impacted businesses globally including virtually every geography in which the Company
operates. Our businesses have been resilient throughout the pandemic and demand for our advice and
services remains strong as the global economic conditions continue to improve.
Although the majority of our colleagues continue to work remotely, the Company has provided guidelines
on return to the office depending on the level of virus containment and local health and safety regulations
in each geography. The safety and well-being of our colleagues is paramount and the Company expects
to continue to service clients effectively in both the remote and in-office environments.
The Company had strong revenue growth in 2021 and benefited from the continued recovery of the global
economy. However, uncertainty remains in the economic outlook and the ultimate extent of the impact of
COVID-19 to the Company will depend on future developments that it is unable to predict, including new
"waves" of infection from emerging variants of the virus, potential renewed restrictions and mandates by
various governments or agencies, and the distribution and uptake of vaccines and vaccine boosters.
Acquisition of JLT
On April 1, 2019, the Company completed the acquisition (the "Transaction") of all of the outstanding
shares of Jardine Lloyd Thompson Group plc ("JLT"), a public company organized under the laws of
England and Wales. JLT's results of operations for the period April 1, 2019 through December 31, 2019
are included in the Company’s results of operations for 2019. Prior to being acquired by the Company,
JLT operated in three segments: Specialty, Reinsurance and Employee Benefits. JLT operated in 41
countries, with significant revenue in the United Kingdom, Pacific, Asia and the United States. As of April
1, 2019, the historical JLT businesses were combined into MMC operations as follows: JLT Specialty is
included by geography within Marsh, JLT Reinsurance is included in Guy Carpenter and the majority of
JLT's Employee Benefits business is included in Mercer Health and Wealth. The Company is expected to
complete the integration of JLT during 2022.
Principles of Consolidation: The accompanying consolidated financial statements include all wholly-
owned and majority-owned subsidiaries. All significant inter-company transactions and balances have
been eliminated.
Revenue: The Company provides detailed discussion regarding its revenue policies in Note 2, Revenue.
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 the United
62
States or as collateral under captive insurance arrangements. The Company maintained $303 million and
$270 million related to these regulatory requirements at December 31, 2021 and 2020, respectively.
Fixed Assets: Fixed assets are stated at cost less accumulated depreciation and amortization.
Expenditures for improvements are capitalized. Upon sale or retirement of an asset, the cost and related
accumulated depreciation and amortization are removed from the accounts and any gain or loss is
reflected in income. Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation of buildings, building improvements, furniture, and equipment is provided on a straight-line
basis over the estimated useful lives of these assets. Furniture and equipment are depreciated over
periods ranging from 3 to 10 years. Leasehold improvements are amortized on a straight-line basis over
the periods covered by the applicable leases or the estimated useful life of the improvement, whichever is
less. Buildings are depreciated over periods ranging from 30 to 40 years. The Company periodically
reviews long-lived assets for impairment whenever events or changes indicate that the carrying value of
assets may not be recoverable.
The components of fixed assets are as follows:
December 31,
(In millions)
Furniture and equipment
Land and buildings
Leasehold and building improvements
Less-accumulated depreciation and amortization
2021
811
385
1,240
2,436
(1,589)
847
$
$
2020
$ 1,326
379
1,310
3,015
(2,159)
856
$
Investments: The caption "Investment income (loss)" 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.
In 2021, the Company recorded investment income of $61 million compared to an investment loss of $22
million in 2020 and investment income of $22 million in 2019. Investment income in 2021 is primarily due
to gains from investments in private equity funds. The net investment loss in 2020 is primarily due to the
loss on the sale of shares of Alexander Forbes ("AF"). The investment gain in 2019 includes gains of $10
million related to mark-to-market changes in equity securities and gains of $12 million related to
investments in private equity funds and other investments.
Goodwill and Other Intangible Assets: Goodwill represents acquisition costs in excess of the fair value
of net assets acquired. Goodwill is assessed at least annually for impairment. The Company performs an
annual impairment test for each of its reporting units during the third quarter of each year. A company can
assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test.
Alternatively, a company may elect to proceed directly to the quantitative goodwill impairment test. When
a quantitative test is performed, fair values of the reporting units are estimated using either a market
approach or a discounted cash flow model. Carrying values for the reporting units are based on balances
at the prior quarter-end and include directly identified assets and liabilities as well as an allocation of
those assets and liabilities not recorded at the reporting unit level. As discussed in Note 6, Goodwill and
Other Intangibles, the Company elected to perform a qualitative impairment assessment during 2021.
63
Other intangible assets, which primarily consist of acquired customer lists, that are not deemed to have
an indefinite life, are amortized over their estimated lives, typically ranging from 10 to 15 years, and
assessed for impairment upon the occurrence of certain triggering events in accordance with applicable
accounting literature. The Company had no indefinite lived identified intangible assets at December 31,
2021 and 2020.
Retirement Benefits: 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 retirement 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 net periodic cost of the Company’s defined benefit plans is measured on an actuarial basis
using various methods and assumptions.
The Company uses actuaries from Mercer, a subsidiary of the Company, to perform valuations of its
pension plans. The long-term rate of return on plan assets assumption is determined for each plan based
on the facts and circumstances that exist as of the measurement date, and the specific portfolio mix of
each plan's assets. The Company utilizes a model developed by the Mercer actuaries to assist in the
determination of this assumption. The model takes into account several factors, including: actual and
target portfolio allocation; investment, administrative and trading expenses incurred directly by the plan
trust; historical portfolio performance; relevant forward-looking economic analysis; and expected returns,
variances and correlations for different asset classes. These measures are used to determine
probabilities using standard statistical techniques to calculate a range of expected returns on the portfolio.
Generally, the Company does not adjust the rate of return assumption from year to year if, at the
measurement date, it is within the range between the 25th and 75th percentile of the expected long-term
annual returns. Historical long-term average asset returns of the most significant plans are also reviewed
to determine whether they are consistent and reasonable compared with the rate selected. The expected
return on plan assets is determined by applying the assumed long-term rate of return to the market-
related value of plan assets. This market-related value recognizes investment gains or losses over a five-
year period from the year in which they occur. Investment gains or losses for this purpose are the
difference between the expected return calculated using the market-related value of assets and the actual
return based on the market value of assets. Since the market-related value of assets recognizes gains or
losses over a five-year period, the future market-related value of the assets will be impacted as previously
deferred gains or losses are reflected. The Company reviews its actuarial assumptions on an annual
basis and modifies these assumptions based on current rates and trends.
The funded status of the Company's pension plans is recorded in the consolidated balance sheets and
provides for a delayed recognition of actuarial gains or losses arising from changes in the projected
benefit obligation due to changes in the assumed discount rates, differences between the actual and
expected value of plan assets and other assumption changes. The unrecognized pension plan actuarial
gains or losses and prior service costs not yet recognized in net periodic pension cost are recognized in
Accumulated Other Comprehensive Income ("AOCI"), net of tax. These gains and losses are amortized
prospectively out of AOCI over a period that approximates the remaining life expectancy of participants in
plans where substantially all participants are inactive, or the average remaining service period of active
participants for plans with active participants. The vast majority of unrecognized losses relate to inactive
plans and are amortized over the remaining life expectancy of the participants.
The discount rate selected for each U.S. plan is based on a model bond portfolio with coupons and
redemptions that closely match the expected liability cash flows from the plan. Discount rates for non-U.S.
plans are based on appropriate bond indices adjusted for duration; in the U.K., the plan duration is
reflected using the Mercer yield curve.
Defined Benefit Pension Plans in the U.K. and certain other countries allow participants an option for the
payment of a lump sum distribution from plan assets before retirement in full satisfaction of the retirement
benefits due to the participant as well as any survivor’s benefit. The Company’s policy is to treat these
lump sum payments as a partial settlement of the plan liability if they exceed the total of interest plus
service costs ("settlement thresholds").
See Note 8, Retirement Benefits for additional information.
64
Leases: A lease is defined as a party obtaining the right to use an asset legally owned by another party.
The Company determines if an arrangement is a lease at inception. Right-of-use ("ROU") assets and
lease liabilities are recorded at the lease commencement date. Lease liabilities are recognized at the
present value of the contractual fixed lease payments. The Company uses discount rates to determine
the present value of future lease payments. The Company primarily uses its incremental borrowing rate
adjusted to reflect a secured rate, based on the information available for leases, including the lease term
and interest rate environment in the country in which the lease exists. The lease terms used to calculate
the ROU asset and lease liability may include options to extend or terminate when it is reasonably certain
that the Company will exercise that option. ROU assets are recognized equal to lease liabilities, adjusted
for prepaid lease payments, initial direct costs and lease incentives. Operating lease expense is
recognized on a straight-line basis over the lease term, while variable lease payments are expensed as
incurred.
Leases are negotiated with third-parties and, in some instances contain renewal, expansion and
termination options. The Company also subleases certain office facilities to third-parties when the
Company no longer utilizes the space. In addition to the base rental costs, the Company's lease
agreements generally provide for rent escalations resulting from increased assessments for real estate
taxes and other charges. A portion of our real estate lease portfolio contains base rents subject to annual
changes in the Consumer Price Index ("CPI") as well as charges for operating expenses which are
reimbursable to the landlord based on actual usage. Changes to the CPI and payments for such
reimbursable operating expenses are considered variable and are recognized as variable lease costs in
the period in which the obligation for those payments was incurred. Approximately 99% of the Company's
lease obligations are for the use of office space. All of the Company's material leases are operating
leases.
As a practical expedient, the Company has elected an accounting policy not to separate non-lease
components from lease components and instead account as a single lease component. The Company
has also elected not to recognize ROU assets and lease liabilities for leases that, at the commencement
date, are for 12 months or less.
See Note 12, Leases for additional information.
Capitalized Software Costs: The Company capitalizes certain costs to develop, purchase or modify
software for the internal use of the Company. These costs are amortized on a straight-line basis over
periods ranging from 3 to 10 years. Costs incurred during the preliminary project stage and post
implementation stage, are expensed as incurred. Costs incurred during the application development
stage are capitalized. Costs related to updates and enhancements are only capitalized if they will result in
additional functionality. Capitalized computer software costs of $475 million and $481 million, net of
accumulated amortization of $1.7 billion and $1.6 billion as of December 31, 2021 and 2020, respectively,
are included in other assets in the consolidated balance sheets.
Legal and Other Loss Contingencies: The Company and its subsidiaries are subject to a significant
number of claims, lawsuits and proceedings including claims for errors and omissions ("E&O"). The
Company records a liability when a loss is both probable and reasonably estimable which requires
significant management judgment. The Company utilizes case level reviews by inside and outside
counsel, an internal actuarial analysis by Oliver Wyman, a subsidiary of the Company, and other methods
to estimate potential losses, including estimated legal costs. 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. Given the unpredictability of E&O claims and of
litigation that could arise from such claims, it is possible that an adverse outcome in a particular matter
could have a material adverse effect on the Company’s businesses, results of operations, financial
condition or cash flow in a given quarterly or annual period.
As of December 31, 2021, the Company’s liability for errors and omissions was $434 million, compared to
$639 million at December 31, 2020, of which $79 million and $271 million, respectively, were included in
accounts payable and accrued liabilities in the consolidated balance sheets. In addition, to the extent that
insurance coverage is available, significant management judgment is required to determine the amount of
recoveries that are probable of collection under the Company’s various insurance programs.
The legal and other contingent liabilities described above are not discounted.
65
Income Taxes: The Company's effective 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
tax provision and in evaluating uncertain tax positions and the ability to realize deferred tax assets.
The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken
or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first
step involves recognition. The Company determines whether it is more likely than not that a tax position
will be sustained upon tax examination, including resolution of any related appeals or litigation, based on
only the technical merits of the position. The technical merits of a tax position derive from both statutory
and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and
their applicability to the facts and circumstances of the tax position. If a tax position does not meet the
more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial
statements. The second step is measurement. A tax position that meets the more-likely-than-not
recognition threshold is measured to determine the amount of benefit to recognize in the financial
statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely
to be realized upon ultimate resolution with a taxing authority. Uncertain tax positions are evaluated based
upon the facts and circumstances that exist at each reporting period. Subsequent changes in judgment
based upon new information may lead to changes in recognition, de-recognition, and measurement.
Adjustments may result, for example, upon resolution of an issue with the taxing authorities, or expiration
of a statute of limitations barring an assessment for an issue. The Company recognizes interest and
penalties, if any, related to unrecognized tax benefits in income tax expense.
Tax law may require items be included in the Company's tax returns at different times than the items are
reflected in the financial statements. As a result, the annual tax expense reflected in the consolidated
statements of income is different than that reported in the income tax returns. Some of these differences
are permanent, such as expenses that are not deductible in the returns, and some differences are
temporary and reverse over time, such as depreciation expense. Temporary differences create deferred
tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax
deduction or credit in tax returns in future years for which benefit has already been recorded in the
financial statements. Valuation allowances are established for deferred tax assets when it is estimated
that future taxable income will be insufficient to use a deduction or credit in that jurisdiction. Deferred tax
liabilities generally represent tax expense recognized in the financial statements for which payment has
been deferred, or expense for which a deduction has been taken already in the tax return but the expense
has not yet been recognized in the financial statements.
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 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 right-of-use 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 right-of-use 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.
Derivative Instruments: All derivatives, whether designated in hedging relationships or not, are recorded
on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the
66
fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in
earnings. The fair value of the derivative is recorded in the consolidated balance sheet in other
receivables or accounts payable and accrued liabilities. If the derivative is designated as a cash flow
hedge, the effective portions of changes in the fair value of the derivative are recorded in other
comprehensive income and are recognized in the income statement when the hedged item affects
earnings. Changes in the fair value attributable to the ineffective portion of cash flow hedges are
recognized in earnings. If a derivative is not designated as an accounting hedge, the change in fair value
is recorded in earnings.
Per Share Data: 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
(In millions, except per share data)
Net income before non-controlling interests
Less: Net income attributable to non-controlling interests
Net income attributable to the Company
Basic weighted average common shares outstanding
Dilutive effect of potentially issuable common shares
Diluted weighted average common shares outstanding
Average stock price used to calculate common stock equivalents
31
30
2021
2020
2019
$ 3,174 $ 2,046 $ 1,773
31
$ 3,143 $ 2,016 $ 1,742
506
5
511
$141.57 $109.12 $ 97.23
507
6
513
506
6
512
Fiduciary Assets and Liabilities: 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. Risk and Insurance Services revenue includes interest on fiduciary funds of $15 million,
$46 million and $105 million in 2021, 2020 and 2019, 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 were $13.0 billion and $11.2 billion at
December 31, 2021 and 2020, respectively. 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.
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. 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.
67
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 potential COVID-19 impacts 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.
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 will 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 contract 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: (i) exception to the incremental approach for intraperiod tax
allocation; (ii) exceptions to accounting for basis differences when there are ownership changes in foreign
investments and (iii) 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 (i) franchise taxes that are partially based on income;
(ii) transactions with a government that result in a step-up in the tax basis of goodwill; (iii) separate
financial statements of legal entities that are not subject to tax and (iv) 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.
New Accounting Pronouncements Adopted Effective January 1, 2020:
In August 2018, the FASB issued new guidance that amends required fair value measurement
disclosures. The guidance adds new requirements, eliminates some current disclosures and modifies
68
other required disclosures. The new disclosure requirements, along with modifications made to
disclosures as a result of the change in requirements for narrative descriptions of measurement
uncertainty, must be applied on a prospective basis. The effects of all other amendments included in the
guidance must be applied retrospectively for all periods presented. The adoption of this guidance
impacted disclosures only and did not have an impact on the Company's financial position or results of
operations.
In August 2018, the FASB issued new guidance that amends disclosures related to Defined Benefit Plans.
The guidance removes disclosures that no longer are considered cost-beneficial, clarifies the specific
requirements of certain disclosures, and adds disclosure requirements identified as relevant. The
guidance must be applied on a retrospective basis. Adoption of this guidance impacted disclosures only
and did not have an impact on the Company's financial position or results of operations.
In January 2017, the FASB issued new guidance to simplify the test for goodwill impairment. The new
guidance eliminates the second step in the current two-step goodwill impairment process, under which a
goodwill impairment loss is measured by comparing the implied fair value of a reporting unit's goodwill
with the carrying amount of that goodwill for that reporting unit. The new guidance requires a one-step
impairment test, in which the goodwill impairment charge is based on the amount by which the carrying
amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total
amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative
assessment for a reporting unit to determine if the quantitative impairment test is necessary. The
guidance should be applied on a prospective basis with the nature of and reason for the change in
accounting principle disclosed upon transition. The adoption of this standard did not have an impact on
the Company's financial position or results of operations.
In June 2016, the FASB issued new guidance on the impairment of financial instruments. The new
guidance adds an allowance for credit losses ("CECL") impairment model that is based on expected
losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its
estimate of lifetime expected credit losses, which the FASB believes will result in more timely recognition
of such losses. The new standard is also intended to reduce the complexity of U.S. GAAP by decreasing
the number of credit impairment models that entities use to account for debt instruments. Further, the new
standard makes targeted changes to the impairment model for available-for-sale debt securities. The
adoption of this standard did not have a material impact on the Company's financial position or results of
operations.
2. Revenue
The core principle of the revenue recognition guidance is that an entity should recognize revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. To
achieve that 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 the 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 approximately 2% of total revenue, and therefore is not presented as a separate line item.
Risk and Insurance Services
Risk and Insurance Services revenue reflects compensation for brokerage and consulting services
through commissions and fees. Commission rates and fees vary in amount and can depend on a number
of factors, including the type of insurance or reinsurance coverage provided, the particular insurer or
reinsurer selected, and the capacity in which the broker acts and negotiates with clients. For the majority
of the insurance and reinsurance brokerage arrangements, advice and services provided which culminate
in the placement of an effective policy are considered a single performance obligation. Arrangements with
clients may include the placement of a single policy, multiple policies or a combination of policy
placements and other services. Consideration related to such "bundled arrangements" is allocated to the
individual performance obligations based on their relative fair value. Revenue for policy placement is
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generally recognized on the policy effective date, at which point control over the services provided by the
Company has transferred to the client and the client has accepted the services. In many cases, fee
compensation may be negotiated in advance, based on the type of risk, coverage required and service
provided by the Company and ultimately, the extent of the risk placed into the insurance market or
retained by the client. The trends and comparisons of revenue from one period to the next can be affected
by changes in premium rate levels, fluctuations in client risk retention and increases or decreases in the
value of risks that have been insured, as well as new and lost business, and the volume of business from
new and existing clients. For such arrangements, revenue is recognized using output measures, which
correspond to the progress toward completing the performance obligation. Fees for non-risk transfer
services provided to clients are recognized over time in the period the services are provided, using a
proportional performance model, primarily based on input measures. These measures of progress
provide a faithful depiction of the progress towards completion of the performance obligation.
Revenue related to reinsurance brokerage for excess of loss ("XOL") treaties is estimated based on
contractually specified minimum or deposit premiums, and adjusted as additional evidence of the ultimate
amount of brokerage is received. Revenue for quota share treaties is estimated based on indications of
estimated premium income provided by the ceding insurer. The estimated brokerage revenue recognized
for quota share treaties is constrained to an amount that is probable to not have a significant negative
adjustment. The estimated revenue and the constraint are evaluated as additional evidence of the
ultimate amount of underlying risks to be covered and are received over the 12 to 18 months following the
effective date of the placement.
In addition to compensation from its clients, the Company also receives other compensation, separate
from retail fees and commissions, from insurance companies. This other compensation includes, among
other things, payments for consulting and analytics services provided to insurers; compensation for
administrative and other services (including fees for underwriting services and services provided to or on
behalf of insurers relating to the administration and management of quota shares, panels and other
facilities in which insurers participate); and contingent commissions, which are paid by insurers based on
factors such as volume or profitability of Marsh's placements primarily driven by Marsh & McLennan
Agency ("MMA") and parts of Marsh's international operations. Revenue for contingent commissions from
insurers is estimated based on historical evidence of the achievement of the respective contingent metrics
and recorded as the underlying policies that contribute to the achievement of the metric are placed. Due
to the uncertainty of the amount of contingent consideration that will be received, the estimated revenue is
constrained to an amount that is probable to not have a significant negative adjustment. Contingent
consideration is generally received in the first quarter of the subsequent year.
A significant majority of the Company's Risk and Insurance Services revenue is for performance
obligations recognized at a point in time. Marsh and Guy Carpenter also receive interest income on
certain funds (such as premiums and claims proceeds) held in a fiduciary capacity for others.
Insurance brokerage commissions are generally invoiced on the policy effective date. Fee based
arrangements generally include a percentage of the total fee due upon signing the arrangement, with
additional fixed installments payable over the remainder of the year. Payment terms range from receipt of
invoice up to 30 days from invoice date.
Reinsurance brokerage revenue is recognized on the effective date of the treaty. Payment terms depend
on the type of reinsurance. For XOL treaties, brokerage revenue is typically collected in four installments
during an annual treaty period based on a contractually specified minimum or deposit premium. For
proportional or quota share treaties, brokerage is billed as underlying insured risks attach to the
reinsurance treaty, generally over 12 to 18 months.
Consulting
The major component of revenue in the Consulting business is fees paid by clients for advice and
services. Mercer, principally through its health line of business, also receives revenue in the form of
commissions received from insurance companies for the placement of group (and occasionally individual)
insurance contracts, primarily health, life and accident coverages. Revenue for Mercer’s investment
management business and certain of Mercer’s defined benefit administration services consists principally
of fees based on assets under delegated management or administration.
70
Consulting projects in Mercer’s wealth and career businesses, and consulting projects in Oliver Wyman
Group, typically consist of a single performance obligation, which is recognized over time as control is
transferred continuously to customers. Therefore, revenue is typically recognized over time using an input
measure of time expended to date relative to total estimated time to be incurred at project completion.
Incurred hours represent services rendered and thereby faithfully depicts the transfer of control to the
customer.
On a limited number of engagements, performance fees may also be earned for achieving certain
prescribed performance criteria. Revenue for achievement is estimated and constrained to an amount
that is probable to not have a significant negative adjustment.
A significant majority of fee revenues in the Consulting segment is recognized over time.
For consulting projects, Mercer generally invoices monthly in arrears with payment due within 30 days of
the invoice date. Fees for delegated management services are either deducted from the net asset value
of the fund or invoiced to the client on a monthly or quarterly basis in arrears. Oliver Wyman Group
typically bills its clients 30-60 days in arrears with payment due upon receipt of the invoice.
Health brokerage and consulting services are components of both Marsh, which includes MMA, and
Mercer, with approximately 60% of such revenues reported in Mercer. Health contracts typically involve a
series of distinct services that are treated as a single performance obligation. Revenue for these services
is recognized over time based on the amount of remuneration the Company expects to be entitled in
exchange for these services. Payments for health brokerage and consulting services are typically paid
monthly in arrears from carriers based on insured lives under the contract.
The following table disaggregates various components of the Company's revenue:
(In millions)
Marsh:
EMEA
Asia Pacific (a)
Latin America
Total International
U.S./Canada
Total Marsh
Guy Carpenter
Subtotal
Fiduciary interest income
Total Risk and Insurance Services
Mercer:
Wealth
Health
Career
Total Mercer
Oliver Wyman Group
Total Consulting
For the Years Ended December 31,
2021
2020
2019
$
2,946 $
2,575 $
1,462
453
4,861
5,342
10,203
1,867
12,070
15
1,059
424
4,058
4,537
8,595
1,696
10,291
46
$
$
$
12,085 $
10,337 $
2,509 $
2,348 $
1,855
890
5,254
2,535
1,793
787
4,928
2,048
7,789 $
6,976 $
2,482
953
460
3,895
4,119
8,014
1,480
9,494
105
9,599
2,369
1,796
856
5,021
2,122
7,143
(a) Revenue in 2021 includes gain on the consolidation of Marsh India of $267 million.
71
The following table provides contract assets and contract liabilities information from contracts with
customers.
(In millions)
Contract assets
Contract liabilities
December 31, 2021
December 31, 2020
December 31, 2019
$
$
290 $
776 $
236 $
676 $
207
593
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
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. The change in contract assets
from January 1, 2021 to December 31, 2021 is primarily due to $547 million of additions during the period,
partly offset by $493 million transferred to accounts receivables, as the rights to bill and collect became
unconditional. The change in contract assets from January 1, 2020 to December 31, 2020 is primarily due
to $311 million of additions during the period offset by $284 million transferred to accounts receivables.
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. The change in
contract liabilities from January 1, 2021 to December 31, 2021 includes cash received for performance
obligations not yet fulfilled of $642 million offset by revenue recognized in 2021 of $539 million that was
included in the contract liability balance at the beginning of the year. The Company recognized revenue of
$527 million in 2020 that was included in the contract liability balance at January 1, 2020.
The amount of revenue recognized in 2021, 2020 and 2019 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 $84 million, $97 million, and $79 million
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 $187 million, primarily related to Mercer. The Company expects revenue in 2022, 2023,
2024, 2025 and 2026 and beyond of $70 million, $63 million, $31 million, $14 million and $9 million,
respectively, related to these performance obligations.
Costs to Obtain and Fulfill a Contract
The Company capitalizes the incremental costs to obtain contracts primarily related to commissions or
sales bonus payments in both segments. These deferred costs are amortized over the expected life of the
underlying customer relationships.
In Risk and Insurance Services, the Company capitalizes certain pre-placement costs that are considered
fulfillment costs that meet the following criteria: these costs (1) relate directly to a contract, (2) enhance
resources used to satisfy the Company’s performance obligation and (3) are expected to be recovered
through revenue generated by the contract. These costs are amortized at a point in time when the
associated revenue is recognized.
In Consulting, the Company incurs implementation costs necessary to facilitate the delivery of the
contracted services. These costs are capitalized and amortized over the initial contract term plus
expected renewal periods.
At December 31, 2021, the Company’s capitalized assets related to deferred implementation costs, costs
to obtain and costs to fulfill were $24 million, $290 million and $316 million, respectively. At December 31,
2020, the Company's capitalized assets related to deferred implementation costs, costs to obtain and
costs to fulfill were $29 million, $253 million and $296 million, respectively. Costs to obtain and deferred
implementation costs are primarily included in other assets and costs to fulfill are primarily included in
72
other current assets in the Company's consolidated balance sheets. The Company recorded
compensation and benefits expense of $1.5 billion, $1.3 billion and $1.2 billion for the years ended
December 31, 2021, 2020 and 2019, respectively, related to the amortization of these capitalized assets.
A significant portion of deferred costs to fulfill in Risk and Insurance Services is amortized within three to
six months. Therefore, the deferral of the cost and its amortization often occur in the same annual period.
The Company has elected to use the practical expedient and recognizes the incremental costs of
obtaining contracts as an expense when incurred if the amortization period of the assets is one year or
less.
3. Supplemental Disclosures
The following table provides additional information concerning acquisitions, interest and income taxes
paid:
For the Years Ended December 31,
(In millions)
Assets acquired, excluding cash
Fiduciary liabilities assumed
Liabilities assumed
Non-controlling interests assumed
Fair value of previously-held equity method investment
Contingent and deferred purchase consideration
Net cash outflow for acquisitions
(In millions)
Interest paid
2021
2020
2019
$ 1,697 $
929 $ 8,655
(18)
(213)
(64)
(390)
(153)
(21)
(78)
—
—
(183)
(1,276)
(2,804)
(280)
—
(66)
859 $
647 $ 4,229
2021
2020
441 $
481 $
673 $
2019
427
661
$
$
Income taxes paid, net of refunds
$ 1,069 $
The classification of contingent consideration payments in the consolidated statement 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 Years Ended December 31,
(In millions)
Operating:
Contingent consideration payments
Prior year dispositions cash received
Acquisition/disposition related net charges for adjustments
Adjustments and payments related to contingent consideration
Financing:
Contingent purchase consideration
Deferred purchase consideration related to prior years' acquisitions
Payments of deferred and contingent consideration for acquisitions
Receipt of contingent consideration related to prior year dispositions
2021
2020
2019
$
(49) $
(48) $
(41)
19
57
—
26
27 $
(22) $
(28) $
(54) $
(89)
(68)
(117) $
(122) $
—
68
27
(22)
(43)
(65)
71 $
— $
—
$
$
$
$
The Company had non-cash issuances of common stock under its share-based payment plan of $228
million, $219 million and $165 million for the years ended December 31, 2021, 2020 and 2019,
respectively. The Company recorded share-based compensation expense related to restricted stock units,
73
performance stock units and stock options of $348 million, $290 million and $252 million for the years
ended December 31, 2021, 2020 and 2019, respectively.
Allowance for Credit Losses on Accounts Receivable
On January 1, 2020, the Company adopted the new guidance on the impairment of financial instruments.
The Company’s policy for providing an allowance for credit losses on its accounts receivable is a
combination of factors, including historical write-offs, aging of balances, and other qualitative and
quantitative analyses.
An analysis of the allowance for credit losses for the years ended December 31, 2021 and 2020 is
provided below. The analysis for 2019 is based on the Company's allowance for doubtful accounts model
prior to adoption of the new accounting guidance:
For the Years Ended December 31,
(In millions)
Balance at beginning of year
Provision charged to operations
Accounts written-off, net of recoveries
Effect of exchange rate changes and other
Balance at end of year
2021
142
46
(16)
(6)
166
$
$
2020
140
47
(30)
(15)
142
$
$
2019
112
32
(16)
12
140
$
$
4. Accumulated Other Comprehensive Income (Loss)
The changes, net of tax, in the balances of each component of AOCI for the years ended December 31,
2021 and 2020, including amounts reclassified out of AOCI, are as follows:
(In millions)
Balance as of January 1, 2021
Other comprehensive gain (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Net current period other comprehensive gain (loss)
Pension and
Post-
Retirement
Plans Losses
Foreign
Currency
Translation
Adjustments
Total
$
(4,126) $
(984) $
(5,110)
765
159
924
(389)
—
(389)
376
159
535
Balance as of December 31, 2021
$
(3,202) $
(1,373) $
(4,575)
(In millions)
Balance as of January 1, 2020
Other comprehensive (loss) gain before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Net current period other comprehensive (loss) gain
Pension and
Post-Retirement
Plans Losses
Foreign
Currency
Translation
Adjustments
Total
$
(3,512) $
(1,543) $
(5,055)
(739)
125
(614)
559
—
559
(180)
125
(55)
Balance as of December 31, 2020
$
(4,126) $
(984) $
(5,110)
74
The components of other comprehensive income (loss) for the years ended December 31, 2021, 2020
and 2019 are as follows:
For the Year Ended December 31,
(In millions)
Foreign currency translation adjustments
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)
Net actuarial losses (a)
Effect of curtailment (a)
Effect of settlement (a)
Subtotal
Net gains arising during period
Foreign currency translation adjustments
Other adjustments
Pension/post-retirement plans gains
Other comprehensive income
2021
Tax
Pre-Tax
(Credit) Net of Tax
$
(389) $
— $
(389)
(2)
208
2
5
213
1,003
19
(6)
1,229
—
52
1
1
54
249
4
(2)
305
$
840 $
305 $
(2)
156
1
4
159
754
15
(4)
924
535
(a) Components of net periodic pension cost are 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.
For the Year Ended December 31,
(In millions)
Foreign currency translation adjustments
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)
Net actuarial losses (a)
Effect of settlement (a)
Subtotal
Net losses arising during period
Foreign currency translation adjustments
Other adjustments
Pension/post-retirement plans losses
Other comprehensive loss
2020
Tax
(Credit)
Pre-Tax
Net of Tax
$
559 $
— $
559
(2)
161
3
162
(772)
(163)
(11)
(784)
(1)
37
1
37
(177)
(28)
(2)
(170)
$
(225) $
(170) $
(1)
124
2
125
(595)
(135)
(9)
(614)
(55)
(a) Components of net periodic pension cost are 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.
75
For the Year Ended December 31,
(In millions)
Foreign currency translation adjustments
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)
Net actuarial losses (a)
Effect of settlement (a)
Subtotal
Net losses arising during period
Foreign currency translation adjustments
Pension/post-retirement plans losses
Other comprehensive loss
2019
Tax
(Credit)
Pre-Tax
Net of Tax
$
148 $
(3) $
151
(2)
102
6
106
(758)
(50)
(702)
(1)
22
1
22
(154)
(11)
(143)
$
(554) $
(146) $
(1)
80
5
84
(604)
(39)
(559)
(408)
(a) Components of net periodic pension cost are 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.
The components of accumulated other comprehensive income (loss) are as follows:
(In millions)
December 31, 2021 December 31, 2020
Foreign currency translation adjustments (net of deferred tax asset
of $13 in 2021 and $11 in 2020, respectively)
Net charges related to pension/post-retirement plans (net of
deferred tax asset of $1,501 and $1,805 in 2021 and 2020,
respectively)
$
$
(1,373) $
(984)
(3,202)
(4,575) $
(4,126)
(5,110)
76
5. Acquisitions and Dispositions
The Company’s acquisitions have been accounted for as business combinations. Net assets and results
of operations are included in the Company’s consolidated financial statements commencing at the
respective purchase closing dates. In connection with acquisitions, the Company records the estimated
values of the net tangible assets and the identifiable intangible assets purchased, which typically consist
of customer relationships, developed technology, trademarks and non-compete agreements. The
valuation of purchased intangible assets involves significant estimates and assumptions. The Company
estimates the fair value of purchased intangible assets, primarily using the income approach, by
determining the present value of future cash flows over the remaining economic life of the respective
assets. The significant estimates and assumptions used in this approach include the determination of the
discount rate, economic life, future revenue growth rates, expected account attrition rates and earnings
margins. Refinement and completion of final valuation of net assets acquired could affect the carrying
value of tangible assets, goodwill and identifiable intangible assets.
The Risk and Insurance Services segment completed eight acquisitions during 2021.
•
•
•
•
April – Marsh McLennan Agency ("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%.
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 2021 was approximately $1.4 billion, which
consisted of cash paid of $888 million, deferred purchase and estimated contingent consideration of $153
million and the fair value of a previously held equity method investment in Marsh India of $390 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 2021, the
Company also paid $89 million of deferred purchase consideration and $77 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.
The following table presents the preliminary allocation of purchase consideration to the assets acquired
and liabilities assumed during 2021 based on the estimated fair values for the acquisitions as of their
respective acquisition dates.
77
Acquisitions for the Year-Ended December 31, 2021
(In millions)
Cash
Estimated fair value of deferred/contingent consideration
Fair value of previously-held equity method investment
Total consideration
Allocation of purchase price:
Cash and cash equivalents
Cash and cash equivalents held in a fiduciary capacity
Net receivables
Other current assets
Goodwill
Other intangible assets
Fixed assets, net
Right of use assets
Other assets
Total assets acquired
Current liabilities
Fiduciary liabilities
Long-term lease liabilities
Other liabilities
Total liabilities assumed
Non-controlling interests
Net assets acquired
$
$
$
$
888
153
390
1,431
11
18
77
20
1,045
508
5
36
6
1,726
72
18
36
105
231
64
1,431
The purchase price allocation above 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 instrument 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.
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.
78
The following table provides information about intangible assets acquired during 2021:
Intangible assets through December 31, 2021
(In millions)
Customer relationships
Other
Amount
494
14
508
$
$
Weighted Average
Amortization Period
13.3 years
3.8 years
The consolidated statement of income for 2021 includes approximately $114 million of revenue and
operating income of $3 million related to acquisitions made during 2021. The consolidated statement of
income for 2020 includes approximately $169 million of revenue and $11 million of operating income
related to acquisitions made during 2020, and the consolidated statement of income for 2019 includes
approximately $1.2 billion of revenue and $40 million of operating loss related to acquisitions made during
2019.
In 2021 and 2020, acquisition-related costs were $5 million and $3 million, respectively, primarily related
to legal fees. In 2019, the Company incurred acquisition-related costs, primarily for legal, investment
banking and U.K. stamp duty tax related to the acquisition of JLT, of $125 million.
In December 2021, in connection with its increased investment in Marsh India, the Company recorded a
gain of $267 million related to the re-measurement of its previously held equity method investment to fair
value. The fair value of the pre-existing equity method investment was calculated using an average of
applying an income approach based on discounted future cash flows and market approach.
Dispositions
During 2021, the Company sold certain businesses, primarily in the U.S. and the U.K., for cash proceeds
of approximately $84 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.
Prior year acquisitions
During 2020, the Risk and Insurance Services segment completed seven acquisitions.
•
•
•
•
January – Marsh & McLennan Agency ("MMA") acquired Momentous Insurance Brokerage Inc., a
California-based full-service risk management and employee benefits firm specializing in high net
worth private client services and insurance solutions for the entertainment industry, and Ironwood
Insurance Services, LLC, an Atlanta-based broker that provides commercial property/casualty
insurance, employee benefits, and private client solutions to mid-size businesses and individuals
across the U.S.
April – MMA acquired Assurance Holdings, Inc., an Illinois-based full-service brokerage providing
business insurance, employee benefits, private client insurance, and retirement services to
businesses and individuals across the U.S.
June – MMA acquired Nico Insurance Services, Inc., a California-based agency providing
employee benefits solutions to groups and individuals.
December – MMA acquired Heritage Insurance Services, Inc., a Kentucky-based full service
broker that provides commercial property and casualty and personal lines primarily in the trucking
and transportation industry, Inspro Insurance, Inc., a Nebraska-based full-service broker that
provides commercial property and casualty insurance, personal lines and employee benefits
services, and Compass Financial Partners, LLC, a North Carolina-based retirement consulting
and investment advisory firm.
Total purchase consideration for acquisitions made during 2020 was approximately $877 million, which
consisted of cash paid of $694 million and deferred purchase and estimated contingent consideration of
$183 million. Contingent consideration arrangements are based primarily on EBITDA and/or revenue
targets over periods of two to four years. The fair value of the contingent consideration was based on
projected revenue and earnings of the acquired entities. Estimated fair values of assets acquired and
liabilities assumed are subject to adjustment when purchase accounting is finalized. During 2020, the
79
Company also paid $68 million of deferred purchase consideration and $102 million of contingent
consideration related to acquisitions made in prior years.
Subsequent to the JLT acquisition, the Company purchased the outstanding non-controlling interests of
several JLT subsidiaries for cash payments of approximately $79 million.
Prior year dispositions
During 2020, the Company sold certain businesses, primarily in the U.S. and the U.K., for cash proceeds
of approximately $98 million.
In February and May 2020, the Company sold approximately 240 million shares of the common stock of
Alexander Forbes (AF). Upon completion of the sale of shares in May 2020, the investment in AF was
accounted at fair value, with investment gains and losses recorded as investment income in the
consolidated statement of income.
Pro-Forma Information
The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company
during 2021, 2020 and 2019. In accordance with accounting guidance related to pro-forma disclosures,
the information presented for current year acquisitions is as if they occurred on January 1, 2020 and
reflects acquisitions made in 2020 as if they occurred on January 1, 2019. The 2019 information includes
2019 acquisitions as if they occurred on January 1, 2018. The 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.
(In millions, except per share data)
Revenue
Net income attributable to the Company
Basic net income per share attributable to the Company
Diluted net income per share attributable to the Company
6. Goodwill and Other Intangibles
Years Ended December 31,
2021
$ 20,008
$ 3,179
6.27
$
6.20
$
2020
$ 17,586
$ 2,042
4.03
$
3.99
$
2019
$ 17,323
$ 1,877
3.71
$
3.67
$
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.
80
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:
(In millions)
Balance as of January 1, as reported
Goodwill acquired
Other adjustments(a)
Balance at December 31,
2021
$ 15,517
1,045
(245)
$ 16,317
2020
$ 14,671
593
253
$ 15,517
(a) Primarily reflects the impact of foreign exchange and dispositions.
The goodwill acquired in 2021 and 2020 included approximately $96 million and $179 million,
respectively, which is deductible for tax purposes, primarily related to the Risk and Insurance Services
segment.
Goodwill allocable to the Company’s reportable segments is as follows: Risk and Insurance Services,
$12.5 billion and Consulting, $3.8 billion.
The gross cost and accumulated amortization of intangible assets at December 31, 2021 and 2020 are as
follows:
(In millions)
2021
2020
Customer relationships
Other(a)
Amortized intangibles
Gross
Cost
$ 4,066 $
365
$ 4,431 $
Accumulated
Amortization
Net
Carrying
Amount
Gross
Cost
Accumulated
Amortization
1,334 $
287
1,621 $
2,732 $ 3,713 $
78
386
2,810 $ 4,099 $
Net
Carrying
Amount
1,170 $ 2,543
156
1,400 $ 2,699
230
(a) Primarily non-compete agreements, trade names and developed technology.
Aggregate amortization expense was $365 million, $351 million, and $314 million for the years ended
December 31, 2021, 2020 and 2019, respectively. The estimated future aggregate amortization expense
is as follows:
For the Years Ending December 31,
(In millions)
2022
2023
2024
2025
2026
Subsequent years
$
$
350
327
307
271
252
1,303
2,810
81
7.
Income Taxes
For financial reporting purposes, income before income taxes includes the following components:
For the Years Ended December 31,
(In millions)
Income before income taxes:
U.S.
Other
The expense (benefit) for income taxes is comprised of:
Current –
U.S. Federal
Other national governments
U.S. state and local
Deferred –
U.S. Federal
Other national governments
U.S. state and local
Total income taxes
2021
2020
2019
1,590 $
2,618
4,208 $
1,075 $
1,718
2,793 $
657
1,782
2,439
251 $
714
132
1,097
(40)
(12)
(11)
(63)
1,034 $
172 $
456
79
707
40
(14)
14
40
747 $
70
455
57
582
69
(16)
31
84
666
$
$
$
$
The significant components of deferred income tax assets and liabilities and their balance sheet
classifications are as follows:
December 31,
(In millions)
Deferred tax assets:
Accrued expenses not currently deductible(a)
Differences related to non-U.S. operations(b)
Accrued U.S. retirement benefits
Net operating losses(c)
Income currently recognized for tax
Other
Deferred tax liabilities:
Differences related to non-U.S. operations
Depreciation and amortization
Accrued retirement & postretirement benefits - non-U.S. operations
Capitalized expenses currently recognized for tax
Other
2021
2020
647 $
293
293
183
29
32
1,477 $
624 $
506
403
98
32
1,663 $
547
294
494
60
25
43
1,463
569
491
143
87
32
1,322
$
$
$
$
(a) Net of valuation allowances of $2 million in 2021 and none in 2020.
(b) Net of valuation allowances of $144 million in 2021 and $123 million in 2020.
(c) Net of valuation allowances of $88 million in 2021 and $75 million in 2020.
82
December 31,
(In millions)
Balance sheet classifications:
Deferred tax assets
Other liabilities
2021
2020
$
$
551 $
737 $
702
561
The amount of cumulative undistributed earnings that are indefinitely reinvested in non-U.S. subsidiaries
is approximately $730 million as of December 31, 2021. While no additional U.S. federal income tax
would be required if such earnings were repatriated, additional state and withholding taxes would apply.
The amount of these additional taxes is estimated to be approximately $70 million.
Future U.S. federal tax costs related to basis differences in non-U.S. subsidiaries would primarily be
realized through the U.S. GILTI tax regime. The Company elected to recognize GILTI tax costs as a
period cost and therefore, has not provided deferred tax liabilities on these basis differences.
A reconciliation from the U.S. federal statutory income tax rate to the Company’s effective income tax rate
is shown below:
For the Years Ended December 31,
U.S. Federal statutory rate
U.S. state and local income taxes—net of U.S. Federal income
tax benefit
Differences related to non-U.S. operations
U.K. statutory rate change
Gain on consolidation of business
Equity compensation
Uncertain tax positions
Other
Effective tax rate
2021
2020
2019
21.0 %
21.0 %
21.0 %
2.3
0.1
2.6
(1.5)
(0.7)
0.1
0.7
24.6 %
2.5
2.3
—
—
(1.4)
1.1
1.2
26.7 %
3.0
3.0
—
—
(1.3)
—
1.6
27.3 %
The rates in all periods reflect the effects of tax planning and the ongoing impact of regulatory and other
guidance as it became available. The tax rate in 2021 includes the effect of a statutory rate change in the
U.K., the tax effect of a gain from the fair value re-measurement of the Company’s previously held equity
method investment in Marsh India upon the Company increasing its ownership interest from 49% to 92%,
which the Company has asserted will be indefinitely reinvested, and certain tax planning. The tax rate in
2020 includes a valuation allowance for certain tax credits, the impact of uncertain tax positions and
certain tax planning benefits. The 2019 rate includes certain tax costs related to JLT integration and
restructuring activity.
A valuation allowance was recorded to adjust deferred tax assets to the amount that the Company
believes is more likely than not to be realized. Valuation allowances had net increases of $36 million, $72
million and $60 million in 2021, 2020, and 2019, respectively. Adjustments of the beginning of the year
balances of valuation allowances increased income tax expense by $2 million during 2021. Adjustments
of the beginning of the year valuation allowances in 2020 decreased income tax expense by $14 million,
while in 2019 changes to the beginning of year valuation allowance had no impact on income tax
expense. Approximately 29% of the Company’s net operating loss carryforwards expire from 2022
through 2038, and others are unlimited. The potential tax benefit from net operating loss carryforwards at
the end of 2021 comprised federal, state and local, and non-U.S. tax benefits of $9 million, $24 million,
and $246 million, respectively, before reduction for valuation allowances.
83
Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the years ended
December 31, 2021, 2020 and 2019:
(In millions)
Balance at January 1,
Additions, based on tax positions related to current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Lapses in statutes of limitation
Balance at December 31,
2021
98
2
11
(1)
(1)
(15)
94
$
$
2020
86
9
25
(9)
(4)
(9)
98
$
$
2019
78
8
15
(1)
(1)
(13)
86
$
$
Of the total unrecognized tax benefits at December 31, 2021, 2020 and 2019, $87 million, $90 million and
$75 million, respectively, represent the amount that, if recognized, would favorably affect the effective tax
rate in any future periods. The total gross amount of accrued interest and penalties at December 31,
2021, 2020 and 2019, before any applicable federal benefit, was $45 million, $40 million and $31 million,
respectively.
The Company is routinely examined by the jurisdictions in which it has significant operations. In the U.S.
federal jurisdiction, the Company participates in the Internal Revenue Service’s ("IRS") Compliance
Assurance Process ("CAP"), which is structured to be, in effect, a real-time audit. During 2021, the IRS
concluded its examination of the Company’s 2017, 2018 and 2019 tax returns. Due to its status as a
compliant taxpayer, the Company was accepted into the Bridge phase of the CAP program for tax years
2020 and 2021, and therefore, generally will not be audited by the IRS for those years.
New York is a significant tax jurisdiction for the Company. New York State and New York City have
continuing examinations underway for various entities covering the years 2010 through 2018. During
2020, New York City initiated an audit for the tax years 2016 through 2018.
We conduct business through multiple legal entities in significant jurisdictions outside the United States.
Separate audits for individual entities within a jurisdiction may open or close within a particular year.
The status of audits for significant jurisdictions outside the United States are summarized in the table
below:
Tax Audit (Years)
Jurisdiction:
France
Germany
Hong Kong
Italy
Singapore
Initiated in 2021
Ongoing
Concluded
2019
2017-2018
2013-2016
2015-2017
2017-2019
2018
2011, 2012 during 2018
2009-2012 during 2018
United Kingdom
2019
2016-2018
2014, 2015 during 2018
The Company has established liabilities for uncertain tax positions in relation to potential assessments in
the jurisdictions in which it operates. The Company believes the resolution of tax matters will not have a
material effect on the consolidated financial position of the Company, although a resolution of tax matters
could have a material impact on the Company's net income or cash flows and on its effective tax rate in a
particular future period. It is reasonably possible that the total amount of unrecognized tax benefits will
decrease between zero and approximately $47 million within the next twelve months due to settlement of
audits and expiration of statutes of limitation.
84
8. Retirement Benefits
The Company maintains qualified and non-qualified defined benefit pension plans for its U.S. and non-
U.S. eligible employees.
Combined U.S. and Non-U.S. Plans
The weighted average actuarial assumptions utilized for the U.S. and significant non-U.S. defined benefit
plans and post-retirement benefit plans are as follows:
Weighted average assumptions:
Discount rate (for expense)
Expected return on plan assets
Rate of compensation increase (for expense)*
Discount rate (for benefit obligation)
Rate of compensation increase (for benefit
obligation)*
Pension
Benefits
Post-retirement
Benefits
2021
2020
2021
2020
1.92 %
4.73 %
1.85 %
2.28 %
2.57 %
5.31 %
1.76 %
1.92 %
2.42 %
—
—
2.36 %
2.72 %
—
—
2.42 %
2.16 %
1.85 %
—
—
*Rate of compensation increase assumptions include a zero percent rate of compensation increase for
the U.S. defined benefit plans since future benefit accruals were discontinued for those plans after
December 31, 2016 and earned benefits are not subject to final salary level adjustments.
The target asset allocation for the U.S. plans is 60% equities and equity alternatives and 40% fixed
income. At the end of 2021, the actual allocation for the U.S. plans was 65% equities and equity
alternatives and 35% fixed income. The target asset allocation for the U.K. plans, which comprise
approximately 81% of non-U.S. plan assets, is 26% equities and equity alternatives and 74% fixed
income. At the end of 2021, the actual allocation for the U.K. plans was 28% equities and equity
alternatives and 72% fixed income. 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 parameters. The Company uses threshold-based portfolio re-balancing to ensure
the actual portfolio remains consistent with target asset allocation ranges.
The components of the net periodic benefit cost for defined benefit and other post-retirement plans are as
follows:
Combined U.S. and significant non-U.S. Plans
For the Years Ended December 31,
Pension
Benefits
Post-retirement
Benefits
(In millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service
Recognized actuarial loss (gain)
Net periodic benefit (credit) cost
Curtailment loss
Plan termination
Settlement loss
Total (credit) cost
2021
2020
2019
2021
2020
2019
$
38 $
36 $
31 $
1 $ — $ —
341
(832)
—
206
421
487
(844)
(863)
—
161
—
104
2
—
(2)
1
3
—
(2)
—
3
—
(2)
(1)
$ (247) $ (226) $ (241) $
2 $
1 $ —
2
—
5
—
1
3
—
—
7
—
—
—
—
—
—
—
—
—
$ (240) $ (222) $ (234) $
2 $
1 $ —
85
The following table provides the amounts reported in the consolidated statements of income:
Combined U.S. and significant non-U.S. Plans
For the Years Ended December 31,
Pension
Benefits
Post-retirement
Benefits
(In millions)
2021
2020
2019
2021
2020
2019
Compensation and benefits expense
$
38 $
36 $
31 $
1 $ — $ —
Other net benefit (credit) cost
(278)
(258)
(265)
1
1
—
Total (credit) cost
$ (240) $ (222) $ (234) $
2 $
1 $ —
Pension Settlement Charge
The Company recorded $5 million, $3 million and $7 million of non-cash settlement charges for the years
ended December 31, 2021, 2020 and 2019 respectively, related to non-U.S. plans.
Plan Assets
For the U.S. plans, investment allocation decisions are made by a fiduciary committee composed of
senior executives appointed by the Company’s Chief Executive Officer. For the non-U.S. plans,
investment allocation decisions are made by local fiduciaries, in consultation with the Company for the
larger plans. Plan assets are invested in a manner consistent with the fiduciary standards set forth in all
relevant laws relating to pensions and trusts in each country. Primary investment objectives are (1) to
achieve an investment return that, in combination with current and future contributions, will provide
sufficient funds to pay benefits as they become due, and (2) to minimize the risk of large losses. The
investment allocations are designed to meet these objectives by broadly diversifying plan assets among
numerous asset classes with differing expected returns, volatilities, and correlations.
The major categories of plan assets include equity securities, equity alternative investments, and fixed
income securities. For the U.S. plan, the category ranges are 56-64% for equities and equity alternatives,
and 36-44% for fixed income. For the U.K. plans, the category ranges are 23-29% for equities and equity
alternatives, and 71-77% for fixed income. Asset allocation is monitored frequently and re-balancing
actions are taken as appropriate.
Plan investments are exposed to stock market, interest rate, and credit risk. Concentrations of these risks
are generally limited due to diversification by investment style within each asset class, diversification by
investment manager, diversification by industry sectors and issuers, and the dispersion of investments
across many geographic areas.
86
U.S. Plans
The following tables provide information concerning the Company’s U.S. defined benefit pension and
post-retirement benefit plans:
(In millions)
Change in benefit obligation:
Benefit obligation at beginning of year
Interest cost
Employee contributions
Plan amendments
Actuarial (gain) loss
Benefits paid
Benefit obligation, December 31
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Employee contributions
Benefits paid
Other
Fair value of plan assets, December 31
Net funded status, December 31
Amounts recognized in the consolidated balance sheets:
Current liabilities
Non-current liabilities
Net liability recognized, December 31
Amounts recognized in other comprehensive income
(loss):
Prior service cost
Net actuarial (loss) gain
Total recognized accumulated other comprehensive
(loss) income, December 31
Cumulative employer contributions in excess of (less
than) net periodic cost
Net amount recognized in consolidated balance sheet
Accumulated benefit obligation at December 31
U.S. Pension
Benefits
U.S. Post-retirement
Benefits
2021
2020
2021
2020
$
6,914 $ 6,322 $
31 $
184
—
1
213
—
—
(227)
(278)
6,594 $ 6,914 $
650
(271)
5,100 $ 4,715 $
$
$
680
35
—
(278)
—
591
65
—
(271)
—
$
5,537 $ 5,100 $
$ (1,057) $ (1,814) $
$
(31) $
(30) $
(1,026)
(1,784)
$ (1,057) $ (1,814) $
1
4
—
(1)
(7)
28 $
2 $
—
3
4
(7)
—
2 $
(26) $
(1) $
(25)
(26) $
$
(1) $
— $
(1,777)
(2,446)
— $
3
$ (1,778) $ (2,446) $
3 $
721
632
$ (1,057) $ (1,814) $
6,594 $ 6,914 $
$
(29)
(26) $
— $
31
1
4
—
1
(6)
31
2
—
3
4
(6)
(1)
2
(29)
(1)
(28)
(29)
—
3
3
(32)
(29)
—
87
(In millions)
Reconciliation of net actuarial (loss) gain recognized in
accumulated other comprehensive income (loss):
Beginning balance
Recognized as component of net periodic benefit cost
(credit)
Changes in plan assets and benefit obligations
recognized in other comprehensive income (loss):
Other
Liability experience
Asset experience
Total gain (loss) recognized as change in plan assets
and benefit obligations
Net actuarial (loss) gain, December 31
U.S. Pension
Benefits
U.S. Post-retirement
Benefits
2021
2020
2021
2020
$ (2,446) $ (2,114) $
3 $
90
72
(1)
(1)
227
353
579
—
(650)
246
(404)
—
1
—
1
$ (1,777) $ (2,446) $
3 $
4
—
—
(1)
—
(1)
3
For the Years Ended December 31,
(In millions)
Total recognized in net periodic benefit cost and
other comprehensive (income) loss
U.S. Pension
Benefits
2020
2021
2019
U.S. Post-retirement
Benefits
2020
2021
2019
$ (722) $ 272 $ 160 $ — $
2 $
2
The weighted average actuarial assumptions utilized in determining expense during the year and benefit
obligation at the end of the year for the U.S. defined benefit and other U.S. post-retirement plans are as
follows:
Weighted average assumptions:
Discount rate (for expense)
Expected return on plan assets
Discount rate (for benefit obligation)
U.S. Pension
Benefits
U.S. Post-retirement
Benefits
2021
2020
2021
2020
2.73 %
7.03 %
3.00 %
3.44 %
7.82 %
2.73 %
2.18 %
—
2.56 %
3.10 %
—
2.18 %
88
The accumulated benefit obligation and aggregate fair value of plan assets for U.S. pension plans with
accumulated benefit obligations in excess of plan assets were $6.6 billion and $5.5 billion, respectively, as
of December 31, 2021 and $6.9 billion and $5.1 billion, respectively, as of December 31, 2020.
The projected benefit obligation and fair value of plan assets for U.S. pension plans with projected benefit
obligations in excess of plan assets was $6.6 billion and $5.5 billion, respectively, as of December 31,
2021 and $6.9 billion and $5.1 billion, respectively, as of December 31, 2020. The decrease in the benefit
obligation in 2021 compared to 2020 reflects the increase in discount rates used to measure plan
liabilities.
As of December 31, 2021, the U.S. qualified plan holds 2 million shares of the Company’s common stock
which were contributed to the qualified plan by the Company in 2005. This represented approximately
6.3% of that plan's assets as of December 31, 2021.
The components of the net periodic benefit credit (cost) for the U.S. defined benefit and other post-
retirement benefit plans are as follows:
U.S. Plans only
For the Years Ended December 31,
(In millions)
Interest cost
Expected return on plan assets
Recognized actuarial loss (gain)
Net periodic benefit (credit) cost
Pension
Benefits
2020
2021
2019
$ 184 $ 213 $ 241
(343)
44
(327)
90
(53) $
(345)
72
(60) $ (58) $ — $
$
Post-retirement
Benefits
2019
2020
1
1
—
—
—
(1)
1 $ —
2021
1
—
(1)
The assumed health care cost trend rate for Medicare eligibles and non-Medicare eligibles is
approximately 5.5% in 2021, gradually declining to 4% in 2045. Assumed health care cost trend rates
have a small effect on the amounts reported for the U.S. health care plans because the Company caps its
share of health care trend at 5%.
Estimated Future Contributions
The Company expects to contribute approximately $31 million to its U.S. plans in 2022. The Company’s
policy for funding its tax-qualified defined benefit retirement plans is to contribute amounts at least
sufficient to meet the funding requirements set forth in the U.S. and applicable foreign law.
89
Non-U.S. Plans
The following tables provide information concerning the Company’s non-U.S.defined benefit pension and
post-retirement benefit plans:
Non-U.S. Pension
Benefits
2021
2020
Non-U.S.
Post-retirement Benefits
2020
2021
12,998 $
38
157
2
(617)
7
(16)
(2)
—
(395)
(115)
12,057 $
14,028 $
306
(16)
95
2
(395)
(165)
13,855 $
1,798 $
11,321 $
36
208
2
1,273
11
(13)
—
1
(402)
561
12,998 $
12,313 $
1,415
(13)
78
2
(402)
635
14,028 $
1,030 $
2,269 $
(6)
(465)
1,798 $
1,764 $
(7)
(727)
1,030 $
(18) $
(13) $
(2,904)
(3,467)
73 $
1
1
—
(4)
—
—
—
—
(3)
—
68 $
— $
—
—
3
—
(3)
—
— $
(68) $
— $
(3)
(65)
(68) $
7 $
(10)
(2,922) $
(3,480) $
(3) $
4,720
4,510
(65)
1,798 $
11,830 $
1,030 $
12,736 $
(68) $
— $
61
—
2
—
10
—
—
—
—
(2)
2
73
—
—
—
2
—
(2)
—
—
(73)
—
(3)
(70)
(73)
9
(16)
(7)
(66)
(73)
—
(In millions)
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Employee contributions
Actuarial (gain) loss
Plan amendments
Effect of settlement
Effect of curtailment
Special termination benefits
Benefits paid
Foreign currency changes
Benefit obligation, December 31
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Effect of settlement
Company contributions
Employee contributions
Benefits paid
Foreign currency changes
Fair value of plan assets, December 31
Net funded status, December 31
Amounts recognized in the consolidated balance
sheets:
Non-current assets
Current liabilities
Non-current liabilities
Net asset (liability) recognized, December 31
Amounts recognized in other comprehensive loss:
Prior service (credit) cost
Net actuarial loss
Total recognized accumulated other
comprehensive (loss) income, December 31
Cumulative employer contributions in excess of
(less than) net periodic cost
Net asset (liability) recognized in consolidated
balance sheets, December 31
Accumulated benefit obligation, December 31
$
$
$
$
$
$
$
$
$
$
$
90
(In millions)
Reconciliation of prior service (cost) credit
recognized in accumulated other comprehensive
income (loss):
Beginning balance
Recognized as component of net periodic benefit
credit:
Amortization of prior service credit
Effect of curtailment
Total recognized as component of net periodic
benefit cost (credit)
Changes in plan assets and benefit obligations
recognized in other comprehensive income:
Plan amendments
Prior service (cost) credit, December 31
(In millions)
Reconciliation of net actuarial (loss) gain recognized
in accumulated other comprehensive (loss) income:
Beginning balance
Recognized as component of net periodic benefit
cost:
Amortization of net loss
Effect of settlement
Total recognized as component of net periodic
benefit credit
Changes in plan assets and benefit obligations
recognized in other comprehensive income (loss):
Liability experience
Asset experience
Effect of curtailment
Total amount recognized as change in plan assets
and benefit obligations
Exchange rate adjustments
Net actuarial loss, December 31
Non-U.S. Pension
Benefits
2021
2020
Non-U.S.
Post-retirement Benefits
2020
2021
$
(13) $
(2) $
9 $
11
—
2
2
—
—
—
(2)
—
(2)
(7)
(18) $
(11)
(13) $
$
—
7 $
(2)
—
(2)
—
9
Non-U.S. Pension
Benefits
2021
2020
Non-U.S.
Post-retirement Benefits
2020
2021
$ (3,467) $ (3,055) $
(16) $
(5)
116
5
121
617
(199)
2
420
22
89
3
92
(1,273)
916
—
(357)
(147)
$ (2,904) $ (3,467) $
2
—
2
4
—
—
4
—
(10) $
—
—
—
(10)
—
—
(10)
(1)
(16)
For the Years Ended December 31,
(In millions)
Total recognized in net periodic benefit cost
and other comprehensive (income) loss
Non-U.S. Pension
Benefits
2020
2021
2019
Non-U.S. Post-retirement
Benefits
2020
2021
2019
$ (745) $
261 $ 311 $
(2) $
13 $
5
91
The weighted average actuarial assumptions utilized in determining expense during the year and benefit
obligation at the end of the year for the non-U.S. defined benefit plans are as follows:
Weighted average assumptions:
Discount rate (for expense)
Expected return on plan assets
Rate of compensation increase (for expense)
Discount rate (for benefit obligation)
Rate of compensation increase (for benefit
obligation)
Non-U.S. Pension
Benefits
Non-U.S.
Post-retirement Benefits
2021
2020
2021
2020
1.49 %
3.89 %
2.84 %
1.89 %
2.09 %
4.35 %
2.75 %
1.49 %
1.96 %
2.53 %
—
—
2.28 %
—
—
1.96 %
3.34 %
2.84 %
—
—
The accumulated benefit obligation and fair value of plan assets for the non-U.S. pension plans with
accumulated benefit obligations in excess of plan assets were $1.6 billion and $1.2 billion, respectively, as
of December 31, 2021 and $3.1 billion and $2.5 billion, respectively, as of December 31, 2020.
The projected benefit obligation and fair value of plan assets for non-U.S. pension plans with projected
benefit obligations in excess of plan assets was $1.7 billion and $1.2 billion, respectively, as of
December 31, 2021 and $3.3 billion and $2.6 billion, respectively, as of December 31, 2020.
The decrease in the benefit obligation in 2021 compared to 2020 reflects an actuarial gain primarily due to
the increase in discount rates used to measure plan liabilities.
Components of Net Periodic Benefits Costs
The components of the net periodic benefit cost for the non-U.S. defined benefit and other post-retirement
benefit plans and the curtailment, settlement and termination expenses are as follows:
For the Years Ended December 31,
(In millions)
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Recognized actuarial loss
Net periodic benefit credit
Settlement loss
Curtailment loss
Special termination benefits
Total credit
Non-U.S. Pension
Benefits
Non-U.S. Post-retirement
Benefits
2021
2020
2019
2021
2020
2019
$
38 $
36 $
31 $
1 $
— $
157
(505)
—
116
208
(499)
—
89
246
(520)
—
60
(194)
(166)
(183)
5
2
—
3
—
1
7
—
—
1
—
(2)
2
2
—
—
—
2
—
(2)
—
—
—
—
—
$ (187) $ (162) $ (176) $
2 $
— $
—
2
—
(2)
—
—
—
—
—
—
The assumed health care cost trend rate was approximately 4.94% in 2021, gradually declining to 4.36%
in 2040. Assumed health care cost trend rates can have a significant effect on the amounts reported for
the non-U.S. health care plans.
Estimated Future Contributions
The Company expects to contribute approximately $147 million to its non-U.S. pension plans in 2022.
Funding requirements for non-U.S. plans vary by country. Contribution rates are generally based on local
funding practices and requirements, which may differ significantly from measurements under U.S. GAAP.
Funding amounts may be influenced by future asset performance, the level of discount rates and other
variables impacting the assets and/or liabilities of the plan. Discretionary contributions may also be
92
affected by alternative uses of the Company’s cash flows, including dividends, investments and share
repurchases.
In the U.K., the assumptions used to determine pension contributions are the result of legally prescribed
negotiations between the Company and the plans' trustee that typically occurs every three years in
conjunction with the actuarial valuation of the plans. Currently, this results in a lower funded status than
under U.S. GAAP and may result in contributions irrespective of the U.S. GAAP funded status.
During 2021, the JLT Pension Scheme was merged into the MMC U.K. Pension Fund with a new
segregated JLT section created. The Company made deficit contributions of $38 million to the JLT section
in 2021 and is expected to make contributions totaling approximately $112 million in 2022. The funding
level of the JLT section will be reassessed during 2022 to determine contributions from 2023 onwards.
For the MMC U.K. Pension Fund, excluding the JLT section, an agreement was reached with the trustee
in the fourth quarter of 2019 based on the surplus funding position at December 31, 2018. Under the
agreement no deficit funding is required until 2023. The funding level will be re-assessed during 2022, as
part of the December 31, 2021 actuarial valuation, to determine if contributions are required in 2023. As
part of a long-term strategy, which depends on having greater influence over asset allocation and overall
investment decisions, in November 2019 the Company renewed its agreement to support annual deficit
contributions by the U.K. operating companies under certain circumstances, up to £450 million over a
seven-year period.
Estimated Future Benefit Payments
The estimated future benefit payments for the Company's pension and post-retirement benefit plans are
as follows:
For the Years Ended December 31,
(In millions)
2022
2023
2024
2025
2026
2027-2031
Pension
Benefits
Post-retirement
Benefits
U.S.
300
312
323
329
335
1,719
$
$
$
$
$
$
Non-U.S.
349
$
376
$
380
$
391
$
403
$
2,225
$
$
$
$
$
$
$
U.S.
Non-U.S.
3
$
3
$
3
$
3
$
3
$
15
$
4
3
3
3
3
9
Defined Benefit Plans Fair Value Disclosures
The U.S. and non-U.S. plan investments are classified into Level 1, which refers to investments valued
using quoted prices from active markets for identical assets; Level 2, which refers to investments not
traded on an active market but for which observable market inputs are readily available; Level 3, which
refers to investments valued based on significant unobservable inputs; and NAV, which refers to
investments valued using net asset value as a practical expedient. Assets and liabilities are classified in
their entirety based on the lowest level of input that is significant to the fair value measurement. See Note
10, Fair Value Measurements, for further description of fair value hierarchy leveling.
93
The following table sets forth, by level within the fair value hierarchy, a summary of the U.S. and non-U.S.
plans' investments measured at fair value on a recurring basis at December 31, 2021 and 2020:
Fair Value Measurements at December 31, 2021
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
NAV
Total
$
476 $
— $
— $
5,221 $
—
2,368
—
15
—
681
348
11
4,209
44
—
7,364
—
—
—
6
—
1
—
—
—
—
—
662
—
—
1,531
—
356
—
—
—
5,697
4,209
2,413
1,531
7,379
356
681
348
679
$
$
3,899 $
11,623 $
663 $
7,108 $
23,293
—
(3,899)
—
—
(3,899)
3,899 $
7,724 $
663 $
7,108 $
19,394
Fair Value Measurements at December 31, 2020
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
NAV
Total
$
561 $
— $
— $
4,298 $
—
2,737
—
15
—
1,040
234
13
4,707
39
—
4,331
—
—
—
7
2
1
—
—
—
—
—
771
—
—
1,353
—
487
—
—
—
4,859
4,709
2,777
1,353
4,346
487
1,040
234
791
$
$
4,600 $
9,084 $
774 $
6,138 $
20,596
—
(1,522)
—
—
(1,522)
4,600 $
7,562 $
774 $
6,138 $
19,074
Assets
(In millions)
Common/collective trusts
Corporate obligations
Corporate stocks
Private equity/partnerships
Government securities
Real estate
Short-term investment
funds
Company common stock
Other investments
Total investments
Net derivative liabilities
Net investments
Assets
(In millions)
Common/collective trusts
Corporate obligations
Corporate stocks
Private equity/partnerships
Government securities
Real estate
Short-term investment
funds
Company common stock
Other investments
Total investments
Net derivative liabilities
Net investments
94
The tables below set forth a summary of changes in the fair value of the plans’ Level 3 assets for the
years ended December 31, 2021 and December 31, 2020:
Assets
(In millions)
Other
investments
Corporate stocks
Total assets
Assets
(In millions)
Other
investments
Corporate stocks
Total assets
Fair Value,
January 1,
2021
Purchases Sales
Unrealized
Gain/
(Loss)
Realized
Gain/
(Loss)
Exchange
Rate
Impact
Transfers
in/(out)
and
Other
Fair
Value,
December
31, 2021
$
$
773
$
19
$ (15) $
(78) $
1
1
—
(1)
774
$
20
$ (15) $
(79) $
1
—
1
$
$
(36) $
(2) $
—
—
(36) $
(2) $
662
1
663
Fair Value,
January 1,
2020
Purchases Sales
Unrealized
Gain/
(Loss)
Realized
Gain/
(Loss)
Exchange
Rate
Impact
Transfers
in/(out)
and
Other
Fair
Value,
December
31, 2020
$
$
682
$
1
683
$
20
—
20
$ (12) $
—
$ (12) $
25
—
25
$
$
1
—
1
$
$
55
—
55
$
$
2
—
2
$
$
773
1
774
The following is a description of the valuation methodologies used for assets measured at fair value:
Company common stock: Valued at the closing price reported on the New York Stock Exchange.
Common stocks, preferred stocks, convertible equity securities, rights/warrants and real estate
investment trusts (included in Corporate stocks): Valued at the closing price reported on the primary
exchange.
Corporate bonds (included in Corporate obligations): The fair value of corporate bonds is estimated using
recently executed transactions, market price quotations (where observable) and bond spreads. The
spread data used are for the same maturity as the bond. If the spread data does not reference the issuer,
then data that references a comparable issuer are used. When observable price quotations are not
available, fair value is determined based on cash flow models.
Commercial mortgage-backed and asset-backed securities (included in Corporate obligations): Fair value
is determined using discounted cash flow models. Observable inputs are based on trade and quote
activity of bonds with similar features including issuer vintage, purpose of underlying loan (first or second
lien), prepayment speeds and credit ratings. The discount rate is the combination of the appropriate rate
from the benchmark yield curve and the discount margin based on quoted prices.
Common/Collective trusts: Trust assets include mutual funds that are valued based on readily
determinable market values and other assets valued at the net asset value of units of a bank collective
trust. The net asset value as provided by the trustee, is used as a practical expedient to estimate fair
value. The net asset value is based on the fair value of the underlying investments held by the fund less
its liabilities. This practical expedient is not used when it is determined to be probable that the fund will
sell the investment for an amount different than the reported net asset value.
U.S. government bonds (included in Government securities): The fair value of U.S. government bonds is
estimated by pricing models that utilize observable market data including quotes, spreads and data points
for yield curves.
U.S. agency securities (included in Government securities): U.S. agency securities are comprised of two
main categories consisting of agency issued debt and mortgage pass-throughs. Agency issued debt
securities are valued by benchmarking market-derived prices to quoted market prices and trade data for
identical or comparable securities. Mortgage pass-throughs include certain "To-be-announced" (TBA)
securities and mortgage pass-through pools. TBA securities are generally valued using quoted market
prices or are benchmarked thereto. Fair value of mortgage pass-through pools are model driven with
respect to spreads of the comparable TBA security.
Private equity and real estate partnerships: Investments in private equity and real estate partnerships are
valued based on the fair value reported by the manager of the corresponding partnership and reported on
95
a one quarter lag. The managers provide unaudited quarterly financial statements and audited annual
financial statements which set forth the value of the fund. The valuations obtained from the managers are
based on various analyses on the underlying holdings in each partnership, including financial valuation
models and projections, comparable valuations from the public markets, and precedent private market
transactions. Investments are valued in the accompanying financial statements based on the Plan’s
beneficial interest in the underlying net assets of the partnership as determined by the partnership
agreement.
Insurance group annuity contracts: The fair values for these investments are based on the current market
value of the aggregate accumulated contributions plus interest earned.
Net derivative liabilities: Includes interest rate swaps, inflation swaps, total return swaps, repurchase
agreements and equity based derivatives, primarily related to the U.K. plans. These derivatives are
structured to hedge interest rate, inflation and equity exposure in the U.K. plans. Fair values for interest
rate, inflation and equity based derivatives are calculated using a discounted cash flow pricing model.
These models use observable market data such as contractual fixed rate, spot equity price or index value
and dividend data.
Short-term investment funds: Primarily high-grade money market instruments valued at a readily
determinable price.
Registered investment companies: Valued at the closing price reported on the primary exchange.
Defined Contribution Plans
The Company maintains certain defined contribution plans for its employees, including the Marsh &
McLennan Companies 401(k) Savings & Investment Plan ("MMC 401(k) Plan") and the Marsh &
McLennan Agency Savings and Investment Plan (collectively, the "401(k) Plans"), that are qualified under
U.S. tax laws. For the 401(k) Plans, eligible employees may contribute a percentage of their base salary,
subject to certain limitations, and the Company matches a fixed portion of the employees’ contributions. In
addition, the Company also amended the MMC 401(k) Plan for most of its U.S. employees to add an
automatic Company contribution equal to 4% of eligible base pay beginning on January 1, 2017. The
401(k) Plans contain an Employee Stock Ownership Plan feature under U.S. tax law. Approximately $742
million of the 401(k) Plans' assets at December 31, 2021 and $537 million at December 31, 2020 were
invested in the Company’s common stock. If a participant does not choose an investment direction for his
or her future contributions, they are automatically invested in a BlackRock LifePath Portfolio that most
closely matches the participant’s expected retirement year. The cost of these defined contribution plans
was $150 million in 2021, $145 million in 2020 and $139 million in 2019. In addition, the Company has
significant defined contribution plans in the U.K. As noted above, effective August 1, 2014, a newly formed
defined contribution plan replaced the existing defined contribution and defined benefit plans with regard
to future service. In addition, the Company has assumed responsibility for the defined contribution section
of the JLT U.K. plan. The cost of the U.K. defined contribution plan was $141 million, $121 million and
$100 million in 2021, 2020 and 2019, respectively.
9. Stock Benefit Plans
The Company maintains multiple stock-based payment arrangements under which employees may be
awarded restricted stock units, stock options and other forms of stock-based benefits.
Marsh & McLennan Companies, Inc. Incentive and Stock Award Plans
On May 21, 2020, the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan (the
"2020 Plan") was approved by the Company's stockholders. The 2020 Plan replaced the Company's
previous equity incentive plan, the 2011 Incentive and Stock Award Plan.
The types of awards permitted under the 2020 Plan include stock options, restricted stock units payable in
Company common stock or cash, and other stock-based awards. Performance-based restricted stock
units are referred to as performance stock units. The 2020 Plan contains a provision which, in the event of
a change in control of the Company, may accelerate the vesting of awards. This provision requires both a
change in control of the Company and a subsequent specified termination of employment for vesting to
be accelerated. There are 20 million shares approved for issuance under the 2020 plan. The total number
of shares issued in connection with full-value awards may not exceed 12.5 million shares. Full-value
96
awards include awards such as restricted stock units and performance stock units but exclude stock
options.
The Company's current practice is to grant non-qualified stock options, restricted stock units ("RSUs")
and/or performance stock units ("PSUs") on an annual basis to senior executives and a limited number of
other employees as part of their total compensation. RSU awards are also granted to new hires or as
retention awards for certain employees.
Stock Options: The Company currently grants non-qualified stock options under the 2020 Plan. The
Compensation Committee determines when the options vest and may be exercised and under what terms
the options are forfeited. Options are generally granted with an exercise price equal to the market value of
the Company's common stock on the date of grant. These option awards generally vest 25% per year and
have a contractual term of 10 years.
The estimated fair value of options granted is calculated using the Black-Scholes option pricing valuation
model. This model takes into account several factors and assumptions. The expected dividend yield is
based on expected dividends for the expected life of the stock options.
The assumptions used in the Black-Scholes option pricing valuation model for options granted by the
Company in 2021, 2020 and 2019 are as follows:
Risk-free interest rate
Expected life (in years)
Expected volatility
Expected dividend yield
2021
0.79 %
6.0
23.45 %
1.58 %
2020
1.44 %
6.0
20.33 %
1.53 %
2019
2.51 %
6.0
20.93 %
1.82 %
A summary of the status of the Company’s stock option awards as of December 31, 2021 and changes
during the year then ended is presented below:
Balance at January 1, 2021
Granted
Exercised
Forfeited
Balance at December 31, 2021
Options vested or expected to vest
at December 31, 2021
Options exercisable at
December 31, 2021
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term
Shares
Aggregate
Intrinsic Value
($000)
7,769,895 $
79.71
1,324,618 $ 117.53
(1,676,783) $
61.42
(200,605) $ 105.98
7,217,125 $
90.17
6.4 years $
601,999
7,128,248 $
89.98
6.5 years $
595,954
3,988,943 $
75.19
5.1 years $
392,470
In the above table, forfeited options are unvested options whose requisite service period has not been
met. Expired options are vested options that were not exercised. The weighted-average grant-date fair
value of the Company's option awards granted during the years ended December 31, 2021, 2020 and
2019 was $22.25, $21.09 and $17.87, respectively. The total intrinsic value of options exercised during
the same periods was $137.5 million, $159.3 million and $136.7 million, respectively.
As of December 31, 2021, there was $15.0 million of unrecognized compensation cost related to the
Company's option awards. The weighted-average period over which that cost is expected to be
recognized is approximately 1.13 years. Cash received from the exercise of stock options for the years
ended December 31, 2021, 2020 and 2019 was $103.0 million, $72.0 million and $106.5 million,
respectively.
The Company's policy is to issue treasury shares upon option exercises or share unit conversion. The
Company intends to issue treasury shares as long as an adequate number of those shares is available.
97
Restricted Stock Units and Performance Stock Units: The Company currently grants RSU and PSU
awards under the 2020 Plan. The Compensation Committee determines the restrictions on such units,
when the restrictions lapse, when the units vest and are paid, and under what terms the units are
forfeited. The cost of these awards is amortized over the vesting period, which is generally three years.
Dividend equivalents are not paid out unless and until such time that the award vests and shares are
distributed.
The payout for PSU awards granted prior to 2020 is based on the achievement of the Company's
performance measures, based on adjusted EPS growth as modified for executive compensation purposes
and measured on a three-year annualized growth basis, and paid out generally over the three-year
performance period. The Company accounts for these awards as performance condition restricted stock
units. The performance condition is not considered in the determination of grant date fair value of such
awards. Compensation cost is recognized over the performance period based on management’s estimate
of the number of units expected to vest and shares to be paid and is adjusted to reflect the actual number
of shares paid out at the end of the three-year performance period.
The payout for PSU awards granted in 2020 and 2021 is based on the achievement of the Company's
adjusted EPS growth as well as a relative total stockholder return ("TSR") modifier versus the S&P 500
companies. The TSR modifier is a market condition with the grant-date fair value determined using a
Monte Carlo simulation model. The Monte Carlo model takes into account several factors and
assumptions including the risk-free interest rate, historical volatility of and correlations between the stock
prices of the Company and the S&P 500 companies, and the Company’s relative TSR versus S&P 500
companies for the brief portion of the three-year performance period prior to the grant date.
The number of shares actually earned at the end of the three-year period will vary, based on actual
Company financial performance, and for 2020 and 2021 PSU awards, relative TSR, from 0% to 200% of
the number of performance share units granted.
The assumptions used in the Monte Carlo simulation model for PSU's granted with the TSR modifier by
the Company in 2021 include:
Risk-Free Interest Rate
Dividend Yield
Volatility
Initial TSR
2021
0.20 %
1.7 %
25.0 %
2.6 %
A summary of the status of the Company's RSU and PSU awards as of December 31, 2021 and changes
during the period then ended is presented below:
Non-vested balance at January 1, 2021
Granted
Vested
Forfeited
Non-vested balance at December 31, 2021
Restricted Stock Units
Performance Stock Units
Weighted
Average
Grant Date
Fair Value
Shares
5,513,681 $
101.22
2,469,062 $
120.19
(2,125,113) $
97.26
(309,168) $
106.91
5,548,462 $
110.86
Weighted
Average
Grant Date
Fair Value
101.54
122.77
83.05
111.76
114.35
Shares
656,682 $
250,813 $
(197,216) $
(48,089) $
662,190 $
The weighted-average grant-date fair value of the Company's RSU awards granted during the years
ended December 31, 2020 and 2019 was $118.20 and $92.50, respectively. The weighted average grant
date fair value of the Company's PSU awards granted during the years ended December 31, 2020 and
2019 was $127.71 and $91.17, respectively. The total fair value of the shares distributed during the years
ended December 31, 2021, 2020 and 2019 in connection with the Company's non-option equity awards
was $277.8 million, $290 million and $211.9 million, respectively.
98
The payout of shares in 2021 with respect to the PSU awards granted in 2018 was 110% of target based
on performance for the three-year performance period. In aggregate, 217,003 shares became
distributable in respect to PSUs vested in 2021.
As of December 31, 2021, there was $384 million of unrecognized compensation cost related to the
Company's RSU and PSU awards. The weighted-average period over which that cost is expected to be
recognized is approximately one year.
Marsh & McLennan Companies Stock Purchase Plans
In May 1999, the Company's stockholders approved an employee stock purchase plan (the "1999 Plan")
to replace the 1994 Employee Stock Purchase Plan (the "1994 Plan"), which terminated on September
30, 1999 following its fifth annual offering. Under the current terms of the Plan, shares are purchased four
times during the plan year at a price that is 95% of the average market price on each quarterly purchase
date. Under the 1999 Plan, after including the available remaining unused shares in the 1994 Plan and
reducing the shares available by 10,000,000 consistent with the Company's Board of Directors' action in
March 2007 and the addition of 4,750,000 shares due to a shareholder action in May 2018, no more than
40,350,000 shares of the Company's common stock may be sold. Employees purchased 362,230 shares
during the year ended December 31, 2021 and at December 31, 2021, 4,516,058 shares were available
for issuance under the 1999 Plan. Under the 1995 Company Stock Purchase Plan for International
Employees (the "International Plan"), after reflecting the additional 5,000,000 shares of common stock for
issuance approved by the Company's Board of Directors in July 2002, the addition of 4,000,000 shares
due to a shareholder action in May 2007 and reducing the shares available by 1,000,000 consistent with
the Company's Board of Directors' action in March 2018, no more than 11,000,000 shares of the
Company's common stock may be sold. Employees purchased 121,873 shares during the year ended
December 31, 2021 and there were 1,034,131 shares available for issuance at December 31, 2021 under
the International Plan. The plans are considered non-compensatory.
10. Fair Value Measurements
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 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)
b)
c)
d)
quoted prices for similar assets or liabilities in active markets;
quoted prices for identical or similar assets or liabilities in non-active markets
(examples include corporate and municipal bonds, which trade infrequently);
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
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).
99
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 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.
Contingent Purchase Consideration Assets and Liability - 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 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 December 31, 2021 and 2020:
Identical Assets
(Level 1)
Observable Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Total
12/31/21
12/31/20
12/31/21
12/31/20
12/31/21
12/31/20
12/31/21
12/31/20
(In millions)
Assets:
Financial instruments owned:
(a)
Exchange traded equity
securities
Mutual funds(a)
Money market funds(b)
Other equity investment(a)
Contingent purchase
consideration asset(c)
Total assets measured at fair
value
Fiduciary Assets:
Money market funds
U.S. Treasury Bills(e)
Total fiduciary assets measured
at fair value
Liabilities:
Contingent purchase
consideration liability(d)
Total liabilities measured at fair
value
$
$
$
$
$
$
61
$
59
$
— $
— $
— $
— $
61
$
192
425
—
—
678
527
55
$
$
186
587
—
—
832
173
150
$
$
—
—
8
—
—
—
8
—
8
$
8
$
—
—
—
5
5
—
—
—
68
192
425
8
5
$
68
$
691
— $
— $
— $
— $
—
—
—
—
527
55
$
$
59
186
587
8
68
908
173
150
582
$
323
$
— $
— $
— $
— $
582
$
323
— $
— $
— $
— $
352
— $
— $
— $
— $
352
$
$
243
243
$
$
352
352
$
$
243
243
(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 at December 31, 2021 and other assets at December 31, 2020 in the consolidated balance sheets.
(d) Included in accounts payable and accrued liabilities and other liabilities in the consolidated balance sheets.
(e) U.S. Treasury bills with 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, 2020 is driven primarily by
100
cash receipts of approximately $90 million, partially offset by accretion and adjustments to the fair value of
the contingent purchase consideration assets.
During the year ended December 31, 2021, there were no assets or liabilities that were transferred
between any of the levels.
The table below sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities
related to contingent consideration from acquisitions for the years ended December 31, 2021 and
December 31, 2020.
(In millions)
Balance at January 1,
Net additions
Payments
Revaluation impact
Other (a)
Balance at December 31,
$
$
2021
243
107
(77)
81
(2)
2020
225
107
(102)
11
2
$
352
$
243
(a) Primarily reflects the impact of foreign exchange.
Long-Term Investments
The Company holds investments in certain private equity investments and private companies that are
accounted for using the equity method of accounting. The carrying value of these investments was $207
million and $280 million at December 31, 2021 and 2020, respectively.
Investments in Public and Private Companies
The Company has investments in private insurance and consulting companies with a carrying value of
$58 million and $169 million at December 31, 2021 and 2020, respectively. The Company’s equity
investment in insurance and consulting companies 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 $149 million and $111 million at December 31,
2021 and 2020, respectively. The carrying values of these private equity investments approximates 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 (loss) line in the consolidated statement of
income. These investments are included in other assets in the consolidated balance sheets. The
Company recorded net investment income of $56 million and $3 million from these investments for the
years ended December 31, 2021 and 2020, respectively.
Other Investments
At December 31, 2021 and 2020 the Company held certain equity investments with readily determinable
market values of $75 million and $72 million, respectively. In 2021 and 2020, the Company recorded
investment losses on these investments of $5 million and losses of $27 million, respectively. The
Company also held investments without readily determinable market values of $36 million and $33 million
at December 31, 2021 and 2020, respectively.
The Company sold 242 million shares of the common stock of AF during 2020. The investment in AF,
which was accounted for using the equity method of accounting prior to the sale of these shares, is
accounted for at fair value, with unrealized investment gains and losses recorded as investment income
(loss) in the consolidated statement of income.
101
11. Derivatives
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 sheet. The Company
concluded that the hedge continues to be highly effective as of December 31, 2021. During 2021, the
U.S. dollar value of the euro notes decreased $100 million through December 31, 2021 due to the impact
of foreign exchange rates, with a corresponding decrease to accumulated other comprehensive loss.
JLT Derivatives and Hedging Activity
JLT Fair Value Debt Derivative Contracts
A significant portion of JLT's outstanding senior notes at the time of completion of the JLT Transaction
were denominated in U.S. dollars. In order to hedge its exposure against the risk of fluctuations between
the British pound and the U.S. dollar, JLT entered into foreign exchange contracts as well as interest rate
swaps to protect against the risk of changes in interest rates, which were designated as fair value hedges.
In June, 2019, the Company redeemed these U.S. dollar denominated senior notes and settled the
related derivative contracts. The offsetting changes in fair value of the debt and the change in fair value of
the derivative contracts were recorded in the consolidated statement of income for the year ended
December 31, 2019.
JLT Cash Flow Hedges
JLT also had a number of foreign exchange contracts to hedge the risk of foreign exchange movements
between the U.S. dollar and the British pound, related to JLT’s U.S. dollar denominated revenue in the
U.K. Prior to the acquisition, these derivative contracts were designated as cash flow hedges. Upon
completion of the JLT Transaction, these derivative contracts were not re-designated as cash flow hedges
by the Company. The contracts were settled in June 2019. The change in fair value between the
acquisition date and the settlement date resulted in a charge of $26 million for the year ended December
31, 2019. The charge is recorded as a change in fair value of acquisition related derivative contracts in
the consolidated statement of income.
JLT Acquisition Related Derivatives
Foreign Exchange Forward Contract
On September 20, 2018, the Company entered into the FX contract to purchase £5.2 billion at a
contracted exchange rate, to hedge the risk of appreciation of the GBP-denominated purchase price of
JLT, which was settled on April 1, 2019 upon the closing of the JLT Transaction. The FX contract did not
qualify for hedge accounting treatment under applicable accounting guidance, which required the
Company to record the change in the fair value of the FX contract on each reporting date to the statement
of income. The Company recorded a gain of $31 million in the consolidated statement of income for the
year ended December 31, 2019, related to the settlement of the FX Contract.
Foreign Exchange Contract on Euro Debt Issuance
In March 2019, the Company issued €1.1 billion of senior notes related to the JLT Transaction. In
connection with the senior note issuances, the Company entered into a forward exchange contract to
hedge the economic risk of changes in foreign exchange rates from the issuance date to settlement date
of the Euro senior notes. The Company recorded a charge of $7.3 million in the consolidated statement of
income for the year ended December 31, 2019, related to the settlement of this contract.
102
Treasury Locks on Senior Notes
In connection with the JLT Transaction, to hedge the economic risk of changes in future interest rates
prior to its issuance of fixed rate debt, in the fourth quarter of 2018, the Company entered into treasury
locks related to $2 billion of senior notes issued in January 2019. Upon issuance of the $5 billion of senior
notes, the Company settled the treasury lock derivatives and made a payment to its counterparty for
$122 million. A charge of $6 million was recorded in the first quarter of 2019 related to the settlement of
the treasury lock derivatives.
12. Leases
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.
The Company determined that $16 million and $28 million of its ROU assets were impaired, and
therefore, recorded a charge to the consolidated statement of income for the year ended December 31,
2021 and 2020, respectively, with an offsetting reduction to ROU assets.
The following table provides additional information about the Company’s property leases:
For the Years Ended December 31,
(In millions, except weighted average data)
Lease Cost:
Operating lease cost(a)
Short-term lease cost
Variable lease cost
Sublease income
Net lease cost
Other information:
Operating cash outflows from operating leases
Right of use assets obtained in exchange for new operating lease
liabilities
2021
2020
$
$
$
$
374
$
4
144
(20)
502
412
348
$
$
$
396
3
138
(19)
518
420
261
Weighted-average remaining lease term – real estate
Weighted-average discount rate – real estate leases
8.87 years
8.42 years
2.72 %
2.94 %
(a) Excludes ROU asset impairment charges.
103
Future minimum lease payments for the Company’s operating leases as of December 31, 2021 are as
follows:
Payment Dates (In millions)
Real Estate Leases
2022
2023
2024
2025
2026
Subsequent years
Total future lease payments
Less: imputed interest
Total
Current lease liabilities
Long-term lease liabilities
Total lease liabilities
$
$
$
$
389
350
307
276
253
924
2,499
(287)
2,212
332
1,880
2,212
Note: Table excludes obligations for leases with original terms of 12 months or less which have not been
recognized as a right to use asset or liability in the consolidated balance sheets.
As of December 31, 2021, the Company had additional operating real estate leases that had not yet
commenced of $13 million. These operating leases will commence over the next 12 months.
104
13. Debt
The Company’s outstanding debt is as follows:
December 31,
(In millions)
Short-term:
Current portion of long-term debt
Long-term:
Senior notes – 4.80% due 2021
Senior notes – 2.75% due 2022
Senior notes – 3.30% due 2023
Senior notes – 4.05% due 2023
Senior notes – 3.50% due 2024
Senior notes – 3.875% due 2024
Senior notes – 3.50% due 2025
Senior notes – 1.349% due 2026
Senior notes – 3.75% due 2026
Senior notes – 4.375% due 2029
Senior notes – 1.979% due 2030
Senior notes – 2.25% due 2030
Senior notes – 2.375% due 2031
Senior notes – 5.875% due 2033
Senior notes – 4.75% due 2039
Senior notes – 4.35% due 2047
Senior notes – 4.20% due 2048
Senior notes – 4.90% due 2049
Senior notes – 2.90% due 2051
Mortgage – 5.70% due 2035
Other
Less current portion
2021
2020
$
17 $
17
517
517
—
—
349
249
599
997
498
629
598
1,499
614
739
397
298
495
493
593
1,238
346
316
3
10,950
17
10,933 $
500
499
349
249
598
995
498
677
597
1,499
664
737
—
298
495
493
592
1,237
—
331
5
11,313
517
10,796
$
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 no commercial paper outstanding at December 31, 2021.
Credit Facilities
On April 2, 2021, the Company entered into an amended and restated multi-currency unsecured $2.8
billion five-year revolving credit facility ("New Facility"). The interest rate on the New Facility is based on
LIBOR plus a fixed margin which varies with the Company’s credit ratings. The New Facility expires in
April 2026 and requires the Company to maintain certain coverage and leverage ratios which are tested
quarterly. The New 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 December 31, 2021, the Company had no borrowings
under this facility.
105
In connection with the New Facility, the Company terminated its previous multi-currency unsecured $1.8
billion five-year revolving credit facility and its unsecured $1 billion 364-day unsecured revolving credit
facility.
In January 2020, the Company closed on a $500 million one-year and $500 million two-year term loan
facilities. In the first quarter of 2020 the Company borrowed $1 billion against these facilities, which were
subsequently repaid during the third and fourth quarters of 2020. These two facilities were terminated as
of December 31, 2020 after repayment of the initial draw down.
Additional credit facilities, guarantees and letters of credit are maintained with various banks aggregating
$508 million at December 31, 2021 and $573 million at December 31, 2020. There were no outstanding
borrowings under these facilities at December 31, 2021 and December 31, 2020.
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.
In December 2020, the Company repaid $700 million of maturing senior notes. The Company also
prepaid $300 million of floating rate notes with an original maturity of December 2021.
In May 2020, the Company issued $750 million of 2.250% senior notes due 2030. The Company used the
net proceeds from this offering to pay outstanding borrowings under the previous revolving credit facility.
In March 2020, the Company repaid $500 million of maturing senior notes.
Scheduled repayments of long-term debt in 2022 and in the four succeeding years are $17 million, $616
million, $1.6 billion, $518 million and $1.2 billion, respectively.
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.
(In millions)
Short-term debt
Long-term debt
December 31, 2021
Carrying
Amount
Fair
Value
December 31, 2020
Carrying
Amount
Fair
Value
$
$
17 $
17
10,933 $
12,466
$
$
517 $
523
10,796 $
12,858
The fair value of the Company’s short-term debt consists primarily of 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- and long-term debt would be classified as
Level 2 in the fair value hierarchy.
106
14. Restructuring Costs
JLT Related Integration and Restructuring
The costs incurred in connection with the integration and restructuring of the combined businesses,
primarily related to severance, real estate and technology rationalization, process management consulting
fees, and legal fees for the rationalization of legal entity structures.
Since the acquisition of JLT, the Company has incurred JLT integration and restructuring costs of
$679 million through December 31, 2021. This reflects $93 million and $251 million of costs incurred for
the year ended December 31, 2021, and 2020, respectively.
Costs recognized are based on applicable accounting guidance which includes accounting for disposal or
exit activities, guidance related to impairment of long lived assets (for right of use assets related to real
estate leases), as well as other costs resulting from accelerated depreciation or amortization of leasehold
improvements and other property and equipment. The Company is expected to complete the integration
of JLT during 2022.
In connection with the JLT integration and restructuring, for the year ended December 31, 2021, the
Company incurred costs of $93 million: $53 million in RIS, $36 million in Consulting, $4 million in
Corporate. The severance and related costs were included in compensation and benefits and the other
costs were included in other operating expenses in the consolidated statement of income.
Details of the JLT integration and restructuring activity from January 1, 2020 through December 31, 2021,
are as follows:
(In millions)
Liability at 1/1/20
2020 charges
Cash payments
Non-cash charges
$
Liability at 12/31/20
$
2021 charges
Cash payments
Non-cash charges
Liability at 12/31/21
$
Severance
Real Estate
Related Costs
(a)
Information
Technology
(a)
Consulting
and Other
Outside
Services (b)
Total
42
43
(69)
—
16
14
(13)
—
17
$
$
$
$
$
5
69
(25)
(42)
7
26
(12)
(17)
— $
— $
62
(55)
(5)
2
23
(25)
—
77
(77)
—
$
— $
30
(30)
—
4
$
— $
— $
47
251
(226)
(47)
25
93
(80)
(17)
21
(a) Includes ROU asset impairments, data center contract termination costs and temporary infrastructure leasing
costs.
(b) Includes consulting fees related to the management of the integration processes and legal fees related to the
rationalization of legal entity structures.
Other Restructuring
The Company has initiated other restructuring actions related to improving and streamlining the
Company's global information technology and HR functions, improving efficiencies and client services
related to Marsh's Centers of Excellence program and adjustments to restructuring liabilities for future rent
under non-cancellable leases. For the year ended December 31, 2021, the Company incurred costs of
$70 million, reflecting $31 million in RIS, $12 million in Consulting and $27 million in Corporate related to
these initiatives.
107
The following details the other restructuring liabilities for actions initiated during 2021 and prior:
(In
millions)
Liability at
1/1/20
Amounts
Accrued
Cash
Paid
Non-
Cash/
Other
Liability at
12/31/20
Amounts
Accrued
Cash
Paid
Non-
Cash/
Other
Liability at
12/31/21
51 $
39 $
(54) $ — $
36 $
24 $
(42) $ — $
18
Severance $
Future rent
under non-
cancelable
leases and
other costs
51
50
(46)
(10)
45
46
(56)
(5)
Total
$
102 $
89 $ (100) $
(10) $
81 $
70 $
(98) $
(5) $
The expenses associated with these initiatives are included in compensation and benefits and other
operating expenses in the consolidated statements of income. The liabilities associated with these
initiatives are classified on the consolidated balance sheets as accounts payable and accrued liabilities,
other liabilities or accrued compensation and employee benefits, depending on the nature of the items.
15. Common Stock
30
48
In November 2019, the Board of Directors of the Company authorized the Company to repurchase up to
$2.5 billion of the Company's common stock, which superseded any prior authorizations. During 2021, the
Company repurchased 7.9 million shares of its common stock for $1.2 billion. The Company remains
authorized to purchase additional shares of its common stock up to a value of approximately $1.3 billion.
There is no time limit on the authorization. The Company did not repurchase any of its common stock
during 2020.
The Company issued approximately 3.8 million and 4.1 million shares related to stock compensation and
employee stock purchase plans during the years ended December 31, 2021 and 2020, respectively.
16. Claims, Lawsuits and Other Contingencies
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. See Note 5, Acquisitions and Dispositions, for additional information. 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.
108
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 the state-owned insurer. These individuals, including
the former JLT employee, have since pleaded guilty to criminal charges. In December 2021, the
U.S. Department of Justice (DOJ) notified JLT of its intention to decline to pursue any charges
against any JLT entity and to seek disgorgement of $29 million in alleged gross profits on this
account. JLT has agreed in principle to this resolution, and the Company recorded a charge for
this amount in the fourth quarter 2021. We are cooperating with all ongoing investigations related
to this matter.
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's 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, together with a
reduction of the actuarial estimates of future redress payments, reduced the recorded liability to
£16 million (or $22 million) as of December 31, 2021. We expect to finalize the suitability review
and redress calculations and to make substantially all redress payments by the end of the first
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.
109
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 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 16 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.
17. Segment Information
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 used for the consolidated financial
statements described in Note 1, Summary of Significant Accounting Policies. 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.
Prior to being acquired by the Company, JLT operated in three segments: Specialty, Reinsurance and
Employee Benefits. JLT operated in 41 countries, with significant revenue in the United Kingdom, Pacific,
Asia and the United States. As of April 1, 2019, the historical JLT businesses were combined into MMC
operations as follows: JLT Specialty is included by geography within Marsh, JLT Reinsurance is included
in Guy Carpenter and the majority of JLT's Employee Benefits business was included in Mercer Health
and Wealth.
110
Selected information about the Company’s segments and geographic areas of operation are as follows:
For the Years Ended December 31,
(In millions)
Revenue
Operating
Income
(Loss)
Total
Assets
Depreciation
and
Amortization
Capital
Expenditures
2021 –
Risk and Insurance Services
Consulting
Total Segments
Corporate/Eliminations
Total Consolidated
2020 –
Risk and Insurance Services
Consulting
Total Segments
Corporate/Eliminations
Total Consolidated
2019 –
Risk and Insurance Services
Consulting
Total Segments
Corporate/Eliminations
Total Consolidated
$ 12,085 (a) $
7,789 (b)
19,874
(54)
$ 19,820
$
$ 10,337 (a) $
6,976 (b)
17,313
(89)
$ 17,224
$
$ 9,599 (a) $
7,143 (b)
16,742
(90)
$ 16,652
$
3,080
1,504
4,584
(272)
4,312
2,346
994
3,340
(274)
3,066
1,833
1,210
3,043
(366)
2,677
$ 21,996 (d) $
10,346 (e)
32,342
2,046 (c)
$ 34,388
$
$ 20,612 (d) $
9,571 (e)
30,183
2,866 (c)
$ 33,049
$
$ 26,098 (d) $
9,722 (e)
35,820
(4,463) (c)
$ 31,357
$
505
171
676
71
747
500
174
674
67
741
416
156
572
75
647
$
$
$
$
$
$
214
109
323
83
406
170
107
277
71
348
184
150
334
87
421
(a) 2021 includes inter-segment revenue of $5 million in both 2021 and 2020 and $8 million in 2019, interest income
on fiduciary funds of $15 million, $46 million and $105 million in 2021, 2020 and 2019, respectively, and equity
method income of $31 million, $27 million and $25 million in 2021, 2020 and 2019. Revenue in 2021 also
includes gain on the consolidation of Marsh India of $267 million and gain on disposition of business of
$50 million.
(b)
Includes inter-segment revenue of $49 million, $84 million and $82 million in 2021, 2020 and 2019, respectively,
and equity method income of $5 million and $16 million in 2020 and 2019, respectively.
(c) Corporate assets primarily include insurance recoverables, pension related assets, the owned portion of the
Company headquarters building and intercompany eliminations.
(d)
(e)
Includes equity method investments of $53 million, $165 million and $179 million at December 31, 2021, 2020
and 2019, respectively.
Includes equity method investments of $5 million at December 31, 2021 and 2020 and $149 million at December
31, 2019, respectively.
111
Details of operating segment revenue are as follows:
For the Years Ended December 31,
(In millions)
Risk and Insurance Services
Marsh
Guy Carpenter
Total Risk and Insurance Services
Consulting
Mercer
Oliver Wyman Group
Total Consulting
Total Segments
Corporate/Eliminations
Total
Information by geographic area is as follows:
For the Years Ended December 31,
(In millions)
Revenue
United States
United Kingdom
Continental Europe
Asia Pacific
Other
Corporate/Eliminations
Total
2021
2020
2019
$ 10,214
$
1,871
12,085
5,254
2,535
7,789
$
8,628
1,709
10,337
4,928
2,048
6,976
8,085
1,514
9,599
5,021
2,122
7,143
19,874
17,313
16,742
(54)
(89)
(90)
$ 19,820
$ 17,224
$ 16,652
2021
2020
2019
$
$
9,343
3,130
3,219
2,617 (a)
1,565
19,874
(54)
8,168
2,818
2,881
2,093
1,353
$
7,840
2,679
2,837
2,001
1,385
17,313
16,742
(89)
(90)
$ 19,820
$ 17,224
$ 16,652
(a) Revenue in 2021 includes gain on the consolidation of Marsh India of $267 million.
For the Years Ended December 31,
(In millions)
Fixed Assets, Net
United States
United Kingdom
Continental Europe
Asia Pacific
Other
Total
2021
2020
2019
$
$
484
116
68
96
83
$
492
115
74
105
70
$
847
$
856
$
462
149
68
101
78
858
18. Revision of Prior Period Financial Statements
During the fourth quarter of 2021, the Company revised the presentation of cash and cash equivalents
held in a fiduciary capacity in the consolidated statements of cash flows.
Historically, the Company did not present cash and cash equivalents held in a fiduciary capacity in the
statements of cash flows, since these funds cannot be used for general purposes and were not
considered a source of liquidity for the Company. The Company has since revised its presentation and
includes cash and cash equivalents held in a fiduciary capacity as a component of total cash, cash
112
equivalents, and cash and cash equivalents held in a fiduciary capacity, in the consolidated statements of
cash flows.
Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting
Bulletins (“SAB”) No. 99 Materiality and SAB No. 108, Considering the Effects of Prior Years
Misstatements When Quantifying Misstatements in Current Year Financial Statements, the Company
concluded the effect of the change was not material to any previously filed interim or annual financial
statements. Accordingly, the Company revised the previously reported financial information in this Annual
Report on Form 10-K in the consolidated statements of cash flows and related disclosures for the years
ended December 31, 2020 and 2019, and for the unaudited interim periods ended March 31, 2021, June
30, 2021 and September 30, 2021.
The tables below reflect the impact to the consolidated statements of cash flows for the years ended
December 31, 2020 and 2019, and to the previously filed unaudited quarterly reports on Form 10-Q for
the three months ended March 31, 2021, six months ended June 30, 2021 and the nine months ended
September 30, 2021:
For the Years Ended December 31,
As Reported
(In millions)
Net cash provided by operations
Financing cash flows:
Change in fiduciary liabilities
Other lines
Net cash used for financing activities
Investing cash flows:
Acquisitions, net of cash and cash held in a fiduciary capacity acquired
Other lines
Net cash used for investing activities
Effect of exchange rate changes on cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity
Increase in changes on cash, cash equivalents, and cash and cash equivalents
held in a fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary
capacity at beginning of year
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary
capacity at end of year
Net cash provided by operations
Financing cash flows:
Change in fiduciary liabilities
Other lines
Net cash provided by financing activities
Investing cash flows:
Acquisitions, net of cash and cash held in a fiduciary capacity acquired
Other
Net cash used for investing activities
Effect of exchange rate changes on cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity
Increase in changes on cash, cash equivalents, and cash and cash equivalents
held in a fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary
capacity at beginning of year
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary
capacity at end of year
113
Effect of
Change
2020
As Revised
$
3,382 $
— $
3,382
$
$
$
$
$
$
$
$
—
(1,880)
(1,880) $
(668) $
(146)
(814) $
246
934
1,155
955
—
955
(1,880)
955 $
(925)
21 $
—
21 $
265
1,241
7,344
(647)
(146)
(793)
511
2,175
8,499
2,089 $
8,585 $
10,674
2019
2,361 $
— $
2,361
—
3,306
1,025
—
3,306 $
1,025 $
1,025
3,306
4,331
(5,505) $
1,276 $
(4,229)
(166)
—
(166)
(5,671) $
1,276 $
(4,395)
93
89
42
135
2,343
2,432
1,066
5,001
6,067
$
1,155 $
7,344 $
8,499
(Unaudited)
(In millions)
Net cash provided by operations
Financing cash flows:
Change in fiduciary liabilities
Other lines
Net cash used for financing activities
Investing cash flows:
Acquisitions, net of cash and cash held in a fiduciary capacity acquired
Other lines
Net cash used for investing activities
Effect of exchange rate changes on cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity
Decrease (increase) in changes on cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
at beginning of period
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
at end of period
Net cash provided by operations
Financing cash flows:
Change in fiduciary liabilities
Other lines
Net cash used for financing activities
Investing cash flows:
Acquisitions, net of cash and cash held in a fiduciary capacity acquired
Other lines
Net cash used for investing activities
Effect of exchange rate changes on cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity
Decrease (increase) in changes on cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
at beginning of period
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
at end of period
Net cash provided by operations
Financing cash flows:
Change in fiduciary liabilities
Other lines
Net cash used for financing activities
Investing cash flows:
Acquisitions, net of cash and cash held in a fiduciary capacity acquired
Other lines
Net cash used for investing activities
Effect of exchange rate changes on cash, cash equivalents, and cash and cash
equivalents held in a fiduciary capacity
Decrease in changes on cash, cash equivalents, and cash and cash equivalents
held in a fiduciary capacity
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
at beginning of period
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity
at end of period
As
Reported
Effect of
Change
As Revised
September 30, 2021
$
2,074 $
— $
2,074
$
$
$
$
$
$
$
$
$
$
$
$
$
—
(2,046)
1,919
—
(2,046) $
1,919 $
1,919
(2,046)
(127)
(401) $
(188)
(589) $
17 $
—
17 $
(130)
(113)
(384)
(188)
(572)
(243)
(691)
1,823
1,132
2,089
8,585
10,674
1,398 $
10,408 $
11,806
June 30, 2021
750 $
— $
750
—
(1,491)
1,277
—
(1,491) $
1,277 $
1,277
(1,491)
(214)
(363) $
(74)
(437) $
13 $
—
13 $
(23)
61
(1,201)
1,351
(350)
(74)
(424)
38
150
2,089
8,585
10,674
888 $
9,936 $
10,824
March 31, 2021
(408) $
— $
(408)
—
(451)
(451) $
— $
(67)
(67) $
(43)
(969)
190
—
190 $
— $
—
— $
7
197
190
(451)
(261)
—
(67)
(67)
(36)
(772)
2,089
8,585
10,674
$
1,120 $
8,782 $
9,902
114
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Marsh & McLennan Companies, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Marsh & McLennan Companies, Inc.
and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated
statements of income, comprehensive income, cash flows, and equity for each of the three years in the
period ended December 31, 2021, and the related notes (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2021, in conformity with accounting
principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the Company's internal control over financial reporting as of December
31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 16,
2022, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to
express an opinion on the Company's financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the
financial statements that was communicated or required to be communicated to the audit committee and
that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Liability for Errors and Omissions — Refer to Notes 1 and 16 to the financial statements
Critical Audit Matter Description
The Company is subject to a significant number of claims, lawsuits and proceedings in the ordinary
course of business. Such claims and lawsuits consist principally of alleged errors and omissions (“E&O”)
in connection with the performance of professional services. These claims may seek damages, including
punitive and treble damages, in amounts that could be significant. The Company uses case level reviews
performed by inside and outside counsel, internal actuarial analysis and other methods to estimate
potential losses resulting from reported and unreported claims.
Given that the determination of the liability for E&O requires management to make significant estimates
and assumptions in projecting ultimate settlement values of reported and unreported claims, performing
audit procedures to evaluate the reasonableness of such estimates and assumptions required a high
degree of auditor judgment, including the need to involve our actuarial specialists.
115
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the determination of the liability for E&O included the following, among
others:
• We tested the effectiveness of internal controls related to the determination of the liability for
E&O, including controls over the projection of ultimate settlement values of reported and
unreported claims determined through internal actuarial analyses, management’s review of the
appropriateness of the assumptions used and calculation of case loss estimates, and
management’s independent review of case level estimates provided by inside and outside
counsel, as applicable.
•
For selected E&O matters, we evaluated the reasonableness of management’s case loss
estimates and, as applicable, made inquiries of the Company’s inside and outside counsel
regarding the status of these matters and likelihood of settlement.
• We compared total incurred losses and current case estimates as of the balance sheet date to
amounts reported in prior periods to evaluate trends and developments in reported cases.
• With the assistance of our actuarial specialists, we evaluated the reasonableness of the
assumptions and methodologies involved in the development of the liability for E&O by:
–
Testing the underlying data that served as the basis for the actuarial analysis, including
historical claims and case loss estimates, to evaluate whether the inputs to the actuarial
estimate were reasonable.
– Comparing management’s prior-year assumptions of expected development and ultimate loss
to actual amounts incurred during the current year to identify potential bias in the
determination of the liability for E&O.
– Developing a range of independent estimates and comparing those to the liability for E&O
recorded by the Company.
/s/ Deloitte & Touche LLP
New York, New York
February 16, 2022
We have served as the Company’s auditor since 1989.
116
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures. Based on their evaluation, as of the end of the period covered
by this annual report on Form 10-K, the Company’s chief executive officer and chief financial officer have
concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or
15d-15(e) under the Securities Exchange Act of 1934) are effective.
In addition, we considered the revision of our Consolidated Statements of Cash Flows for the years ended
December 31, 2020 and December 31, 2019 to comply with the guidance in accordance with ASC 230,
“Statement of Cash Flows” as disclosed in Note 18, Revision of Prior Period Financial Statements, in the
notes to the consolidated financial statements of this Form 10-K, and concluded that such revision does
not represent a material weakness in our internal control over financial reporting.
Internal Control over Financial Reporting.
(a) Management’s Annual Report on Internal Control Over Financial Reporting
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Marsh & McLennan Companies, Inc. is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. The Company’s internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.
The Company’s internal control over financial reporting includes those policies and procedures relating to
the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; the recording of all necessary transactions to permit the
preparation of the Company’s consolidated financial statements in accordance with generally accepted
accounting principles; the proper authorization of receipts and expenditures in accordance with
authorizations of the Company’s management and directors; and the prevention or timely detection of the
unauthorized acquisition, use or disposition of assets that could have a material effect on the Company’s
consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management evaluated the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021 under the supervision and with the participation of the Company’s principal executive
and principal financial officers. In making this evaluation, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—
Integrated Framework issued in 2013. Based on its evaluation, management determined that the
Company maintained effective internal control over financial reporting as of December 31, 2021.
Deloitte & Touche LLP, the Independent Registered Public Accounting Firm that audited and reported on
the Company’s consolidated financial statements included in this annual report on Form 10-K, also issued
an audit report on the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021.
117
(b) Audit Report of the Registered Public Accounting Firm.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Marsh & McLennan Companies, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Marsh & McLennan Companies, Inc.
and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2021, based on criteria established in
Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended
December 31, 2021, of the Company and our report dated February 16, 2022, expressed an unqualified
opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on
our audit. We are a public accounting firm registered with the PCAOB and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
118
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
New York, New York
February 16, 2022
(c) Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection
with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Securities Exchange Act of 1934
that occurred during the quarter ended December 31, 2021 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information.
None.
119
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Information as to the directors and nominees for the board of directors of the Company is incorporated
herein by reference to the material set forth under the heading "Item 1: Election of Directors" in the 2022
Proxy Statement.
The executive officers and executive officer appointees of the Company are Peter J. Beshar, Paul
Beswick, John Q. Doyle, Martine Ferland, Carmen Fernandez, Daniel S. Glaser, Dean Klisura, Mark C.
McGivney, Martin South and Nick Studer. Information with respect to these individuals is provided in Part
I, Item 1 above under the heading "Executive Officers of the Company".
The information set forth in the 2022 Proxy Statement in the sections "Corporate Governance—Codes of
Conduct", "Board of Directors and Committees—Committees—Audit Committee" and "Additional
Information—Transactions with Management and Others" is incorporated herein by reference.
Item 11. Executive Compensation.
The information set forth in the sections "Additional Information—Director Compensation" and "Executive
Compensation—Compensation of Executive Officers" in the 2022 Proxy Statement is incorporated herein
by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The information set forth in the sections "Additional Information—Stock Ownership of Directors,
Management and Certain Beneficial Owners" and "Additional Information—Equity Compensation Plan
Information" in the 2022 Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information set forth in the sections "Corporate Governance—Director Independence", "Corporate
Governance—Review of Related-Person Transactions" and "Additional Information—Transactions with
Management and Others" in the 2022 Proxy Statement is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information set forth under the heading "Item 3: Ratification of Selection of Independent Registered
Public Accounting Firm—Fees of Independent Registered Public Accounting Firm" in the 2022 Proxy
Statement is incorporated herein by reference.
120
PART IV
Item 15. Exhibits and Financial Statement Schedules. †
The following documents are filed as a part of this report:
(1)
Consolidated Financial Statements:
Consolidated Statements of Income for each of the three years in the period ended December 31,
2021
Consolidated Statements of Comprehensive Income for each of the three years in the period
ended December 31, 2021
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2021
Consolidated Statements of Shareholders Equity for each of the three years in the period ended
December 31, 2021
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
(2)
All required Financial Statement Schedules are included in the Consolidated Financial
Statements or the Notes to Consolidated Financial Statements.
(3)
The following exhibits are filed as a part of this report:
(2.1)
Stock Purchase Agreement, dated as of June 6, 2010, by and between Marsh & McLennan
Companies, Inc. and Altegrity, Inc. (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2010)
(2.2)
Rule 2.7 Announcement, dated as of September 18, 2018 (incorporated by reference to the
Company’s Current Report on Form 8-K dated September 18, 2018)
†As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed with this Form 10-K
certain instruments defining the rights of holders of long-term debt of the Company and its subsidiaries
because the total amount of securities authorized under any of such instruments does not exceed 10% of the
total assets of the Company and its subsidiaries on a consolidated basis. The Company agrees to furnish a
copy of any such agreement to the Commission upon request.
121
(2.3)
Co-operation Agreement, dated as of September 18, 2018, by and among Marsh &
McLennan Companies, Inc., MMC Treasury Holdings (UK) Limited and Jardine Lloyd
Thompson Group plc. (incorporated by reference to the Company’s Current Report on Form
8-K dated September 18, 2018)
(3.1)
Restated Certificate of Incorporation of Marsh & McLennan Companies, Inc. (incorporated by
reference to the Company’s Current Report on Form 8-K dated July 17, 2008)
(3.2)
Amended and Restated By-Laws of Marsh & McLennan Companies, Inc. (incorporated by
reference to the Company’s Current Report on Form 8-K dated January 12, 2017)
(4.1)
Indenture dated as of June 14, 1999 between Marsh & McLennan Companies, Inc. and State
Street Bank and Trust Company, as trustee (incorporated by reference to the Company’s
Registration Statement on Form S-3, Registration No. 333-108566)
(4.2)
Third Supplemental Indenture dated as of July 30, 2003 between Marsh & McLennan
Companies, Inc. and U.S. Bank National Association (as successor to State Street Bank and
Trust Company), as trustee (incorporated by reference to the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2003)
(4.3)
Indenture dated as of March 19, 2002 between Marsh & McLennan Companies, Inc. and
State Street Bank and Trust Company, as trustee (incorporated by reference to the
Company’s Registration Statement on Form S-4, Registration No. 333-87510)
(4.4)
Indenture, dated as of July 15, 2011, between Marsh & McLennan Companies, Inc. and The
Bank of New York Mellon, as trustee (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2011)
(4.5)
First Supplemental Indenture, dated as of July 15, 2011, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011)
(4.6)
Form of Third Supplemental Indenture between Marsh & McLennan Companies, Inc. and The
Bank of New York Mellon, as trustee (incorporated by reference to the Company’s Current
Report on Form 8-K dated September 24, 2013)
(4.7)
Form of Fourth Supplemental Indenture between Marsh & McLennan Companies, Inc. and
The Bank of New York Mellon, as trustee (incorporated by reference to the Company’s
Current Report on Form 8-K dated May 27, 2014)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
122
(4.8)
Form of Fifth Supplemental Indenture between Marsh & McLennan Companies, Inc. and The
Bank of New York Mellon, as trustee (incorporated by reference to the Company’s Current
Report on Form 8-K dated September 10, 2014)
(4.9)
Sixth Supplemental Indenture, dated as of March 6, 2015, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015)
(4.10)
Seventh Supplemental Indenture, dated as of September 14, 2015, between Marsh &
McLennan Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by
reference to the Company's Current Report on Form 8-K filed on September 14, 2015)
(4.11)
Eighth Supplemental Indenture, dated as of March 14, 2016, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
the Company's Quarterly Report on Form 10-Q filed on May 2, 2016)
(4.12)
Ninth Supplemental Indenture, dated as of January 12, 2017, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
the Company's Annual Report on Form 10-K filed on February 24, 2017)
(4.13)
Tenth Supplemental Indenture, dated as of March 1, 2018, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
the Company's Current Report on Form 8-K filed on March 1, 2018)
(4.14)
Eleventh Supplemental Indenture, dated January 15, 2019, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
the Company's Current Report on Form 8-K filed on January 15, 2019)
(4.15)
Twelfth Supplemental Indenture, dated March 21, 2019, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
the Company's Current Report on Form 8-K filed on March 21, 2019)
(4.16)
Thirteenth Supplemental Indenture, dated May 7, 2020, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
Company’s Current Report on Form 8-K dated May 7, 2020)
(4.17)
Fourteenth Supplemental Indenture, dated December 8, 2021, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as trustee (incorporated by reference to
Company’s Current Report on Form 8-K dated December 9, 2021)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
123
(4.18)
Description of Marsh & McLennan Companies, Inc.’s Securities Registered Pursuant to
Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 2019)
(10.1)
*Marsh & McLennan Companies, Inc. U.S. Employee 1996 Cash Bonus Award Voluntary
Deferral Plan (incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996
(10.2)
*Marsh & McLennan Companies, Inc. U.S. Employee 1997 Cash Bonus Award Voluntary
Deferral Plan (incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997)
(10.3)
*Marsh & McLennan Companies, Inc. U.S. Employee 1998 Cash Bonus Award Voluntary
Deferral Plan (incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998)
(10.4)
*Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive and Stock Award Plan
(incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended
December 31, 1999)
(10.5)
*Amendments to Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive and
Stock Award Plan and the Marsh & McLennan Companies, Inc. 2000 Employee Incentive and
Stock Award Plan (incorporated by reference to the Company’s Quarterly Report on Form 10-
Q for the quarter ended June 30, 2005)
(10.6)
*Form of Awards under the Marsh & McLennan Companies, Inc. 2000 Senior Executive
Incentive and Stock Award Plan (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004)
(10.7)
*Additional Forms of Awards under the Marsh & McLennan Companies, Inc. 2000 Senior
Executive Incentive and Stock Award Plan (incorporated by reference to the Company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2005)
(10.8)
*Marsh & McLennan Companies, Inc. 2000 Employee Incentive and Stock Award Plan
(incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2001)
(10.9)
*Form of Awards under the Marsh & McLennan Companies, Inc. 2000 Employee Incentive
and Stock Award Plan (incorporated by reference to the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
124
(10.10)
*Additional Forms of Awards under the Marsh & McLennan Companies, Inc. 2000 Employee
Incentive and Stock Award Plan (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2005)
(10.11)
*Form of Long-term Incentive Award under the Marsh & McLennan Companies, Inc. 2000
Senior Executive Incentive and Stock Award Plan and the Marsh & McLennan Companies,
Inc. 2000 Employee Incentive and Stock Award Plan (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006)
(10.12)
*Form of 2012 Long-term Incentive Award under the Marsh & McLennan Companies, Inc.
2011 Incentive and Stock Award Plan (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2012)
(10.13)
*Form of 2013 Long-term Incentive Award under the Marsh & McLennan Companies, Inc.
2011 Incentive and Stock Award Plan (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2013)
(10.14)
*Form of 2014 Long-term Incentive Award under the Marsh & McLennan Companies, Inc.
2011 Incentive and Stock Award Plan (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2014)
(10.15)
*Form of 2015 Long-term Incentive Award under the Marsh & McLennan Companies, Inc.
2011 Incentive and Stock Award Plan (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2015)
(10.16)
*Form of 2016 Long-term Incentive Award under the Marsh & McLennan Companies, Inc.
2011 Incentive and Stock Award Plan (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2016)
(10.17)
*Form of Deferred Stock Unit Award, with grant dates from March 1, 2018 through February
1, 2019, under the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan
(incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2018)
(10.18)
*Form of Deferred Stock Unit Award, with grant dates from March 1, 2019 through February
1, 2020, under the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan
(incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2019)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
125
(10.19)
*Form of Deferred Stock Unit Award, with grant dates from May 1, 2019 through February 1,
2020, under the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan -
Form A (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2019)
(10.20)
*Form of Deferred Stock Unit Award, with grant dates from May 1, 2019 through February 1,
2020, under the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan -
Form B (incorporated by reference to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2019)
(10.21)
*Form of Deferred Stock Unit Award, with grant dates from March 1, 2020 through February
1, 2021, under the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan
(incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2020)
(10.22)
*Form of Deferred Stock Unit Award, with grant dates from March 1, 2021 through February
1, 2022, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan
– Cliff Vesting (incorporated by reference to the Company’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2021)
(10.23)
*Form of Deferred Stock Unit Award, with grant dates from March 1, 2021 through February
1, 2022, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan
– Ratable Vesting (incorporated by reference to the Company’s Quarterly Report on Form 10-
Q for the quarter ended March 31, 2021)
(10.24)
*Form of Restricted Stock Unit Award, dated as of February 21, 2018 under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference
to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018)
(10.25)
*Form of Restricted Stock Unit Award, dated as of February 19, 2019, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019)
(10.26)
*Form of Restricted Stock Unit Award, dated as of May 1, 2019, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan - Form A (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2019)
(10.27)
*Form of Restricted Stock Unit Award, dated as of May 1, 2019, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan - Form B (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2019)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
126
(10.28)
*Form of Restricted Stock Unit Award, dated as of February 22, 2021, under the Marsh &
McLennan Companies, Inc. 2020 Incentive and Stock Award Plan (incorporated by reference
to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021)
(10.29)
*Form of Restricted Stock Unit Award, dated as of May 1, 2019, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan - Form C (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2019)
(10.30)
*Form of Restricted Stock Unit Award, dated as of February 19, 2020, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020)
(10.31)
*Form of Performance Stock Unit Award, dated as of February 21, 2018, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018)
(10.32)
*Form of Performance Stock Unit Award, dated as of February 19, 2019, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019)
(10.33)
*Form of Performance Stock Unit Award, dated as of May 1, 2019, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019)
(10.34)
*Form of Performance Stock Unit Award, dated as of February 19, 2020, under the Marsh &
McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020)
(10.35)
*Form of Performance Stock Unit Award, dated as of February 22, 2021, under the Marsh &
McLennan Companies, Inc. 2020 Incentive and Stock Award Plan (incorporated by reference
to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021)
(10.36)
*Form of Stock Option Award, dated as of February 22, 2017, under the Marsh & McLennan
Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017)
(10.37)
*Form of Stock Option Award, dated as of February 21, 2018, under the Marsh & McLennan
Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
127
(10.38)
*Form of Stock Option Award, dated as of February 19, 2019, under the Marsh & McLennan
Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019)
(10.39)
*Form of Stock Option Award, dated as of May 1, 2019, under the Marsh & McLennan
Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019)
(10.40)
*Form of Stock Option Award, dated as of February 19, 2020, under the Marsh & McLennan
Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020)
(10.41)
*Form of Stock Option Award, dated as of February, 22, 2021, under the Marsh & McLennan
Companies, Inc. 2020 Incentive and Stock Award (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021)
(10.42)
*Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (incorporated by
reference to the Company’s Registration Statement on Form S-8 dated August 5, 2011,
Registration No. 333-176084)
(10.43)
*Amendment to the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award
Plan (incorporated by reference to the Company’s Annual Report on Form 10-K for the year
ended December 31, 2018)
(10.44)
*Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan (incorporated by
reference from Exhibit C to the Company’s Definitive Proxy Statement on Schedule 14A filed
on April 3, 2020)
(10.45)
*Amendments to Certain Marsh & McLennan Companies Equity-Based Awards Due to U.S.
Tax Law Changes Affecting Equity-Based Awards granted under the Marsh & McLennan
Companies, Inc. 2000 Senior Executive Incentive and Stock Award Plan and the Marsh &
McLennan Companies, Inc. 2000 Employee Incentive and Stock Award Plan, effective
January 1, 2009 (incorporated by reference to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008)
(10.46)
*Section 409A Amendment Document, effective as of January 1, 2009 (incorporated by
reference to the Company’s Annual Report on Form 10-K for the year ended December 31,
2008)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
128
(10.47)
*Section 409A Amendment Regarding Payments Conditioned Upon Employment-Related
Action to Any and All Plans or Arrangements Entered into by the Marsh & McLennan
Companies, Inc., or any of its Direct or Indirect Subsidiaries, that Provide for the Payment of
Section 409A Nonqualified Deferred Compensation, effective December 21, 2012
(incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2012)
(10.48)
*Marsh & McLennan Companies Supplemental Savings & Investment Plan (formerly the
Marsh & McLennan Companies Stock Investment Supplemental Plan) Restatement, effective
January 1, 2012 (incorporated by reference to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2012)
(10.49)
*First Amendment to the Marsh & McLennan Companies Supplemental Savings & Investment
Plan Restatement effective January 1, 2012 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 2016)
(10.50)
*Second Amendment to the Marsh & McLennan Companies Supplemental Savings &
Investment Plan Restatement effective January 1, 2012 (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 2017)
(10.51)
*Third Amendment to the Marsh & McLennan Companies Supplemental Savings &
Investment Plan Restatement effective January 1, 2012 (incorporated by reference to the
Company’s Annual Report on Form 10-K for the year ended December 31, 2018)
(10.52)
*Fourth Amendment to the Marsh & McLennan Companies Supplemental Savings &
Investment Plan Restatement effective January 1, 2012 ( incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 2020)
(10.53)
*Marsh & McLennan Companies Benefit Equalization Plan and Marsh & McLennan
Companies Supplemental Retirement Plan as Restated, effective January 1, 2012
(incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2012)
(10.54)
*First Amendment to the Marsh & McLennan Companies Benefit Equalization Plan and Marsh
& McLennan Companies Supplemental Retirement Plan as Restated effective January 1,
2012 (incorporated by reference to the Company's Annual Report on Form 10-K for the year
ended December 31, 2016)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
129
(10.55)
*Second Amendment to the Marsh & McLennan Companies Benefit Equalization Plan and
Marsh & McLennan Companies Supplemental Retirement Plan as Restated effective January
1, 2012 (incorporated by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 2016)
(10.56)
*Marsh & McLennan Companies, Inc. Senior Executive Severance Pay Plan (incorporated by
reference to the Company’s Quarterly Report on Form 10-Q for the Quarter ended March 31,
2008)
(10.57)
*Amendment to the Marsh & McLennan Companies, Inc. Senior Executive Severance Pay
Plan, effective December 31, 2009 (incorporated by reference to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009)
(10.58)
*Marsh & McLennan Companies, Inc. Senior Management Incentive Compensation Plan
(incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended
December 31, 1994)
(10.59)
*Marsh & McLennan Companies, Inc. Directors' Stock Compensation Plan - May 31, 2009
Restatement (incorporated by reference to the Company’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2009)
(10.60)
*Marsh & McLennan Companies International Retirement Plan As Amended and Restated
Effective January 1, 2009 (incorporated by reference to the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2014)
(10.61)
*Description of compensation arrangements for independent directors of Marsh & McLennan
Companies, Inc. effective June 1, 2021 (incorporated by reference to the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2021)
(10.62)
*Letter Agreement, effective as of March 20, 2013, between Marsh & McLennan Companies,
Inc. and Daniel S. Glaser (incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2013)
(10.63)
*Non-Competition and Non-Solicitation Agreement, effective as of September 18, 2013,
between Marsh & McLennan Companies, Inc. and Daniel S. Glaser (incorporated by
reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 2013)
(10.64)
*Letter Agreement, effective as of May 14, 2014, between Marsh & McLennan Companies,
Inc. and Daniel S. Glaser (incorporated by reference to the Company’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2014)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
130
(10.65)
*Letter Agreement, effective as of February 22, 2016, between Marsh & McLennan
Companies, Inc. and Daniel S. Glaser (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2016)
(10.66)
*Letter Agreement, effective as of February 22, 2017, between Marsh & McLennan
Companies, Inc. and Daniel S. Glaser (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2017)
(10.67)
*Letter Agreement, dated as of September 18, 2019, between Marsh & McLennan
Companies, Inc. and Daniel S. Glaser (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2019)
(10.68)
*Letter Agreement, effective as of January 1, 2016, between Marsh & McLennan Companies,
Inc. and Mark C. McGivney (incorporated by reference to the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2015)
(10.69)
*Non-Competition and Non-Solicitation Agreement, effective as of January 1, 2016, between
Marsh & McLennan Companies, Inc. and Mark C. McGivney (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015)
(10.70)
*Letter Agreement, effective as of January 17, 2018, between Marsh & McLennan
Companies, Inc. and Mark C. McGivney (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 2017)
(10.71)
*Letter Agreement, effective as of January 16, 2019, between Marsh & McLennan, Inc. and
Mark C. McGivney (incorporated by reference to the Company’s Annual Report on Form 10-K
for the year ended December 31, 2018)
(10.72)
*Letter Agreement, effective as of July 5, 2017, between Marsh & McLennan Companies, Inc.
and John Q. Doyle (incorporated by reference to the Company’s Quarterly Report on Form
10-Q for the quarter ended March 31, 2018)
(10.73)
*Non-Competition and Non-Solicitation Agreement, dated as of February 25, 2016, between
Marsh & McLennan Companies, Inc. and John Q. Doyle (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
131
(10.74)
*Letter Agreement, effective as of January 15, 2020, between Marsh & McLennan
Companies, Inc. and John Q. Doyle (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2020)
(10.75)
*Letter Agreement, effective as of January 1, 2022 between Marsh & McLennan Companies,
Inc. and John Q. Doyle
(10.76)
*Letter Agreement, effective as of March 1, 2019, between Marsh & McLennan Companies,
Inc. and Martine Ferland (incorporated by reference to the Company’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2020)
(10.77)
*Non-Competition and Non-Solicitation Agreement, effective as of March 1, 2016, between
Marsh & McLennan Companies, Inc. and Martine Ferland (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020)
(10.78)
*Letter Agreement, effective as of January 20, 2021, between Marsh & McLennan
Companies, Inc. and Martine Ferland (incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2021)
(10.79)
*Letter Agreement, effective as of February 19, 2019, between Marsh & McLennan
Companies, Inc. and Peter C. Hearn (incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2019)
(10.80)
*Non-Competition and Non-Solicitation Agreement, effective as of June 1, 2016, between
Marsh & McLennan Companies, Inc. and Peter C. Hearn (incorporated by reference to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019)
(10.81)
Calculation Agency Agreement, dated as of January 15, 2019, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as calculation agent (incorporated by
reference to the Company's Current Report on Form 8-K filed on January 15, 2019)
(10.82)
Paying Agency Agreement, dated as of March 21, 2019, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, London Branch, as paying agent
(incorporated by reference to the Company's Current Report on Form 8-K filed on March 21,
2019)
(10.83)
Shareholder Undertaking, dated as of September 18, 2018 (incorporated by reference to the
Company’s Current Report on Form 8-K dated September 18, 2018)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
132
(10.84)
Form of Director Undertaking, dated as of September 18, 2018 (incorporated by reference to
the Company’s Current Report on Form 8-K dated September 18, 2018)
(10.85)
Bridge Loan Agreement, dated as of September 18, 2018 by and between Marsh &
McLennan Companies, Inc., the lenders party thereto and Goldman Sachs Bank USA, as
administrative agent (incorporated by reference to the Company’s Current Report on Form 8-
K dated September 18, 2018)
(10.86)
Calculation Agency Agreement, dated as of January 15, 2019, between Marsh & McLennan
Companies, Inc. and The Bank of New York Mellon, as calculation agent (incorporated by
reference to the Company's Current Report on Form 8-K filed on January 15, 2019)
(10.87)
Amended and Restated 5 Year Credit Agreement, dated as of April 2, 2021, among Marsh &
McLennan Companies, Inc., the designated subsidiaries party thereto as borrowers, Citibank,
N.A., as administrative agent, and the lenders from time to time party thereto (incorporated by
reference to the Company’s Current Report on Form 8-K filed on April 2, 2021)
(14.1)
Code of Ethics for Chief Executive and Senior Financial Officers (incorporated by reference to
the Company’s Annual Report on Form 10-K for the year ended December 31, 2002)
(21.1)
List of Subsidiaries of Marsh & McLennan Companies, Inc.
(23.1)
Consent of Independent Registered Public Accounting Firm
(24.1)
Power of Attorney (included on signature page)
(31.1)
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
(31.2)
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
(32.1)
Section 1350 Certifications
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
104.
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
133
Item 16. Form 10-K Summary.
None.
134
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MARSH & McLENNAN COMPANIES, INC.
Dated: February 16, 2022
By
/S/ DANIEL S. GLASER
Daniel S. Glaser
President and Chief Executive Officer
Each person whose signature appears below hereby constitutes and appoints Courtenay Birchler and
Connor Kuratek, and each of them singly, such person’s lawful attorneys-in-fact and agents, with full
power to them and each of them to sign for such person, in the capacity indicated below, any and all
amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities indicated this 16th day of
February, 2022.
Name
Title
Date
/S/ DANIEL S. GLASER
Daniel S. Glaser
/S/ MARK C. MCGIVNEY
Mark C. McGivney
/S/ STACY M. MILLS
Stacy M. Mills
/S/ ANTHONY K. ANDERSON
Anthony K. Anderson
/S/ OSCAR FANJUL
Oscar Fanjul
/S/ H. EDWARD HANWAY
H. Edward Hanway
/S/ DEBORAH C. HOPKINS
Deborah C. Hopkins
/S/ TAMARA INGRAM
Tamara Ingram
Jane H. Lute
/S/
Jane H. Lute
/S/ STEVEN A. MILLS
Steven A. Mills
/S/ BRUCE P. NOLOP
Bruce P. Nolop
/S/ MARC D. OKEN
Marc D. Oken
/S/ MORTON O. SCHAPIRO
Morton O. Schapiro
/S/ LLOYD M. YATES
Lloyd M. Yates
/S/ R. DAVID YOST
R. David Yost
Director, President &
Chief Executive Officer
Chief Financial Officer
Vice President & Controller
(Chief Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
February 16, 2022
Exhibit 31.1
I, Daniel S. Glaser, certify that:
CERTIFICATIONS
1. I have reviewed this Annual Report on Form 10-K of Marsh & McLennan Companies, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 16, 2022
/s/ Daniel S. Glaser
Daniel S. Glaser
President and Chief Executive Officer
Exhibit 31.2
I, Mark C. McGivney, certify that:
CERTIFICATIONS
1. I have reviewed this Annual Report on Form 10-K of Marsh & McLennan Companies, Inc. (the "registrant");
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 16, 2022
/s/ Mark C. McGivney
Mark C. McGivney
Chief Financial Officer
Exhibit 32.1
Certification of Chief Executive Officer and Chief Financial Officer
The certification set forth below is being submitted in connection with the Annual Report on Form 10-K for the year
ended December 31, 2021 of Marsh & McLennan Companies, Inc. (the "Report") for the purpose of complying with
Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Section 1350 of Chapter 63 of Title 18 of the United States Code.
Daniel S. Glaser, the President and Chief Executive Officer, and Mark C. McGivney, the Chief Financial Officer, of
Marsh & McLennan Companies, Inc. each certifies that, to the best of his knowledge:
1.
2.
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and
the information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of Marsh & McLennan Companies, Inc.
Date: February 16, 2022
Date: February 16, 2022
/s/ Daniel S. Glaser
Daniel S. Glaser
President and Chief Executive Officer
/s/ Mark C. McGivney
Mark C. McGivney
Chief Financial Officer
Stock performance graph
The following graph compares the annual cumulative stockholder return for the five-year period ended
December 31, 2021 of Marsh McLennan common stock with the Standard & Poor’s 500® Stock Index,
assuming an investment of $100 on December 31, 2016, with dividends reinvested.
Comparpp ison of Cumulative Totaltt
($100 invested 12/31/16 with dividends reinvested)
Stockholder Return
300
260
220
180
140
100
2016
2017
2018
2019
2020
2021
Marsh McLennan
S&P 500
100
100
123
122
123
116
174
153
186
181
281
233
STOCKHOLDER INFORMATION
Annual Meeting
Direct Purchase Plan
Stock Listings
Information concerning the 2022
Annual Meeting of Stockholders
can be found at proxy.mmc.com.
Investor Information
Stockholders of record
inquiring about reinvestment
and payment of dividends,
consolidation of accounts,
(cid:62)(cid:63)(cid:58)(cid:46)(cid:54)(cid:2362)(cid:46)(cid:48)(cid:61)(cid:63)(cid:52)(cid:529)(cid:46)(cid:44)(cid:63)(cid:48)(cid:2362)(cid:51)(cid:58)(cid:55)(cid:47)(cid:52)(cid:57)(cid:50)(cid:62)(cid:2991)(cid:2362)(cid:62)(cid:63)(cid:58)(cid:46)(cid:54)(cid:2362)
(cid:46)(cid:48)(cid:61)(cid:63)(cid:52)(cid:529)(cid:46)(cid:44)(cid:63)(cid:48)(cid:2362)(cid:63)(cid:61)(cid:44)(cid:57)(cid:62)(cid:49)(cid:48)(cid:61)(cid:62)(cid:2362)(cid:44)(cid:57)(cid:47)(cid:2362)(cid:44)(cid:47)(cid:47)(cid:61)(cid:48)(cid:62)(cid:62)(cid:2362)
changes should contact:
EQ Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854
Telephone: 800 457 8968 or
651 450 4064 (Outside US/Canada)
Mailing Address:
1110 Centre Pointe Curve,
Suite 101
Mendota Heights,
MN 55120-4100
EQ’s website:
shareowneronline.com
Stockholders who hold shares
(cid:58)(cid:49)(cid:2362)(cid:28)(cid:44)(cid:61)(cid:62)(cid:51)(cid:2362)(cid:28)(cid:46)(cid:27)(cid:48)(cid:57)(cid:57)(cid:44)(cid:57)(cid:2362)(cid:45)(cid:48)(cid:57)(cid:48)(cid:529)(cid:46)(cid:52)(cid:44)(cid:55)(cid:55)(cid:68)(cid:2362)
through a broker, bank or other
intermediary organization should
contact that organization for
these services.
Stockholders of record and
other interested investors can
purchase Marsh McLennan
common stock directly through
the Company’s transfer agent
and the Administrator for the
Plan, EQ Shareowner Services.
A brochure on the Plan is available
on the EQ Shareowner Services
website or by contacting EQ
Shareowner Services directly:
EQ Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854
Telephone: 800 457 8968 or
651 450 4064 (Outside US/Canada)
EQ’s website:
shareowneronline.com
Financial Information
Copies of Marsh McLennan annual
reports and Forms 10-K and 10-Q
are available on the Company’s
website. These documents also
may be requested by contacting:
Marsh & McLennan Companies, Inc.
Investor Relations
1166 Avenue of the Americas
New York, NY 10036
Telephone: 212 345 1227
Website: mmc.com
Email:
mmc.investor.relations@mmc.com
Marsh McLennan common stock
(NYSE ticker symbol: MMC) is
listed on the New York, Chicago
and London Stock Exchanges.
Procedures For
Raising Complaints And
Concerns Regarding
Accounting Matters
Marsh McLennan is committed
to complying with all applicable
accounting standards, internal
accounting controls, audit practices
and securities laws and regulations
(collectively, “Accounting Matters”).
To raise a complaint or concern
regarding Accounting Matters,
you may contact the Company by
mail, telephone or online. You may
review the Company’s procedures
for handling complaints and
concerns regarding Accounting
Matters at marshmclennan.com.
By mail:
Marsh & McLennan Companies, Inc.
Audit Committee
c/o Connor Kuratek
Corporate Secretary
1166 Avenue of the Americas
New York, NY 10036
By telephone or online:
Visit ethicscomplianceline.com
for dialing instructions or to
raise a concern online.
an an 2021 Annual Rep
Marsh McLennan 2021 Annual Report
Marsh McLennan 2021 Annual Report 6
2021 Annual Rep 6
Marsh McLennan
1166 Avenue of the Americas
New York, NY 10036
marshmclennan.com