Realizing new
possibilities
2022 Annual Report
We are 85,000+ colleagues
in four global businesses
united by a common
purpose to make a difference
in the moments that matter.
Three commitments unite us as we strive to live our purpose:
Succeeding
together.
Accelerating
impact.
Advancing
good.
We are in business to expand
what’s possible for our clients
and each other.
We embrace change and create
enduring client value.
We strive to serve the greater good.
Our businesses:
Marsh
Mercer
Provides data-driven risk advisory services
and insurance solutions to commercial and
consumer clients
Delivers advice and technology-driven solutions
that help organizations redefine the world of work
guy carpenter
oliver wyman
Develops advanced risk, reinsurance and capital
strategies that help clients grow profitably and
pursue emerging opportunities
Serves as a critical strategic, economic and brand
advisory to private sector and governmental clients
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Marsh McLennan 2022 Annual Report “ It’s a privilege to
do the work we
do, helping clients
find opportunity
and navigate
pressing issues in
the areas of risk,
strategy and people.”
John Q. Doyle
President and Chief Executive Officer,
Marsh McLennan
2
Realizing New Possibilities
To Our Shareholders,
Colleagues and Clients,
I am honored to be writing this letter to
you as Marsh McLennan’s new President
and CEO, and grateful for the opportunity
to lead this exceptional company.
2022 was an outstanding year for our firm. We delivered
strong revenue and earnings, while continuing to
invest in capabilities to support our clients and maintain
our momentum.
It’s a privilege to do the work we do, helping clients
find opportunity and navigate pressing issues in the
areas of risk, strategy and people. When the world is
uncertain, demand for this work is high. In the current
environment, business leaders are facing immediate
and urgent economic and geopolitical risks, along with
significant issues related to pandemic, supply chain,
tight labor markets, cybersecurity, and climate and
severe weather events, among others.
As our clients face risks and opportunities that
continue to grow and evolve in complexity, our
approach to serving them also continues to evolve.
We’re increasingly bringing our four global businesses
together in new ways to realize new possibilities. To
deliver greater value to our stakeholders, we’re striving
to be an even more agile and connected organization.
With significant capabilities and strong client
relationships, Marsh McLennan is well positioned
for 2023 and beyond. We’ve got talented leaders
and well-defined succession planning in place, as
demonstrated by the seamless leadership transitions
in two of our four global businesses last year. We’ve
got excellent momentum, and our more than 85,000
colleagues continue to live our purpose every day,
making a difference in the moments that matter for our
colleagues, clients, shareholders and communities.
It’s an exciting time for our company and it’s my
pleasure to bring you up to date on our progress.
3
Marsh McLennan 2022 Annual Report Driving growth
Fundamentally, Marsh McLennan is a
growth company. We focus on delivering
consistent, solid performance in the near
term while investing for sustained growth
over the long term. 2022 was another
year of outstanding performance in this
regard. We grew underlying revenue 9%
for the year and delivered strong earnings
growth, while deploying a significant
amount of capital to invest for the future.
Our Risk and Insurance Services segment generated
9% underlying revenue growth, with Marsh increasing
8% and Guy Carpenter 9%, extending the segment’s
strongest period of growth in nearly two decades.
Underlying revenue growth in our Consulting segment
was 8%, with Mercer posting 6%, the strongest since
2008, and Oliver Wyman delivering 13%, a second
consecutive year of double-digit growth.
Our total revenue grew 5% and surpassed $20 billion for
the first time. We grew adjusted operating income 11%
to $4.8 billion, which followed an 18% increase in 2021.
Our bottom-line performance included delivering 11%
adjusted earnings per share (EPS) growth, which came
on top of 24% in 2021. Also, for the 15th consecutive
year, we reported adjusted operating margin expansion,
reflecting our ability to generate operating leverage in
our business as we invest and expand.1
Despite uncertainty about the current global economic
outlook, we see many factors that are favorable for
the continued growth of our business. For example,
inflation remains high and supportive of insured values
and higher loss costs. P&C insurance rates continue to
increase as insurers account for factors such as rising
frequency and severity of catastrophe losses. And
tight labor markets can be a tailwind for our benefits
business at Mercer and Marsh, as well as our workers’
compensation business.
While we’re not immune to the challenges of a slowing
economy, we’ve proven to be resilient, with a track
record of performance across economic cycles. We
believe Marsh McLennan is well positioned to continue
to deliver the value our clients, communities and
shareholders expect from us.
4
Realizing New Possibilities Delivering
Growth and
Long-Term Value
The key to our strong financial performance, year
in and year out, is our approach to expense and
capital management. We focus on growing revenue
faster than expenses—which contributes to annual
margin expansion and adjusted EPS growth—and we
manage capital allocation to balance performance in
the near term with investing for the long term.
We favor reinvestment in our business, and aim
to increase our dividend and reduce share count
each year. In 2022, we raised our dividend for the
13th consecutive year, and completed $1.9 billion of
share repurchases, the largest annual amount in
our history.
Achieving and sustaining growth requires consistent
reinvestment for the long term. One way we do that
is through mergers and acquisitions. The past year
was another active one for M&A, as we completed
20 acquisitions, two investments and seven
divestitures. Marsh McLennan Agency acquired two
top-100 agencies in 2022 and has now surpassed
100 acquisitions since its inception in 2009. Oliver
Wyman expanded its capabilities and geographic
reach with the acquisitions of specialty consultant
Avascent and Booz Allen Hamilton’s Middle East and
North Africa (MENA) practice. And Mercer expects
to close its transactions with Westpac in Australia in
the first half of 2023.
Overall, we committed approximately $806 million
to acquisitions in 2022.
Marsh McLennan 2022 Annual Report
5
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Marsh McLennan 2022 Annual Report OUR WORK WITH CLIENTS
Marsh McLennan brings exceptional
talent and a wide range of capabilities
to our clients’ needs and opportunities
in the critical areas of risk, strategy and
people. No other firm can match the
unique collective expertise of Marsh,
Guy Carpenter, Mercer and Oliver Wyman.
We also bring capabilities from across our organization
to clients who have challenges that go beyond the
expertise of just one of our businesses.
Recently, a global bank hired Oliver Wyman to assess
the effects of climate change on its customers and
their portfolios. By adding Marsh’s expertise in physical
risk into the mix, we helped the bank develop new
capabilities that are making them a leader in climate-
related funding. We’re now using a similar approach
for clients in the UK, Europe and the Americas.
After Oliver Wyman brought in Marsh to develop a new
enterprise risk management strategy for an existing
client, a US health system facing new competition and
industry consolidation, a Mercer team helped them
translate it into a new workforce strategy, enabling
our client to act decisively across more dimensions of
its business.
And when a leading personal-lines-focused P&C insurer
wanted to grow a product offering to meet the full needs
of its customers, Oliver Wyman and Guy Carpenter drew
on their collective expertise in strategy development,
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operating model design and reinsurance risk advisory
to help the client pursue its strategy while managing
the capital and earnings implications of shifting its
business mix.
The changing and increasingly complex needs of our
clients don’t always fit neatly into the boxes on our
org chart, so often it is our collective capabilities that
are required. We’re finding new and different ways to
connect our businesses at their intersections, where
together our scale, data, insights and solutions create a
unique and compelling value proposition.
Climate change is a prime example. Along with physical
and social risks, it is precipitating a global industrial
transition—and mobilization of capital, technologies and
workforces. In addition to placing property insurance,
we’re also helping clients understand and model risks
in their portfolios to build resilience, and advising on
business models and organizational transformations to
realize new opportunities.
Similarly, in healthcare, breakthrough technologies and
new therapies change what’s possible every day, but
delivery, access and sustainability remain challenges.
We’re helping clients address the financial, systemic and
human issues that stand in the way of healthier societies.
This kind of client-centric growth is made possible by
more than just our breadth of capabilities. It takes
colleagues who are agile and strategic, thinking beyond
the challenge or opportunity at hand, and collaboration
and cohesion among our leadership.
Realizing New Possibilities Marsh McLennan 2022 Annual Report
77
ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
In addition to helping clients and communities address
ESG-related challenges and opportunities, we’re
leading by example, starting with the commitment we
announced in March 2022 to set and execute low-carbon
transition strategies that chart a path to net-zero across
our operations by 2050—and reduce our emissions by
50% by 2030.
Pay equity is a vital issue that we are committed to—
and our managers around the world are accountable
for. We conduct an annual study to identify any new
discrepancies that might have emerged in pay based
on gender (globally) and on race/ethnicity (in the US).
This study helps inform the actions we take, including
the continuous improvements we can make to
our processes.
While we know there’s always more to be done, it’s
gratifying to be recognized by Ethisphere as one of
the 2022 World’s Most Ethical Companies, reflecting
our dedication to “integrity, sustainability, governance
and community.”
You can read more about our ESG commitments and
how our work advances good in our latest ESG report
on marshmclennan.com.
Marsh McLennan has the privilege of
helping our clients find opportunity and
navigate pressing issues, a number of
which fall in the broad spectrum of ESG.
We’re working across our businesses—
on everything from guiding sustainable
investments, to supporting diversity
and inclusion, to improving healthcare
systems, confronting cyber threats, and
helping close the world’s protection
gaps—to help enable our clients to
meet their ESG goals.
We have a long track record of ESG engagement and
achievements, and it’s an area where we continue to
see an opportunity to support our colleagues, clients
and communities.
Some of this work takes place as part of broader, global
initiatives such as the UN’s Race to Resilience program,
where we’re championing disaster-risk-reduction
initiatives that make communities stronger. But much of
it takes place in our work with clients, such as Marsh’s
role in helping to bring clean hydropower to New York
City from Canada via a privately funded, fully buried
transmission line, or Mercer’s market-leading efforts to
help organizations address gender and racial pay equity
and ensure fairness in their rewards.
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Realizing New Possibilities Transitioning
to a Lower-
Carbon World
Marsh McLennan is committed to helping
clients develop low-carbon business
models and manage risks associated with
a world moving toward cleaner energy.
As we do our part to support this
transition, we recognize that a secure
energy supply is crucial for the global
economy and society as a whole. This is
particularly true in the context of today’s
geopolitical environment.
We believe we can best serve communities
by working with operators of clean-
energy assets to accelerate progress to
a lower-carbon world, while also working
with traditional energy clients to enable
them to make the transition as quickly and
responsibly as possible.
Marsh McLennan 2022 Annual Report
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9
Marsh McLennan 2022 Annual Report We focus on
delivering
consistent, solid
performance in
the near term
while investing for
sustained growth
over the long term.
10
Realizing New Possibilities
Annual revenue of
$20.7 billion
Record-high adjusted operating income of
$4.8 billion
Committed over
$17 billion
across 250+ acquisitions and investments since 2009
24.7%
consolidated adjusted margin—an increase
of over 1,590 basis points since 2008
15 consecutive years
of adjusted EPS growth
13 consecutive years
of underlying revenue growth and dividend increases
Marsh McLennan 2022 Annual Report
Marsh McLennan 2022 Annual Report
11
11
OUR COLLEAGUES
AND CULTURE
Last year, we achieved our goal of $100 million of
diverse supplier spend in the US. To help diverse
business leaders and owners grow and thrive, this year
we are launching Equity = Possibility, an offering that
includes issues-based research and insights, an annual
Black Leaders Symposium, customized solutions and a
commitment to providing opportunities and access for
the next generation of diverse leaders.
We’re proud of our commitment to advancing good in
the communities where we live and work. In 2022, we
saw the highest level of colleague volunteerism since we
started tracking this metric in 2012. This commitment
was also reflected in our colleagues’ charitable giving—
which totaled $7.7 million with company match in 2022—
toward worthy causes such as helping the people of
Ukraine and supporting organizations that advocate for
social justice.
The foundation of our culture and the work we do is
trust. The Greater Good, our code of conduct, spells out
our values and our obligations. We are fortunate to have
so many talented colleagues who are focused not only
on the work they are doing and how to achieve the best
outcomes, but on why it matters. They bring their ideas
and their ideals to work.
Our success has always been defined
by our collaborative culture and our
people—and our ability to attract
talented colleagues and enable them to
do their best work.
We offer colleagues the opportunity to do meaningful
work in the areas of risk, strategy and people, and we
help them reach their full potential by providing robust
training and professional development opportunities.
From global learning festivals to our continuous
performance management framework to collaborative
sales training programs, it’s gratifying to see so many
colleagues grow and thrive.
Look no further than Marsh McLennan Agency, where
we’ve retained 98% of “super producers” (individuals
generating $1 million or more in revenue) following the
acquisition of their firms by our company. In aggregate,
our number of super producers has grown 80% over
the years, demonstrating the strength of our colleagues
and culture.
We continue to make significant strides toward our
commitments to increase diverse representation,
facilitate empowerment and create impact within and
beyond our company. In 2022, we met our initial goal
of having more than 30% female representation on our
Board of Directors. Overall, women now make up 54% of
our workforce globally. Of our leadership roles globally,
32% are held by women, up from 29% in 2020.
12
Realizing New Possibilities Helping the
People of
Ukraine
As the war in Ukraine began to unfold last
year, we brought the best of our company
together to support our colleagues
and clients.
Immediate actions included providing
resources to help clients better
understand some of the critical
implications of the war, and hosting
colleague sessions with our business
leaders to discuss the ways in which
we could best assist our clients.
One example of making a difference for
clients was Marsh’s partnership with a
Lloyd’s insurer to provide insurance cover
for ships carrying grain out of Ukraine,
one of the world’s largest grain exporters.
By helping manage this risk, we also
helped ease pressure on the world’s food
supply and enabled supply chains to keep
functioning.
In 2022, financial donations from our
colleagues around the world, matched
by our company, raised $1.4 million to
support the people of Ukraine through
three humanitarian organizations. Our
colleagues in neighboring countries such
as Poland and Romania added to our
impact locally by organizing everything
from clothing drives to transportation for
those leaving Ukraine.
Marsh McLennan 2022 Annual Report
1313
Looking ahead
We enter 2023 with great momentum, yet the outlook
for the global economy remains uncertain. In addition
to ripple effects from the global pandemic, the world
faces a host of urgent issues, including geopolitical
instability, economic uncertainty, social inequities,
energy security and the ongoing war in Ukraine. Despite
these challenges, we are confident in our position
and the relevance of our work—and optimistic about
our prospects.
As we help our clients navigate their increasingly
interconnected challenges, we’re becoming more
focused on opportunities at the intersections of our
four global businesses to deliver client impact and
accelerate growth, improve the client and colleague
experience, and become a more agile and efficient firm.
We’re also evolving our leadership model to enable
more purposeful collaboration, including the recent
appointments of Marsh McLennan leaders responsible
for working across our businesses to identify and
capture opportunities for outperformance.
While we intend to pursue our strategy of leveraging
our collective capabilities for greater client impact,
growth and efficiency, there are core elements of our
strategy and philosophy that will continue. Clients
remain at the center of everything we do as a firm.
We will continue to support our colleagues, as they are
our company. And we remain committed to achieving
exceptional results over time by striving to strike the
balance between delivering in the near term while
investing to sustain our momentum into the future.
None of this happens on its own. I’d like to thank my
predecessor, Dan Glaser, who retired from Marsh
McLennan at the end of 2022. During his decade-long
tenure as CEO, our company’s revenue nearly doubled,
our adjusted EPS more than tripled and our market cap
quadrupled. Total shareholder return also more than
doubled the S&P 500. Our company owes Dan a debt of
14
gratitude for guiding our firm with vision, courage and
integrity, and we wish him all the best.
Thank you to our Independent Chairman, Ed Hanway,
and the members of our Board of Directors, whose
wisdom and guidance help keep us moving forward.
Thank you to the members of our Executive Committee,
who deliver the leadership and passion for excellence
that our clients, colleagues and stakeholders expect,
and that I rely on.
Thank you to our colleagues around the world for
your hard work and dedication to our clients and
each other, and thank you to our clients for the
ongoing opportunity to earn your trust each day.
Finally, thank you to our investors for your support
and belief in the value we deliver.
It’s a privilege to do the work that we do. It’s also a
pleasure to work with so many talented people who
are relentlessly focused on client impact.
We are ready for what comes next and excited by the
opportunity to create new possibilities for our clients,
our colleagues, our communities and our company.
Together, we are writing the next chapter in Marsh
McLennan’s growth story.
All the best,
John Q. Doyle
President and Chief Executive Officer
Marsh McLennan
February 13, 2023
Realizing New Possibilities
Marsh McLennan 2022 Annual Report
15
Our Board of Directors
Top, from left: Jane Lute, R. David Yost, Lloyd M. Yates, John Q. Doyle, Bruce P. Nolop, Morton O. Schapiro, Steven A. Mills,
Anthony K. Anderson, Hafize Gaye Erkan. Bottom, from left: Oscar Fanjul, Deborah C. Hopkins, H. Edward Hanway, Tamara Ingram.
Anthony K. Anderson
Former Vice Chair and Midwest
Area Managing Partner,
Ernst & Young LLP
H. Edward Hanway
Former Chairman and Chief
Executive Officer, CIGNA Corporation
Bruce P. Nolop
Former Executive Vice President
and Chief Financial Officer,
E*TRADE Financial Corporation
John Q. Doyle
President and Chief
Executive Officer,
Marsh McLennan
Hafize Gaye Erkan
Former President and
Co-Chief Executive Officer,
First Republic Bank
Oscar Fanjul
Vice Chairman, Omega Capital
Founding Chairman and
Former Chief Executive
Officer, Respol
16
Deborah C. Hopkins
Former Chief Executive Officer
of Citi Ventures and Former
Chief Innovation Officer,
Citigroup
Tamara Ingram
Former Global Chairman,
Wunderman Thompson
Steven A. Mills
Former Executive Vice President,
Software & Systems,
International Business Machines
Corporation (IBM)
Jane Lute
Strategic Director,
SICPA North America
Morton O. Schapiro
Executive Vice President
and Senior Advisor of TWG
Global and President Emeritus,
Northwestern University
Lloyd M. Yates
President and
Chief Executive Officer,
NiSource Inc.
R. David Yost
Former President and
Chief Executive Officer,
AmerisourceBergen
Realizing New Possibilities Our Executive Committee
Top, from left: Katherine J. Brennan, John Jones, Paul Beswick, Dean Klisura, Nick Studer. Bottom, from left: Martine Ferland,
John Q. Doyle, Martin South, Carmen Fernandez, Mark McGivney.
John Q. Doyle
President and
Chief Executive Officer,
Marsh McLennan
Paul Beswick
Senior Vice President and
Chief Information Officer,
Marsh McLennan
Carmen Fernandez
Senior Vice President and
Chief People Officer,
Marsh McLennan
John Jones
Chief Marketing and
Communications Officer,
Marsh McLennan
Katherine J. Brennan
Senior Vice President and
General Counsel, Marsh McLennan
Dean Klisura
President and Chief Executive
Officer, Guy Carpenter
Vice Chair, Marsh McLennan
Martine Ferland
President and
Chief Executive Officer, Mercer
Vice Chair, Marsh McLennan
Mark McGivney
Chief Financial Officer,
Marsh McLennan
Martin South
President and
Chief Executive Officer, Marsh
Vice Chair, Marsh McLennan
Nick Studer
President and
Chief Executive Officer,
Oliver Wyman Group
Vice Chair, Marsh McLennan
17
Marsh McLennan 2022 Annual Report 18
Realizing New Possibilities 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, 2022
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, 2022, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was
approximately $77,420,628,314 computed by reference to the closing price of such stock as reported on the New York Stock Exchange
on June 30, 2022.
As of February 9, 2023, there were outstanding 494,571,451 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 2023 Annual Meeting of
Stockholders (the "2023 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 of geopolitical or macroeconomic conditions on us, our clients and the countries and
industries in which we operate, including from conflicts such as the war in Ukraine, slower GDP
growth or recession, capital markets volatility and inflation;
the increasing prevalence of ransomware, supply chain and other forms of cyberattacks, and their
potential to disrupt our operations and result in the disclosure of confidential client or company
information;
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, including claims
related to our investment business’ ability to execute timely trades;
the financial and operational impact of complying with laws and regulations, including domestic
and international sanctions regimes, anti-corruption laws such as the U.S. Foreign Corrupt
Practices Act, U.K. Anti Bribery Act and cybersecurity and data privacy regulations;
our ability to attract, retain and develop industry leading talent;
our ability to compete effectively and adapt to competitive pressures in each of our businesses,
including from disintermediation as well as technological change, digital disruption and other
types of innovation;
our ability to manage potential conflicts of interest, including where our services to a client
conflict, or are perceived to conflict, with the interests of another client or our own interests;
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.
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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
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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 more than 85,000 colleagues advise clients in over 130 countries. With annual
revenue of over $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
future of work, shape retirement and investment outcomes, and advance health and well-being for a
changing workforce. Oliver Wyman Group 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 solutions and products, and specialized
management, strategic, 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 2022 and employs approximately 48,600 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 45,200 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 51% of the Company's total
revenue in 2022.
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
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develop innovative solutions and products. The firm’s resources also include nearly three dozen specialty
and industry practices, including cyber, construction, renewable energy, healthcare, and financial and
professional service practices, along with ESG products such as a 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 is an integrated and globally coordinated team of experts who provides clients
in highly specialized industry and product areas with data driven insights, service, advice and
access to global insurance markets. These specialists support clients who require advice and
support across aviation & space, credit specialties, construction, energy & power, financial &
professional services (FINPRO), marine & cargo, and private equity, mergers & acquisitions
(PEMA).
Corporate. Middle market clients are served by Marsh’s brokerage operations globally; this segment is
also serviced by Marsh & McLennan Agency (MMA) in the United States.
• Marsh McLennan Agency (MMA) provides business insurance, employee health and benefits,
retirement and wealth management, and private client insurance solutions to individuals and mid-
market organizations. MMA advises on insurance program structure and market dynamics, along
with industry expertise and transactional capability. Since its first acquisition in 2009, MMA has
acquired more than 100 agencies.
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 and administration.
•
Victor Insurance Managers (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 its Victor for
Agents 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 other P&C programs and
administers group and retiree benefits programs and claims handling operations for individuals,
organizations and businesses. Victor also has a business in the UK, the Netherlands, Italy and
Germany. In addition, Victor manages Torrent Technologies, a service provider to Write Your Own
(WYO) insurers and direct policy providers participating in the National Flood Insurance Program
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(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
in the United States 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. Marsh Advisory’s four main service areas (Consulting, Claims,
Analytics, and Captives) advise clients on existing and emerging risk exposures, protecting critical
business activities and developing strategies to optimize total cost of risk.
Marsh Captive Solutions, a prominent part of the Marsh Advisory practice, helps organizations of all
sizes retain risks through comprehensive and innovative captive solutions. This team is comprised of
captive consultants, actuaries and captive management professionals which offer complete, end-to-end
captive management services.
Bowring Marsh is an international placement broker. This unit’s core strategy is to modernize risk
transfer advice and solutions for clients. This is executed through a combination of data solutions,
capacity creation vehicles, segmentation, placement platforms (on-shoring solutions within the network),
and improved operational efficiency – all designed to yield a better client outcome and experience. The
products Bowring Marsh places include property, casualty, terrorism, product recall, and special risks.
Mercer Marsh Benefits provides health benefits brokerage and consulting services 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 help clients minimize risk,
optimize benefits structure, drive efficiencies and maximize employee engagement.
Services for Insurers
Marsh's Insurer Consulting Group (ICG) provides services to insurance carriers. Through Marsh's
patented electronic platform, MarketConnect, and sophisticated data analysis, ICG 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. ICG 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.
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GUY CARPENTER
Guy Carpenter, the Company’s reinsurance intermediary and advisor, generated approximately 10% of
the Company's total revenue in 2022. 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, reinsurance accounting and fiduciary services.
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, segments and
specialties including: Automobile / Motor, Aviation, Captives, Crop/Agriculture, Cyber, Engineering /
Construction, Financial Lines, InsurTech, Life / Accident / Health, Marine and Energy, Medical
Professional, Personal Lines, Mortgage, Political Risk & Trade Credit, Primary & Excess Casualty,
Managing General Agents and 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 insurance-linked securities. GC Securities, the Guy Carpenter division of MMC
Securities LLC and MMC Securities (Europe) Limited, offer 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, refer to Part II, Item 7
("Management's Discussion and Analysis of Financial Condition and Results of Operations") of this report.
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CONSULTING
The Company's Consulting segment generated approximately 39% of the Company's total revenue in
2022 and employs approximately 30,900 colleagues worldwide. The Company conducts business in this
segment through Mercer and Oliver Wyman Group.
MERCER
Mercer is a leading provider in delivering advice and solutions that help organizations meet the health,
wealth and career needs of a changing workforce. Mercer has approximately 24,200 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 2022.
Mercer operates in the following areas:
Health. Mercer helps public and private sector employers design and manage 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. Mercer offers clients tools to enhance employee
engagement with their health benefits through its DarwinSM platform.
Outside of the United States, Mercer and Marsh go to market together for Health benefits brokerage and
consulting under the Mercer Marsh BenefitsSM (MMB) brand, as described above.
Wealth. Through its Wealth business, Mercer assists clients worldwide in the design, governance and risk
management of defined benefit, defined contribution, hybrid retirement plans and other pools of assets,
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 investment
consulting and investment management services to U.S. public sector clients, financial intermediaries 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 investment research (through its Mercer-Insight service) 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, U.S. public sector clients, insurance companies and family offices, as well as wealth managers and
other financial intermediaries, primarily through manager of manager strategies and 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, 2022, Mercer and its global affiliates had
assets under management of approximately $345 billion worldwide.
Mercer also provides services to individual retail clients, including financial planning, high net worth risk
solutions and other discretionary investment services.
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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’s Career products include solutions relating
to rewards, mobility, engagement, workforce analytics and assessments. 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 6,700 professionals and offices in over 30 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 14%
of the Company's total revenue in 2022.
Oliver Wyman is a global leader in management consulting and combines deep industry knowledge with
specialized expertise in strategy, operations, risk management and organization transformation. The firm
works with clients around the world to help optimize their business, improve their operations and risk
profile, and accelerate their organizational performance to seize attractive opportunities. Industry groups
include:
• Automotive and Manufacturing Industries
• Communications, Media & Technology
• Energy and Natural Resources
• Financial Services (including corporate and institutional banking, public policy, and retail and
business banking)
•
Insurance and Asset Management
• Health and Life Sciences
• Public Sector
• Private Capital
• Retail & Consumer Goods
• Transportation Services (including aviation; aerospace and defense; rail; express, postal and third
party logistics; services, including travel and leisure, environmental and facility management, and
business and tech services; and CAVOK, which provides technical consulting and market
forecasting services)
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.
• Finance and Risk. Oliver Wyman provides leading financial institutions with custom solutions and
insights covering all aspects of risk and finance functions, including credit risk, market risks, asset
and liability management and liquidity risks, and non-financial risks, together with integrated risk
management topics, such as aggregated risk analyses, business applications and culture and
organization.
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• Restructuring. Oliver Wyman offers a complete management solution and "one-stop-shop"
approach to turning around companies, providing strategic, operational, and financial
restructuring advice.
• 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.
• 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.
• People and Organizational Performance. Oliver Wyman's People and Organizational
Performance 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.
• Customer First. Oliver Wyman helps bring together capabilities required to identify customer and
business growth, conduct detailed business design, build and launch a business, and maintain a
focus on realizing growth while de-risking delivery.
• Performance Transformation. Oliver Wyman helps clients to design, realize and sustain value
growth via large-scale transformations.
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, refer to Part II, Item 7 ("Management's
Discussion and Analysis of Financial Condition and Results of Operations") of this report.
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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. 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 the United Kingdom, our business is regulated by the Financial Conduct Authority ("FCA"). The FCA’s
responsibilities and powers include licensing of insurance and reinsurance intermediaries and related
criteria such as professional competence, financial capacity and the requirement to hold professional
indemnity insurance, the broking of premium finance to consumers, and competition powers that enable
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"), 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 Securities LLC, MMC Securities Limited, MMC Securities (Ireland) Limited, MMA Securities
LLC, and MMA Asset Management LLC are indirect, wholly-owned subsidiaries of Marsh & McLennan
Companies, Inc.
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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 Securities and Exchange Commission (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 United States. Mercer provides annuity buy-out support that is subject to
regulations (for example, in the United States, 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, refer to "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
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.
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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 Health business faces additional competition from insurers and from
non-traditional competitors seeking to enter or expand in the health benefits space (for example, payroll
firms, large consumer businesses, and digitally oriented consultancies). 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. ESG is central to who we
are and how we serve our clients and communities. We believe that Marsh McLennan is well positioned
to help our clients tackle the challenges of climate resilience and we are committed to developing
innovative solutions to help move the world towards a more sustainable future.
Our ESG Report provides more information about our ESG philosophy, goals and achievements. It also
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, 2022, the Company and its consolidated subsidiaries employed more
than 85,000 colleagues worldwide, including approximately 48,600 in Risk and Insurance Services and
30,900 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 17% 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. Additionally, we have
established cross-enterprise leadership development programs designed to expand professional
development and opportunities for career progression, including our Black Leadership Program,
Accelerated Leadership Program and our Racial Inclusion and Social Equity (RISE) MBA Fellowship
program in partnership with the National Black MBA Association and Fisk University. We also offer
regionally based and business-specific affinity programming to support leadership development for
women, racially and ethnically underrepresented colleagues, and LGBTQIA+ identifying colleagues.
Those programs include Marsh’s global Diversity Sponsorship Program and women’s Leadership
Development Programs in South Africa and India.
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 aim to build a learning culture and deliver a digital-first learning strategy, supplemented by formal
programs for key groups. For example, we implemented a new learning platform to accelerate usage of
digital learning as well as increasing participation in live learning. Our digital learning platform empowers
colleagues to choose their own skill development, customize preferences, learn in local language, and get
personalized development recommendations, and enables managers to have more meaningful
development conversations. Parts of our business also sponsored Learning Days in 2022.
We also recognize the importance of our 16,800 people managers to our talent pipeline and have given
them increased support and opportunities for promoting the growth of their teams. In 2022 we offered 440
live learning sessions in addition to more than 32,000 individual learning courses to help our colleagues
grow and develop. Our People Manager Hub is a one-stop digital 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, including four new
learning pathways on our digital learning platform and a series of People Manager Workshops on topics
ranging from Building Inclusion in Your Team to Managing Change and Transitions, which were offered for
the first time in 2022.
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 2022, we expanded the survey with questions on manager effectiveness,
covering topics related to well-being, inclusion and diversity, feedback and colleague development. A
third-party administers our survey in order to maintain confidentiality of responses. Collective survey
outcomes allow us to monitor the evolution of our culture over time and identify opportunities to build on
strengths and address challenges, all with the intention of furthering our productivity through an engaged
workforce.
Health and Well-being. As a company, our success depends on the health and well-being of our
colleagues—we want to support our colleagues with the 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
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an Employee Assistance Program for confidential counselling on personal issues for 99% 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 2022.
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 well-being.
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 as of
February 13, 2023:
Paul Beswick, age 48, 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.
Katherine J. Brennan, age 44, is Senior Vice President and General Counsel of Marsh McLennan. In
this role, she leads Marsh McLennan’s global legal, compliance and public affairs function, which supports
the Company’s four businesses, Marsh, Guy Carpenter, Mercer and Oliver Wyman. She also leads the
Company’s ESG efforts. Ms. Brennan has held several legal and compliance leadership roles at Marsh
McLennan, serving most recently as General Counsel, Marsh LLC. She also served as Deputy General
Counsel, Corporate Secretary and Chief Compliance Officer for Marsh McLennan from 2017 to 2021, and
prior to that, as General Counsel of Guy Carpenter. Ms. Brennan currently serves on the Board of the Red
Cross of Greater New York.
John Q. Doyle, age 59, is President and Chief Executive Officer of Marsh McLennan. Previously, from
2021 to 2022 he served as Group President and Chief Operating Officer, responsible for the strategy and
operational objectives of Marsh McLennan’s four global businesses. He joined the firm in 2016 as
President of Marsh, then led Marsh as President and CEO from 2017 to 2021. An industry veteran with
more than 35 years of management experience, Mr. Doyle began his career at AIG, where he held
several executive positions. He is a member of the Board of the New York Police and Fire Widows’ and
Children’s Benefit Fund, a Trustee of the Inner-City Scholarship Fund, a member of the Board of
Overseers of the Maurice R. Greenberg School of Risk Management, Insurance and Actuarial Science at
St. John’s University and a former Director of the American Insurance Association. Mr. Doyle serves as
the Chairman of the US Federal Advisory Committee on Insurance.
Martine Ferland, age 61, 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 EMEA, 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
and a member of the Board of Trustees of the New York Academy of Medicine.
Carmen Fernandez, age 49, 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.
John Jones, age 51, is Chief Marketing and Communications officer of Marsh McLennan. Previously, he
served as Chief Marketing and Communications Officer of Marsh from 2018 to 2022. Mr. Jones joined
Marsh in 2016 as senior vice president of Marsh’s business planning, leading strategic planning and
global growth initiatives. Prior to that, Mr. Jones was senior vice president of commercial marketing and
strategy for AIG and has more than 25 years of marketing, communications and strategy experience.
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Dean Klisura, age 59, 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 55, 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 58, 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 49, is Chief Executive Officer of Oliver Wyman Group, 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
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
Managing Partner of the Financial Services Practice Group, Head of the European Finance and Risk
Practice and Global head of the Corporate and Institutional Banking practice. He has over 25 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:
• Our results of operations and investments could be adversely affected by geopolitical or
macroeconomic conditions;
• 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 Privacy Rights Act (CPRA), 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;
• We may not be able to effectively identify and manage actual and apparent conflicts of interest;
•
•
•
The loss of members of our senior management team or other key colleagues, or if we are
unsuccessful in our efforts to attract, retain and develop 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 laws and expectations from regulators, investors, clients and
our colleagues with respect to our environmental, social and governance (ESG) practices and
disclosure 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 in ways that could harm our business;
• 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 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 Wealth business is subject to a number of risks, including risks related to public and
private capital market fluctuations, third-party asset managers, operational and technology risks,
conflicts of interest, ESG and greenwashing, 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
Macroeconomic Risks
Our results of operations and investments could be adversely affected by geopolitical or
macroeconomic conditions.
Geopolitical and macroeconomic conditions, including conflicts such as the war in Ukraine, slower GDP
growth or recession, capital markets volatility and inflation 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, the war in Ukraine has continued to result in worldwide geopolitical and macroeconomic
uncertainty and may negatively impact other regional and global economic markets (including Europe and
the United States), companies in other countries (particularly those that have done business with Russia)
and various sectors, industries and markets for securities and commodities globally, such as oil and
natural gas, and may increase financial market volatility and adversely impact regional and global
economic markets, industries and companies. Moreover, for nearly three years, the COVID-19 pandemic
has impacted businesses, including our clients, third-party vendors and business partners, globally in
every geography in which we operate. The ultimate extent of the impact of COVID-19, including the
impact of hybrid working arrangements, on us will depend on future developments that we are unable to
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predict. In addition, the continuing legal uncertainty, negotiations and potentially divergent laws and
regulations as a result of Brexit may continue to lead to economic and legal uncertainty, causing
increased economic volatility or disrupting the markets and clients we serve.
Changes in macroeconomic and geopolitical 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.
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. For example, in 2022, market conditions
caused exchange rates to fluctuate significantly. These fluctuations in foreign exchange rates between the
U.S. dollar and foreign currencies may adversely affect our results of operations.
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.
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, and undersea cables, are potentially vulnerable to unauthorized
access, damage or interruption from a variety of external threats, including physical attack, cyberattacks,
computer viruses and other malware, ransomware and other types of data and systems-related modes of
attack. A disruption of physical infrastructure could impact our ability to conduct business and service
clients. This may include deliberate or unintentional disruption of service to electrical systems, satellite
communications, undersea or terrestrial cable systems, Internet services, or other systems our colleagues
or third parties rely on us to conduct business in a multitude of jurisdictions across the globe. Disruptions
may be the result of weather, natural disaster, war, terrorism, pandemic, or other natural or geopolitical
event. 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 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 and hackers, through use of
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increasingly sophisticated methods of attack, including the deployment of artificial intelligence to find and
exploit vulnerabilities, "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
during periods of heightened geopolitical conflict, such as the war in Ukraine, 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, an increased level of remote and hybrid work arrangements post COVID-19 has
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 tools 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
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 and our employees. 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
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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.
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
emails sent to the wrong recipient, 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
cyberattack 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 Privacy Rights Act (CPRA), 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
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 data 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. These fines are not limited to data breaches and regulators are
increasingly focusing on other data processing activities including those related to ad-tech and “data
subject” rights.
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
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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., CPRA was passed
in late 2020 and has greatly expanded the requirements under the California Consumer Privacy Act
(CCPA). Despite a proliferation of regulatory guidance papers, there remains uncertainty in key areas
related to the GDPR and the CPRA, and that uncertainty could result in potential liability for our failure to
meet our obligations under the GDPR and the CPRA. 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 CPRA 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 continue to generate 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, Indonesia passed the Personal Data Protection Bill in 2022, Australia and Canada are seeking
to make major amendments to their existing privacy laws and India is engaging in an ongoing effort to
enact a new privacy law. Some of the laws enacted in recent years, including those in China and the
Kingdom of Saudi Arabia, 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 and CPRA, four other states (Colorado, Connecticut, Utah
and Virginia) passed privacy laws and there remains continued legislative interest in passing laws in
additional states, as well as a federal privacy law, though the prospects of such a law passing soon have
diminished.
In addition to data protection laws, countries and states in the U.S. are enacting cybersecurity laws and
regulations. For example, in 2017 the New York State Department of Financial Services (NYDFS) issued
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. The NYDFS
has now proposed an array of modifications to those rules which if passed would impose significant new
requirements. A number of states have also adopted laws covering data collected by insurance licensees
that include security and breach notification requirements. And at the federal level, the Securities and
Exchange Commission is seeking to impose new cybersecurity requirements, including new reporting
obligations, on publicly traded companies. 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
privacy and security, and we cannot yet determine the impact such future laws, regulations and standards
may have on our business. Data protection laws also include strict notification requirements for
organizations related to confirmed or suspected breaches. With such a limited time available to validate
indicators, there is an increased risk of reporting a false alarm or immaterial breach, which may lead to
reputational damage despite there not being an actual data breach.
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
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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 CPRA, the maturity level of proposed compliance frameworks and the continued lack of certainty
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, breach of contract 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 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 could 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
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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, investment management
(including, for example, from trading or other operational errors), 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 services, 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, Australia and the other
jurisdictions in which we operate. We are also subject to trade sanctions laws relating to countries such
as Afghanistan, Belarus, Cuba, Iran, North Korea, Russia, Syria, Ukraine (Russia-controlled territories)
and Venezuela, and anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K.
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
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. In addition, geopolitical conflict, such as the war
in Ukraine, has resulted in, and may continue to result in, new and rapidly evolving trade sanctions, which
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may increase our costs, negatively impact our revenues or impose additional operational limitations on
our businesses.
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, or new and evolving regulations regarding cybersecurity, artificial
intelligence or environmental, social and governance matters, 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.
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.
We may not be able to effectively identify and manage actual and apparent conflicts of interest.
Given the significant volume of our engagements, potential conflicts of interest may arise across our
businesses. There is a risk that we may not effectively identify and manage potential conflicts of interest,
including but not limited to where our services to a client conflict, or are perceived to conflict, with the
interests of another client or our own interests, where we receive revenue or benefits from third-parties
with whom we conduct business (including but not limited to insurers, investment managers and vendors)
and where our colleagues have personal interests.
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Competitive Risks
The loss of members of our senior management team or other key colleagues, or if we are
unsuccessful in our efforts to attract, retain and develop 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 or if
our succession plans do not operate effectively.
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
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. In addition, regulation or legislation impacting the workforce, such as the proposed U.S. Federal
Trade Commission rule regarding noncompete clauses, may lead to increased uncertainty and
competition for talent.
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 arrangements 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 laws and expectations from regulators, investors, clients and
our colleagues with respect to our environmental, social and governance (ESG) practices and
disclosure may impose additional costs on us or expose us to new or additional risks.
There is increased focus, including from governmental organizations, regulators (including the SEC in the
United States), investors, colleagues and clients, on ESG issues such as environmental stewardship,
climate change, greenhouse gas emissions, inclusion and diversity, human rights, 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.
Additionally, there has been increased regulatory focus on ESG and sustainability. For example, laws and
regulations related to ESG issues continue to evolve, including in the U.S., the U.K., the EU and Australia,
and these regulations may impose additional compliance or disclosure obligations on us. In particular,
heightened demand for, and scrutiny of, ESG and sustainable-related products, funds, investment
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strategies and advice has increased the risk that we could be perceived as, or accused of, making
inaccurate or misleading statements, commonly referred to as "greenwashing" or that we have otherwise
run afoul of regulation. Such perceptions or accusations could damage our reputation, result in litigation
or regulatory enforcement actions, and adversely affect our business. Furthermore, perceptions of our
efforts to achieve ESG goals or advance ESG and sustainable-related products, funds, investment
strategies or advice may differ widely among stakeholders and could present risks to our reputation and
business.
Moreover, as we continue 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 have expanded our public disclosures in these areas,
including providing additional metrics and goals. These disclosures, metrics and goals and any failure to
accurately report or comply with federal, state or international ESG laws and regulations, or to achieve
progress on our metrics and goals on a timely basis, or at all, may result in legal and regulatory
proceedings against us and negatively impact our reputation.
Implementation of our ESG initiatives also depends in part on third-party performance or data that is
outside the Company's control.
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.
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
following the COVID-19 pandemic and recent dislocation in the market resulting from proposed and actual
combinations among our competitors.
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 companies that market and service their
insurance products directly to consumers and reinsurance companies that market and service their
products directly to insurance companies, in each case 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
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products and services to potential clients, which may give them a competitive advantage. Some of our
competitors also may be able to invest more significant capital in technology and digital solutions. 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, custodians, 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.
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.
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, war or other geopolitical tensions, 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 3,500 and 5,600 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.
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
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effect. Such risks have increased significantly due to the hybrid work environment following the COVID-19
pandemic. 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.
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 93 in the period from 2017
to 2022. 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.
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, 2022, our receivables for our commissions and fees were
approximately $5.3 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 geopolitical conditions, such as a slower economic growth or recession, the war in
Ukraine, 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
27
our businesses 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, particularly in an environment of rising interest rates. In addition, our ability
to obtain financing will depend in part upon prevailing conditions in credit and capital markets, which are
beyond our control.
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 $11.8 billion, and related plan assets of approximately $13.0 billion, at
December 31, 2022 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 51% of our total revenue reported in 2022 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:
•
•
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;
28
•
•
•
•
•
•
•
fluctuations in capacity and utilization rates and clients' ability to terminate engagements without
penalty;
our net colleague hires and related compensation and benefits expense;
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
public and private capital 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
•
general economic conditions, including factors beyond our control affecting economic conditions
such as global health crises or pandemics, severe weather, climate change, geopolitical unrest
such as the war in Ukraine, 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 Fitch and Baa1 by Moody's. The Company
carries a Stable outlook with both S&P and Fitch and Positive outlook with 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, 2022, we had total consolidated debt outstanding of approximately $11.5 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 provisions in U.S. income tax law that may have a meaningful
impact on our income tax expense and require significant judgments and estimates in interpretation and
calculations. Current tax legislation includes, among other provisions, limitations on the deductibility of net
interest expense, a minimum tax on most non-U.S. income called Global Intangible Low-Taxed Income
("GILTI"), and the Base Erosion and Anti-Abuse Tax ("BEAT"). In addition, a recently enacted book
minimum tax could increase the impact of these provisions on our income tax expense. Given the
29
significant complexity of the rules, and the potential for additional guidance from the 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. As a U.S.-domiciled company, any such increases would likely 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 2022, approximately 51% 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:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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;
the implementation of the Organization for Economic Cooperation and Development (OECD)
international tax framework, including the Pillar 2 minimum tax regime and the Pillar 1 profit
reallocation regime, which could substantially increase the Company’s effective tax rate;
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;
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;
unexpected reassessment by tax authorities of interpretations of existing rules which may require
companies to defend previously accepted positions and may create both new and prior-year
exposures;
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;
geopolitical tensions, such as the war in Ukraine, in countries where we operate, international
hostilities, international trade disputes, 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;
30
•
•
•
•
•
•
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 Afghanistan, Belarus, Cuba, Iran, North Korea, Russia, Syria,
Ukraine (Russia-controlled territories) and Venezuela, 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;
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 2022. 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 risk services and insurance and reinsurance coverage, as
applicable, which would adversely impact our commission revenue and other revenue based on
premiums placed and services provided 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.
31
In addition to movements in premium rates, our (and Mercer's Health business's) 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 expanded 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.
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 2022. 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 2022. Our businesses in this segment are subject to particular risks.
Mercer’s Wealth business is subject to a number of risks, including risks related to public and
private capital market fluctuations, third-party asset managers, operational and technology risks,
conflicts of interest, ESG and greenwashing, 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. Mercer’s Investments business is subject to a number of risks, including risks
related to litigation (both by clients and by plan participants, particularly as we increasingly act in a
fiduciary capacity), liquidity and market volatility, third-parties, our operations and technology, trading
errors, 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 making inaccurate or misleading
statements regarding the investment strategies of our offerings with respect to ESG or sustainability,
commonly referred to as “greenwashing,” or 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
32
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. Mercer or its clients may be subject to claims or
class action litigation relating to advice given or investment decisions made by plan sponsors and plan
fiduciaries, particularly relating to 401(k) plans in the U.S. or pension schemes in the U.K. These risks, if
realized, could result in significant liability and damage 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.
Global economic conditions, including slower GDP growth or recession, inflationary pressure and foreign
exchange rate volatility, 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. If our
clients reduce their headcounts, they will have fewer employee lives covered under their health plans,
which may reduce premiums and the commission or supplemental compensation Mercer may receive.
In addition, some of Mercer's Investments business generate fees based upon the value of the clients’
assets under management, advisement or administration. Changes in the value of equity, debt, currency,
real estate, commodities, alternatives or other asset classes could cause the value of assets under
management, advisement or administration, 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 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
33
services have brought, and may bring, significant claims against us, particularly in the United States and
the United Kingdom.
Additionally, a rapid rise in interest rates could result in higher defined benefit pension plan funding levels.
In some markets, this could accelerate clients’ desire to conduct a buyout or third-party risk transfer. Such
a transaction could result in additional short-term revenue for Mercer to the extent we advise the client on
the transaction, but a loss in longer term recurring revenue related to the plan.
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:
•
•
•
•
•
•
•
•
•
general economic conditions;
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; and
the potential disruptive impact of acquisitions and dispositions.
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:
•
•
general economic conditions;
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; and
the extent to which our clients develop in-house or other capabilities to perform the services that
they might otherwise purchase from us.
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.
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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.
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.
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Item 4. Mine Safety Disclosures.
Not applicable.
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 in 2022 and 2021 and each quarterly period thereof:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
2022
Stock Price Range
Low
High
$142.80
$173.34
$143.33
$183.14
$146.82
$174.23
$148.14
$176.75
$142.80
$183.14
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
On March 23, 2022, the Board of Directors of the Company authorized an additional $5 billion in share
repurchases. This is in addition to the Company's existing share repurchase program, which had
approximately $1.3 billion of remaining authorization as of December 31, 2021. The Company
repurchased approximately 12.2 million shares of its common stock for $1.9 billion in 2022. As of
December 31, 2022, the Company remained authorized to repurchase up to approximately $4.3 billion in
shares of its common stock. There is no time limit on the authorization.
The Company repurchased approximately 7.9 million shares of its common stock for $1.2 billion in 2021.
The following information relates to the Company's repurchases of equity securities during any month
within the fourth quarter of the fiscal year covered by this report:
Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced Plans
or Programs
977,063 $
382,066 $
800,566 $
2,159,695 $
Maximum Number
(or Approximate
Dollar Value)
of Shares (or Units)
that May
Yet Be Purchased
Under the Plans or
Programs
4,512,323,223
4,449,317,300
4,313,994,859
4,313,994,859
Period
Oct 1-31, 2022
Nov 1-30, 2022
Dec 1-31, 2022
Total
Total Number
of Shares
(or Units)
Purchased
Average Price
Paid per Share
(or Unit)
977,063 $
382,066 $
800,566 $
2,159,695 $
155.2316
164.9085
169.0335
162.0597
As February 9, 2023, there were 4,210 stockholders of record.
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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.
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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
more than 85,000 colleagues advise clients in over 130 countries. With annual revenue of over $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 technology-driven solutions that help organizations redefine the future of
work, shape retirement and investment outcomes, and advance health and well-being for a changing
workforce. Oliver Wyman Group 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 solutions and products, and specialized
management, strategic, economic and brand consulting services. The Company conducts
business in this segment through Mercer and Oliver Wyman Group.
The consolidated results of operations in the Management Discussion & Analysis ("MD&A") includes an
overview of the Company’s consolidated 2022 results compared to the 2021 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, of this report.
For information and comparability of the Company's results of operations and liquidity and capital
resources for fiscal year 2020, refer to "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, 2021.
This MD&A contains forward-looking statements as defined in the Private Securities Litigation Reform Act
of 1995. Refer to "Information Concerning Forward-Looking Statements" at the outset of this report.
Financial Highlights
•
•
•
•
•
•
Consolidated revenue in 2022 was $20.7 billion, an increase of 5% compared with 2021, or 9%
on an underlying basis.
Consolidated operating income decreased $32 million, or 1% to $4.3 billion in 2022, compared
with 2021. Net income attributable to the Company was $3.0 billion. Earnings per share
decreased from $6.13 to $6.04, or 1% from the prior year.
Risk and Insurance Services revenue in 2022 was $12.6 billion, an increase of 5%, or 9% on an
underlying basis. Operating income was $3.1 billion in both 2022 and 2021.
Consulting revenue in 2022 was $8.1 billion, an increase of 5%, or 8% on an underlying basis.
Operating income was $1.6 billion and $1.5 billion in 2022 and 2021, respectively.
The Company's results of operations in 2022 were impacted by restructuring activities of
$427 million, primarily related to severance and lease exit charges for activities focused on
workforce actions, technology rationalization and reductions in real estate.
The Company completed 20 acquisitions in 2022, the largest being the acquisition of HMS
Insurance Inc., a full service broker in the Risk and Insurance services segment, and the
38
Avascent Group Ltd, an aerospace and defense management consulting firm in the Consulting
segment.
In 2022, Mercer sold its U.S. affinity business that provided insurance marketing, brokerage and
administration to association and affinity groups for cash proceeds of approximately $140 million
and a net gain of $112 million.
The Company issued senior notes of $500 million due 2032 and $500 million due 2052, and
repaid senior notes of $350 million due in March 2023.
In 2022, the Company repurchased 12.2 million shares for $1.9 billion.
•
•
•
For additional details, refer to the consolidated results of operations and liquidity and capital resources
sections in this MD&A.
Acquisitions and dispositions impacting the Risk and Insurance Services and Consulting segments are
discussed in Note 5, Acquisitions and Dispositions, in the notes to the consolidated financial statements.
Deconsolidation of Russia
On February 24, 2022, Russian forces launched a military invasion of Ukraine. In response, the United
States (U.S.), the European Union (E.U.), United Kingdom (U.K.) and other governments have imposed
significant economic sanctions on Russia, and Russia has responded with counter-sanctions.
The Company concluded that it did not meet the accounting criteria for control over its wholly-owned
Russian businesses due to the evolving trade and economic sanctions, and recorded a loss of $52 million
on the deconsolidation of the Russian businesses and other related charges. Subsequently, the Company
entered into a definitive agreement to exit its businesses in Russia and transfer ownership to local
management, pending regulatory approvals. Refer to Note 5, Acquisitions and Dispositions, in the notes
to the consolidated financial statements for additional information on the deconsolidation of the Russian
businesses.
The war in Ukraine has continued to result in worldwide geopolitical and macroeconomic uncertainty. The
Company continues to monitor the ongoing situation and its potential impact on our business, financial
condition, results of operations and cash flows.
Business Update related to COVID-19
For nearly three years, the COVID-19 pandemic has impacted businesses globally including in every
geography in which the Company operates. Our businesses have remained resilient throughout the
pandemic and demand for our advice and services remains strong. The ultimate extent of the impact of
COVID-19 to the Company will depend on future developments that it is unable to predict.
Factors that could adversely affect the Company’s financial statements related to the financial and
operational impact of COVID-19 are included in "Item 1A - Risk Factors" in Part I of this report.
39
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,
2022
2021
2020
$
20,720 $
19,820 $
17,224
$
$
$
$
$
$
12,071
4,369
16,440
11,425
4,083
15,508
4,280 $
4,312 $
4,082 $
4,208 $
3,087 $
3,174 $
3,050 $
3,143 $
10,129
4,029
14,158
3,066
2,793
2,046
2,016
6.11 $
6.04 $
6.20 $
6.13 $
499
505
495
507
513
504
3.98
3.94
506
512
508
Consolidated operating income decreased $32 million, or 1% to $4.3 billion in 2022, compared to the prior
year, reflecting a 5% increase in revenue and a 6% increase in expenses. Revenue growth was driven by
increases of 5% in both Risk and Insurance Services and Consulting, reflecting the continued strong
demand for our advice and services and the expansion of the global economy. The increase in expenses
is primarily due to increased headcount and higher incentive compensation, as well as severance and
lease exit charges. Expenses also reflect higher travel and entertainment costs, partially offset by lower
depreciation and amortization primarily in the Risk and Insurance Services segment in 2022 compared to
the prior year. In 2022, net operating income was also impacted by foreign exchange movements across
both segments due to the strengthening of the U.S. dollar.
Diluted earnings per share decreased from $6.13 to $6.04, or 1% from the prior year. The decrease is
primarily the result of lower operating income, other net benefits credits and investment income, and
higher interest expense in 2022, compared to the prior year. The decrease in net income attributable to
the Company was offset by lower income taxes in 2022. Income taxes for 2021, included a net charge of
$110 million for 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, partially offset by no tax impact on the gain related to the
consolidation of Marsh India.
40
In 2022 and 2021, the Company’s results of operations and earnings per share were impacted by the
following items:
For the Years Ended December 31,
(In millions)
Restructuring, excluding JLT
Changes in contingent consideration
JLT integration and restructuring costs
JLT acquisition-related costs and other
JLT legacy legal charges
Legal claims
Disposal of businesses
Pre-acquisition related costs
Deconsolidation of Russian businesses and other related
charges
Gain on consolidation of business
Other
Impact on income before taxes
2022
312 $
$
49
115
28
1
30
(122)
21
52
—
—
486 $
$
2021
70 $
57
93
81
(69)
62
(49)
—
—
(267)
—
(22) $
2020
89
26
251
54
161
—
(8)
—
—
—
5
578
•
•
•
•
•
•
•
•
Restructuring, excluding JLT: Primarily includes severance and lease exit charges for activities
focused on workforce actions, rationalization of technology and functional resources, and
reductions in real estate. Costs also reflect charges for Marsh's operational excellence program.
These costs are discussed in more detail in Note 14, Restructuring Costs, in the notes to the
consolidated financial statements.
Changes in contingent consideration: Includes the change in fair value of contingent
consideration related to acquisitions and dispositions measured each quarter.
JLT integration and restructuring costs: Primarily reflects lease exit charges for a legacy JLT
U.K. location in 2022. In 2021, costs incurred include severance, lease exit charges, technology
costs, and consulting services related to the integration of JLT. The Company completed the
integration of JLT in 2022.
JLT acquisition-related costs and other: Retention costs and legal charges related to the
acquisition of JLT.
JLT legacy legal charges: Charges and recoveries related to legacy JLT legal matters. In 2021,
the Company recorded a $36 million reduction in the liability for a legacy JLT errors and
omissions ("E&O") related to the suitability of advice provided to individuals for defined benefit
pension transfers in the U.K., as well as $33 million of recoveries under indemnities and
insurance. The reduction in liability primarily reflects lower redress payments than previously
estimated, partially offset by higher costs to review and calculate redress. Refer to Note 16,
Claims, Lawsuits and Other Contingencies, in the notes to the consolidated financial statements.
Legal claims: The Company recorded settlement and legal costs related to strategic recruiting.
Disposal of businesses: Primarily reflects a net gain of $112 million on sale of the Mercer U.S.
affinity business in 2022, that provided insurance marketing, brokerage and administration to
association and affinity groups. In 2021, the amount primarily reflects a gain on the sale of the
U.K. commercial networks business that provided broking and back-office solutions for small
independent brokers. These amounts are reflected as a component of revenue in the
consolidated statements of income and excluded from the calculations of underlying revenue.
Pre-acquisition related costs: Includes integration costs for the pending Westpac Banking
Corporation superannuation fund transaction in Australia, which is expected to close in the first
half of 2023. Refer to Note 5, Acquisitions and Dispositions, in the notes to the consolidated
financial statements.
41
•
Deconsolidation of Russian businesses and other related charges: Loss on deconsolidation
of Russian businesses of $39 million is included in revenue in the consolidated statements of
income and excluded from the calculations of underlying revenue.
• Gain on consolidation of business: In 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.
42
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 is as follows:
Year Ended
December 31,
(In millions, except percentages)
2022
2021
%
Change
GAAP
Revenue
%
Change
Revenue
excl. Marsh
India Gain*
Components of Revenue Change**
Acquisitions/
Dispositions/
Other Impact
Underlying
Revenue
Currency
Impact
Risk and Insurance Services
Marsh
Guy Carpenter
Subtotal
2,020
12,525
120
Total Risk and Insurance Services 12,645
Fiduciary Interest Income
$10,505 $10,203
1,867
12,070
15
12,085
Consulting
Mercer
Oliver Wyman Group
Total Consulting
Corporate Eliminations
Total Revenue
5,345
2,794
8,139
(64)
5,254
2,535
7,789
(54)
$20,720 $19,820
3 %
8 %
4 %
5 %
2 %
10 %
5 %
6 %
6 %
(3)%
(2)%
(3)%
7 %
(3)%
(5)%
(4)%
(5)%
5 %
6 %
(4)%
1 %
1 %
1 %
1 %
1 %
1 %
1 %
1 %
8 %
9 %
8 %
9 %
6 %
13 %
8 %
9 %
* Percentage change excludes the gain from the consolidation of Marsh India of $267 million from prior year’s GAAP revenue.
** Components of revenue change may not add due to rounding.
The following table provides more detailed revenue information for certain of the components presented
above:
Year Ended
December 31,
(In millions, except percentages)
2022
2021
%
Change
GAAP
Revenue
%
Change
Revenue
excl. Marsh
India Gain*
Components of Revenue Change**
Acquisitions/
Dispositions/
Other Impact
Underlying
Revenue
Currency
Impact
Marsh:
EMEA
Asia Pacific
Latin America
Total International
U.S./Canada
Total Marsh
Mercer:
Wealth
Health
Career
Total Mercer
$ 2,879
$ 2,946
1,333
1,462
502
4,714
5,791
453
4,861
5,342
$10,505 $10,203
$ 2,366
$ 2,509
2,017
1,855
962
890
$ 5,345
$ 5,254
(2)%
(9)%
11 %
(3)%
8 %
3 %
(6)%
9 %
8 %
2 %
12 %
3 %
6 %
(7)%
(8)%
(1)%
(7)%
—
(3)%
(6)%
(3)%
(6)%
(5)%
(3)%
6 %
—
—
1 %
1 %
—
3 %
—
1 %
8 %
13 %
11 %
10 %
7 %
8 %
—
9 %
14 %
6 %
* Percentage change excludes the gain from the consolidation of Marsh India of $267 million from prior year’s GAAP revenue.
** Components of revenue change may not add due to rounding.
43
Consolidated Revenue
Consolidated revenue increased $900 million, or 5%, to $20.7 billion in 2022, compared to $19.8 billion in
2021. Consolidated revenue increased 9% on an underlying basis and 1% from acquisitions, partially
offset by a decrease of 4% from the impact of foreign currency translation. On an underlying basis,
revenue increased 9% and 8% in 2022, in the Risk and Insurance Services and Consulting segments,
respectively.
Underlying revenue growth in the Risk and Insurance Services and Consulting segments was driven by
the continued strong demand for our advice and services, the expansion of the global economy, new
business growth, and solid retention including continued benefits from pricing in the market place.
Consolidated Operating Expenses
Consolidated operating expenses increased $932 million, or 6%, to $16.4 billion in 2022, compared to
$15.5 billion in 2021, reflecting increases of 10% on an underlying basis and 1% from acquisitions,
partially offset by a decrease of 4% from the impact of foreign currency translation. On an underlying
basis, expenses increased 9% in 2022, in both the Risk and Insurance Services and Consulting
segments.
The increase in underlying expenses is primarily due to increased headcount and higher incentive
compensation, as well as severance and lease exit charges. Expenses also reflect higher travel and
entertainment costs, partially offset by lower depreciation and amortization primarily in the Risk and
Insurance Services segment in 2022 compared to the prior year.
In 2022, the Company incurred $427 million of restructuring costs, primarily severance and lease exit
charges, of which $219 million related to the Company's activities focused on workforce actions,
rationalization of technology and functional services, and reductions in real estate. These activities were
initiated in the fourth quarter of 2022 and the Company expects related estimated savings in 2023 to be in
the range of $125 million to $150 million. Based on current estimates, the Company anticipates these
activities will continue throughout 2023 and into 2024. However, additional charges are unlikely to exceed
costs incurred in 2022. The Company's plans are still being finalized, which may change the expected
timing, estimates of expected costs and related savings, as the Company continues to refine its detailed
plans for each business and location.
Expenses also reflect lease exit charges of $89 million in the Risk and Insurance Services segment for a
legacy JLT U.K. location. For additional details, refer to Note 14, Restructuring Costs, in the notes to the
consolidated financial statements.
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, insurance program management, risk consulting, analytical
modeling and alternative risk financing services, primarily under the name of Marsh, and engage in
specialized reinsurance broking, strategic advisory services and analytics solutions, 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
value of risks that have been insured, as well as new and lost business, and the volume of business from
new and existing clients.
44
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 Marsh McLennan
Agency ("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.
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 income 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 as follows:
(In millions, except percentages)
Revenue
Compensation and benefits
Other operating expenses
Operating expenses
Operating income
Operating income margin
Revenue
$
$
2022
12,645
6,938
2,618
9,556
3,089
24.4%
$
$
2021
12,085
6,506
2,499
9,005
3,080
25.5%
$
$
2020
10,337
5,690
2,301
7,991
2,346
22.7%
Revenue in the Risk and Insurance Services segment increased $560 million, or 5%, to $12.6 billion in
2022, compared with $12.1 billion in 2021. Revenue increased by 7% excluding the Marsh India gain in
2021. This reflects increases of 9% on an underlying basis and 1% from acquisitions, offset by a decrease
of 3% from the impact of foreign currency translation. Interest earned on fiduciary funds increased by
$105 million to $120 million, compared to $15 million in the prior year.
The increase in underlying revenue in the Risk and Insurance Services segment was primarily due to
growth in new business from existing clients, investments in talent, and solid retention including continued
benefits from pricing in the marketplace. The increase in interest earned on fiduciary funds in 2022 is a
result of higher interest rates compared to the prior year.
In Marsh, revenue increased $302 million, or 3%, to $10.5 billion in 2022, compared to $10.2 billion in
2021. Revenue increased by 6% excluding the Marsh India gain in 2021. This reflects increases of 8% on
an underlying basis and 1% from acquisitions, offset by a decrease of 3% from the impact of foreign
currency translation. On an underlying basis, U.S./Canada rose 7%. Total International operations
produced underlying revenue growth of 10%, reflecting growth of 13% in Asia Pacific, 11% in Latin
America and 8% in EMEA.
Results in 2022 also include a charge of $27 million related to the loss on deconsolidation of the
Company's Russian businesses. In 2021, revenue from acquisitions reflected a gain of $267 million
related to the re-measurement of the previously held equity method investment in Marsh India and a net
gain of approximately $50 million related to the disposition of the commercial networks business in the
U.K.
At Guy Carpenter, revenue increased $153 million, or 8%, to $2.0 billion in 2022, compared with $1.9
billion in 2021. This reflects increases of 9% on an underlying basis and 1% from acquisitions, offset by a
decrease of 2% related to the impact of foreign currency translation.
The Risk and Insurance Services segment completed 16 acquisitions in 2022. Information regarding
these acquisitions is included in Note 5, Acquisitions and Dispositions, in the notes to the consolidated
financial statements.
45
Operating Expenses
Expenses in the Risk and Insurance Services segment increased $551 million, or 6%, to $9.6 billion in
2022, compared with $9.0 billion in 2021. This reflects increases of 9% on an underlying basis and 1%
from acquisitions, offset by a decrease of 4% from the impact of foreign currency translation.
The increase in underlying expenses in 2022 is primarily due to increased headcount and higher incentive
compensation, as well as severance and lease exit charges. In 2022, the Company incurred $254 million
for restructuring costs in Risk and Insurance Services, of which $104 million related to the Company's
activities focused on workforce actions, rationalization of technology and functional services, and
reductions in real estate.
Expenses also reflect higher lease related exit costs for a legacy JLT U.K. location of $89 million, and
higher travel and entertainment costs, partially offset by lower depreciation and amortization in 2022,
compared to the prior year.
Consulting
The Company conducts business in its Consulting segment through Mercer and Oliver Wyman Group.
Mercer delivers advice and technology-driven solutions that help organizations redefine the future of
work, shape retirement and investment outcomes, and advance 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 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 benefit and 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 and the effect of government policies and regulations. 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 as follows:
(In millions, except percentages)
Revenue
Compensation and benefits
Other operating expenses
Operating expenses
Operating income
Operating income margin
Revenue
$
$
2022
8,139
4,626
1,960
6,586
1,553
19.1%
$
$
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%
Consulting revenue increased $350 million, or 5%, to $8.1 billion in 2022, compared with $7.8 billion in
2021. This reflects increases of 8% on an underlying basis and 1% from acquisitions, partially offset by a
decrease of 5% from the impact of foreign currency translation.
Mercer's revenue increased $91 million, or 2%, to $5.3 billion in 2022, compared to the prior year. This
reflects increases of 6% on an underlying basis and 1% from dispositions, offset by a decrease of 5%
from the impact of foreign currency translation. On an underlying basis, revenue for Career and Health
increased 14%, and 9%, respectively, while underlying revenue for Wealth remained flat.
46
The increase in underlying revenue at Mercer in 2022 was primarily due to continued strong demand for
our advice and services and the expansion of the global economy. The increase in Career products and
services was due to continued demand for solutions linked to new ways of working, skill gaps, workforce
transformation and diversity & inclusion issues. Health continued to benefit from growth in new business,
higher retention, increased enrolled lives from a strong labor market, and medical inflation. Underlying
revenue in Wealth grew in retirement solutions in 2022, offset by a decrease in investment management
fees from the decline in assets under management due to market volatility on investments.
Results in 2022 also include a net gain of $112 million from the sale of the Mercer U.S. affinity business.
Oliver Wyman Group's revenue increased $259 million, or 10%, to $2.8 billion in 2022, compared with
$2.5 billion in 2021, reflecting increases of 13% on an underlying basis and 1% from acquisitions, offset
by a decrease of 4% from the impact of foreign currency translation.
The increase in underlying revenue at Oliver Wyman in 2022 was primarily due to increased demand for
project-based services across all industries. Results in 2022, also include a charge of $12 million related
to the loss on deconsolidation of the Company's Russian businesses.
The Consulting segment completed 4 acquisitions in 2022. Information regarding these acquisitions is
included in Note 5, Acquisitions and Dispositions, in the notes to the consolidated financial statements.
Operating Expenses
Consulting expenses increased $301 million, or 5%, to $6.6 billion in 2022, compared to $6.3 billion in
2021. This reflects an increase of 9% on an underlying basis, partially offset by a decrease of 5% from the
impact of foreign currency translation.
The increase in underlying expenses in the Consulting segment in 2022 is primarily due to increased
headcount and higher incentive compensation, as well as severance and lease exit charges. In 2022, the
Company incurred $77 million for restructuring costs in Consulting, of which $53 million related to the
Company's activities focused on workforce actions, rationalization of technology and functional services,
and reductions in real estate.
Expenses also reflect higher travel and entertainment costs compared to the prior year. Results in 2021
also included a $69 million reduction in the liability for a legacy JLT E&O, including recoveries under
indemnities and insurance, recorded in other expenses.
Corporate and Other
Corporate expenses increased $90 million, or 33% to $362 million in 2022, compared with $272 million in
2021. This reflects an increase of 34% on an underlying basis, offset by a decrease of 1% from the impact
of foreign currency translation. The increase in underlying expenses is primarily related to $62 million in
lease exit charges for reductions in real estate.
Interest
Interest expense was $469 million in 2022, compared to $444 million in 2021. Interest expense increased
$25 million due to higher short term borrowings in 2022 at higher interest rates 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 investments in private equity funds.
The Company recorded net investment income of $21 million in 2022, compared to $61 million in 2021.
Net investment income in 2022 is driven primarily by lower mark-to-market gains from the Company's
private equity investments compared to the prior year.
Income and Other Taxes
The Company's consolidated effective tax rate for 2022 and 2021 was 24.4% and 24.6%, respectively.
47
The tax rates in both years 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, non-taxable adjustments related to contingent consideration for acquisitions, and valuation
allowances for certain tax credits. The rates in both years also reflect tax benefits from planning that
postponed the utilization of current year losses in the U.K. to a future year when the tax rate will be 25%.
The excess tax benefit related to share-based payments is the most significant discrete item in 2022,
reducing the effective tax rate by 0.7%. The reduction in 2021 was also 0.7%.
The effective tax rate for 2021 reflects a net charge of $100 million related to the re-measuring of the
Company's U.K. deferred tax assets and liabilities upon enactment of legislation on June 10, 2021,
increasing the U.K. corporate income tax rate from 19% to 25%, effective April 1, 2023. The re-
measurement of the Company's U.K. deferred tax assets and liabilities was the most significant discrete
item in the prior year, increasing the Company's effective tax rate by 2.6% in 2021.
The effective tax rate in 2021 also decreased 1.5% due to the Company not recording a tax on the gain
from the fair value re-measurement of the Company’s previously-held equity method investment in Marsh
India when the Company increased its ownership interest from 49% to 92%. The Company does not
intend to dispose the business and has indefinitely reinvested this gain.
The effective tax rate may vary significantly from period to period. The effective tax rate is sensitive to the
geographic mix of earnings and the cost to repatriate the Company's earnings, which may result in higher
or lower effective tax rates. Therefore, a shift in the mix of profits among jurisdictions, or changes in the
Company's repatriation strategy to access offshore cash, can affect the effective tax rate. In 2022, pre-tax
income in the U.K., Barbados, Canada, Ireland, Bermuda, Australia, Japan, India, and Germany
accounted for approximately 65% of the Company's total non-U.S. pre-tax income, with effective rates in
those countries of 17.8%, 1.2%, 26.8%, 11.9%, 3.7%, 29.3%, 32.8%, 24.9%, and 32.6%, respectively.
In addition, losses in certain jurisdictions cannot be offset by earnings from other operations and may
require valuation allowances that affect the rate in a particular period, 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 limitations.
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.
On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was enacted into law. The Company
evaluated the provisions of the new legislation, the most significant of which are the corporate alternative
minimum tax and the share repurchase tax. The IRA is effective as of January 1, 2023, and will not have a
significant impact on the Company's financial results of operations.
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.
Changes to the U.S. tax law in recent years have allowed the Company to repatriate foreign earnings
without incurring additional U.S. federal income tax costs as foreign income is generally already taxed in
the U.S. 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, which are generally limited to local country
withholding taxes.
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 2022, respectively.
48
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, 2022, the Company had approximately $921 million of cash and
cash equivalents in its foreign operations, which includes $325 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.
In 2022, the Company recorded foreign currency translation adjustments which decreased net equity by
$1 billion. Continued strengthening of the U.S. dollar against foreign currencies would further 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 provided $3.5 billion of cash from operations in both 2022 and 2021. 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, including incentive compensation, or receipts of receivables and pension
contributions. The Company used cash of $193 million related to its restructuring activities in 2022,
compared to $178 million in 2021.
Pension Related Items
Contributions
In 2022, the Company contributed $30 million to its U.S. defined benefit pension plans and $139 million to
its non-U.S. defined benefit pension plans. In 2021, the Company contributed $35 million to its U.S.
defined benefit pension plans and $95 million to its non-U.S. defined benefit pension plans.
In the U.S., contributions to the tax-qualified defined benefit plans are based on Employee Retirement
Income Security Act ("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 2022, the Company
made contributions of $30 million to its non-qualified plans and expects to contribute approximately $31
million in 2023. The Company was not required to and made no contributions to its U.S. qualified plans in
2022, and is not required to make any contributions in 2023.
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 79% of non-U.S. plan assets at December 31,
2022. Contribution rates for non-U.S. plans are generally based on local funding practices and statutory
requirements, which may differ significantly from measurements in accordance with U.S. GAAP.
The Company contributed $113 million to its U.K. plans (including the JLT section) in 2022. The
Company's contributions to its U.K. plans (including the JLT section) for 2023 are expected to be
approximately $41 million.
49
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 3 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.
In 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 $103 million to the JLT section in 2022,
and is expected to make contributions totaling approximately $39 million in 2023.
For the MMC U.K. Pension Fund, excluding the JLT section, an agreement was reached with the trustee
in the fourth quarter of 2022, based on the surplus funding position at December 31, 2021. In accordance
with the agreement, no deficit funding is required until 2026. The funding level will be re-assessed during
2025 as part of the December 31, 2024 actuarial valuation to determine if contributions are required in
2026. As part of a long-term strategy which depends on having greater influence over asset allocation and
overall investment decisions, in December 2022, the Company renewed its agreement to support annual
deficit contributions by the U.K. operating companies under certain circumstances, up to £450 million (or
$541 million) over a 7-year period.
The Company expects to contribute approximately $76 million to its non-U.S. defined benefit plans in
2023, comprising approximately $41 million to the U.K. plans and $35 million to plans outside of the U.K.
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 as of December 31, 2022 were approximately $1.4 billion and $2.6 billion for the U.S. plans and
non-U.S. plans, respectively, compared with losses of $1.8 billion and $2.9 billion as of December 31,
2021. 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 the impact of foreign exchange, partially offset by a
decrease 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 2022 increased in the U.S. and U.K.,
the Company's largest plans, following an increase in 2021 and a decrease in 2020. 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. In
2022, the Company's defined benefit pension plan assets had losses of 18.3% and 29.2% in the U.S. and
U.K., respectively, as compared to gains of 13.2% and 1.9% in the U.S. and U.K., respectively, in 2021.
Overall, based on the measurement at December 31, 2022, net benefit credits related to the Company’s
defined benefit plans are expected to decrease in 2023 by approximately $12 million compared to 2022,
reflecting a decrease in the U.S. plans of $40 million, offset by an increase in non-U.S. plans of
approximately $28 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, refer to 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 $1.0 billion in 2022, compared with $1.3 billion used by
financing activities in 2021.
Credit Facilities
The Company has a multi-currency unsecured $2.8 billion five-year revolving credit facility (the "Credit
Facility"), entered into in April 2021. The interest rate on the Credit Facility is based on LIBOR plus a fixed
margin which varies with the Company’s credit ratings. The Credit Facility expires in April 2026 and
requires the Company to maintain certain coverage and leverage ratios which are tested quarterly. The
Credit Facility includes provisions for determining a LIBOR successor rate in the event LIBOR reference
50
rates are no longer available or in certain other circumstances which are determined to make using an
alternative rate desirable. As of December 31, 2022 and 2021, the Company had no borrowings under
this facility.
In May 2022, the Company secured a $250 million uncommitted revolving credit facility. The facility
expires in May 2023, and has similar coverage and leverage ratios as the Credit Facility. The Company
had no borrowings outstanding under this facility at December 31, 2022.
The Company also maintains other credit facilities, guarantees and letters of credit with various banks
aggregating $514 million at December 31, 2022, and $508 million at December 31, 2021. There were no
outstanding borrowings under these facilities as of December 31, 2022 or as of December 31, 2021.
Debt
In October 2022, the Company issued $500 million of 5.75% senior notes due 2032 and $500 million of
6.25% senior notes due 2052. The Company used the net proceeds from these issuances for general
corporate purposes, and repaid $350 million of 3.30% senior notes in November 2022, with an original
maturity date of March 2023.
In October 2022, the Company increased its short-term commercial paper financing program to $2.8
billion from $2 billion. The Company had no commercial paper outstanding at December 31, 2022.
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.
The Company's senior debt is currently rated A- by Standard & Poor's ("S&P"), Baa1 by Moody's and A-
by Fitch. The Company's short-term debt is currently rated A-2 by S&P, P-2 by Moody's and F2 by Fitch.
The Company carries a Positive outlook with Moody's and a Stable outlook with S&P and Fitch.
Share Repurchases
On March 23, 2022, the Board of Directors of the Company authorized an additional $5 billion in share
repurchases. This is in addition to the Company's existing share repurchase program, which had
approximately $1.3 billion of remaining authorization as of December 31, 2021.
In 2022, the Company repurchased 12.2 million shares of its common stock for $1.9 billion. As of
December 31, 2022, the Company remained authorized to repurchase up to approximately $4.3 billion in
shares of its common stock. There is no time limit on this authorization. In 2021, the Company
repurchased 7.9 million shares of its common stock for $1.2 billion.
Dividends
The Company paid dividends on its common stock shares of $1.1 billion ($2.25 per share) in 2022 and
$1.0 billion ($2.00 per share) in 2021.
51
Contingent Payments Related To Acquisitions
The classification of contingent consideration in the consolidated statements of cash flows is dependent
upon whether the receipt or payment 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:
2022
2021
2020
Contingent consideration payments for prior year acquisitions
$
(38) $
(49) $
(48)
Receipt of contingent consideration for dispositions
Acquisition/disposition related net charges for adjustments
Adjustments and payments related to contingent consideration
Financing:
Contingent consideration for prior year acquisitions
Deferred consideration related to prior year acquisitions
Payments of deferred and contingent consideration for acquisitions
Receipt of contingent consideration for dispositions
—
49
19
57
—
26
11 $
27 $
(22)
(32) $
(28) $
(126)
(89)
(54)
(68)
(158) $
(117) $
(122)
3 $
71 $
—
$
$
$
$
For acquisitions completed in 2022, and in prior years, remaining estimated future contingent payments of
$377 million and deferred consideration payments of $142 million, are recorded in accounts payable and
accrued liabilities or other liabilities in the consolidated balance sheets at December 31, 2022.
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, 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 is recorded in
accumulated other comprehensive loss in the consolidated balance sheets.
The U.S. dollar value of the Euro notes decreased by $82 million in 2022 related to the change in foreign
exchange rates. The Company concluded that the hedge was highly effective and recorded a gain as a
decrease to accumulated other comprehensive loss for the year ended December 31, 2022.
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 sheets as an offset to fiduciary liabilities. Financing cash flows reflect
an increase of $1.7 billion and $1.2 billion in 2022 and 2021, respectively, related to fiduciary liabilities.
Investing Cash Flows
Net cash used for investing activities amounted to $850 million in 2022, compared with $1.2 billion used
for investing activities in 2021.
The Company paid $572 million and $859 million, net of cash, cash equivalents and cash and cash
equivalents held in a fiduciary capacity acquired, for acquisitions it made in 2022 and 2021, respectively,
including the Company's increased ownership interest in Marsh India from 49% to 92% in December
2021.
52
In 2022, the Company sold certain business, primarily Mercer's U.S. affinity business, for cash proceeds
of approximately $155 million, partially offset by $36 million primarily related to cash and cash equivalents
held in a fiduciary capacity in the disposed businesses. In 2021, the Company sold certain of its
businesses, primarily in the U.S. and U.K., for cash proceeds of approximately $84 million.
In the third quarter of 2022, the Company sold the remaining investment in the common stock of
Alexander Forbes ("AF"), for cash proceeds of approximately $62 million.
The Company’s additions to fixed assets and capitalized software, which amounted to $470 million in
2022 and $406 million in 2021, 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 $160 million in private
equity funds that invest primarily in financial services companies, including a $100 million commitment to
invest in a private equity fund entered into on April 1, 2022.
Commitments and Obligations
The following sets forth the Company’s future contractual obligations by type as of December 31, 2022:
(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 (a)
Total
Total
$
268 $
11,304
6,021
2,228
509
600
$ 20,930 $
Payment due by Period
1-3
Years
4-5
Years
Within
1 Year
After 5
Years
268 $
—
458
362
256
253
1,597 $
— $
2,138
794
615
194
274
4,015 $
— $
1,224
692
500
59
68
—
7,942
4,077
751
—
5
2,543 $ 12,775
(a) Primarily reflects future payments of deferred and contingent purchase consideration.
The table does not include the liability for unrecognized tax benefits of $97 million as the Company is
unable to reasonably predict the timing of settlement of these liabilities, other than approximately $32
million that may become payable within one year. The table also 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.
53
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 following
policies 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.
Refer to 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 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 based on claims
developments. In many cases, the Company has not recorded a liability, other than for legal fees to
defend the claim, because the Company is unable, at 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
flows 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 benefit (credit) costs are recorded as a component of Accumulated Other Comprehensive Income
("AOCI"), 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
54
unrecognized losses relate to inactive plans and are amortized over the remaining life expectancy of the
participants.
The determination of net periodic benefit (credit) 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 50% equities and equity alternatives and 50% fixed
income. At the end of 2022, the actual allocation for the U.S. plans was 61% equities and equity
alternatives and 39% fixed income. The target asset allocation for the U.K. plans, which comprise
approximately 79% of non-U.S. plan assets, is 14% equities and equity alternatives and 86% fixed
income. At the end of 2022, the actual allocation for the U.K. plans was 16% equities and equity
alternatives and 84% 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, 2022 measurement date used to measure pension expense in 2023 for the total Company,
the U.S. and the Rest of World ("ROW").
Assumed rate of return on plan assets
Discount rate
Total Company
5.31 %
5.16 %
U.S.
6.49 %
5.53 %
ROW
4.74 %
4.89 %
Holding all other assumptions constant, a 0.5 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 85% 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) $
(1) $
U.K.
(45) $
$
6
U.S.
24
1
$
$
U.K.
45
(8)
$
$
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
and leaving the other assumptions constant, may also 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.
55
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% 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 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 accumulated other comprehensive income.
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 against deferred tax assets. 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.
56
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 2022, 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 2022 and concluded that a
quantitative goodwill impairment test was not required in 2022 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."
57
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:
For the Years Ended December 31,
(In millions)
Cash and cash equivalents
Cash and cash equivalents held in a fiduciary capacity
$
$
2022
1,442 $
10,660 $
2021
1,752
9,622
Based on the above balances at December 31, 2022, if short-term interest rates increased or decreased
by 10%, or 25 basis points for the year 2023, annual interest income, including interest earned on cash
and cash equivalents held in a fiduciary capacity, would increase or decrease by approximately $30
million. At December 31, 2021, a change in short-term interest rates of 10%, or 1 basis point, would have
increased or decreased interest income by approximately $1 million. The change in interest rate risk at
December 31, 2022 is due to higher short-term interest rates compared to the prior year.
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 51% 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
revenue and expense, 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
2022, the Company estimates net operating income would increase or decrease by approximately $74
million. The corresponding increase or decrease in net operating income in 2021 was estimated at $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.
58
Equity Price Risk
The Company holds investments in both public and private companies as well as private equity funds,
including investments of approximately $17 million that are valued using readily determinable fair values
and approximately $42 million of investments without readily determinable fair values. The Company also
has investments of approximately $215 million that are accounted for using the equity method. The
Company's investments are subject to risk of decline in market value, which, if determined to be other
than temporary, could result in realized impairment losses. The Company periodically reviews the carrying
value of such investments to determine if any valuation adjustments are appropriate under the applicable
accounting pronouncements.
Other
A number of lawsuits and regulatory proceedings are pending. Refer to Note 16, Claims, Lawsuits and
Other Contingencies, in the notes to the consolidated financial statements included in this report.
59
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
Investment income (loss)
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,
2022
2021
2020
$ 20,720 $ 19,820 $ 17,224
12,071
4,369
16,440
4,280
235
15
(469)
21
4,082
995
3,087
37
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
$
$
$
3,050 $
3,143 $
2,016
6.11 $
6.04 $
6.20 $
6.13 $
3.98
3.94
499
505
495
507
513
504
506
512
508
The accompanying notes are an integral part of these consolidated statements.
60
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 (loss) income, before tax:
Foreign currency translation adjustments
Gain (loss) related to pension and post-retirement plans
Other comprehensive (loss) income, before tax
Income tax expense (credit) on other comprehensive loss
Other comprehensive (loss) income, net of tax
Comprehensive income
Less: Comprehensive income attributable to non-controlling
interests
2022
2021
2020
$
3,087 $ 3,174
$ 2,046
(1,198)
641
(557)
182
(739)
(389)
1,229
840
305
535
559
(784)
(225)
(170)
(55)
2,348
3,709
1,991
37
31
30
Comprehensive income attributable to the Company
$
2,311 $ 3,678
$ 1,961
The accompanying notes are an integral part of these consolidated statements.
61
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, 2022 and 2021
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Non-controlling interests
Less – treasury shares, at cost, 65,855,914 shares at December 31, 2022
and 57,105,619 shares at December 31, 2021
Total equity
The accompanying notes are an integral part of these consolidated statements.
62
2022
2021
$
1,442
$
1,752
5,293
103
616
6,012
(160)
5,852
1,005
8,299
16,251
2,537
871
2,127
1,562
358
1,449
5,093
136
523
5,752
(166)
5,586
926
8,264
16,317
2,810
847
2,270
1,868
551
1,461
$
33,454
$
34,388
$
268
$
3,278
3,095
310
221
7,172
10,660
(10,660)
—
11,227
921
1,667
355
1,363
—
—
561
1,179
20,301
(5,314)
229
16,956
(6,207)
10,749
33,454
$
$
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
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
Deconsolidation of Russian businesses
Gain on consolidation of entity
Net (gain) loss on investments
Net (gain) loss on disposition of assets
Share-based compensation expense
Changes in assets and liabilities:
Net receivables
Other assets
Accrued compensation and employee benefits
Provision for taxes, net of payments and refunds
Contributions to pension and other benefit plans in excess of current year credit
Other liabilities
Operating lease liabilities
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
Net purchase of non-controlling interests
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 financing activities
Investing cash flows:
Capital expenditures
Purchases of long term investments
Sales of long term investments
Dispositions
Acquisitions, net of cash and cash held in a fiduciary capacity acquired
Other, net
Net cash used for investing activities
2022
2021
2020
$
3,087
$
3,174
$
2,046
381
338
404
11
39
(2)
(21)
(127)
367
(492)
(122)
171
(54)
(385)
193
(323)
3,465
(1,950)
—
984
(365)
(7)
(198)
126
(158)
3
(27)
(1,138)
1,684
(1,046)
(470)
(22)
86
119
(572)
9
(850)
382
365
327
27
—
(267)
(61)
(33)
348
(570)
(354)
574
(33)
(372)
358
(349)
3,516
(1,159)
—
743
(1,016)
—
(101)
161
(117)
71
(36)
(1,026)
1,183
(1,297)
(406)
(28)
41
84
(859)
4
(1,164)
390
351
355
(22)
—
—
22
24
290
412
255
171
63
(356)
(268)
(351)
3,382
—
1,000
737
(2,515)
(3)
(132)
132
(122)
—
(34)
(943)
955
(925)
(348)
(23)
130
98
(647)
(3)
(793)
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
$
(841)
728
11,374
12,102
$
(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.
2022
2021
2020
$
$
1,442
10,660
12,102
$
$
1,752
9,622
11,374
$
$
2,089
8,585
10,674
63
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: $2.25 in
2022, $2.00 in 2021, and $1.84 in 2020)
Dividends declared and paid – (per share amounts: $2.25 in 2022, $2.00
in 2021, and $1.84 in 2020)
Balance, end of year
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of year
Other comprehensive (loss) income, 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
2022
2021
2020
$
561 $
561 $
561
$ 1,112 $
943 $
(2)
124
80
(11)
45
—
862
75
7
(1)
$ 1,179 $ 1,112 $
943
$ 18,389 $ 16,272 $ 15,199
3,050
3,143
2,016
(13)
(12)
(11)
(1,125)
(1,014)
(932)
$ 20,301 $ 18,389 $ 16,272
$ (4,575) $ (5,110) $ (5,055)
(739)
535
(55)
$ (5,314) $ (4,575) $ (5,110)
$ (4,478) $ (3,562) $ (3,774)
221
243
(1,950)
(1,159)
212
—
$ (6,207) $ (4,478) $ (3,562)
$
213 $
156 $
37
(28)
7
31
(38)
64
150
30
(21)
(3)
$
229 $
213 $
156
$ 10,749 $ 11,222 $ 9,260
The accompanying notes are an integral part of these consolidated statements.
64
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Nature of Operations: Marsh & McLennan Companies, Inc., and its consolidated subsidiaries (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") includes risk management activities (risk advice, risk
transfer and risk control and mitigation solutions) 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 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.
The Consulting segment includes health, wealth and career solutions and products, and specialized
management, strategic, economic and brand consulting services. The Company conducts business in this
segment through Mercer and Oliver Wyman Group. Mercer delivers advice and technology-driven
solutions that help organizations redefine the future of work, shape retirement and investment outcomes,
and advance health and well-being for a changing workforce. Oliver Wyman Group serves as a critical
strategic, economic and brand advisor to private sector and governmental clients.
Deconsolidation of Russia
On February 24, 2022, Russian forces launched a military invasion of Ukraine. In response, the United
States (U.S.), the European Union (E.U.), United Kingdom (U.K.) and other governments have imposed
significant economic sanctions on Russia, and Russia has responded with counter-sanctions.
The Company concluded that it did not meet the accounting criteria for control over its wholly-owned
Russian businesses due to the evolving trade and economic sanctions, and recorded a loss of $52 million
on the deconsolidation of the Russian businesses and other related charges. Subsequently, the Company
entered into a definitive agreement to exit its businesses in Russia and transfer ownership to local
management, pending regulatory approvals.
The Company continues to monitor the ongoing situation and its potential impact on our business,
financial condition, results of operations and cash flows.
Business Update related to COVID-19
For nearly three years, the COVID-19 pandemic has impacted businesses globally including in every
geography in which the Company operates. Our businesses have remained resilient throughout the
pandemic and demand for our advice and services remains strong. The ultimate extent of the impact of
COVID-19 to the Company will depend on future developments that it is unable to predict.
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 of the U.S. or
as collateral under captive insurance arrangements. At December 31, 2022, the Company maintained
$348 million compared to $303 million at December 31, 2021 related to these regulatory requirements.
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.
65
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
Fixed assets, net
2022
772
372
1,258
2,402
(1,531)
871
$
$
2021
811
385
1,240
2,436
(1,589)
847
$
$
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 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 accounted for in
accordance with the equity method of accounting are included in "other assets" in the consolidated
balance sheets.
In 2022, the Company recorded net investment income of $21 million, compared to $61 million in 2021,
and a net investment loss of $22 million in 2020. Net Investment income in 2022 is driven primarily by
lower mark-to-market gains from the Company's private equity investments compared to the prior year.
The net investment loss in 2020 is primarily due to the loss on the sale of shares of Alexander Forbes
("AF").
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 in 2022.
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,
2022 and 2021.
66
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 benefit 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.
Refer to Note 8, Retirement Benefits, for additional information.
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
67
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 the Company's 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. Refer to 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 $492 million and $475 million, net of
accumulated amortization of $1.8 billion and $1.7 billion as of December 31, 2022 and 2021, 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 the Company is unable, at 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 flows in a given quarterly or annual period.
As of December 31, 2022, the Company’s liability for errors and omissions was $419 million, compared to
$434 million at December 31, 2021, of which $64 million and $79 million, respectively, were current
liabilities and 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.
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
68
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
on the facts and circumstances that exist at each reporting period. Subsequent changes in judgment
based on 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.
Restructuring Costs: Charges associated with restructuring activities are recognized in accordance with
applicable accounting guidance which includes accounting for disposal or exit activities, guidance related
to impairment of ROU 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.
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 rationalization 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 ROU asset is accelerated from the decision date to the cease use date. For locations
where the Company expects to sub-lease the properties subsequent to its vacating the property, the ROU
asset is reviewed for potential impairment at the earlier of the cease use date or the date a sub-lease is
signed. To determine the amount of impairment, the fair value of the ROU asset is determined based on
the present value of the estimated net cash flows related to the property. Contractual costs outside of the
ROU asset are recognized based on the net present value of expected future cash outflows for which the
Company will not receive any benefit. Such amounts are reliant on estimates of future sub-lease income
to be received and future contractual costs to be incurred.
These costs are included in other operating expenses in the consolidated statements of income.
Other costs related to 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 consolidated balance sheets at fair value. If the derivative is designated as a fair value hedge, the
changes in the 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 sheets in
69
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 consolidated statements of income 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, such as forward
contracts periodically used by the Company to limit foreign currency exchange rate exposure on net
income, 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
37
2022
2021
2020
$ 3,087 $ 3,174 $ 2,046
30
$ 3,050 $ 3,143 $ 2,016
506
6
512
$160.39 $141.57 $109.12
499
6
505
507
6
513
Fiduciary Assets and Liabilities: The Company, in its capacity as an insurance broker or agent,
generally collects premiums from insureds and after deducting its commissions, remits the premiums to
the respective insurance underwriters. The Company also collects claims or refunds from underwriters on
behalf of insureds. Unremitted insurance premiums and claims proceeds are held by the Company in a
fiduciary capacity. The Company's fiduciary assets primarily include bank or short-term time deposits and
liquid money market funds, classified as cash and cash equivalents. Risk and Insurance Services
revenue includes interest on fiduciary funds of $120 million, $15 million and $46 million in 2022, 2021 and
2020, 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 at December 31, 2022
and 2021. The Company is not a principal to the contracts under which the right to receive premiums or
the right to receive reimbursement of insured losses arises. Accordingly, net uncollected premiums and
claims and the related payables are not assets and liabilities of the Company and are not included in the
accompanying consolidated balance sheets.
In certain instances, the Company advances premiums, refunds or claims to insurance underwriters or
insureds prior to collection. These advances are made from corporate funds and are reflected in the
accompanying consolidated balance sheets as receivables.
The Company, through its Mercer subsidiary, manages assets in trusts or funds for which Mercer’s
management or trustee fee is not considered a variable interest, since the fees are commensurate with
the level of effort required to provide those services. Mercer is not the primary beneficiary of these trusts
or funds. Mercer’s maximum exposure to loss of its interests is, therefore, limited to collection of its fees.
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.
70
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 impact of macroeconomic factors including
inflation, volatility in interest rates, the war in Ukraine and COVID-19 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. Actual
results may differ from these estimates.
New Accounting Pronouncement Adopted Effective January 1, 2022:
In October 2021, the Financial Accounting Standards Board ("FASB") issued new guidance for measuring
contract assets and contract liabilities acquired in a business combination. In accordance with the new
guidance, contract assets and contract liabilities should be measured in accordance with the guidance for
revenue from contracts with customers as opposed to the guidance for business combinations. The
guidance must be applied on a prospective basis, and is effective for fiscal years beginning after
December 15, 2022, including interim periods therein. Early adoption is permitted. The Company elected
to adopt this new standard effective January 1, 2022. Adoption of this guidance did not have a material
impact on the Company's financial position or results of operations.
New Accounting Pronouncements Adopted Effective January 1, 2021:
In January 2020, the FASB issued guidance that addresses accounting for the transition into and out of
the equity method and measuring certain purchased options and forward contracts to acquire
investments. The standard takes effect for public business entities for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2020. The adoption of this standard did not have
a material impact on the Company’s financial position or its results of operations.
In December 2019, the FASB issued guidance related to the accounting for income taxes. The standard
removes specific exceptions in the current rules and eliminates the need for an organization to analyze
whether the following apply in a given period: (a) exception to the incremental approach for intraperiod tax
allocation; (b) exceptions to accounting for basis differences when there are ownership changes in foreign
investments and (c) exception in interim period income tax accounting for year-to-date losses that exceed
anticipated losses. The standard also is designed to improve financial statement preparers’ application of
income tax-related guidance and simplify GAAP for (a) franchise taxes that are partially based on income;
(b) transactions with a government that result in a step-up in the tax basis of goodwill; (c) separate
financial statements of legal entities that are not subject to tax and (d) enacted changes in tax laws in
interim periods. The standard takes effect for public business entities for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2020. The adoption of this standard did not have
a material impact on the Company’s financial position or its results of operations.
71
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 less than 2% of total revenue and 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
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 the 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
72
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 portion of the Company's Risk and Insurance Services revenue is commission revenue for
brokerage arrangements recognized at a point in time on the effective date of the underlying policy.
Commission revenue is estimated using historical information about the risks to be covered over the
policy period, some of which are dependent on variable factors such as number of employees covered,
covered payroll, airline passenger miles flown, shipped tonnage of marine cargo and others. 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 earns 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 and contribution administration services
consists principally of fees based on assets under delegated management or administration.
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 to 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 59% 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.
73
The following table disaggregates various components of the Company's revenue:
For the Years Ended December 31,
(In millions)
Marsh:
EMEA (a)
Asia Pacific (b)
Latin America
Total International
U.S./Canada
Total Marsh
Guy Carpenter
Subtotal
Fiduciary interest income
Total Risk and Insurance Services
Mercer:
Wealth
Health (c)
Career
Total Mercer
Oliver Wyman Group (a)
Total Consulting
2022
2021
2020
$
$
$
$
2,879 $
1,333
502
4,714
5,791
10,505
2,020
12,525
120
12,645 $
2,366 $
2,017
962
5,345
2,794
8,139 $
2,946 $
1,462
453
4,861
5,342
10,203
1,867
12,070
15
12,085 $
2,509 $
1,855
890
5,254
2,535
7,789 $
2,575
1,059
424
4,058
4,537
8,595
1,696
10,291
46
10,337
2,348
1,793
787
4,928
2,048
6,976
(a) Revenue in 2022 includes the loss on deconsolidation of the Company's Russian businesses at Marsh and Oliver
Wyman of $27 million and $12 million, respectively. Revenue in 2021 includes a net gain on the disposition of
businesses of approximately $50 million.
(b) Revenue in 2021 includes gain on consolidation of Marsh India of $267 million.
(c) Revenue in 2022 includes a net gain from the sale of the Mercer U.S. affinity business of $112 million.
The following table provides contract assets and contract liabilities information from contracts with
customers:
December 31,
(In millions)
Contract assets
Contract liabilities
$
$
2022
335 $
837 $
2021
290 $
776 $
2020
236
676
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.
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.
74
Details of the change in Contract Assets and Contract Liabilities for 2022 and 2021 are as follows:
For the Years Ended December 31,
(In millions)
Contract Assets
Balance beginning of the year
Additions
Transfers to accounts receivable (a)
Effect of foreign exchange rate changes
Balance at the end of the year
Contract Liabilities
Balance beginning of the year
Cash received for performance obligations not yet fulfilled
Revenue recognized
Effect of foreign exchange rate changes
Balance at the end of the year
2022
290 $
661
(614)
(2)
335 $
776 $
726
(640)
(25)
837 $
2021
236
547
(493)
—
290
676
642
(539)
(3)
776
$
$
$
$
(a) Amounts transferred to accounts receivable as the rights to bill and collect became unconditional.
The amount of revenue recognized in 2022, 2021 and 2020 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 $83 million, $84 million, and $97 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 $231 million, primarily related to Mercer. The Company expects revenue in 2023, 2024,
2025, 2026 and 2027 and beyond of $99 million, $63 million, $42 million, $18 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, 2022, the Company’s capitalized assets related to deferred implementation costs, costs
to obtain and costs to fulfill were $19 million, $328 million and $320 million, respectively. 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. Costs to obtain and deferred
implementation costs are primarily included in other assets and costs to fulfill are primarily included in
other current assets in the Company's consolidated balance sheets. The Company recorded
compensation and benefits expense of $1.6 billion, $1.5 billion and $1.3 billion for the years ended
December 31, 2022, 2021 and 2020, respectively, related to the amortization of these capitalized assets.
75
A significant portion of deferred costs to fulfill in Risk and Insurance Services is amortized within 3 to 6
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, and cash and cash equivalents held
in a fiduciary capacity
Acquisition-related deposit
Fiduciary liabilities assumed
Liabilities assumed
Non-controlling interests assumed
Fair value of previously-held equity method investment
Contingent/deferred purchase consideration
Net cash outflow for acquisitions
(In millions)
Interest paid
Income taxes paid, net of refunds
2022
2021
2020
$
734 $ 1,697 $
24
(6)
(49)
(5)
(6)
(120)
572 $
—
(18)
(213)
(64)
(390)
(153)
859 $
$
2022
2021
$
431 $
441 $
$ 1,049 $ 1,069 $
929
—
(21)
(78)
—
—
(183)
647
2020
481
673
The classification of contingent consideration in the consolidated statement of cash flows is dependent
upon whether the receipt or payment 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 for prior year acquisitions
Receipt of contingent consideration for dispositions
Acquisition/disposition related net charges for adjustments
Adjustments and payments related to contingent consideration
Financing:
Contingent consideration for prior year acquisitions
Deferred consideration related to prior year acquisitions
Payments of deferred and contingent consideration for acquisitions
Receipt of contingent consideration for dispositions
2022
2021
2020
(38) $
—
49
11 $
(49) $
19
57
27 $
(48)
—
26
(22)
(32) $
(126)
(158) $
(28) $
(89)
(117) $
(54)
(68)
(122)
3 $
71 $
—
$
$
$
$
$
The Company had non-cash issuances of common stock under its share-based payment plan of $372
million, $228 million and $219 million in 2022, 2021 and 2020, respectively. The Company recorded
share-based compensation expense related to restricted stock units, performance stock units and stock
options of $367 million, $348 million and $290 million in 2022, 2021 and 2020, respectively.
76
Statement of Cash Flows Reclassifications
In 2022, the Company refined the statements of cash flows presentation to combine and reclassify certain
line items in the operating cash flows section and separately present purchases and sales of long-term
investments in the investing cash flows section. The prior year presentation was conformed to the current
presentation with no impact on either operating or investing cash flows.
Allowance for Credit Losses on Accounts Receivable
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 is provided below:
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
2022
166
17
(17)
(6)
160
$
$
2021
142
46
(16)
(6)
166
$
$
2020
140
47
(30)
(15)
142
$
$
77
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,
2022 and 2021, including amounts reclassified out of AOCI, are as follows:
(In millions)
Balance as of January 1, 2022
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Net current period other comprehensive income (loss)
Pension and
Post-
Retirement
Plans Losses
Foreign
Currency
Translation
Adjustments
Total
$
(3,202) $
(1,373) $
(4,575)
371
110
481
(1,220)
—
(1,220)
(849)
110
(739)
Balance as of December 31, 2022
$
(2,721) $
(2,593) $
(5,314)
(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 income (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)
The components of other comprehensive (loss) income for the years ended December 31, 2022, 2021
and 2020 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 benefit (credit) cost:
Prior service credits (a)
Net actuarial losses (a)
Effect of settlement (a)
Subtotal
Net gains arising during period
Foreign currency translation adjustments
Other adjustments
Pension/post-retirement plans gains
Other comprehensive (loss) income
2022
Pre-Tax
Tax
Net of Tax
$
(1,198) $
22 $
(1,220)
(2)
150
2
150
203
285
3
641
—
38
—
38
51
71
—
160
$
(557) $
182 $
(2)
112
2
112
152
214
3
481
(739)
(a) Included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses is
included in income tax expense.
78
For the Year Ended December 31,
(In millions)
Foreign currency translation adjustments
Pension/post-retirement plans:
Amortization of (gains) losses included in net benefit (credit) cost:
Prior service credits (a)
Net actuarial losses (a)
Effect of curtailment (a)
Effect of settlement (a)
Subtotal
Net losses arising during period
Foreign currency translation adjustments
Other adjustments
Pension/post-retirement plans gains
Other comprehensive income
2021
Tax
(Credit)
Pre-Tax
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) Included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses is
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 benefit (credit) 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) Included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses is
included in income tax expense.
The components of accumulated other comprehensive loss are as follows:
(In millions)
December 31, 2022 December 31, 2021
Foreign currency translation adjustments (net of deferred tax liability of
$8 in 2022 and deferred tax asset of $13 in 2021, respectively)
Net charges related to pension/post-retirement plans (net of deferred
tax asset of $1,340 and $1,501 in 2022 and 2021, respectively)
$
$
(2,593) $
(2,721)
(5,314) $
(1,373)
(3,202)
(4,575)
79
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 16 acquisitions in 2022:
•
•
•
•
•
•
January – MMA acquired Heil & Kay Insurance Agency Inc., an Illinois-based full-service broker
providing business insurance, employee health benefits services and personal lines insurance.
April – Marsh acquired the business of Regional Treaty Services Corporation, a Rhode Island-
based managing general underwriter, which manages reinsurance facilities for small to midsize
U.S.-based insurers primarily writing personal lines, small agriculture, and main street commercial
business.
June – MMA acquired Clark Insurance, a Maine-based full-service broker providing business
insurance, employee health and benefits and private client services to businesses and individuals
across the region.
July – MMA acquired CS Insurance Strategies, Inc., an Illinois-based full-service broker providing
employee health and benefits, business insurance, and risk management consulting services to
organizations of all sizes across the U.S. and Suchanek Partners LLC, an Ohio-based employee
benefits insurance broker.
August – Marsh acquired Best Insurance Co. Ltd, a Japan-based insurance broker that provides
affinity type schemes, general and personal lines insurance.
September – MMA acquired Steinberg & Associates, Inc., a South Carolina-based insurance
broker that primarily offers employee health benefit services to group clients and Leykell, Inc., a
Texas-based full-service broker that provides specialty insurance focused on trade credit.
• October – MMA acquired Galbraith Group, a Texas-based employee health and benefits
insurance broker.
•
•
November – MMA acquired Focus Insurance and Financial Services, a Texas-based personal
insurance broker and Bradley Insurance Agency, a commercial insurance broker in Knoxville,
Tennessee, with expertise serving the hospitality and construction industries. Marsh increased its
ownership interest in Beassur SARL, a Morocco-based multi-line insurance broker, from 35% to
70%.
December – MMA acquired McDonald-Zaring Insurance, Inc., a Washington-based full-service
broker focused on agri-business, wineries, crops and contractors, Chartwell Insurance Brokers,
Inc., a Massachusetts-based full-service broker that specializes in commercial Property &
Casualty insurance in the technology, financial services and non-profit space, and HMS
Insurance Associates, Inc., a Maryland-based full-service broker providing commercial, surety,
employee benefits, and personal lines insurance. Marsh acquired BHM Consultores S.A., d/b/a
Grupo Mesos, a leading auto affinity insurance broker specialist in Chile that has extensive
distribution partnerships with car dealerships, original equipment manufacturers and auto finance
companies.
80
The Consulting segment completed 4 acquisitions in 2022:
•
February – Oliver Wyman acquired Azure Consulting, an Australia-based management consulting
firm with expertise in strategy development, organizational design and operations in the
industrials, energy and natural resources sectors.
• March – Mercer acquired GeFi Assurances, a France-based brokerage and consulting firm
specializing in collective corporate social protection.
•
•
September – Oliver Wyman acquired Booz Allen Hamilton's strategy consulting business serving
the Middle East and North Africa.
November – Oliver Wyman acquired the Avascent Group Ltd, an aerospace and defense
management consulting firm focused on the corporate and private equity sectors based in the
U.S., U.K., Canada and France.
Total purchase consideration for acquisitions made during 2022 was $705 million, which consisted of cash
paid of $579 million, deferred purchase and estimated contingent consideration of $120 million, and the
fair value of a previously-held equity method investment of $6 million. Contingent consideration
arrangements are based primarily on earnings before interest, tax, depreciation and amortization
("EBITDA") or revenue targets over a period of 2 to 4 years. In 2022, the Company also paid $126 million
of deferred purchase consideration and $70 million of contingent consideration related to acquisitions
made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to
adjustment until purchase accounting is finalized.
The following table presents the preliminary allocation of purchase consideration to the assets acquired
and liabilities assumed in 2022, based on the estimated fair values for the acquisitions as of their
respective acquisition dates.
Acquisitions for the Year Ended December 31, 2022
(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
$
$
$
$
579
120
6
705
25
6
32
3
460
228
3
7
1
765
35
6
7
7
55
5
705
Note: Amounts in the table above primarily reflect the acquisition of HMS Insurance Associates, Inc.
81
The purchase price allocation for assets acquired and liabilities assumed is based on estimates that are
preliminary in nature and subject to adjustments, which could be material. Any necessary adjustments
must be finalized during the measurement period, which for a particular asset, liability, or non-controlling
interest ends once the acquirer determines that either (1) the necessary information has been obtained or
(2) the information is not available. However, the measurement period for all items is limited to one year
from the acquisition date.
Items subject to change include:
•
•
•
•
amounts of intangible assets, fixed assets, capitalized software assets and right-of-use assets,
subject to finalization of valuation efforts;
amounts for contingencies, pending the finalization of the Company’s assessment of the portfolio
of contingencies;
amounts for deferred tax assets and liabilities pending the finalization of valuations of the assets
acquired, liabilities assumed and associated goodwill discussed below; and
amounts for income tax assets, receivables and liabilities, pending the filing of the acquired
companies' pre-acquisition income tax returns and receipt of information from taxing authorities
which may change certain estimates and assumptions used.
The estimation of fair value requires numerous judgments, assumptions and estimates about future
events and uncertainties, which could materially impact these values, and the related amortization, where
applicable, in the Company’s results of operations.
The following table provides information about other intangible assets acquired in 2022:
(In millions)
Customer relationships
Other
Total other intangible assets
Amount
219
9
228
$
$
Weighted Average
Amortization Period
12.7 years
2.3 years
The consolidated statements of income include the results of operations of acquired companies since
their respective acquisition dates. The consolidated statement of income for 2022 includes approximately
$58 million of revenue and an operating loss of $5 million related to acquisitions made in 2022. The
consolidated statement of income for 2021 includes approximately $114 million of revenue and $3 million
of operating income related to acquisitions made in 2021, and the consolidated statement of income for
2020 includes approximately $169 million of revenue and $11 million of operating income related to
acquisitions made in 2020.
Pending transactions with Westpac Banking Corporation
In May 2022, the Company entered into an agreement with Westpac Banking Corporation ("Westpac") to
acquire one of its financial advisory businesses, Advance Asset Management. Westpac will also transfer
BT Financial Group's personal and corporate pension funds to the Mercer Super Trust managed by
Mercer Australia (collectively, the "Transaction"). The Transaction is expected to be completed in the first
half of 2023, subject to regulatory approvals. In 2022, the Company incurred approximately $21 million of
integration expenses, primarily for technology, consulting, legal and people related costs.
Dispositions
In April 2022, Mercer sold its U.S. affinity business that provided insurance marketing, brokerage and
administration to association and affinity groups for cash proceeds of approximately $140 million and
recorded a net gain of $112 million which is included in revenue in the consolidated statements of income.
In addition, in 2022, the Company sold certain businesses in the U.K., the Czech Republic, Brazil and
Belgium for cash proceeds of approximately $15 million and recorded a net gain of $15 million.
The cash proceeds received were partially offset by $36 million primarily related to cash and cash
equivalents held in a fiduciary capacity in the disposed businesses.
82
Deconsolidation of Russia
In the first quarter of 2022, the Company concluded that it does not meet the accounting criteria for
control over its wholly-owned Russian subsidiaries due to the evolving trade and economic sanctions
against Russia and the related Russian counter sanctions. These sanctions included restrictions on
payments to and from Russian companies and reduced currency access through official exchange
markets that have significantly impacted the Company's ability to effectively manage and operate its
Russian businesses.
As a result, the Company deconsolidated its Russian businesses effective as of the end of the first
quarter, and recorded a loss of $39 million included in revenue in the consolidated statements of income.
The loss consisted of the reclassification of cumulative translation losses from accumulated other
comprehensive income and a charge for the write-off of the Russia businesses' net assets.
In June 2022, the Company entered into a definitive agreement to exit its businesses in Russia and
transfer ownership to local management, pending regulatory approvals.
Prior year acquisitions
The Risk and Insurance Services segment completed 8 acquisitions in 2021:
•
•
•
•
April – MMA acquired PayneWest Insurance, Inc., a Montana-based full-service broker providing
business insurance, surety, employee benefits and personal insurance services to companies
and individuals, and The Pryor Group, LLC, a Texas-based full-service broker providing business
insurance with a specialty in quick service restaurants and the personal lines of franchise owners.
September – MMA acquired Vaaler Insurance, Inc., a North Dakota-based insurance broker
providing business insurance, employee health and benefits, and personal lines solutions, with
specialized expertise in the construction, education, and healthcare industries.
November – MMA acquired Pelnik Insurance, a North Carolina-based full-service broker providing
business insurance, employee health and benefits, and private client services to midsize
businesses and individuals throughout the Mid-Atlantic, Southwest Truck Insurance Agency, Inc.,
a Texas-based broker providing business insurance for the trucking industry, serving clients in the
U.S., and Mexico and InSource Insurance Group LLC, a Texas-based full-service broker
providing business insurance, employee health and benefits, private client and surety services to
the oil and gas, construction, manufacturing, and transportation industries.
December – Marsh acquired Services Assurance Monétique (SAM), a France-based affinity
insurance broker specializing in bank and retail insurance markets and increased its ownership
interest in Marsh India Insurance Broker Private Limited ("Marsh India") from 49% to 92%.
The Consulting segment completed 1 acquisition in 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 in 2021 was approximately $1.4 billion, which
consisted of cash paid of $888 million and 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 EBITDA or revenue targets over
periods of 2 to 4 years. The fair value of the contingent consideration was based on projected revenue
and earnings of the acquired entities. In 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.
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 and consolidation 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.
83
Prior year dispositions
In 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.
Pro-Forma Information
The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company in
2022, 2021 and 2020. 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, 2021 and reflects
acquisitions made in 2021 as if they occurred on January 1, 2020. The 2020 information includes 2020
acquisitions as if they occurred on January 1, 2019. The un-audited 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.
For the Years Ended December 31,
(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
2022
$ 20,880
$ 3,078
6.16
$
6.10
$
2021
$ 20,220
$ 3,177
6.27
$
6.20
$
2020
$ 17,586
$ 2,042
4.03
$
3.99
$
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 the third quarter of
2022, the Company completed a qualitative impairment assessment and concluded that goodwill was not
impaired. 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.
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 had no indefinite lived identified intangible assets at
December 31, 2022 and 2021.
84
Changes in the carrying amount of goodwill are as follows:
(In millions)
Balance as of January 1
Goodwill acquired
Other adjustments (a)
Balance at December 31,
2022
16,317
460
(526)
16,251
$
$
2021
15,517
1,045
(245)
16,317
$
$
(a) Primarily reflects the impact of foreign exchange and dispositions.
The goodwill arising from acquisitions in 2022 and 2021 consists largely of the synergies and economies
of scale expected from combining the operations of the Company and the acquired entities and the
trained assembled workforce acquired.
The goodwill acquired in 2022 included approximately $348 million and $64 million in the Risk and
Insurance Services and Consulting segments, respectively, which is deductible for tax purposes. The
goodwill acquired in 2021 included approximately $96 million, primarily related to the Risk and Insurance
Service segment, which is deductible for tax purposes.
Goodwill allocable to the Company’s reportable segments as of December 31, 2022, is $12.5 billion for
Risk and Insurance Services and $3.8 billion for Consulting.
The gross cost and accumulated amortization of other intangible assets at December 31, 2022 and 2021
are as follows:
(In millions)
2022
2021
Customer relationships
Other (a)
Other intangible assets
Gross
Cost
$ 3,993 $
360
$ 4,353 $
Accumulated
Amortization
Net
Carrying
Amount
Gross
Cost
Accumulated
Amortization
1,508 $
308
1,816 $
2,485 $ 4,066 $
52
365
2,537 $ 4,431 $
Net
Carrying
Amount
1,334 $ 2,732
78
1,621 $ 2,810
287
(a) Primarily non-compete agreements, trade names and developed technology.
Aggregate amortization expense was $338 million, $365 million, and $351 million for the years ended
December 31, 2022, 2021 and 2020, respectively. The estimated future aggregate amortization expense
is as follows:
For the Years Ended December 31,
(In millions)
2023
2024
2025
2026
2027
Subsequent years
Total future amortization
$
$
327
307
274
253
249
1,127
2,537
85
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
2022
2021
2020
1,468 $
2,614
4,082 $
1,590 $
2,618
4,208 $
1,075
1,718
2,793
262 $
653
123
1,038
38
(91)
10
(43)
995 $
251 $
714
132
1,097
(40)
(12)
(11)
(63)
1,034 $
172
456
79
707
40
(14)
14
40
747
$
$
$
$
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
(a) Net of valuation allowances of $5 million in 2022 and $2 million in 2021.
(b) Net of valuation allowances of $160 million in 2022 and $144 million in 2021.
(c) Net of valuation allowances of $69 million in 2022 and $88 million in 2021.
86
2022
2021
670 $
275
172
285
34
25
1,461 $
543 $
510
408
107
57
1,625 $
647
293
293
183
29
32
1,477
624
506
403
98
32
1,663
$
$
$
$
December 31,
(In millions)
Balance sheet classifications:
Deferred tax assets
Other liabilities
2022
2021
$
$
358 $
522 $
551
737
The amount of cumulative undistributed earnings that are indefinitely reinvested in non-U.S. subsidiaries
is approximately $830 million as of December 31, 2022. 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 $80 million.
Future U.S. federal tax costs related to basis differences in non-U.S. subsidiaries would primarily be
realized through the U.S. Global Intangible Low-Taxed Income ("GILTI") minimum tax regime. The
Company elected to recognize GILTI tax costs as a period cost and 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
2022
21.0 %
2.7
0.7
—
—
(0.7)
0.1
0.6
24.4 %
2021
21.0 %
2.3
0.1
2.6
(1.5)
(0.7)
0.1
0.7
24.6 %
2020
21.0 %
2.5
2.3
—
—
(1.4)
1.1
1.2
26.7 %
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 rates in all periods include a valuation allowance for certain tax
credits, the impact of uncertain tax positions, and certain tax planning benefits. The tax rate in 2021 also
included the effect of a statutory rate change in the U.K. and 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%. The Company does not intend to dispose
the business and has indefinitely reinvested this gain.
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 a net decrease of $1 million in
2022 and increases of $36 million and $72 million in 2021, and 2020, respectively. Adjustments of the
beginning of the year balances of valuation allowances decreased income tax expense by $5 million in
2022. Adjustments of the beginning of the year valuation allowances increased tax expense by $2 million
in 2021 and decreased income tax expense by $14 million in 2020. Approximately 14% of the Company’s
net operating loss carryforwards expire from 2023 through 2038, and others are unlimited. The potential
tax benefit from net operating loss carryforwards at the end of 2022 comprised of federal, state and local,
and non-U.S. tax benefits of $5 million, $13 million, and $342 million, respectively, before reduction for
valuation allowances.
87
Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the years ended
December 31, 2022, 2021 and 2020:
(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 limitations
Balance at December 31,
2022
94
1
15
(2)
(2)
(9)
97
$
$
2021
98
2
11
(1)
(1)
(15)
94
$
$
2020
86
9
25
(9)
(4)
(9)
98
$
$
Of the total unrecognized tax benefits at December 31, 2022, 2021, and 2020, $94 million, $87 million
and $90 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,
2022, 2021 and 2020, before any applicable federal benefit, was $48 million, $45 million, and $40 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. In 2021, the IRS
concluded its examination of the Company’s 2017, 2018, and 2019 tax returns. The Company was
accepted into the Bridge phase of the CAP program for tax years 2020 and 2021, and generally will not
be audited by the IRS for those years. In 2022, the IRS began its pre-filing examination of the Company's
2022 tax year.
New York is a significant tax jurisdiction for the Company. New York State and New York City have
continuing examinations underway in 2022 and 2021 for various entities covering the years 2010 through
2018. The New York State audits for 2010-2012 were finalized in 2022.
We conduct business through multiple legal entities in significant jurisdictions outside the U.S. 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 U.S. are summarized in the table below:
Tax Audit (Years)
Jurisdiction:
France
Germany
Hong Kong
Italy
Singapore
United Kingdom
Initiated in 2022
Ongoing
2013-2016
2015-2016
2017-2021
2016-2020
2018-2021
2020
Concluded
2017, 2018 during 2022
2017-2018 during 2022
2019 during 2022
2017 during 2022
2018-2020 during 2022
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 could
decrease up to approximately $42 million within the next 12 months due to settlement of audits and
expiration of statutes of limitations.
88
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
2022
2021
2022
2021
2.28 %
4.57 %
3.34 %
5.16 %
1.92 %
4.73 %
1.85 %
2.28 %
2.36 %
—
—
4.92 %
2.42 %
—
—
2.36 %
3.16 %
2.16 %
—
—
*There are no rate of compensation increase assumptions 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 50% equities and equity alternatives and 50% fixed
income. At December 31, 2022, the actual allocation for the U.S. plans was 61% equities and equity
alternatives and 39% fixed income. The target asset allocation for the U.K. plans, which comprise
approximately 79% of non-U.S. plan assets, is 14% equities and equity alternatives and 86% fixed
income. At December 31, 2022, the actual allocation for the U.K. plans was 16% equities and equity
alternatives and 84% 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 net benefit (credit) or cost of the Company's defined benefit and other post-retirement plans is
measured on an actuarial basis using various methods and assumptions. The components of the net
benefit (credit) or cost for the years 2022, 2021 and 2020 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
Net benefit (credit) cost
2022
2021
2020
2022
2021
2020
$
28 $
38 $
36 $ — $
1 $ —
389
341
421
(778)
(832)
(844)
1
149
—
206
—
161
(211)
(247)
(226)
—
—
2
2
—
5
——
1
3
3
—
(2)
1
2
—
—
2
—
(2)
1
2
—
—
—
$ (209) $ (240) $ (222) $
2 $
2 $
3
—
(2)
—
1
—
—
—
1
89
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)
2022
2021
2020
2022
2021
2020
Compensation and benefits expense
$
28 $
38 $
36 $ — $
1 $ —
Other net benefit (credit) cost
Net benefit (credit) cost
Plan Assets
(237)
(278)
(258)
2
1
$ (209) $ (240) $ (222) $
2 $
2 $
1
1
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 46%-54% for both equities and equity
alternatives, and for fixed income. For the U.K. plans, the category ranges are 11%-17% for equities and
equity alternatives, and 83%-89% for fixed income. Asset allocation is frequently monitored 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.
90
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
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
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 benefit (credit) cost
Net amount recognized in consolidated balance sheet
Accumulated benefit obligation at December 31
U.S. Pension
Benefits
U.S. Post-retirement
Benefits
2022
2021
2022
2021
$
6,594 $ 6,914 $
28 $
193
—
—
(1,625)
(286)
184
—
1
(227)
(278)
4,876 $ 6,594 $
5,537 $ 5,100 $
(1,005)
30
—
680
35
—
(286)
(278)
4,276 $ 5,537 $
(600) $ (1,057) $
(31) $
(31) $
(1,026)
(569)
(600) $ (1,057) $
1
3
—
(3)
(7)
22 $
2 $
—
4
3
(7)
2 $
(20) $
(1) $
(19)
(20) $
(1) $
(1) $
(1,419)
(1,777)
— $
8
$
$
$
$
$
$
$
$ (1,420) $ (1,778) $
8 $
820
721
$
$
(600) $ (1,057) $
4,876 $ 6,594 $
(28)
(20) $
— $
31
1
4
—
(1)
(7)
28
2
—
3
4
(7)
2
(26)
(1)
(25)
(26)
—
3
3
(29)
(26)
—
91
(In millions)
Reconciliation of net actuarial (loss) gain recognized in
accumulated other comprehensive income (loss):
Beginning balance
Recognized as component of net benefit (credit) cost
Changes in plan assets and benefit obligations
recognized in other comprehensive income (loss):
Other
Liability experience
Asset experience
Total gain recognized as change in plan assets and
benefit obligations
U.S. Pension
Benefits
U.S. Post-retirement
Benefits
2022
2021
2022
2021
$ (1,777) $ (2,446) $
74
—
1,625
(1,341)
284
90
(1)
227
353
579
3 $
—
2
3
—
5
3
(1)
—
1
—
1
3
Net actuarial (loss) gain, December 31
$ (1,419) $ (1,777) $
8 $
For the Years Ended December 31,
(In millions)
Total recognized in net benefit (credit) cost and
other comprehensive (income) loss
U.S. Pension
Benefits
2021
2022
2020
U.S. Post-retirement
Benefits
2021
2022
2020
$ (427) $ (722) $ 272 $
(4) $ — $
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
2022
2021
2022
2021
3.00 %
6.88 %
5.53 %
2.73 %
7.03 %
3.00 %
2.56 %
—
5.31 %
2.18 %
—
2.56 %
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 $4.9 billion and $4.3 billion, respectively, as
of December 31, 2022 and $6.6 billion and $5.5 billion, respectively, as of December 31, 2021. The
decrease in the benefit obligation in 2022 compared to 2021 reflects the increase in discount rates used
to measure plan liabilities.
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 $4.9 billion and $4.3 billion, respectively, as of December 31,
2022 and $6.6 billion and $5.5 billion, respectively, as of December 31, 2021. The decrease in the benefit
obligation in 2022 compared to 2021 reflects the increase in discount rates used to measure plan
liabilities.
As of December 31, 2022, 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
7.8% of that plan's assets as of December 31, 2022.
92
The components of the net 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 benefit (credit) cost
2020
2022
Pension
Benefits
2021
$ 193 $ 184 $ 213 $
(327)
90
(53) $ (60) $
(336)
74
(69) $
(345)
72
$
Post-retirement
Benefits
2021
2022
1 $
—
—
1 $ — $
1 $
—
(1)
2020
1
—
—
1
The assumed health care cost trend rate for Medicare eligibles and non-Medicare eligibles is
approximately 6.4% in 2022, gradually declining to 4% in 2046. 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 non-qualified U.S. plans in 2023. 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. The
Company was not required to and made no contributions to its U.S. qualified plans in 2022, and is not
required to make any contributions in 2023.
93
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
2022
2021
Non-U.S.
Post-retirement Benefits
2021
2022
12,057 $
28
196
3
2
(3,953)
—
(22)
—
(342)
(1,083)
6,886 $
13,855 $
1
(3,609)
(22)
139
3
(342)
(1,261)
8,764 $
1,878 $
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 $
2,127 $
(6)
(243)
1,878 $
2,269 $
(6)
(465)
1,798 $
(16) $
(18) $
(2,610)
(2,904)
68 $
—
2
—
—
(14)
—
—
—
(2)
(6)
48 $
— $
—
—
—
2
—
(2)
—
— $
(48) $
— $
(3)
(45)
(48) $
5 $
6
(2,626) $
(2,922) $
11 $
4,504
4,720
(59)
1,878 $
6,776 $
1,798 $
11,830 $
(48) $
— $
73
1
1
—
—
(4)
—
—
—
(3)
—
68
—
—
—
—
3
—
(3)
—
—
(68)
—
(3)
(65)
(68)
7
(10)
(3)
(65)
(68)
—
(In millions)
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Employee contributions
Plan combination
Actuarial (gain) loss
Plan amendments
Effect of settlement
Effect of curtailment
Benefits paid
Foreign currency changes
Benefit obligation, December 31
Change in plan assets:
Fair value of plan assets at beginning of year
Plan combination
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 benefit (credit) cost
Net asset (liability) recognized in consolidated
balance sheets, December 31
Accumulated benefit obligation, December 31
$
$
$
$
$
$
$
$
$
$
$
94
(In millions)
Reconciliation of prior service (cost) credit
recognized in accumulated other comprehensive
income (loss):
Beginning balance
Recognized as component of net benefit (credit)
cost:
Amortization of prior service credit
Effect of curtailment
Total recognized as component of net benefit (credit)
cost
Changes in plan assets and benefit obligations
recognized in other comprehensive income:
Plan amendments
Exchange rate adjustments
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 benefit (credit)
cost:
Amortization of net loss
Effect of settlement
Total recognized as component of net benefit
(credit) cost
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) gain, December 31
Non-U.S. Pension
Benefits
2022
2021
Non-U.S.
Post-retirement Benefits
2021
2022
$
(18) $
(13) $
7 $
9
—
—
—
—
2
2
—
2
(16) $
(7)
—
(18) $
$
(2)
—
(2)
—
—
5 $
(2)
—
(2)
—
—
7
Non-U.S. Pension
Benefits
2022
2021
Non-U.S.
Post-retirement Benefits
2021
2022
$ (2,904) $ (3,467) $
(10) $
(16)
75
2
77
3,953
(4,051)
—
(98)
315
116
5
121
617
(199)
2
420
22
$ (2,610) $ (2,904) $
1
—
1
14
—
—
14
1
6 $
2
—
2
4
—
—
4
—
(10)
For the Years Ended December 31,
(In millions)
Total recognized in net benefit (credit) cost
and other comprehensive (income) loss
Non-U.S. Pension
Benefits
2021
2022
2020
Non-U.S. Post-retirement
Benefits
2021
2022
2020
$ (436) $ (745) $ 261 $
(13) $
(2) $
13
95
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
2022
2021
2022
2021
1.89 %
3.64 %
3.34 %
4.89 %
1.49 %
3.89 %
2.84 %
1.89 %
2.28 %
1.96 %
—
—
4.73 %
—
—
2.28 %
3.16 %
3.34 %
—
—
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 $935 million and $718 million, respectively,
as of December 31, 2022 and $1.6 billion and $1.2 billion, respectively, as of December 31, 2021.
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 $1.0 billion and $723 million, respectively, as of
December 31, 2022 and $1.7 billion and $1.2 billion, respectively, as of December 31, 2021. The
decrease in the benefit obligation in 2022 compared to 2021 reflects an actuarial gain primarily due to the
increase in discount rates used to measure plan liabilities.
Components of Net Benefit (Credit) or Cost
The components of the net benefit (credit) or 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) cost
Settlement loss
Curtailment loss
Special termination benefits
Non-U.S. Pension
Benefits
Non-U.S. Post-retirement
Benefits
2022
2021
2020
2022
2021
2020
$
28 $
38 $
36 $
— $
1 $
196
(442)
1
75
157
(505)
—
116
208
(499)
—
89
(142)
(194)
(166)
2
—
—
5
2
—
3
——
1
2
—
(2)
1
1
—
—
1
—
(2)
2
2
—
—
—
—
2
—
(2)
—
—
—
—
—
—
Net benefit (credit) cost
$ (140) $ (187) $ (162) $
1 $
2 $
The assumed health care cost trend rate was approximately 4.91% in 2022, gradually declining to 4.45%
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 $76 million to its non-U.S. pension plans in 2023.
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
affected by alternative uses of the Company’s cash flows, including dividends, investments and share
repurchases.
96
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.
In 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 $103 million to the JLT section in 2022
and is expected to make contributions totaling approximately $39 million in 2023.
For the MMC U.K. Pension Fund, excluding the JLT section, an agreement was reached with the trustee
in the fourth quarter of 2022 based on the surplus funding position at December 31, 2021. In accordance
with the agreement no deficit funding is required until 2026. The funding level will be re-assessed during
2025, as part of the December 31, 2024 actuarial valuation, to determine if contributions are required in
2026. In November 2022, as part of a long-term strategy to have greater influence over asset allocation
and overall investment decisions, the Company renewed its agreement to support annual deficit
contributions by the U.K. operating companies under certain circumstances, up to £450 million (or
$541 million) over a 7 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)
2023
2024
2025
2026
2027
2028-2032
Pension
Benefits
Post-retirement
Benefits
U.S.
312
324
337
343
347
1,760
$
$
$
$
$
$
Non-U.S.
337
$
344
$
352
$
360
$
371
$
2,054
$
$
$
$
$
$
$
U.S.
Non-U.S.
3
$
3
$
3
$
3
$
3
$
15
$
3
3
3
2
2
8
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 investments valued using net
asset value ("NAV") 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. Refer to Note 10, Fair Value
Measurements, for further description of fair value hierarchy leveling.
97
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, 2022 and 2021:
Fair Value Measurements at December 31, 2022
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
NAV
Total
$
43 $
— $
— $
3,995 $
—
527
—
15
—
609
331
10
2,402
36
—
4,662
—
3
—
11
—
1
—
—
—
—
—
308
—
—
1,433
—
261
—
—
—
4,038
2,402
564
1,433
4,677
261
612
331
329
$
$
1,535 $
7,114 $
309 $
5,689 $
14,647
—
(1,605)
—
—
(1,605)
1,535 $
5,509 $
309 $
5,689 $
13,042
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
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
98
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, 2022 and December 31, 2021:
Assets
(In millions)
Other
investments
Corporate stocks
Total assets
Assets
(In millions)
Other
investments
Corporate stocks
Total assets
Fair Value,
January 1,
2022
Purchases Sales
Unrealized
Gain/
(Loss)
Realized
Gain/
(Loss)
Exchange
Rate
Impact
Transfers
in/(out)
and
Other
Fair
Value,
December
31, 2022
$
$
662
$
1
663
$
18
—
18
$ (19) $
(302) $
— $
(51) $
— $
—
—
—
—
—
$ (19) $
(302) $
— $
(51) $
— $
308
1
309
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
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
99
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 $677
million of the 401(k) Plans' assets at December 31, 2022 and $742 million at December 31, 2021 were
invested in the Company’s common stock. If a participant does not choose an investment direction for
their 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 $161 million in 2022, $150 million in 2021 and $145 million in 2020. In addition, the Company has
significant defined contribution plans in the U.K. 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 assumed responsibility for the defined contribution section of the JLT
U.K. plan. Members of the JLT U.K. plan defined contribution section transferred to the MMC U.K.
Pension Fund defined contribution section in 2021. The cost of the U.K. defined contribution plan was
$140 million, $141 million and $121 million in 2022, 2021 and 2020, 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
100
of shares issued in connection with full-value awards may not exceed 12.5 million shares. Full-value
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 certain employees as part of their annual
total compensation. Senior executives are granted options and PSU awards. In addition, a small group of
other employees are granted options, PSU and RSU awards and a larger group of other employees are
granted RSU awards. 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 considers 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 2022, 2021 and 2020 are as follows:
Risk-free interest rate
Expected life (in years)
Expected volatility
Expected dividend yield
2022
1.88 %
5.8
22.58 %
1.41 %
2021
0.79 %
6.0
23.45 %
1.58 %
2020
1.44 %
6.0
20.33 %
1.53 %
A summary of the status of the Company’s stock option awards as of December 31, 2022 and changes
during the year then ended are presented below:
Balance at January 1, 2022
Granted
Exercised
Forfeited
Balance as of December 31, 2022
Options vested or expected to vest at
December 31, 2022
Options exercisable at
December 31, 2022
Weighted
Average
Exercise
Price
Shares
7,217,125 $
90.17
1,026,615 $ 151.37
77.37
(648,016) $
(62,679) $ 141.68
99.18
7,533,045 $
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic Value
($000)
5.9 years $
494,391
7,458,604 $
98.96
6.1 years $
491,121
4,634,039 $
82.46
4.7 years $
381,622
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 in 2022, 2021 and 2020 was $31.38, $22.25 and $21.09,
respectively. The total intrinsic value of options exercised during the same periods was $56 million, $138
million and $159 million, respectively.
As of December 31, 2022, there was $22 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 1.43 years. Cash received from the exercise of stock options in 2022, 2021
and 2020 was $50 million, $103 million and $72 million, respectively.
101
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.
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 at the end of February
after the three-year performance period is completed. 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 beginning in 2020 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
constituents. The TSR modifier is a market condition with the grant-date fair value determined using a
Monte Carlo simulation model. The Monte Carlo model considers 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 constituents, and the Company’s relative TSR versus S&P 500 constituents
for the brief portion of the three-year performance period prior to the grant date.
The number of shares earned at the end of the three-year vesting period will vary, based on actual
Company financial performance, and for 2020, 2021 and 2022 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 awards granted with the TSR
modifier by the Company in 2022 include:
Risk-Free Interest Rate
Dividend Yield
Volatility
Initial TSR
2022
1.75 %
1.4 %
25.0 %
(12.8)%
A summary of the status of the Company's RSU and PSU awards as of December 31, 2022 and changes
during the period then ended are presented below:
Non-vested balance at January 1, 2022
Granted
Vested
Forfeited
Non-vested balance at December 31, 2022
Restricted Stock Units
Performance Stock Units
Weighted
Average
Grant Date
Fair Value
110.86
152.34
104.56
127.32
135.01
Shares
5,548,462 $
2,048,576 $
(3,173,780) $
(240,563) $
4,182,695 $
Weighted
Average
Grant Date
Fair Value
114.35
151.00
91.12
132.57
133.36
Shares
662,190 $
212,875 $
(208,730) $
(27,357) $
638,978 $
The weighted-average grant-date fair value of the Company's RSU awards granted in 2021 and 2020 was
$120.19 and $118.20, respectively. The weighted-average grant-date fair value of the Company's PSU
awards granted in 2021 and 2020 was $122.77 and $127.71, respectively. The total fair value of the
102
shares distributed in 2022, 2021 and 2020 in connection with the Company's non-option equity awards
was $560 million, $278 million and $290 million, respectively.
The payout of shares in 2022 with respect to the PSU awards granted in 2019 was 195% of target based
on performance for the three-year performance period. In aggregate, 407,203 shares became
distributable in respect to PSUs vested in 2022.
As of December 31, 2022, there was $351 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. In accordance with the current terms of the 1999 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. In accordance with 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 322,999 shares in 2022 and at December 31, 2022, 4,193,759 shares were available for
issuance for the 1999 Plan.
In accordance with 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 113,321 shares in 2022 and there were 920,811
shares available for issuance at December 31, 2022 for 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 measured using Level 1 inputs include exchange-traded equity securities, exchange-
traded mutual funds and money market funds.
Level 2.
Assets and liabilities whose values are based on the following:
a)
b)
c)
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
103
d)
pricing models whose inputs are derived principally from or corroborated by
observable market data through correlation or other means for substantially the
full asset or liability (for example, certain mortgage loans).
Assets and liabilities using Level 2 inputs are related to an equity security.
Level 3.
Assets and liabilities whose values are based on prices, or valuation techniques that
require inputs that are both unobservable and significant to the overall fair value
measurement. These inputs reflect management’s own assumptions about the
assumptions a market participant would use in pricing the asset or liability.
Assets and liabilities measured using Level 3 inputs relate to assets and liabilities for contingent purchase
consideration.
Valuation Techniques
Equity Securities, Money Market 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 2 to 4 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, 2022 and 2021:
(In millions)
Assets:
Identical Assets
(Level 1)
Observable Inputs
(Level 2)
Unobservable Inputs
(Level 3)
Total
12/31/22
12/31/21
12/31/22
12/31/21
12/31/22
12/31/21
12/31/22
12/31/21
Financial instruments owned:
Exchange traded equity securities (a) $
Mutual funds (a)
Money market funds (b)
Other equity investment (a)
Contingent purchase consideration
asset (c)
Total assets measured at fair value
$
Fiduciary Assets:
U.S. treasury bills (d)
Money market funds
Total fiduciary assets measured at
fair value
Liabilities:
$
$
Contingent purchase consideration
liability(e)
$
Total liabilities measured at fair value $
6
$
61
$
— $
— $
— $
— $
6
$
162
146
—
—
314
$
— $
201
192
425
—
—
678
55
527
$
$
—
—
13
—
13
$
—
—
8
—
8
$
—
—
—
3
3
$
—
—
—
5
5
162
146
13
3
$
330
$
691
61
192
425
8
5
— $
— $
— $
— $
— $
—
—
—
—
201
55
527
201
$
582
$
— $
— $
— $
— $
201
$
582
— $
— $
— $
— $
— $
— $
— $
— $
377
377
$
$
352
352
$
$
377
377
$
$
352
352
(a) Included in other assets in the consolidated balance sheets.
(b) Included in cash and cash equivalents in the consolidated balance sheets.
(c) Included in other receivables in the consolidated balance sheets.
(d) Maturity dates of three months or less.
(e) Included in accounts payable and accrued liabilities and other liabilities in the consolidated balance sheets.
The Level 3 assets in the table reflect contingent purchase consideration from the sale of businesses. The
change in the contingent purchase consideration assets from December 31, 2021 is driven by cash
receipts.
104
In 2022 and 2021, there were no assets or liabilities that were transferred between levels.
The following table sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities
for the years ended December 31, 2022 and December 31, 2021.
(In millions)
Balance at January 1,
Net additions
Payments
Revaluation impact
Other (a)
Balance at December 31,
(a) Primarily reflects the impact of foreign exchange.
Long-Term Investments
2022
352
46
(70)
49
—
377
$
$
2021
243
107
(77)
81
(2)
352
$
$
The Company holds investments in public and private companies as well as certain private equity
investments that are accounted for using the equity method of accounting. The carrying value of these
investments was $215 million and $207 million at December 31, 2022 and 2021, respectively.
Investments in Public and Private Companies
The Company has investments in private insurance and consulting companies with a carrying value of
$56 million and $58 million at December 31, 2022 and 2021, respectively. These investments are
accounted for using the equity method of accounting, the results of which are included in revenue in the
consolidated statements of income and the carrying value of which is included in other assets in the
consolidated balance sheets. The Company records its share of income or loss on its equity method
investments, some of which are on a one quarter lag basis. In December 2021, the Company increased
its ownership in Marsh India from 49% to 92%. Prior to the increase in ownership, the Company
accounted for the investment under the equity method of accounting.
Private Equity Investments
The Company's investments in private equity funds were $159 million and $149 million at December 31,
2022 and 2021, 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 line in the consolidated statements of income.
These investments are included in other assets in the consolidated balance sheets. The Company
recorded net investment gains of $18 million, $56 million and $3 million from these investments in 2022,
2021 and 2020, respectively.
The Company has commitments for potential future investments of approximately $160 million in private
equity funds that invest primarily in financial services companies.
Other Investments
At December 31, 2022 and 2021, the Company held certain equity investments with readily determinable
market values of $17 million and $75 million, respectively. In 2022, 2021, and 2020, the Company
recorded mark-to-market investment gains on these investments of $11 million and $5 million, and losses
of $27 million, respectively.
The Company also held investments without readily determinable market values of $42 million and $36
million at December 31, 2022 and 2021, respectively.
In 2022, the Company sold certain of these investments for cash proceeds of approximately $62 million,
including its remaining investment in the common stock of AF, and recorded a net loss of $4 million.
105
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 accumulated other comprehensive loss in the consolidated balance sheets.
The U.S. dollar value of the Euro notes decreased by $82 million in 2022 related to the change in foreign
exchange rates. The Company concluded that the hedge was highly effective and recorded a gain as a
decrease to accumulated other comprehensive loss for the year ended December 31, 2022.
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. The Company’s leases have no restrictions on the
payment of dividends, the acquisition of debt or entering into additional lease obligations. The leases also
do not contain any significant purchase options. Operating leases are recognized on the consolidated
balance sheets as ROU assets and operating lease liabilities based on the present value of the remaining
future minimum payments over the lease term at the commencement date of the lease.
The Company determined that $118 million and $16 million of its ROU assets were impaired and
recorded a charge to the consolidated statements of income in 2022 and 2021, respectively.
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
Weighted-average remaining lease term – real estate
Weighted-average discount rate – real estate leases
(a) Excludes ROU asset impairment charges.
2022
2021
$
$
$
$
343 $
4
133
(17)
463 $
380 $
196 $
8.37 years
2.90 %
374
4
144
(20)
502
412
348
8.87 years
2.72 %
106
Future minimum lease payments for the Company’s operating leases as of December 31, 2022 are as
follows:
(In millions)
2023
2024
2025
2026
2027
Subsequent years
Total future lease payments
Less: imputed interest
Total
Current lease liabilities
Long-term lease liabilities
Total lease liabilities
Real Estate Leases
$
$
$
$
362
324
291
268
232
751
2,228
(251)
1,977
310
1,667
1,977
Note: The above table excludes obligations for leases with original terms of 12 months or less which have
not been recognized as a ROU asset or liability in the consolidated balance sheets.
As of December 31, 2022, the Company had additional operating real estate leases that had not yet
commenced of $33 million. These operating leases will commence over the next 12 months.
107
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 – 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 – 5.750% due 2032
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
Senior notes – 6.250% due 2052
Mortgage – 5.70% due 2035
Other
Less current portion
2022
2021
$
268 $
268
17
17
—
250
599
998
499
587
598
1,499
576
739
397
493
298
495
493
593
1,238
346
492
301
4
11,495
268
11,227 $
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
$
The senior notes in the table above are registered by the Company with the Securities and Exchange
Commission and are not guaranteed.
In October 2022, the Company increased its short-term commercial paper financing program to $2.8
billion from $2.0 billion. The Company had previously increased its short-term commercial financial
program on April 9, 2021, to $2.0 billion from $1.5 billion. The Company had no commercial paper
outstanding at December 31, 2022 and 2021.
Credit Facilities
The Company has a multi-currency unsecured $2.8 billion five-year revolving credit facility (the "Credit
Facility") entered into on April 1, 2021. The interest rate on the Credit Facility is based on LIBOR plus a
fixed margin which varies with the Company’s credit ratings. The Credit Facility expires in April 2026 and
requires the Company to maintain certain coverage and leverage ratios which are tested quarterly. The
Credit Facility includes provisions for determining a LIBOR successor rate in the event LIBOR reference
rates are no longer available or in certain other circumstances which are determined to make using an
alternative rate desirable. As of December 31, 2022 and 2021, the Company had no borrowings under
this facility.
108
In connection with the Credit Facility, the Company terminated its previous multi-currency unsecured
$1.8 billion five-year and its unsecured $1 billion 364-day revolving credit facilities.
In May 2022, the Company secured a $250 million uncommitted revolving credit facility. The facility
expires in May 2023, and has similar coverage and leverage ratios as the Credit Facility. The Company
had no outstanding borrowings under this facility at December 31, 2022.
The Company also maintains other credit facilities, guarantees and letters of credit with various banks
aggregating $514 million at December 31, 2022 and $508 million at December 31, 2021. There were no
outstanding borrowings under these facilities at December 31, 2022 and December 31, 2021.
Senior Notes
In October 2022, the Company issued $500 million of 5.75% senior notes due 2032 and $500 million of
6.25% senior notes due 2052. The Company used the net proceeds from these issuances for general
corporate purposes, and repaid $350 million of 3.30% senior notes in November 2022, with an original
maturity date of March 2023.
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.
Scheduled repayments of long-term debt in 2023 and in the four succeeding years are $268 million, $1.6
billion, $518 million, $1.2 billion and $21 million, 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, 2022
Carrying
Amount
Fair
Value
December 31, 2021
Carrying
Amount
Fair
Value
$
$
268 $
11,227 $
265
10,544
$
$
17 $
10,933 $
17
12,466
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.
14. Restructuring Costs
In the fourth quarter of 2022, the Company initiated activities focused on workforce actions, rationalization
of technology and functional services, and reductions in real estate. The Company incurred $219 million
related to these activities, primarily severance and lease exit charges. Based on current estimates, the
Company anticipates that these activities will continue throughout 2023 and into 2024. However,
additional charges are unlikely to exceed costs incurred in 2022. The Company's plans are still being
finalized, which may change the expected timing, estimates of expected costs and related savings, as the
Company continues to refine its detailed plans for each business and location.
Restructuring activities also include charges related to improving the Company's global information
technology and HR functions, JLT integration costs, and improving efficiencies and client services related
to the Marsh operational excellence program. Expenses also reflect additional lease related exit charges
of $89 million in the Risk and Insurance Services segment for a legacy JLT U.K. location.
In 2022, the Company incurred costs related to these initiatives of $427 million, reflecting $254 million in
RIS, $77 million in Consulting, and $96 million and in Corporate.
109
In 2021, the Company incurred restructuring costs of $163 million, reflecting $84 million in RIS,
$48 million in Consulting, and $31 million in Corporate.
Details of the restructuring activity from January 1, 2021 through December 31, 2022, are as follows:
(In millions)
Liability at 1/1/21
2021 charges
Cash payments
Non-cash charges
Liability at 12/31/21
2022 charges
Cash payments
Non-cash charges
Liability at 12/31/22
$
$
Severance
$
Real Estate
Related Costs (a)
51
31
(26)
(22)
34
195
(25)
(148)
56
52 $
38
(55)
—
35 $
111
(58)
—
88 $
$
Information
Technology
2
$
23
(25)
—
— $
15
(6)
(9)
— $
$
$
Consulting
and Other
Outside
Services
Total
$
1
71
(72)
—
— $
106
(104)
—
2
$
106
163
(178)
(22)
69
427
(193)
(157)
146
(a) Includes ROU and fixed asset impairments and other related costs.
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
On March 23, 2022, the Board of Directors of the Company authorized an additional $5 billion in share
repurchases. This is in addition to the Company's existing share repurchase program, which had
approximately $1.3 billion of remaining authorization as of December 31, 2021.
In 2022, the Company repurchased 12.2 million shares of its common stock for $1.9 billion. The Company
remains authorized to repurchase up to approximately $4.3 billion in shares of its common stock. There is
no time limit on the authorization. In 2021, the Company repurchased 7.9 million shares of its common
stock for $1.2 billion.
The Company issued approximately 3.5 million and 3.8 million shares related to stock compensation and
employee stock purchase plans during the years ended December 31, 2022 and 2021, 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. 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 utilizes 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
110
adjusted as developments warrant. In many cases, the Company has not recorded a liability, other than
for legal fees to defend the claim, because we are unable, at the present time, to make a determination
that a loss is both probable and reasonably estimable. To the extent that expected losses exceed our
deductible in any policy year, the Company also records an asset for the amount that we expect to
recover under any available third-party insurance programs. The Company has varying levels of third-
party insurance coverage, with policy limits and coverage terms varying significantly by policy year.
Our activities are regulated under the laws of the U.S. and its various states, the U.K., the E.U. 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 March 2022, the U.S.
Department of Justice (DOJ) issued a declination letter declining to pursue any charges against
any JLT entity and seeking disgorgement of $29 million in alleged gross profits on this account.
As previously disclosed, the Company recorded a charge for this amount in the fourth quarter of
2021. In addition, in March 2022, the Colombian Superintendecia de Sociedades (SS) concluded
its investigation of this matter and notified JLT of its intention to seek $2 million in civil penalties
which was recorded in the first quarter of 2022. The SS issued its final resolution in May 2022. In
June 2022, JLT reached an agreement to settle the investigation by the U.K. Financial Conduct
Authority (FCA) for £7.9 million (or $11 million) in civil penalties which concluded the FCA’s
investigation into this matter, and the Company recorded a charge for this amount in the second
quarter of 2022.
From 2014, Marsh Ltd. was engaged by Greensill Capital (UK) Limited as its insurance broker.
Marsh Ltd. placed a number of trade credit insurance policies for Greensill. On March 1, 2021,
Greensill filed an action against certain of its trade credit insurers in Australia seeking a
mandatory injunction compelling these insurers to renew coverage under expiring policies. Later
that day, the Australian court denied Greensill’s application. Since then, a number of Greensill
entities have filed for, or been subject to, insolvency proceedings, and several litigations and
investigations have been commenced in the U.K., Australia, Germany, Switzerland and the U.S.
Consulting Segment
•
In 2014, the FCA conducted an industry-wide review of the suitability of financial advice provided
to individuals by a number of companies, including JLT, relating to enhanced transfer value
("ETV") defined benefit pension transfers. In January 2015, the FCA notified JLT that it was
commissioning a Skilled Person review of ETV pension transfer advice given by JLT and a
business acquired by JLT in 2012. Following the Skilled Person review, which took place between
2015 and 2018, JLT engaged a compliance consulting firm to conduct an analysis of
approximately 14,000 individual files to assess the suitability of the advice provided and, where
appropriate, the amount of redress to be paid. In February 2019, prior to the completion of its
acquisition by the Company, JLT recorded a gross liability of £59 million (or $77 million). This
preliminary estimate by JLT reflected projected redress amounts based on the limited number of
files examined as part of the Skilled Person's review and report. Thereafter, the FCA expanded
111
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 in 2021 and 2022 reduced the
recorded liability to £5 million (or $6 million) as of December 31, 2022. The suitability review and
calculation redress for affected costumers is now complete, and redress payments have been
made. In July 2022, the FCA notified JLT that it had closed its review of this matter. This gross
liability has been, and we anticipate will continue to be, partially offset by a contractual indemnity
obligation and insurance recoveries from third-party E&O insurers.
At this time, we are unable to predict the likely timing, outcome or ultimate impact of the foregoing
matters. Adverse determinations in one or more of these matters could have a material impact on the
Company's consolidated results of operations, financial condition or cash flows in a future period.
Other Contingencies-Guarantees
In connection with its acquisition of U.K.-based Sedgwick Group in 1998, the Company acquired several
insurance underwriting businesses that were already in run-off, including River Thames Insurance
Company Limited ("River Thames"), which the Company sold in 2001. Sedgwick guaranteed payment of
claims on certain policies underwritten through the Institute of London Underwriters (the "ILU") by River
Thames. The policies covered by this guarantee are partly reinsured by a related party of River Thames.
Payment of claims under the reinsurance agreement is collateralized by funds withheld by River Thames
from the reinsurer. To the extent River Thames or the reinsurer is unable to meet its obligations under
those policies, a claimant may seek to recover from the Company under the guarantee.
From 1980 to 1983, the Company owned indirectly the English & American Insurance Company ("E&A"),
which was a member of the ILU. The ILU required the Company to guarantee a portion of E&A's
obligations. After E&A became insolvent in 1993, the ILU agreed to discharge the guarantee in exchange
for the Company's agreement to post an evergreen letter of credit that is available to pay claims by
policyholders on certain E&A policies issued through the 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.
112
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 restructuring costs but not the Company’s corporate-level expenses. Revenues are
attributed to geographic areas on the basis of where the services are performed.
Selected information about the Company’s segments and geographic areas of operation are as follows:
For the Years Ended December 31,
(In millions)
2022 –
Risk and Insurance Services
Consulting
Total Segments
Corporate/Eliminations
Total Consolidated
2021 –
Risk and Insurance Services
Consulting
Total Segments
Corporate/Eliminations
Total Consolidated
2020 –
Risk and Insurance Services
Consulting
Total Segments
Corporate/Eliminations
Total Consolidated
Revenue
Operating
Income
(Loss)
Total
Assets
Depreciation
and
Amortization
Capital
Expenditures
$ 12,645 (a) $
8,139 (b)
20,784
(64)
$ 20,720
$
$ 12,085 (a) $
7,789 (b)
19,874
(54)
$ 19,820
$
$ 10,337 (a) $
6,976 (b)
17,313
(89)
$ 17,224
$
3,089
1,553
4,642
(362)
4,280
3,080
1,504
4,584
(272)
4,312
2,346
994
3,340
(274)
3,066
$ 22,776 (c) $
10,032 (d)
32,808
646 (e)
$ 33,454
$
$ 21,996 (c) $
10,346 (d)
32,342
2,046 (e)
$ 34,388
$
$ 20,612 (c) $
9,571 (d)
30,183
2,866 (e)
$ 33,049
$
469
158
627
92
719
505
171
676
71
747
500
174
674
67
741
$
$
$
$
$
$
283
109
392
78
470
214
109
323
83
406
170
107
277
71
348
(a) Includes inter-segment revenue of $5 million in each of 2022, 2021 and 2020, interest income on fiduciary funds of
$120 million, $15 million and $46 million in 2022, 2021 and 2020, respectively, and equity method income of $12
million, $31 million and $27 million in 2022, 2021 and 2020, respectively. Revenue in 2022 also includes the loss on
deconsolidation of the Russian businesses of $27 million. Revenue in 2021 includes the gain on the consolidation
of Marsh India of $267 million and a net gain on disposition of business of approximately $50 million.
(b) Includes inter-segment revenue of $59 million, $49 million and $84 million in 2022, 2021 and 2020, respectively,
and equity method income of $1 million in 2022 and $5 million in 2020, respectively. Revenue in 2022, also
includes a net gain on the sale of the Mercer U.S. affinity business of $112 million, partially offset by the loss on
deconsolidation of the Russian businesses of $12 million.
(c) Includes equity method investments of $50 million, $53 million and $165 million at December 31, 2022, 2021 and
2020, respectively.
(d) Includes equity method investments of $6 million at December 31, 2022 and $5 million at December 31, 2021 and
2020.
(e) Corporate assets primarily include insurance recoverables, pension related assets, the owned portion of the
Company headquarters building and intercompany eliminations.
113
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
2022
2021
2020
$
10,585
2,060
12,645
$
10,214
1,871
12,085
$
8,628
1,709
10,337
5,345
2,794
8,139
20,784
(64)
20,720
$
5,254
2,535
7,789
19,874
(54)
19,820
$
4,928
2,048
6,976
17,313
(89)
17,224
$
2022
2021
2020
$ 10,215 (a) $
3,114
3,223 (b)
2,537
1,695
20,784
(64)
$ 20,720
9,343
3,130 (c)
3,219
2,617 (d)
1,565
19,874
(54)
$ 19,820
$
8,168
2,818
2,881
2,093
1,353
17,313
(89)
$ 17,224
(a) Revenue in 2022 includes a net gain from the sale of the Mercer U.S. affinity business of $112 million.
(b) Revenue in 2022 includes the loss on deconsolidation of the Company's Russian businesses at Marsh and Oliver
Wyman of $27 million and $12 million, respectively.
(c) Revenue in 2021 includes a net gain on the disposition of businesses of approximately $50 million.
(d) 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
2022
2021
2020
$
$
473
166
68
81
83
871
$
$
484
116
68
96
83
847
$
$
492
115
74
105
70
856
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, 2022 and 2021, the related consolidated
statements of income, comprehensive income, cash flows, and equity for each of the three years in the
period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2022, 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, 2022, 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 13,
2023 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 13, 2023
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.
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, 2022 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, 2022.
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, 2022.
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, 2022, 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, 2022, 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, 2022, of the Company and our report dated February 13, 2023, 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.
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 13, 2023
118
(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 2023
Proxy Statement.
The executive officers and executive officer appointees of the Company are Paul Beswick, Katherine J.
Brennan, John Q. Doyle, Martine Ferland, Carmen Fernandez, 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 2023 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 2023 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 2023 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 2023 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 2023 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,
2022
Consolidated Statements of Comprehensive Income for each of the three years in the period
ended December 31, 2022
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2022
Consolidated Statements of Shareholders Equity for each of the three years in the period ended
December 31, 2022
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)
Fifteenth Supplemental Indenture, dated October 31, 2022, 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 October 31, 2022)
(4.19)
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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
124
(10.8)
*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)
(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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
125
(10.18)
*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)
(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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
126
(10.26)
*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)
(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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
127
(10.35)
*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)
(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)
*Form of Deferred Stock Unit Award, with grant dates from March 1, 2022 through February
1, 2023, 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, 2022)
(10.43)
*Form of Deferred Stock Unit Award, with grant dates from March 1, 2022 through February
1, 2023, 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, 2022)
(10.44)
*Form of Restricted Stock Unit Award, dated as of February 23, 2022, 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, 2022)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
128
(10.45)
*Form of Performance Stock Unit Award, dated as of February 23, 2022, 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, 2022)
(10.46)
*Form of Stock Option Award, dated as of February 23, 2022, 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, 2022)
(10.47)
*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)
(10.48)
*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)
(10.49)
*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)
(10.50)
2023 Amendment to the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock
Award Plan effective January 12, 2023
(10.51)
*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)
(10.52)
*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)
(10.53)
*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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
129
(10.54)
*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)
(10.55)
*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)
(10.56)
*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)
(10.57)
*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)
(10.58)
*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)
(10.59)
Marsh & McLennan Companies Supplemental Savings & Investment Plan (formerly the
Marsh & McLennan Companies Stock Investment Supplemental Plan) Restatement effective
January 1, 2022)
(10.60)
*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)
(10.61)
*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
(10.62)
*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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
130
(10.63)
*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)
(10.64)
*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)
(10.65)
*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)
(10.66)
*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)
(10.67)
*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)
(10.68)
*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)
(10.69)
*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)
(10.70)
*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)
(10.71)
*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)
(10.72)
*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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
131
(10.73)
*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)
(10.74)
*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)
(10.75)
*Letter Agreement Amendment, dated September 23, 2022, between Marsh & McLennan
Companies, Inc. and Daniel S. Glaser (incorporated by reference to the Company’s Current
Report on Form 8-K dated September 23, 2022)
(10.76)
*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)
(10.77)
*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)
(10.78)
*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)
(10.79)
*Letter Agreement, effective as of January 16, 2019, 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, 2018)
(10.80)
*Letter Agreement, effective as of September 22, 2022, 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, 2022)
(10.81)
*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)
(10.82)
*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)
(10.83)
*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)
*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)
*Letter Agreement, effective as of January 1, 2022 between Marsh & McLennan Companies,
Inc. and John Q. Doyle (incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 2021)
(10.85)
*Letter Amendment, dated November 10, 2022, between Marsh & McLennan Companies,
Inc. and John Q. Doyle (incorporated by reference to the Company's Current Report on Form
8-K/A dated September 26, 2022)
(10.86)
*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)
(10.87)
*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)
(10.88)
*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)
(10.89)
*Letter Agreement, effective as of April 1, 2022, 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, 2022)
(10.90)
*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)
(10.91)
*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)
(10.92)
*Letter Agreement, effective as of January 1, 2022, 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, 2022)
(10.93)
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)
*Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(b) of Form 10-K.
133
(10.94)
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)
(10.95)
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)
(10.96)
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)
(10.97)
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)
(10.98)
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)
(10.99)
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)
134
Item 16. Form 10-K Summary.
None.
135
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.
SIGNATURES
MARSH & McLENNAN COMPANIES, INC.
Dated: February 13, 2023
By
JOHN Q. DOYLE
/S/
John Q. Doyle
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 13th day of
February, 2023.
Name
Title
Date
JOHN Q. DOYLE
/S/
John Q. Doyle
/S/ MARK C. MCGIVNEY
Mark C. McGivney
/S/ STACY M. MILLS
Stacy M. Mills
/S/ ANTHONY K. ANDERSON
Anthony K. Anderson
/S/ HAFIZE GAYE ERKAN
Hafize Gaye Erkan
/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/ 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
February 13, 2023
Chief Financial Officer
February 13, 2023
Vice President & Controller
(Chief Accounting Officer)
February 13, 2023
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
February 13, 2023
Exhibit 31.1
I, John Q. Doyle, 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 13, 2023
/s/ John Q. Doyle
John Q. Doyle
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 13, 2023
/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, 2022 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.
John Q. Doyle, 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 13, 2023
Date: February 13, 2023
/s/ John Q. Doyle
John Q. Doyle
President and Chief Executive Officer
/s/ Mark C. McGivney
Mark C. McGivney
Chief Financial Officer
Stock Performance Graph
(cid:35)(cid:51)(cid:48)(cid:2362)(cid:49)(cid:58)(cid:55)(cid:55)(cid:58)(cid:66)(cid:52)(cid:57)(cid:50)(cid:2362)(cid:50)(cid:61)(cid:44)(cid:59)(cid:51)(cid:2362)(cid:46)(cid:58)(cid:56)(cid:59)(cid:44)(cid:61)(cid:48)(cid:62)(cid:2362)(cid:63)(cid:51)(cid:48)(cid:2362)(cid:44)(cid:57)(cid:57)(cid:64)(cid:44)(cid:55)(cid:2362)(cid:46)(cid:64)(cid:56)(cid:64)(cid:55)(cid:44)(cid:63)(cid:52)(cid:65)(cid:48)(cid:2362)(cid:62)(cid:63)(cid:58)(cid:46)(cid:54)(cid:51)(cid:58)(cid:55)(cid:47)(cid:48)(cid:61)(cid:2362)(cid:61)(cid:48)(cid:63)(cid:64)(cid:61)(cid:57)(cid:2362)(cid:49)(cid:58)(cid:61)(cid:2362)(cid:63)(cid:51)(cid:48)(cid:2362)(cid:529)(cid:65)(cid:48)(cid:2992)(cid:68)(cid:48)(cid:44)(cid:61)(cid:2362)(cid:59)(cid:48)(cid:61)(cid:52)(cid:58)(cid:47)(cid:2362)(cid:48)(cid:57)(cid:47)(cid:48)(cid:47)(cid:2362)(cid:19)(cid:48)(cid:46)(cid:48)(cid:56)(cid:45)(cid:48)(cid:61)
31, 2022 of Marsh McLennan common stock with the Standard & Poor’s 500® Stock Index, assuming an investment
(cid:58)(cid:49)(cid:2362)(cid:6)(cid:2996)(cid:2995)(cid:2995)(cid:2362)(cid:58)(cid:57)(cid:2362)(cid:19)(cid:48)(cid:46)(cid:48)(cid:56)(cid:45)(cid:48)(cid:61)(cid:2362)(cid:2998)(cid:2996)(cid:2991)(cid:2362)(cid:2997)(cid:2995)(cid:2996)(cid:3002)(cid:2991)(cid:2362)(cid:66)(cid:52)(cid:63)(cid:51)(cid:2362)(cid:47)(cid:52)(cid:65)(cid:52)(cid:47)(cid:48)(cid:57)(cid:47)(cid:62)(cid:2362)(cid:61)(cid:48)(cid:52)(cid:57)(cid:65)(cid:48)(cid:62)(cid:63)(cid:48)(cid:47)(cid:2993)
Comparison of Cumulative Total Stockholder Return
($100 invested 12/31/17 with dividends reinvested)
300
260
220
180
140
100
Marsh McLennan
S&P 500
2017
100
100
2018
100
96
2019
2020
2021
2022
142
126
152
149
229
192
221
157
STOCKHOLDER INFORMATION
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
Investor Relations
1166 Avenue of the Americas
New York, NY 10036
Telephone: 212 345 1227
Website: marshmclennan.com
Email:
mmc.investor.relations@mmc.com
Stock Listings
Marsh McLennan common stock
(NYSE ticker symbol: MMC) is
listed on the New York, Chicago
and London Stock Exchanges.
Procedures For Raising
Complaints And
(cid:133)(cid:171)(cid:170)(cid:159)(cid:161)(cid:174)(cid:170)(cid:175)(cid:4)(cid:148)(cid:161)(cid:163)(cid:157)(cid:174)(cid:160)(cid:165)(cid:170)(cid:163)(cid:3)
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
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.
Annual Meeting
Information concerning the 2023
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, stock
(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)
transfers and address 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
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through a broker, bank or other
intermediary organization should
contact that organization for
these services.
Direct Purchase Plan
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
Marsh McLennan 2022 Annual Report
1
Marsh McLennan
1166 Avenue of the Americas
New York, NY 10036
marshmclennan.com
1
Realizing New Possibilities