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 figures)		2019				2018				2017
Revenue		$	16,652			$	14,950			$	14,024
Expense:
Compensation and benefits		9,734				8,605				8,085
Other operating expenses		4,241				3,584				3,284
Operating expenses		13,975				12,189				11,369
Operating income		2,677				2,761				2,655
Other net benefits credits		265				215				201
Interest income		39				11				9
Interest expense		(524		)		(290		)		(237		)
Cost of extinguishment of debt		(32		)		—				—
Investment income (loss)		22				(12		)		15
Acquisition related derivative contracts		(8		)		(441		)		—
Income before income taxes		2,439				2,244				2,643
Income tax expense		666				574				1,133
Income from continuing operations		1,773				1,670				1,510
Discontinued operations, net of tax		—				—				2
Net income before non-controlling interests		1,773				1,670				1,512
Less: Net income attributable to non-controlling interests		31				20				20
Net income attributable to the Company		$	1,742			$	1,650			$	1,492
Basic net income per share
– Continuing operations		$	3.44			$	3.26			$	2.91
– Net income attributable to the Company		$	3.44			$	3.26			$	2.91
Diluted net income per share
– Continuing operations		$	3.41			$	3.23			$	2.87
– Net income attributable to the Company		$	3.41			$	3.23			$	2.87
Average number of shares outstanding
– Basic		506				506				513
– Diluted		511				511				519
Shares outstanding at December 31,		504				504				509

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, (In millions)	2019				2018				2017
Net income before non-controlling interests	$	1,773			$	1,670			$	1,512
Other comprehensive (loss) income, before tax:
Foreign currency translation adjustments	148				(529		)		717
Unrealized investment (loss) income	—				—				(7		)
(Loss) gain related to pension/post-retirement plans	(702		)		(91		)		408
Other comprehensive (loss) income, before tax	(554		)		(620		)		1,118
Income tax (credit) expense on other comprehensive (loss) income	(146		)		(30		)		68
Other comprehensive (loss) income, net of tax	(408		)		(590		)		1,050
Comprehensive income	1,365				1,080				2,562
Less: Comprehensive income attributable to non-controlling interests	31				20				20
Comprehensive income attributable to the Company	$	1,334			$	1,060			$	2,542

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,
(In millions, except share figures)	2019				2018
ASSETS
Current assets:
Cash and cash equivalents	$	1,155			$	1,066
Receivables
Commissions and fees	4,608				3,984
Advanced premiums and claims	123				79
Other	645				366
	5,376				4,429
Less-allowance for doubtful accounts and cancellations	(140		)		(112		)
Net receivables	5,236				4,317
Other current assets	677				551
Total current assets	7,068				5,934
Goodwill	14,671				9,599
Other intangible assets	2,774				1,437
Fixed assets, net	858				701
Pension related assets	1,632				1,688
Right of use assets	1,921				—
Deferred tax assets	676				680
Other assets	1,757				1,539
	$	31,357			$	21,578
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	1,215			$	314
Accounts payable and accrued liabilities	2,746				2,234
Accrued compensation and employee benefits	2,197				1,778
Acquisition related derivatives	—				441
Current lease liabilities	342				—
Accrued income taxes	179				157
Total current liabilities	6,679				4,924
Fiduciary liabilities	7,344				5,001
Less – cash and investments held in a fiduciary capacity	(7,344		)		(5,001		)
	—				—
Long-term debt	10,741				5,510
Pension, postretirement and postemployment benefits	2,336				1,911
Long-term lease liabilities	1,926				—
Liability for errors and omissions	335				287
Other liabilities	1,397				1,362
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, 2019 and December 31, 2018	561				561
Additional paid-in capital	862				817
Retained earnings	15,199				14,347
Accumulated other comprehensive loss	(5,055		)		(4,647		)
Non-controlling interests	150				73
	11,717				11,151
Less – treasury shares, at cost, 57,013,097 shares at December 31, 2019 and 56,804,468 shares at December 31, 2018	(3,774		)		(3,567		)
Total equity	7,943				7,584
	$	31,357			$	21,578

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,
(In millions)	2019				2018				2017
Operating cash flows:
Net income before non-controlling interests	$	1,773			$	1,670			$	1,512
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization of fixed assets and capitalized software	333				311				312
Amortization of intangible assets	314				183				169
Non cash lease expense	315				—				—
Adjustments and payments related to contingent consideration liability	27				(4		)		(24		)
Loss on deconsolidation of entity	—				11				—
Charge for early extinguishment of debt	32				—				—
Provision (Benefit) for deferred income taxes	84				(39		)		396
(Gain) loss on investments	(22		)		12				(15		)
Loss (gain) on disposition of assets	56				(48		)		10
Share-based compensation expense	252				193				149
Change in fair value of acquisition-related derivative contracts	8				441				—
Changes in assets and liabilities:
Net receivables	(130		)		(78		)		(454		)
Other current assets	(13		)		26				(3		)
Other assets	(1		)		(37		)		(199		)
Accounts payable and accrued liabilities	120				23				87
Accrued compensation and employee benefits	154				68				63
Accrued income taxes	42				(40		)		37
Contributions to pension and other benefit plans in excess of current year expense/credit	(369		)		(291		)		(457		)
Other liabilities	(172		)		9				406
Operating lease liabilities	(327		)		—				—
Effect of exchange rate changes	(115		)		18				(96		)
Net cash provided by operations	2,361				2,428				1,893
Financing cash flows:
Purchase of treasury shares	(485		)		(675		)		(900		)
Net increase in short term borrowings	300				—				—
Proceeds from issuance of debt	6,459				591				987
Repayments of debt	(1,064		)		(263		)		(315		)
Payment of bridge loan fees	—				(35		)		—
Payments for early extinguishment of debt	(585		)		—				—
Purchase of non-controlling interests	(80		)		—				—
Acquisition-related derivative payments	(337		)		—				—
Shares withheld for taxes on vested units – treasury shares	(89		)		(67		)		(49		)
Issuance of common stock from treasury shares	158				93				166
Payments of deferred and contingent consideration for acquisitions	(65		)		(117		)		(136		)
Distributions of non-controlling interests	(16		)		(30		)		(22		)
Dividends paid	(890		)		(807		)		(740		)
Net cash provided by (used for) financing activities	3,306				(1,310		)		(1,009		)
Investing cash flows:
Capital expenditures	(421		)		(314		)		(302		)
Net sales (purchases) of long-term investments	183				4				(13		)
Purchase of equity investment	(91		)		—				—
Proceeds from sales of fixed assets	10				3				8
Dispositions	229				110				—
Acquisitions	(5,505		)		(884		)		(655		)
Other, net	(76		)		(8		)		6
Net cash used for investing activities	(5,671		)		(1,089		)		(956		)
Effect of exchange rate changes on cash and cash equivalents	93				(168		)		251
increase (Decrease) in cash and cash equivalents	89				(139		)		179
Cash and cash equivalents at beginning of year	1,066				1,205				1,026
Cash and cash equivalents at end of year	$	1,155			$	1,066			$	1,205

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

For the Years Ended December 31,
(In millions, except per share figures)	2019				2018				2017
COMMON STOCK
Balance, beginning and end of year	$	561			$	561			$	561
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year	$	817			$	784			$	842
Change in accrued stock compensation costs	89				66				63
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax impact	(44		)		(35		)		(120		)
Other	—				2				(1		)
Balance, end of year	$	862			$	817			$	784
RETAINED EARNINGS
Balance, beginning of year	$	14,347			$	13,140			$	12,388
Net income attributable to the Company	1,742				1,650				1,492
Cumulative effect of adoption of the revenue recognition standard (See Note 1)	—				364				—
Cumulative effect of adoption of other accounting standards (See Note 1)	—				—				—
Dividend equivalents declared and paid - (per share amounts: $1.74 in 2019, $1.58 in 2018, and $1.43 in 2017)	(10		)		(7		)		(6		)
Dividends declared and paid – (per share amounts: $1.74 in 2019, $1.58 in 2018, and $1.43 in 2017)	(880		)		(800		)		(734		)
Balance, end of year	$	15,199			$	14,347			$	13,140
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance, beginning of year	$	(4,647	)		$	(4,043	)		$	(5,093	)
Cumulative effect of adoption of the financial instruments standard (See Note 1)	—				(14		)		—
Other comprehensive (loss) income, net of tax	(408		)		(590		)		1,050
Balance, end of year	$	(5,055	)		$	(4,647	)		$	(4,043	)
TREASURY SHARES
Balance, beginning of year	$	(3,567	)		$	(3,083	)		$	(2,506	)
Issuance of shares under stock compensation plans and employee stock purchase plans	278				191				323
Purchase of treasury shares	(485		)		(675		)		(900		)
Balance, end of year	$	(3,774	)		$	(3,567	)		$	(3,083	)
NON-CONTROLLING INTERESTS
Balance, beginning of year	$	73			$	83			$	80
Net income attributable to non-controlling interests	31				20				20
Distributions and other changes	(27		)		(30		)		(17		)
Net non-controlling interests acquired	73				—				—
Balance, end of year	$	150			$	73			$	83
TOTAL EQUITY	$	7,943			$	7,584			$	7,442

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

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

The Risk and Insurance Services segment provides risk management solutions, services, advice and insurance broking, reinsurance broking and insurance program management 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.

The Company conducts business in its Consulting segment through Mercer and Oliver Wyman Group. Mercer provides consulting expertise, advice, services and solutions in the areas of health, wealth and career consulting services and products. Oliver Wyman Group provides specialized management and economic and brand consulting services.

On April 1, 2019, the Company completed the acquisition (the "Transaction") of all of the outstanding shares of Jardine Lloyd Thompson Group plc ("JLT"), a public company organized under the laws of England and Wales. JLT's results of operations for the period April 1, 2019 through December 31, 2019 are included in the Company’s results of operations for 2019. JLT's results of operations for the period January 1 through March 31, 2019 and for the years ended 2018 and 2017 are not included in the Company's results of operations and therefore, affect comparability. Prior to being acquired by the Company, JLT operated in three segments: Specialty, Reinsurance and Employee Benefits. JLT operated in 41 countries, with significant revenue in the United Kingdom, Pacific, Asia and the United States. As of April 1, 2019, the historical JLT businesses were combined into MMC operations as follows: JLT Specialty is included by geography within Marsh, JLT Reinsurance is included in Guy Carpenter and the majority of JLT's Employee Benefits business is included in Mercer Health and Wealth.

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.

Fiduciary Assets and Liabilities: In its capacity as an insurance broker or agent, generally the Company collects premiums from insureds and after deducting its commissions, remits the premiums to the respective insurance underwriters. The Company also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held by the Company in a fiduciary capacity. Risk and Insurance Services revenue includes interest on fiduciary funds of $105 million, $65 million and $39 million in 2019, 2018 and 2017, respectively. The Consulting segment recorded fiduciary interest income of $4 million, $3 million and $4 million in 2019, 2018 and 2017, respectively. Since fiduciary assets 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 $8.9 billion and $7.3 billion at December 31, 2019 and 2018, respectively. The increase reflects the inclusion of JLT's balances at December 31, 2019. 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.

Mercer 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.

Revenue: The Company provides detailed discussion regarding its revenue policies in Note 2 to the consolidated financial statements.

Cash and Cash Equivalents: Cash and cash equivalents primarily consist of certificates of deposit and time deposits, with original maturities of three months or less, and money market funds. The estimated fair value of the Company's cash and cash equivalents approximates their carrying value. The Company is required to maintain operating funds primarily related to regulatory requirements outside the United States or as collateral under captive insurance arrangements. At December 31, 2019, the Company maintained $197 million 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.

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 is depreciated over periods ranging from three to ten 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 thirty to forty 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 of dollars)		2019				2018
Furniture and equipment		$	1,268			$	1,159
Land and buildings		377				377
Leasehold and building improvements		1,214				1,007
		2,859				2,543
Less-accumulated depreciation and amortization		(2,001		)		(1,842		)
		$	858			$	701

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

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

In 2019, the Company recorded investment income of $22 million compared to investment loss of $12 million in 2018 and investment income of $15 million in 2017. The investment gain in 2019 includes gains of $10 million related to mark-to-market changes in equity securities and gains of $12 million related to investments in private equity funds and other investments. The investment loss in 2018 includes an impairment charge of $83 million related to its investment in Alexander Forbes (see Note 10). The net investment loss in 2018 also includes gains of $54 million related to mark-to-market changes in equity securities and gains of $17 million related to investments in private equity funds and other investments. The investment income in 2017 was due to a gain on the sale of an equity investment and gains related to investments in private equity funds.

Goodwill and Other Intangible Assets: Goodwill represents acquisition costs in excess of the fair value of net assets acquired. Goodwill is reviewed 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. In accordance with applicable accounting guidance, a company can assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test. Alternatively, the 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, the Company elected to perform a quantitative impairment assessment during 2019. 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 reviewed 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, 2019 and 2018.

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 $496 million and $435 million, net of accumulated amortization of $1.4 billion and $1.3 billion as of December 31, 2019 and 2018, 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 preparation of financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires that a liability be recorded when a loss is both probable and reasonably estimable. Significant management judgment is required to apply this guidance. The Company utilizes case level reviews by inside and outside counsel, an internal actuarial analysis by Oliver Wyman Group, a subsidiary of the Company, and other methods to estimate potential losses, including estimated legal costs. The liability is reviewed quarterly and adjusted as developments warrant. In many cases, the Company has not recorded a liability, other than for legal fees to defend the claim, because we are unable, at the present time, to make a determination that a loss is both probable and reasonably estimable. Given the unpredictability of E&O claims and of litigation that could flow from them, it is possible that an adverse outcome in a particular matter could have a material adverse effect on the Company’s businesses, results of operations, financial condition or cash flow in a given quarterly or annual period.

In addition, to the extent that insurance coverage is available, significant management judgment is required to determine the amount of recoveries that are probable of collection under the Company’s various insurance programs.

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. See Part II, Item 7. ("Management’s Discussion and Analysis of Financial Condition and Results of Operations" - Income Taxes) for a discussion of accounting policies governing the Company’s income tax provision.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first step involves recognition. The Company determines whether it is more likely than not that a tax position will be sustained upon tax examination, including resolution of any related appeals or litigation, based on only the technical merits of the position. The technical merits of a tax position derive from both statutory and judicial authority (legislation and statutes, legislative intent, regulations, rulings, and case law) and

their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate resolution with a taxing authority. Uncertain tax positions are evaluated based upon the facts and circumstances that exist at each reporting period. Subsequent changes in judgment based upon new information may lead to changes in recognition, de-recognition, and measurement. Adjustments may result, for example, upon resolution of an issue with the taxing authorities, or expiration of a statute of limitations barring an assessment for an issue. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

Tax law may require items be included in the Company's tax returns at different times than the items are reflected in the financial statements. As a result, the annual tax expense reflected in the consolidated statements of income is different than that reported in the income tax returns. Some of these differences are permanent, such as expenses that are not deductible in the returns, and some differences are temporary and reverse over time, such as depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in tax returns in future years for which benefit has already been recorded in the financial statements. Valuation allowances are established for deferred tax assets when it is estimated that future taxable income will be insufficient to use a deduction or credit in that jurisdiction. Deferred tax liabilities generally represent tax expense recognized in the financial statements for which payment has been deferred, or expense for which a deduction has been taken already in the tax return but the expense has not yet been recognized in the financial statements.

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

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

These costs are included in other operating expenses in the consolidated statements of income.

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

Derivative Instruments: All derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. The fair value of the derivative is recorded in the consolidated balance sheet in other receivables or accounts payable and accrued liabilities. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the income statement when the hedged item affects earnings. Changes in the fair value attributable to the ineffective portion of cash flow hedges are recognized in earnings. If a derivative is not designated as an accounting hedge, the change in fair value is recorded in earnings.

Concentrations of Credit Risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, commissions and fees receivable and insurance recoverables. The Company maintains a policy providing for the diversification of cash and cash equivalent investments and places its investments in a large number of high quality financial institutions to limit the amount of credit risk exposure. Concentrations of credit risk with respect to receivables are generally limited due to the large number of clients and markets in which the Company does business, as well as the dispersion across many geographic areas.

Per Share Data: Basic net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of the Company’s common stock.

Diluted net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares 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. Reconciliations of the applicable components used to calculate basic and diluted EPS - Continuing Operations are presented below. The reconciling items related to the EPS calculation are the same for both basic and diluted EPS.

Basic and Diluted EPS Calculation - Continuing Operations
(In millions, except per share figures)	2019				2018				2017
Net income from continuing operations	$	1,773			$	1,670			$	1,510
Less: Net income attributable to non-controlling interests	31				20				20
	$	1,742			$	1,650			$	1,490
Basic weighted average common shares outstanding	506				506				513
Dilutive effect of potentially issuable common shares	5				5				6
Diluted weighted average common shares outstanding	511				511				519
Average stock price used to calculate common stock equivalents	$	97.23			$	83.13			$	77.30

Estimates: GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may vary from those estimates.

New Accounting Pronouncements Effective January 1, 2019:

The following new accounting standard was adopted using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of January 1, 2019:

Leases

Effective January 1, 2019, the Company adopted new guidance intended to improve financial reporting for leases. Under the new guidance, a lessee is required to recognize assets and liabilities for leases. Consistent with legacy GAAP, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will depend on the classification of the lease as financing or operating. However, unlike legacy GAAP, which requires that only capital leases are recognized on the balance sheet, the new guidance requires that both operating and financing leases be recognized on the balance sheet. The Company adopted this new standard using a modified retrospective method, applying the new guidance as of the beginning of the year of adoption, with a cumulative effect of initially applying the guidance recognized as an adjustment to retained earnings at January 1, 2019. Therefore, prior period information has not been restated. The Company has elected the package of practical expedients, which among other things, allows historical lease classifications to be carried forward. The Company did not elect the hindsight practical expedient in determining lease term and impairment of an entity's Right of Use Assets ("ROU assets"). On January 1, 2019, the Company recognized a lease liability of $1.9 billion and ROU asset of $1.7 billion, related to real estate operating leases. The ROU asset also reflected reclassification adjustments primarily from other liabilities related to existing deferred rent, unamortized lease incentives and restructuring liabilities of approximately $200 million upon adoption. There was no

cumulative-effect adjustment required to be booked to retained earnings upon transition. The adoption of this standard did not have a material impact on our income statement as compared to prior periods.

The following new accounting standards were adopted prospectively as of January 1, 2019:

Derivatives and Hedging

Effective January 1, 2019, the Company adopted new guidance intended to refine and expand hedge accounting for both financial and commodity risks. The guidance creates more transparency around how economic results are presented in both the financial statements and the footnotes, as well as making targeted improvements to simplify the application of hedge accounting guidance. The Company adopted this guidance effective January 1, 2019. The adoption of this standard did not have an impact on the Company's financial position or results of operations.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

Effective January 1, 2019, the Company adopted new guidance that allowed an entity to reclassify the stranded tax effects resulting from the Tax Cuts and Job Act (the "TCJA") from accumulated other comprehensive income ("AOCI") to retained earnings. The guidance is effective for the period beginning January 1, 2019. The Company elected not to reclassify the stranded income tax effects of the TCJA from AOCI to retained earnings. The adoption of this standard had no impact on the Company's financial position or results of operations. The Company’s accounting policy related to releasing income tax effects from AOCI follows the portfolio approach.

New Accounting Pronouncements Effective January 1, 2018:

The following new accounting standards were adopted using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of January 1, 2018:

Revenue Recognition

Effective January 1, 2018, the Company adopted new accounting guidance related to revenue from contracts with customers. The core principle of the 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. The Company adopted the new guidance effective January 1, 2018, using the modified retrospective method, which applies the new guidance beginning with the year of adoption, with the cumulative effect of initially applying the guidance recognized as an adjustment to retained earnings at January 1, 2018. The Company elected to apply the modified retrospective method to all contracts. The cumulative effect of adopting the standard, net of tax, on January 1, 2018 resulted in an increase to the opening balance of retained earnings of $364 million, with offsetting increases/decreases to other balance sheet accounts (accounts receivable, other assets and deferred income taxes).

Recognition and Measurement of Financial Instruments

Effective January 1, 2018, the Company adopted new guidance intended to improve the recognition and measurement of financial instruments. The new guidance requires investments in equity securities (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as "own credit") when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The Company holds certain equity investments that under legacy GAAP were previously treated as available for sale securities, whereby the mark-to-market change was recorded to AOCI in its consolidated balance sheet. The Company adopted the new accounting guidance, effective January 1, 2018, and recorded a cumulative-

effect adjustment increase to retained earnings as of the beginning of the period of adoption of $14 million, reflecting the reclassification of cumulative unrealized gains, net of tax as of December 31, 2017 from AOCI to retained earnings.

Income Tax Consequences of Intra-Entity Transfers

Effective January 1, 2018, the Company adopted new guidance which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance eliminates the exception for an intra-entity transfer of an asset other than inventory. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new guidance was applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. The Company adopted the new guidance effective January 1, 2018, and recorded a cumulative-effect adjustment decrease to retained earnings of approximately $14 million as of the beginning of the period of adoption.

Adoption of amended accounting standard using the retrospective application approach

Effective January 1, 2018, the Company adopted new guidance that changes the presentation of net periodic pension cost and net periodic postretirement cost (''net periodic benefit costs"). The new guidance requires employers to report the service cost component of net periodic benefit costs in the same line item as other compensation costs in the income statement. The other components of net periodic benefit costs are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The new guidance required retrospective application for the presentation of the service cost component and the other components of net periodic benefit costs. Accordingly, the Company reclassified prior period information in the consolidated results of operations, segment data and related disclosures contained in our notes to the consolidated financial statements to reflect the retrospective adoption of this standard.

New Accounting Pronouncements Not Yet Adopted

In December 2019, the Financial Accounting Standards Board ("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 Company is currently evaluating the impact this standard will have on the Company’s financial position.

In August 2018, the FASB issued new guidance that amends required fair value measurement disclosures. The guidance adds new requirements, eliminates some current disclosures and modifies other required disclosures. The new disclosure requirements, along with modifications made to disclosures as a result of the change in requirements for narrative descriptions of measurement uncertainty, must be applied on a prospective basis. The effects of all other amendments included in the guidance must be applied retrospectively for all periods presented. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. Adoption of this guidance will impact disclosures only and will not have an impact on the Company's financial position or results of operations.

In August 2018, the FASB issued new guidance that amends disclosures related to Defined Benefit Plans. The guidance removes disclosures that no longer are considered cost-beneficial, clarifies the specific requirements of certain disclosures, and adds disclosure requirements identified as relevant. The guidance must be applied on a retrospective basis. The guidance is effective for fiscal years ending after

December 15, 2020. Early adoption is permitted. Adoption of this guidance will impact disclosures only and will not have an impact on the Company's financial position or results of operations.

In January 2017, the FASB issued new guidance to simplify the test for goodwill impairment. The new guidance eliminates the second step in the current two-step goodwill impairment process, under which a goodwill impairment loss is measured by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill for that reporting unit. The new guidance requires a one-step impairment test, in which the goodwill impairment charge is based on the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance should be applied on a prospective basis with the nature of and reason for the change in accounting principle disclosed upon transition. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its financial position or results of operations.

In June 2016, the FASB issued new guidance on the impairment of financial instruments. The new guidance adds an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of lifetime expected credit losses, which the FASB believes will result in more timely recognition of such losses. The new standard is also intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. Further, the new standard makes targeted changes to the impairment model for available-for-sale debt securities. The new standard is effective for public companies for annual reporting periods beginning after December 15, 2019, and interim periods therein. The adoption of this standard will not have a material impact on the Company's financial position or results of operations.

2. Revenue

Effective January 1, 2018, the Company adopted new accounting guidance related to revenue from contracts with customers. The Company adopted the new guidance using the modified retrospective method, which applies the new guidance beginning in the year of adoption, with the cumulative effect of initially applying the guidance recognized as an adjustment to retained earnings at January 1, 2018. The Company elected to apply the modified retrospective method to all contracts. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue recognition guidance, while 2017 and prior amounts are not adjusted and continue to be reported in accordance with legacy accounting guidance that were in effect for that period. The adoption of this new revenue recognition standard shifted revenue in the Risk and Insurance Services segment among quarters from historical patterns, but did not have a significant year-over-year impact on annual revenue in either segment.

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.

Other revenue included in the consolidated statements of income that is not from contracts with customers is less than 1% of total revenue, and therefore is not presented as a separate line item.

Risk and Insurance Services

Risk and Insurance Services revenue reflects compensation for brokerage and consulting services through commissions and fees. Commission rates and fees vary in amount and can depend upon 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 is received over the 12 to 18 months following the effective date of the placement.

In addition to commissions and fees from its clients, the Company also receives other compensation from insurance companies. This other insurer compensation includes, among other things, payments for consulting and analytics services provided to insurers, fees for administrative and other services provided to or on behalf of insurers (including services relating to the administration and management of quota shares, panels and other facilities in which insurers participate). The Company is also eligible for certain contingent commissions from insurers based on the attainment of specified metrics (i.e., volume and loss ratio measures) relating to Marsh's placements, particularly in Marsh & McLennan Agency ("MMA") and in parts of Marsh's international operations. Revenue for contingent commissions from insurers is estimated based on historical evidence of the achievement of the respective contingent metrics and recorded as the underlying policies that contribute to the achievement of the metric are placed. Due to the uncertainty of the amount of contingent consideration that will be received, the estimated revenue is constrained to an amount that is probable to not have a significant negative adjustment. Contingent consideration is generally received in the first quarter of the subsequent year.

A significant majority of the Company's Risk and Insurance Services revenue is for performance obligations recognized at a point in time. Marsh and Guy Carpenter also receive interest income on certain funds (such as premiums and claims proceeds) held in a fiduciary capacity for others.

Insurance brokerage commissions are generally invoiced on the policy effective date. Fee based arrangements generally include a percentage of the total fee due upon signing the arrangement, with additional fixed installments payable over the remainder of the year. Payment terms range from receipt of invoice up to 30 days from invoice date.

Reinsurance brokerage revenue is recognized on the effective date of the treaty. Payment terms depend on the type of reinsurance. For XOL treaties, brokerage revenue is typically collected in four installments during an annual treaty period based on a contractually specified minimum or deposit premium. For proportional or quota share treaties, brokerage is billed as underlying insured risks attach to the reinsurance treaty, generally over 12 to 18 months.

Consulting

The major component of revenue in the Consulting business is fees paid by clients for advice and services. Mercer, principally through its health line of business, also receives revenue in the form of commissions received from insurance companies for the placement of group (and occasionally individual) insurance contracts, primarily health, life and accident coverages. Revenue for Mercer’s investment

management business and certain of Mercer’s defined benefit administration services consists principally of fees based on assets under delegated management or administration.

Consulting projects in Mercer’s wealth and career businesses, as well as consulting projects in Oliver Wyman, typically consist of a single performance obligation, which is recognized over time as control is transferred continuously to customers. Typically, revenue is 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 typically bills its clients 30-60 days in arrears with payment due upon receipt of the invoice.

Health brokerage and consulting services are components of both Marsh, which includes MMA, and Mercer, with approximately 63% of such revenues reported in Mercer. Health contracts typically involve a series of distinct services that are treated as a single performance obligation. Revenue for these services is recognized over time based on the amount of remuneration the Company expects to be entitled in exchange for these services. Payments for health brokerage and consulting services are typically paid monthly in arrears from carriers based on insured lives under the contract.

The following schedule disaggregates various components of the Company's revenue:

		Twelve Months Ended December 31,
		2019				2018				2017
Marsh:
EMEA		$	2,482			$	2,132			$	2,033
Asia Pacific		953				683				645
Latin America		460				400				404
Total International		3,895				3,215				3,082
U.S./Canada		4,119				3,662				3,322
Total Marsh		8,014				6,877				6,404
Guy Carpenter		1,480				1,286				1,187
Subtotal		9,494				8,163				7,591
Fiduciary interest income		105				65				39
Total Risk and Insurance Services		$	9,599			$	8,228			$	7,630
Mercer:
Wealth		$	2,369			$	2,185			$	2,148
Health		1,796				1,735				1,648
Career		856				812				732
Total Mercer		5,021				4,732				4,528
Oliver Wyman		2,122				2,047				1,916
Total Consulting		$	7,143			$	6,779			$	6,444

The following schedule provides contract assets and contract liabilities information from contracts with customers.

(In millions)		December 31, 2019				December 31, 2018				January 1, 2018
Contract Assets		$	207			$	112			$	128
Contract Liabilities		$	593			$	545			$	583

The Company records accounts receivable when the right to consideration is unconditional, subject only to the passage of time. Contract assets primarily relate to quota share reinsurance brokerage and contingent insurer revenue. The Company does not have the right to bill and collect revenue for quota share brokerage until the underlying policies written by the ceding insurer attach to the treaty. Estimated revenue related to achievement of volume or loss ratio metrics cannot be billed or collected until all related policy placements are completed and the contingency is resolved. The change in contract assets from January 1, 2019 to December 31, 2019 is primarily due to $437 million of additions during the period (including JLT), partly offset by $342 million transferred to accounts receivables, as the rights to bill and collect became unconditional. The change in contract assets from January 1, 2018 to December 31, 2018 is primarily due to $331 million of additions during the period offset by $347 million transferred to accounts receivables. Contract assets are included in other current assets in the Company's consolidated balance sheets. Contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities are included in current liabilities in the Company's consolidated balance sheets. The change in contract liabilities from January 1, 2019 to December 31, 2019 includes cash received for performance obligations not yet fulfilled of $518 million and $42 million related to JLT, offset by revenue recognized in 2019 of $531 million that was included in the contract liability balance at the beginning of the year. The Company recognized revenue of $582 million in 2018 that was included in the contract liability balance at January 1. 2018. The amount of revenue recognized in 2019 and 2018 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 $79 million and $51 million, respectively. The 2019 amount includes a $17 million adjustment of previous estimates related to a multi-year Guy Carpenter contract in the third quarter of 2019.

The Company applies the practical expedient and therefore 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 $39 million for Marsh, $104 million for Mercer and $4 million for Oliver Wyman. The Company expects revenue in 2020, 2021, 2022, 2023 and 2024 and beyond of $105 million, $36 million, $5 million, $1 million and $1 million, respectively, related to these performance obligations.

Costs to Obtain and Fulfill a Contract

Under the new standard, certain costs to obtain or fulfill a contract that were previously expensed as incurred have been capitalized.

The Company capitalized 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, 2019, the Company’s capitalized assets related to deferred implementation costs, costs to obtain and costs to fulfill were $30 million, $222 million and $262 million, respectively. At December 31, 2018, the Company's capitalized assets related to deferred implementation costs, costs to obtain and costs to fulfill were $41 million, $206 million, and $227 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 amortization of compensation and benefits expense of $1.2 billion and $1.0 billion for the years ended December 31, 2019 and 2018, respectively, related to these capitalized costs.

A significant portion of deferred costs to fulfill in Risk and Insurance Services is amortized within three to six months. Therefore, the deferral of the cost and its amortization often occur in the same annual period.

The Company has elected to use the practical expedient and recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets is one year or less.

3. Supplemental Disclosures

The following schedule provides additional information concerning acquisitions, interest and income taxes paid:

(In millions of dollars)	2019				2018				2017
Assets acquired, excluding cash	$	8,655			$	1,100			$	898
Liabilities assumed	(2,804		)		(83		)		(134		)
Non-controlling interests assumed	(280		)		—				—
Contingent/deferred purchase consideration	(66		)		(133		)		(109		)
Net cash outflow for acquisitions	$	5,505			$	884			$	655

(In millions of dollars)	2019				2018				2017
Interest paid	$	427			$	264			$	199
Income taxes paid, net of refunds	$	661			$	632			$	583

The classification of contingent consideration payments in the consolidated statement of cash flows is dependent upon whether the 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 a financing activity. The Company paid deferred and contingent consideration of $65 million in the year ended December 31, 2019, consisting of deferred purchase consideration of $43 million and contingent purchase consideration of $22 million. In the year ended December 31, 2018, the Company paid deferred and contingent consideration of $117 million, consisting of deferred purchase consideration of $62 million and contingent consideration of $55 million, and in the year ended December 31, 2017 the Company paid deferred and contingent consideration of $136 million, consisting of deferred purchase consideration of $55 million and contingent consideration of $81 million.

The following amounts are included in the operating section of the consolidated statements of cash flows. For the year ended December 31, 2019, the Company recorded a net charge for adjustments to acquisition related accounts of $68 million and contingent consideration payments of $41 million. For the year ended December 31, 2018, the Company recorded a net charge for adjustments to acquisition related accounts of $32 million and contingent consideration payments of $36 million, and for the year ended December 31, 2017 the Company recorded a net charge for adjustments to acquisition related accounts of $3 million and contingent consideration payments of $27 million.

The Company had non-cash issuances of common stock under its share-based payment plan of $165 million, $130 million and $88 million for the years ended December 31, 2019, 2018 and 2017, respectively. The Company recorded stock-based compensation expense related to restricted stock units, performance stock units and stock options of $252 million, $193 million and $149 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Effective January 1, 2019, the Company adopted the new accounting guidance related to leases, which requires a lessee to recognize assets and liabilities for its leases. Upon adoption of this accounting standard, the Company recorded a non-cash ROU asset of $1.7 billion and lease liability of $1.9 billion in the first quarter of 2019.

An analysis of the allowance for doubtful accounts is as follows:

For the Years Ended December 31,
(In millions of dollars)	2019				2018				2017
Balance at beginning of year	$	112			$	110			$	96
Provision charged to operations	32				34				31
Accounts written-off, net of recoveries	(16		)		(24		)		(17		)
Effect of exchange rate changes and other	12				(8		)		—
Balance at end of year	$	140			$	112			$	110

4. Accumulated Other Comprehensive Income (Loss)

The changes in the balances of each component of AOCI for the years ended December 31, 2019 and 2018, including amounts reclassified out of AOCI, are as follows:

(In millions of dollars)	Unrealized Investment Gains (Losses)				Pension/Post-Retirement Plans Gains (Losses)				Foreign Currency Translation Adjustments				Total
Balance as of January 1, 2019	$	—			$	(2,953	)		$	(1,694	)		$	(4,647	)
Other comprehensive (loss) gain before reclassifications	—				(643		)		151				(492		)
Amounts reclassified from accumulated other comprehensive loss	—				84				—				84
Net current period other comprehensive (loss) gain	—				(559		)		151				(408		)
Balance as of December 31, 2019	$	—			$	(3,512	)		$	(1,543	)		$	(5,055	)

(In millions of dollars)	Unrealized Investment Gains (Losses)				Pension/Post-Retirement Plans Gains (Losses)				Foreign Currency Translation Adjustments				Total
Balance as of January 1, 2018	$	14			$	(2,892	)		$	(1,165	)		$	(4,043	)
Cumulative effect of amended accounting standard	(14		)		—				—				(14		)
Other comprehensive loss before reclassifications	—				(205		)		(529		)		(734		)
Amounts reclassified from accumulated other comprehensive loss	—				144				—				144
Net current period other comprehensive loss	—				(61		)		(529		)		(590		)
Balance as of December 31, 2018	$	—			$	(2,953	)		$	(1,694	)		$	(4,647	)

The components of other comprehensive income (loss) are as follows:

For the Year Ended December 31,	2019
(In millions of dollars)	Pre-Tax			Tax (Credit)			Net of Tax
Foreign currency translation adjustments	$	148		$	(3	)	$	151
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)	(2		)	(1		)	(1		)
Net actuarial losses (a)	102			22			80
Effect of curtailment (a)	—			—			—
Effect of settlement (a)	6			1			5
Effect of remeasurement (a)	—			—			—
Plan Termination (a)	—			—			—
Subtotal	106			22			84
Net losses arising during period	(758		)	(154		)	(604		)
Foreign currency translation adjustments	(50		)	(11		)	(39		)
Pension/post-retirement plans losses	(702		)	(143		)	(559		)
Other comprehensive loss	$	(554	)	$	(146	)	$	(408	)
(a) These components of net periodic pension cost are included in other net benefits credits in the Consolidated Statements of Income. Tax on prior service gains and net actuarial losses is included in income tax expense.

For the Year Ended December 31,	2018
(In millions of dollars)	Pre-Tax			Tax (Credit)			Net of Tax
Foreign currency translation adjustments	$	(529	)	$	—		$	(529	)
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)	(4		)	(1		)	(3		)
Net actuarial losses (a)	145			32			113
Effect of settlement (a)	42			8			34
Subtotal	183			39			144
Net losses arising during period	(374		)	(88		)	(286		)
Foreign currency translation adjustments	141			25			116
Other adjustments	(41		)	(6		)	(35		)
Pension/post-retirement plans losses	(91		)	(30		)	(61		)
Other comprehensive loss	$	(620	)	$	(30	)	$	(590	)
(a) These components of net periodic pension cost are included in other net benefits credits in the consolidated statements of income. Tax on prior service gains and net actuarial losses is included in income tax expense.

For the Year Ended December 31,	2017
(In millions of dollars)	Pre-Tax			Tax (Credit)			Net of Tax
Foreign currency translation adjustments	$	717		$	2		$	715
Unrealized investment gains	(7		)	(2		)	(5		)
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a)	(1		)	—			(1		)
Net actuarial losses (a)	167			30			137
Effect of curtailment (a)	(1		)	—			(1		)
Effect of settlement (a)	54			9			45
Subtotal	219			39			180
Net gains arising during period	374			62			312
Foreign currency translation adjustments	(201		)	(36		)	(165		)
Other adjustments	16			3			13
Pension/post-retirement plans gains	408			68			340
Other comprehensive income	$	1,118		$	68		$	1,050
(a) These components of net periodic pension cost are included in other net benefits credits in the consolidated statements of income. Tax on prior service gains and net actuarial losses is included in income tax expense.

The components of accumulated other comprehensive income (loss) are as follows:

(In millions of dollars)	December 31, 2019				December 31, 2018
Foreign currency translation adjustments (net of deferred tax asset of $14 in 2019 and net of deferred tax asset of $15 in 2018)	$	(1,543	)		$	(1,694	)
Net charges related to pension/post-retirement plans (net of deferred tax asset of $1,635 and $1,493 in 2019 and 2018, respectively)	(3,512		)		(2,953		)
	$	(5,055	)		$	(4,647	)

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.

On April 1, 2019, the Company completed the JLT Transaction and purchased all of the outstanding shares of JLT. Under the terms of the Transaction, JLT shareholders received £19.15 in cash for each JLT share, which valued JLT’s existing issued and to be issued share capital at approximately £4.3 billion (or approximately $5.6 billion based on an exchange rate of U.S. $1.31:£1). The Company also assumed existing JLT long-term indebtedness of approximately $1 billion. The Company implemented the Transaction by way of a scheme of arrangement under Part 26 of the United Kingdom Companies Act 2006, as amended.

The Company believes the Transaction strengthens MMC’s leadership position in insurance and reinsurance broking, health and retirement. The addition of over 10,000 colleagues provides deeper industry expertise in almost every part of the Company. The Transaction also builds on MMC’s efforts to expand in faster-growing geographies and market segments, and facilitates investment in data and analytics.

The Risk and Insurance Services segment completed five other acquisitions during 2019.

•	February – MMA acquired Bouchard Insurance, Inc., a Florida-based full service agency and Employee Benefits Group, Inc., a Maryland-based independent insurance agency.

•	April – MMA acquired Lovitt & Touche, Inc., an Arizona-based insurance agency and The Centurion Group, LLC, a Pennsylvania-based retirement consulting, asset management and benefit plan advisory firm.

•	October – MMA acquired Benefits Reports Insurance Services, Inc., a Massachusetts-based independent insurance agency.

Total purchase consideration for acquisitions made during 2019 was approximately $5,927 million, which consisted of cash paid of $5,861 million and deferred purchase and estimated contingent consideration of $66 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. During 2019, the Company also paid $43 million of deferred purchase consideration and $63 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized.

The following table presents the preliminary allocation of purchase consideration to the assets acquired and liabilities assumed during 2019 based on the estimated fair values for JLT and other acquisitions as of their respective acquisition dates:

Acquisitions for the Year-Ended December 31, 2019							Total Acquisitions
(In millions)	JLT			Other
Cash	$	5,568		$	293		$	5,861
Estimated fair value of deferred/contingent consideration	—			66			66
Total consideration	$	5,568		$	359		$	5,927
Allocation of purchase price:
Cash and cash equivalents	$	349		$	7		$	356
Accounts receivable, net	695			6			701
Other current assets	132			—			132
Fixed assets, net	89			1			90
Other intangible assets	1,545			134			1,679
Goodwill	4,912			212			5,124
Right of use assets	382			—			382
Deferred tax assets	66			—			66
Other assets	473			8			481
Total assets acquired	8,643			368			9,011
Current liabilities	708			9			717
Fiduciary liabilities	1,275			—			1,275
Less - fiduciary assets	(1,275		)	—			(1,275		)
Long-term debt	1,044			—			1,044
Long-term lease liability	389			—			389
Pension, post-retirement and post-employment liabilities	248			—			248
Liabilities for errors and omissions	31			—			31
Other liabilities	375			—			375
Total liabilities assumed	2,795			9			2,804
Non-controlling interests	280			—			280
Net assets acquired	$	5,568		$	359		$	5,927

The purchase price allocation above is based on estimates that are preliminary in nature and subject to adjustments, which could be material. Any necessary adjustments must be finalized during the measurement period, which for a particular asset, liability, or non-controlling instrument ends once the acquirer determines that either (1) the necessary information has been obtained or (2) the information is not available. However, the measurement period for all items is limited to one year from the acquisition date. During the fourth quarter of 2019, the Company made certain adjustments to the above JLT purchase price allocation, which included an increase to goodwill of approximately $90 million, an increase to other liabilities, and decreases to net receivables, other assets and current liabilities.

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 chart provides information about intangible assets acquired during 2019:

Intangible assets through December 31, 2019 (In millions)		JLT				Other				Total				JLT Weighted Average Amortization Period		Other Weighted Average Amortization Period
Customer relationships		$	1,435			$	126			$	1,561			13 years		12 years
Other		110				8				118				4 years		4 years
		$	1,545			$	134			$	1,679

Subsequent to the JLT acquisition, the Company purchased the outstanding non-controlling interests of several JLT subsidiaries for cash payments of approximately $79 million.

In January 2019, Marsh increased its equity ownership in Marsh India from 26% to 49%. Marsh India is accounted for under the equity method.

Prior Year Acquisitions

During 2018, the Risk and Insurance Services segment completed 12 acquisitions.

•	February – MMA acquired Highsmith Insurance Agency, a North Carolina-based independent insurance brokerage firm.

•	March – Marsh acquired Hoken Soken, Inc., a Japan-based insurance agency.

•	May – Marsh acquired Mountlodge Limited, a Scotland-based independent insurance broker and Lorant Martínez Salas y Compañía Agente de Seguros y de Fianzas, S.A. de C.V., a Mexico-based multi-line insurance broker.

•	June – MMA acquired Bleakley Insurance Services, a California-based provider of employee benefits solutions; Klein Agency, Inc., a Minnesota-based surety and property/casualty agency; and Insurance Associates, Inc., a Maryland-based independent insurance agency.

•	August – Marsh acquired John L. Wortham & Son, L.P., a Houston-based independent insurance broker.

•	October – MMA acquired Eustis Insurance, Inc., a Louisiana-based insurance agency.

•	November – MMA acquired James P. Murphy & Associates, Inc., a Connecticut-based insurance agency.

•	December – MMA acquired Otis-Magie Insurance Agency, Inc., a Minnesota-based insurance agency, and Marsh acquired Hector Insurance PCC Ltd, a U.K.-based captive management company.

The Consulting segment completed 8 acquisitions during 2018.

•	January – Oliver Wyman acquired Draw Ltd., a U.K.-based digital transformation agency.

•	March – Oliver Wyman acquired 8Works Limited, a U.K.-based design thinking consultancy.

•	May – Mercer acquired EverBe SAS, a France-based Workday implementer and advisory firm; and Evolve Intelligence Pty Ltd., an Australia-based talent strategy firm.

•	June – Mercer acquired India Life Capital Private Ltd., an India-based investment advisor.

•	November – Mercer acquired Induslynk Training Services Private Ltd., an India-based talent assessment company, Pavilion Financial Corp., a Canada-based investment services firm and Summit Strategies Inc., a Missouri-based investment consulting firm.

Total purchase consideration for acquisitions made during 2018 was approximately $1.04 billion, which consisted of cash paid of $910 million and deferred purchase and estimated contingent consideration of $133 million. Contingent consideration arrangements are based primarily on EBITDA and/or revenue targets over periods of two to four years. The fair value of the contingent consideration was based on projected revenue and earnings of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized. During 2018, the Company also paid $62 million of deferred purchase consideration and $91 million of contingent consideration related to acquisitions made in prior years.

Subsequent Event Transactions

During January 2020, MMA completed the acquisition of two independent insurance brokers, Momentous Insurance Brokerage ("Momentous") and Ironwood Insurance Services ("Ironwood"). Momentous is a California-based full-service risk management and employee benefits firm specializing in high net worth private client services and insurance solutions for the entertainment industry. Ironwood is an Atlanta-based broker that provides commercial property/casualty insurance, employee benefits, and private client solutions to mid-size businesses and individuals throughout the US.

At December 31, 2019, the Company owned approximately 34% of Alexander Forbes ("AF"). In January 2020, the Company announced that it would dispose of a substantial portion of its investment in AF in the form of two independent transactions. In February 2020, the Company, in a separate transaction, sold the shares not subject to the agreements above to an independent third party. The consummation of all three transactions will result in a total liquidation of the Company's investment in AF.

Pro-Forma Information

The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company during 2019, 2018 and 2017. 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, 2018 and reflects acquisitions made in 2018 as if they occurred on January 1, 2017. The 2017 information includes 2017 acquisitions as if they occurred on January 1, 2016. The pro-forma information includes the effects of amortization of acquired intangibles and additional interest expense related to the issuance of debt related to the JLT Transaction. 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.

	Years Ended December 31,
(In millions, except per share data)	2019				2018				2017
Revenue	$	17,095			$	17,106			$	14,400
Net income attributable to the Company	$	1,866			$	1,302			$	1,498
Basic net income per share attributable to the Company	$	3.69			$	2.58			$	2.92
Diluted net income per share attributable to the Company	$	3.65			$	2.55			$	2.89

The unaudited pro-forma information presented in the table above includes adjustments for acquisition related costs, the change in fair value of JLT acquisition related derivatives, bridge financing costs and the early extinguishment of debt, including $207 million of costs incurred in 2019 that were reflected in the 2018 pro-forma results presented above.

The consolidated statement of income for 2019 includes approximately $1.2 billion of revenue and an operating loss of $40 million related to acquisitions made during 2019. The consolidated statement of income for 2018 includes approximately $120 million of revenue and $2 million of operating income related to acquisitions made during 2018, and the consolidated statement of income for 2017 includes approximately $156 million of revenue and $19 million of operating income related to acquisitions made during 2017.

The Company incurred acquisition related costs, primarily related to legal, investment banking and U.K. stamp duty tax of $125 million for the year ended December 31, 2019, primarily related to the acquisition of JLT. These costs are included in other operating expenses in the Company's consolidated statement of income.

Acquisition-related expenses incurred in 2018 were $7 million.

Dispositions

During the third quarter of 2019, the Company completed the sale of a U.S. Specialty business at Marsh and a U.S. large market health and defined benefit business at Mercer for cash proceeds of approximately $60 million.

Also, on June 1, 2019, the Company completed its disposition of JLT’s global aerospace business for cash proceeds of $165 million and contingent consideration receivable of approximately $65 million, based on the aerospace business achieving certain revenue milestones in 2020. The aerospace business was divested as part of the European Commission's approval of the JLT Transaction.

In September 2018, Marsh completed its sale of a risk management software and services business resulting in a pre-tax gain of $46 million, which is included in revenue in the consolidated statement of income.

6. Goodwill and Other Intangibles

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 goodwill impairment test. Alternatively, the company may elect to proceed directly to the quantitative goodwill impairment test. In 2019, the Company elected to perform a quantitative impairment assessment. Fair values of the reporting units were estimated using a market approach. 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. The Company completed its 2019 annual assessment in the third quarter and concluded goodwill was not impaired, as the fair value of each reporting unit exceeded its carrying value by a substantial margin.

Other intangible assets that are not deemed to have an indefinite life are amortized over their estimated lives and reviewed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. The Company does not have any indefinite lived intangible assets.

Changes in the carrying amount of goodwill are as follows:

(In millions of dollars)	2019				2018
Balance as of January 1, as reported	$	9,599			$	9,089
Goodwill acquired (a)	5,124				626
Other adjustments (b)	(52		)		(116		)
Balance at December 31,	$	14,671			$	9,599

(a) Includes $4.9 billion from the acquisition of JLT in 2019.

(b) Primarily reflects the impact of dispositions in 2019 and foreign exchange translation in 2018.

The goodwill acquired of $5.1 billion in 2019 (approximately $213 million of which is deductible for tax purposes) is comprised of $5 billion related to the Risk and Insurance Services segment and $167 million related to the Consulting segment.

Goodwill allocable to the Company’s reportable segments is as follows: Risk and Insurance Services, $11.7 billion and Consulting, $3 billion.

The gross cost and accumulated amortization of intangible assets at December 31, 2019 and 2018 are as follows:

(In millions of dollars)	2019												2018
	Gross Cost				Accumulated Amortization				Net Carrying Amount				Gross Cost				Accumulated Amortization				Net Carrying Amount
Customer relationships	$	3,494			$	897			$	2,597			$	1,970			$	639			$	1,331
Other (a)	380				203				177				259				153				106
Amortized intangibles	$	3,874			$	1,100			$	2,774			$	2,229			$	792			$	1,437

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

Aggregate amortization expense was $314 million for the year ended December 31, 2019, $183 million for the year ended December 31, 2018 and $169 million for the year ended December 31, 2017. The estimated future aggregate amortization expense is as follows:

For the Years Ending December 31,
(In millions of dollars)
2020	$	344
2021	328
2022	299
2023	278
2024	267
Subsequent years	1,258
	$	2,774

7. Income Taxes

For financial reporting purposes, income before income taxes includes the following components:

For the Years Ended December 31,
(In millions of dollars)	2019				2018				2017
Income before income taxes:
U.S.	$	657			$	460			$	819
Other	1,782				1,784				1,824
	$	2,439			$	2,244			$	2,643
The expense (benefit) for income taxes is comprised of:
Current –
U.S. Federal	$	70			$	82			$	313
Other national governments	455				449				388
U.S. state and local	57				82				36
	582				613				737
Deferred –
U.S. Federal	69				(30		)		286
Other national governments	(16		)		(1		)		72
U.S. state and local	31				(8		)		38
	84				(39		)		396
Total income taxes	$	666			$	574			$	1,133

The significant components of deferred income tax assets and liabilities and their balance sheet classifications are as follows:

December 31,
(In millions of dollars)	2019				2018
Deferred tax assets:
Accrued expenses not currently deductible	$	492			$	526
Differences related to non-U.S. operations (a)	324				170
Accrued U.S. retirement benefits	438				406
Net operating losses (b)	70				48
Income currently recognized for tax	19				20
Other	27				16
	$	1,370			$	1,186

Deferred tax liabilities:
Differences related to non-U.S. operations	$	400			$	287
Depreciation and amortization	594				342
Accrued retirement & postretirement benefits - non-U.S. operations	151				171
Capitalized expenses currently recognized for tax	77				78
Other	37				49
	$	1,259			$	927

(a)	Net of valuation allowances of $54 million in 2019 and $21 million in 2018.

(b)	Net of valuation allowances of $72 million in 2019 and $45 million in 2018.

December 31,
(In millions of dollars)	2019				2018
Balance sheet classifications:
Deferred tax assets	$	676			$	680
Other liabilities	$	565			$	421

Taxes are not provided on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration, which, at December 31, 2019, the Company estimates amounted to approximately $1.8 billion. The determination of the unrecognized deferred tax liability with respect to these investments is not practicable.

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,	2019			2018			2017
U.S. Federal statutory rate	21.0	%		21.0	%		35.0	%
U.S. state and local income taxes—net of U.S. Federal income tax benefit	3.0			2.3			1.5
Differences related to non-U.S. operations	3.0			3.3			(8.6	)
U.S. Tax Reform	—			(0.3	)		17.4
Equity compensation	(1.3	)		(1.0	)		(2.6	)
Other	1.6			0.3			0.2
Effective tax rate	27.3	%		25.6	%		42.9	%

The Company’s consolidated effective tax rate was 27.3%, 25.6% and 42.9% in 2019, 2018 and 2017, respectively. The rates in 2019 and 2018 reflect ongoing impacts of the Tax Cuts and Jobs Act (TCJA) and certain tax planning benefits, largely offset by higher estimated tax costs from the TCJA quasi-territorial system, greater disallowance of certain expenses, a decrease in excess tax benefits related to share compensation primarily due to the 21% U.S. tax rate, lower Federal benefit for State tax deductions and State treatment of certain TCJA provisions. The 2019 rate includes certain tax costs of the JLT integration. The 2018 rate includes the effect of a charge related to the Company’s investment in Alexander Forbes as discussed in Note 10. The tax rate in 2017 reflects the fact that foreign operations were generally taxed at rates lower than the U.S. statutory tax rate prior to the TCJA, as well as including a provisional estimate of the impact of the enactment of the TCJA.

The TCJA provided for a transition to a quasi-territorial tax system for taxing foreign earnings via a transition tax on undistributed earnings of non-U.S. subsidiaries. The Company recorded a provisional transition tax charge of $240 million upon enactment of the TCJA in 2017. The reduction of the U.S. corporate tax rate from 35% to 21% reduced the value of the U.S. deferred tax assets and liabilities; accordingly, a charge of $220 million was recorded. These amounts were decreased by $5 million and finalized in 2018.

A valuation allowance was recorded to adjust deferred tax assets to the amount that the Company believes is more likely than not to be realized. Valuation allowances had net increases of $60 million and $36 million in 2019 and 2018, respectively. There was no change to income tax expense as a result of adjustments of the beginning of the year valuation allowances in 2019. Adjustments of the beginning of the year balances of valuation allowances increased income tax expense by $1 million during 2018. Approximately 69% of the Company’s net operating loss carryforwards expire from 2020 through 2040, and others are unlimited. The potential tax benefit from net operating loss carryforwards at the end of 2019 comprised federal, state and local, and non-U.S. tax benefits of $32 million, $34 million and $84 million, respectively, before reduction for valuation allowances.

Following is a reconciliation of the Company’s total gross unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017:

(In millions of dollars)	2019				2018				2017
Balance at January 1,	$	78			$	71			$	65
Additions, based on tax positions related to current year	8				6				1
Additions for tax positions of prior years	15				6				14
Reductions for tax positions of prior years	(1		)		—				(6		)
Settlements	(1		)		(2		)		—
Lapses in statutes of limitation	(13		)		(3		)		(3		)
Balance at December 31,	$	86			$	78			$	71

Of the total unrecognized tax benefits at December 31, 2019, 2018 and 2017, $75 million, $64 million and $56 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, 2019, 2018 and 2017, before any applicable federal benefit, was $31 million, $15 million and $12 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. The IRS is currently examining the Company’s 2017 and 2018 tax returns and is performing a pre-filing review of 2019. In 2019, the Company settled its federal audit for the year 2016.

New York is a significant jurisdiction for the Company. During 2019, New York State initiated an audit for the 2015 tax year. During 2018, New York State and New York City closed the examination of tax years 2007 through 2009. New York State and New York City have examinations underway for various entities covering the years 2010 through 2014.

The status of audits for significant jurisdictions outside the United States are summarized in the table below:

Tax Audit (Years)
Jurisdiction:	Initiated in 2019		Ongoing		Concluded
Canada	2018				2013-2016 during 2019
France	2017-2018				2011-2012 during 2018
Germany	2013-2016				2009-2012 during 2018
Italy	2016		2015
Singapore					2014-2016 during 2019
United Kingdom	2017		2016		2014-2015 during 2018

The Company has established liabilities for uncertain tax positions in relation to potential assessments in the jurisdictions in which it operates. The Company believes the resolution of tax matters will not have a material effect on the consolidated financial position of the Company, although a resolution of tax matters could have a material impact on the Company's net income or cash flows and on its effective tax rate in a particular future period. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and approximately $10 million within the next twelve months due to settlement of audits and expiration of statutes of limitation.

8. 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.

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:

	Pension Benefits						Post-retirement Benefits
	2019			2018			2019			2018
Weighted average assumptions:
Discount rate (for expense)	3.48	%		3.07	%		3.65	%		3.21	%
Expected return on plan assets	5.74	%		5.83	%		—			—
Rate of compensation increase (for expense)*	1.74	%		1.73	%		—			—
Discount rate (for benefit obligation)	2.57	%		3.48	%		2.72	%		3.65	%
Rate of compensation increase (for benefit obligation)*	1.76	%		1.74	%		—			—

*Rate of compensation increase assumptions do not include a rate of compensation increase for the U.S. defined benefit plans since future benefit accruals were discontinued for those plans after December 31, 2016.

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 target asset allocation for the U.S. plans is 64% equities and equity alternatives and 36% fixed income. At the end of 2019, the actual allocation for the U.S. plans was 64% equities and equity alternatives and 36% fixed income. The target asset allocation for the U.K. plans, which comprise approximately 81% of non-U.S. plan assets, is 34% equities and equity alternatives and 66% fixed income. At the end of 2019, the actual allocation for the U.K. plans was 35% equities and equity alternatives and 65% 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 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.

JLT Defined Benefit Pension Plans

As part of the JLT Transaction, the Company assumed responsibility for a number of pension plans throughout the world, with $255 million of net pension liabilities as of December 31, 2019 ($1,003 million in liabilities and $748 million of plan assets as of December 31, 2019), the most significant of which is the Jardine Lloyd Thompson U.K. Pension Scheme ("JLT U.K. plan"). The JLT U.K. plan has a defined benefit section which was frozen to future accrual in 2006 and a defined contribution section. The assets of the JLT U.K. plan are held in a trustee administered fund separate from the Company.

The components of the net periodic benefit cost for defined benefit and other post-retirement plans are as follows:

Combined U.S. and significant non-U.S. Plans	Pension												Post-retirement
For the Years Ended December 31,	Benefits												Benefits
(In millions of dollars)	2019				2018				2017				2019				2018				2017
Service cost	$	31			$	34			$	76			$	—			$	1			$	1
Interest cost	487				463				497				3				3				4
Expected return on plan assets	(863		)		(864		)		(921		)		—				—				—
Amortization of prior service (credit) cost	—				(2		)		(2		)		(2		)		(2		)		1
Recognized actuarial loss (gain)	104				146				167				(1		)		(1		)		—
Net periodic benefit (credit) cost	$	(241	)		$	(223	)		$	(183	)		$	—			$	1			$	6
Curtailment (loss) gain	—				—				(1		)		—				—				—
Settlement loss	7				42				54				—				—				—
Total (credit) cost	$	(234	)		$	(181	)		$	(130	)		$	—			$	1			$	6

The following chart provides the amounts reported in the consolidated statements of income:

Combined U.S. and significant non-U.S. Plans	Pension Benefits											Post-retirement Benefits
For the Years Ended December 31,
(In millions)	2019				2018			2017				2019				2018			2017
Compensation and benefits expense (Operating income)	$	31			$	34		$	76			$	—			$	1		$	1
Other net benefit (credit) cost	(265		)		(215		)	(206		)		—				—			5
Total (credit) cost	$	(234	)		$	(181	)	$	(130	)		$	—			$	1		$	6

Pension Settlement Charge

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 under applicable U.S. GAAP is to treat these lump sum payments as a partial settlement of the plan liability if they exceed the total of interest plus service costs ("settlement thresholds"). Based on the amount of lump sum payments through December 31, 2018, the lump sum payments exceeded the settlement thresholds in two of the U.K. plans. The Company recorded non-cash settlement charges of $42 million and $54 million, in the consolidated statements of income for the twelve month periods ended December 31, 2018, and 2017, respectively, primarily related to these plans. The Company recorded $7 million of non-cash settlement charges in 2019 related to other non-U.S. plans.

Plan Assets

For the U.S. plans, investment allocation decisions are made by a fiduciary committee composed of senior executives appointed by the Company’s Chief Executive Officer. For the non-U.S. plans, investment allocation decisions are made by local fiduciaries, in consultation with the Company for the larger plans. Plan assets are invested in a manner consistent with the fiduciary standards set forth in all relevant laws relating to pensions and trusts in each country. Primary investment objectives are (1) to achieve an investment return that, in combination with current and future contributions, will provide sufficient funds to pay benefits as they become due, and (2) to minimize the risk of large losses. The investment allocations are designed to meet these objectives by broadly diversifying plan assets among numerous asset classes with differing expected returns, volatilities, and correlations.

The major categories of plan assets include equity securities, equity alternative investments, and fixed income securities. For the U.S. plan, the category ranges are 59-69% for equities and equity alternatives, and 31-41% for fixed income. For the U.K. plans, the category ranges are 31-37% for equities and equity alternatives, and 63-69% for fixed income. Asset allocation is monitored frequently and re-balancing actions are taken as appropriate.

Plan investments are exposed to stock market, interest rate, and credit risk. Concentrations of these risks are generally limited due to diversification by investment style within each asset class, diversification by investment manager, diversification by industry sectors and issuers, and the dispersion of investments across many geographic areas.

Unrecognized Actuarial Gains/Losses

In accordance with applicable accounting guidance, 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.

U.S. Plans

The following schedules provide information concerning the Company’s U.S. defined benefit pension plans and post-retirement benefit plans:

	U.S. Pension Benefits								U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2019				2018
Change in benefit obligation:
Benefit obligation at beginning of year	$	5,529			$	6,221			$	32			$	36
Interest cost	241				235				1				1
Employee contributions	—				—				4				4
Plan combination	64				—				—				—
Actuarial (gain) loss	753				(502		)		1				(1		)
Benefits paid	(265		)		(425		)		(7		)		(8		)
Benefit obligation, December 31	$	6,322			$	5,529			$	31			$	32
Change in plan assets:
Fair value of plan assets at beginning of year	$	4,062			$	4,787			$	1			$	2
Actual return on plan assets	834				(330		)		—				—
Employer contributions	35				30				4				3
Employee contributions	—				—				4				4
Benefits paid	(265		)		(425		)		(7		)		(8		)
Other	49				—				—				—
Fair value of plan assets, December 31	$	4,715			$	4,062			$	2			$	1
Net funded status, December 31	$	(1,607	)		$	(1,467	)		$	(29	)		$	(31	)
Amounts recognized in the consolidated balance sheets:
Current liabilities	$	(29	)		$	(28	)		$	(1	)		$	(2	)
Non-current liabilities	(1,578		)		(1,439		)		(28		)		(29		)
Net liability recognized, December 31	$	(1,607	)		$	(1,467	)		$	(29	)		$	(31	)
Amounts recognized in other comprehensive income (loss):
Net actuarial (loss) gain	(2,114		)		(1,896		)		4				6
Total recognized accumulated other comprehensive (loss) income, December 31	$	(2,114	)		$	(1,896	)		$	4			$	6
Cumulative employer contributions in excess of (less than) net periodic cost	507				429				(33		)		(37		)
Net amount recognized in consolidated balance sheet	$	(1,607	)		$	(1,467	)		$	(29	)		$	(31	)
Accumulated benefit obligation at December 31	$	6,322			$	5,529			$	—			$	—

	U.S. Pension Benefits								U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2019				2018
Reconciliation of net actuarial (loss) gain recognized in accumulated other comprehensive income (loss):
Beginning balance	$	(1,896	)		$	(1,766	)		$	6			$	6
Recognized as component of net periodic benefit cost (credit)	44				55				(1		)		(1		)
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Liability experience	(753		)		502				(1		)		1
Asset experience	491				(687		)		—				—
Total (loss) gain recognized as change in plan assets and benefit obligations	(262		)		(185		)		(1		)		1
Net actuarial (loss) gain, December 31	$	(2,114	)		$	(1,896	)		$	4			$	6

For the Years Ended December 31,	U.S. Pension Benefits												U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2017				2019				2018				2017
Total recognized in net periodic benefit cost and other comprehensive loss (income)	$	160			$	63			$	(10	)		$	2			$	—			$	5

Estimated amounts that will be amortized from accumulated other comprehensive loss to net periodic pension cost in the next fiscal year:

	U.S. Pension Benefits				U.S. Post-retirement Benefits
(In millions of dollars)	2020				2020
Net actuarial loss	$	72			$	1

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:

	U.S. Pension Benefits						U.S. Post-retirement Benefits
	2019			2018			2019			2018
Weighted average assumptions:
Discount rate (for expense)	4.45	%		3.86	%		4.24	%		3.67	%
Expected return on plan assets	7.95	%		7.95	%		—			—
Discount rate (for benefit obligation)	3.44	%		4.45	%		3.10	%		4.24	%

The projected benefit obligation, accumulated benefit obligation and aggregate fair value of plan assets for U.S. pension plans with accumulated benefit obligations in excess of plan assets were $6.3 billion, $6.3 billion and $4.7 billion, respectively, as of December 31, 2019 and $5.5 billion, $5.5 billion and $4.1 billion, respectively, as of December 31, 2018.

The projected benefit obligation and fair value of plan assets for U.S. pension plans with projected benefit obligations in excess of plan assets was $6.3 billion and $4.7 billion, respectively, as of December 31, 2019 and $5.5 billion and $4.1 billion, respectively, as of December 31, 2018.

As of December 31, 2019, 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 4.8% of that plan's assets as of December 31, 2019.

The components of the net periodic benefit cost (credit) for the U.S. defined benefit and other post-retirement benefit plans are as follows:

U.S. Plans only	Pension Benefits												Post-retirement Benefits
For the Years Ended December 31,
(In millions of dollars)	2019				2018				2017				2019				2018				2017
Interest cost	241				235				264				1				1				2
Expected return on plan assets	(343		)		(357		)		(357		)		—				—				—
Amortization of prior service cost	—				—				—				—				—				3
Recognized actuarial loss (gain)	44				55				37				(1		)		(1		)		(1		)
Net periodic benefit (credit) cost	$	(58	)		$	(67	)		$	(56	)		$	—			$	—			$	4

The assumed health care cost trend rate for Medicare eligibles and non-Medicare eligibles is approximately 6% in 2019, gradually declining to 4.5% in 2039. 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%. A one percentage point change in assumed health care cost trend rates would have no effect on the total service and interest cost components or the post-retirement benefit obligation.

Estimated Future Contributions

The Company expects to contribute approximately $76 million to its U.S. plans in 2020. 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.

Non-U.S. Plans

The following schedules provide information concerning the Company’s non-U.S. defined benefit pension plans and non-U.S. post-retirement benefit plans:

	Non-U.S. Pension Benefits								Non-U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2019				2018
Change in benefit obligation:
Benefit obligation at beginning of year	$	8,969			$	10,053			$	57			$	68
Service cost	31				34				—				1
Interest cost	246				228				2				2
Employee contributions	2				2				—				—
Plan combination	915				—				—				—
Actuarial loss (gain)	1,339				(450		)		3				(8		)
Plan amendments	(1		)		44				—				—
Effect of settlement	(25		)		(162		)		—				—
Benefits paid	(364		)		(290		)		(3		)		(3		)
Foreign currency changes	209				(491		)		2				(3		)
Other	—				1				—				—
Benefit obligation, December 31	$	11,321			$	8,969			$	61			$	57
Change in plan assets:
Fair value of plan assets at beginning of year	$	10,306			$	11,388			$	—			$	—
Plan combination	683				—				—				—
Actual return on plan assets	1,367				(141		)		—				—
Effect of settlement	(25		)		(162		)		—				—
Company contributions	87				82				3				3
Employee contributions	2				2				—				—
Benefits paid	(364		)		(290		)		(3		)		(3		)
Foreign currency changes	257				(573		)		—				—
Fair value of plan assets, December 31	$	12,313			$	10,306			$	—			$	—
Net funded status, December 31	$	992			$	1,337			$	(61	)		$	(57	)
Amounts recognized in the consolidated balance sheets:
Non-current assets	$	1,632			$	1,687			$	—			$	—
Current liabilities	(6		)		(5		)		(3		)		(3		)
Non-current liabilities	(634		)		(345		)		(58		)		(54		)
Net asset (liability) recognized, December 31	$	992			$	1,337			$	(61	)		$	(57	)
Amounts recognized in other comprehensive (loss) income:
Prior service credit	$	(2	)		$	(2	)		$	11			$	12
Net actuarial loss	(3,055		)		(2,568		)		(5		)		(1		)
Total recognized accumulated other comprehensive (loss) income, December 31	$	(3,057	)		$	(2,570	)		$	6			$	11
Cumulative employer contributions in excess of (less than) net periodic cost	4,049				3,907				(67		)		(68		)
Net asset (liability) recognized in consolidated balance sheets, December 31	$	992			$	1,337			$	(61	)		$	(57	)
Accumulated benefit obligation, December 31	$	11,079			$	8,752			$	—			$	—

	Non-U.S. Pension Benefits								Non-U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2019				2018
Reconciliation of prior service credit (cost) recognized in accumulated other comprehensive income (loss):
Beginning balance	$	(2	)		$	43			$	12			$	15
Recognized as component of net periodic benefit credit:
Amortization of prior service credit	—				(2		)		(2		)		(2		)
Total recognized as component of net periodic benefit credit	—				(2		)		(2		)		(2		)
Changes in plan assets and benefit obligations recognized in other comprehensive income:
Plan amendments	1				(44		)		—				—
Exchange rate adjustments	(1		)		1				1				(1		)
Prior service credit, December 31	$	(2	)		$	(2	)		$	11			$	12

	Non-U.S. Pension Benefits								Non-U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2019				2018
Reconciliation of net actuarial (loss) gain recognized in accumulated other comprehensive (loss) income:
Beginning balance	$	(2,568	)		$	(2,646	)		$	(1	)		$	(10	)
Recognized as component of net periodic benefit cost:
Amortization of net loss	60				91				—				—
Effect of settlement	7				42				—				—
Total recognized as component of net periodic benefit credit	67				133				—				—
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Liability experience	(1,339		)		450				(3		)		8
Asset experience	847				(648		)		—				—
Other	—				3				—				—
Total amount recognized as change in plan assets and benefit obligations	(492		)		(195		)		(3		)		8
Exchange rate adjustments	(62		)		140				(1		)		1
Net actuarial loss, December 31	$	(3,055	)		$	(2,568	)		$	(5	)		$	(1	)

For the Years Ended December 31,	Non-U.S. Pension Benefits												Non-U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2017				2019				2018				2017
Total recognized in net periodic benefit cost and other comprehensive loss (income)	$	311			$	(147	)		$	(513	)		$	5			$	(5	)		$	(14	)

Estimated amounts that will be amortized from accumulated other comprehensive loss to net periodic pension cost in the next fiscal year:

	Non-U.S. Pension Benefits				Non-U.S. Post-retirement Benefits
(In millions of dollars)	2020				2020
Prior service credit	$	—			$	(2	)
Net actuarial loss	90				—
Projected cost	$	90			$	(2	)

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 and post-retirement plans are as follows:

	Non-U.S. Pension Benefits						Non-U.S. Post-retirement Benefits
	2019			2018			2019			2018
Weighted average assumptions:
Discount rate (for expense)	2.89	%		2.58	%		3.32	%		2.97	%
Expected return on plan assets	4.87	%		4.94	%		—			—
Rate of compensation increase (for expense)	2.82	%		2.80	%		—			—
Discount rate (for benefit obligation)	2.09	%		2.89	%		2.53	%		3.32	%
Rate of compensation increase (for benefit obligation)	2.75	%		2.82	%		—			—

The projected benefit obligation, 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 $2.9 billion, $2.7 billion and $2.2 billion, respectively, as of December 31, 2019 and $1.7 billion, $1.6 billion and $1.3 billion, respectively, as of December 31, 2018.

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 $3.0 billion and $2.3 billion, respectively, as of December 31, 2019 and $1.9 billion and $1.6 billion, respectively, as of December 31, 2018.

Non-U.S. Plan Amendments

In March 2017, the Company modified its defined benefit pension plans in Canada to discontinue further benefit accruals for participants after December 31, 2017 and replaced them with a defined contribution arrangement. The Company also amended its post-retirement benefits plan in Canada so that individuals who retire after April 1, 2019 will not be eligible to participate, except in certain situations. The Company re-measured the assets and liabilities of the plans, based on assumptions and market conditions on the amendment date.

Components of Net Periodic Benefits Costs

The components of the net periodic benefit cost for the non-U.S. defined benefit and other post-retirement benefit plans and the curtailment, settlement and termination expenses are as follows:

For the Years Ended December 31,	Non-U.S. Pension Benefits												Non-U.S. Post-retirement Benefits
(In millions of dollars)	2019				2018				2017				2019				2018				2017
Service cost	$	31			$	34			$	76			$	—			$	1			$	1
Interest cost	246				228				233				2				2				2
Expected return on plan assets	(520		)		(507		)		(564		)		—				—				—
Amortization of prior service credit	—				(2		)		(2		)		(2		)		(2		)		(2		)
Recognized actuarial loss	60				91				130				—				—				1
Net periodic benefit (credit) cost	(183		)		(156		)		(127		)		—				1				2
Settlement loss	7				42				54				—				—				—
Curtailment (gain) loss	—				—				(1		)		—				—				—
Total (credit) cost	$	(176	)		$	(114	)		$	(74	)		$	—			$	1			$	2

The assumed health care cost trend rate was approximately 4.98% in 2019, gradually declining to 4.34% in 2029. Assumed health care cost trend rates can have a significant effect on the amounts reported for the non-U.S. health care plans. A one percentage point change in assumed health care cost trend rates would have the following effects:

(In millions of dollars)	1 Percentage Point Increase				1 Percentage Point Decrease
Effect on total of service and interest cost components	$	—			$	—
Effect on post-retirement benefit obligation	$	6			$	(5	)

Estimated Future Contributions

The Company expects to contribute approximately $84 million to its non-U.S. pension plans in 2020. 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.

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. For the MMC UK Pension Fund, in November 2016, the Company and the trustee agreed to a funding deficit recovery plan for the U.K. defined benefit pension plans. A new agreement was reached with the trustee in fourth quarter of 2019 based on the surplus funding position at December 31, 2018. Under the agreement no deficit funding is required until 2023. The funding level will be re-assessed during 2022 to determine if contributions are required in 2023. As part of a long-term strategy, which depends on having greater influence over asset allocation and overall investment decisions, in November 2019 the Company renewed its agreement to support annual deficit contributions by the U.K. operating companies under certain circumstances, up to GBP 450 million over a seven-year period. In addition in the U.K. the Company assumed responsibility for the JLT's Pension Scheme (JLT U.K. plan). Deficit funding of approximately $28 million is expected during 2020 with a new funding agreement expected to be reached with the trustee during 2020.

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,	Pension Benefits								Post-retirement Benefits
(In millions of dollars)	U.S.				Non-U.S.				U.S.				Non-U.S.
2020	$	281			$	322			$	4			$	3
2021	$	293			$	328			$	4			$	3
2022	$	305			$	338			$	3			$	3
2023	$	312			$	358			$	3			$	3
2024	$	318			$	368			$	3			$	3
2025-2029	$	1,675			$	2,019			$	11			$	15

Defined Benefit Plans Fair Value Disclosures

The U.S. and non-U.S. plan investments are classified into Level 1, which refers to investments valued using quoted prices from active markets for identical assets; Level 2, which refers to investments not traded on an active market but for which observable market inputs are readily available; Level 3, which refers to investments valued based on significant unobservable inputs; and NAV, which refers to investments valued using net asset value as a practical expedient. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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, 2019 and 2018:

	Fair Value Measurements at December 31, 2019
Assets (In millions of dollars)	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				NAV				Total
Common/collective trusts	$	492			$	—			$	—			$	5,959			$	6,451
Corporate obligations	—				4,063				—				—				4,063
Corporate stocks	2,871				34				1				—				2,906
Private equity/partnerships	—				—				—				1,055				1,055
Government securities	20				679				—				—				699
Real estate	—				—				—				660				660
Short-term investment funds	309				3				—				—				312
Company common stock	223				—				—				—				223
Other investments	15				17				682				2				716
Total investments	$	3,930			$	4,796			$	683			$	7,676			$	17,085

	Fair Value Measurements at December 31, 2018
Assets (In millions of dollars)	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				NAV				Total
Common/collective trusts	$	291			$	—			$	—			$	5,329			$	5,620
Corporate obligations	—				3,673				—				—				3,673
Corporate stocks	2,046				33				1				—				2,080
Private equity/partnerships	—				—				—				921				921
Government securities	15				535				—				—				550
Real estate	—				—				—				563				563
Short-term investment funds	286				—				—				—				286
Company common stock	319				—				—				—				319
Other investments	13				20				333				—				366
Total investments	$	2,970			$	4,261			$	334			$	6,813			$	14,378

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, 2019 and December 31, 2018:

Assets (In millions)	Fair Value, January 1, 2019				Purchases				Sales				Unrealized Gain/ (Loss)				Realized Gain/ (Loss)				Exchange Rate Impact				Transfers in/(out) and Other (a)				Fair Value, December 31, 2019
Other investments	$	333			$	17			$	(14	)		$	72			$	1			$	(9	)		$	282			$	682
Corporate stocks	1				—				—				—				—				—				—				1
Total assets	$	334			$	17			$	(14	)		$	72			$	1			$	(9	)		$	282			$	683

(a) Transfers in during 2019 are primarily related to the inclusion of JLT plan assets.

Assets (In millions)	Fair Value, January 1, 2018				Purchases				Sales				Unrealized Gain/ (Loss)				Realized Gain/ (Loss)				Exchange Rate Impact				Transfers in/(out) and Other				Fair Value, December 31, 2018
Other investments	$	350			$	20			$	(19	)		$	(5	)		$	1			$	(14	)		$	—			$	333
Corporate stocks	2				—				—				—				—				—				(1		)		1
Corporate obligations	20				—				—				—				—				—				(20		)		—
Total assets	$	372			$	20			$	(19	)		$	(5	)		$	1			$	(14	)		$	(21	)		$	334

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: 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 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.

Swap assets (included in Other investments): Fair values for interest rate swaps, equity index swaps and inflation swaps are estimated 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. The fair values of credit default swaps are estimated using an income approach model which determines expected cash flows based on default probabilities from the issuer-specific credit spread curve and credit loss recovery rates, both of which are dependent on market quotes.

Short-term investment funds: Primarily high-grade money market instruments valued at net asset value at year-end.

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 ("401(k) Plan"), that are qualified under U.S. tax laws. Under these plans, eligible employees may contribute a percentage of their base salary, subject to certain limitations. For the 401(k) Plan, the Company matches a fixed portion of the employees’ contributions. In addition, as mentioned above, as part of the modification to its U.S. defined benefit pension plans, the Company also amended its U.S. defined contribution retirement plans 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) Plan contains an Employee Stock Ownership Plan feature under U.S. tax law. Approximately $556 million of the 401(k) Plan’s assets at December 31, 2019 and $444 million at December 31, 2018 were invested in the Company’s common stock. If a participant does not choose an investment direction for his or her future contributions, they are automatically invested in a BlackRock LifePath Portfolio that most closely matches the participant’s expected retirement year. The cost of these defined contribution plans was $139 million in 2019, $133 million in 2018 and $130 million in 2017. In addition, the Company has significant defined contribution plans in the U.K. As noted above, effective August 1, 2014, a newly formed defined contribution plan replaced the existing defined contribution and defined benefit plans with regard to future service. In addition, the Company has assumed responsibility

for the defined contribution section of the JLT U.K. plan. The cost of the U.K. defined contribution plan was $100 million, $80 million and $75 million in 2019, 2018 and 2017, respectively.

9. Stock Benefit Plans

The Company maintains multiple stock-based payment arrangements under which employees are awarded grants of restricted stock units, stock options and other forms of stock-based benefits.

Marsh & McLennan Companies, Inc. Incentive and Stock Award Plans

On May 19, 2011, the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (the "2011 Plan") was approved by the Company's stockholders. The 2011 Plan replaced the Company's two previous equity incentive plans (the 2000 Senior Executive Incentive and Stock Award Plan and the 2000 Employee Incentive and Stock Award Plan).

The types of awards permitted under the 2011 Plan include stock options, restricted stock and restricted stock units payable in Company common stock or cash, and other stock-based and performance-based awards. The Compensation Committee of the Board of Directors (the "Compensation Committee") determines, at its discretion, which affiliates may participate in the 2011 Plan, which eligible employees will receive awards, the types of awards to be received, and the terms and conditions thereof. The right of an employee to receive an award may be subject to performance conditions as specified by the Compensation Committee. The 2011 Plan contains a provision which, in the event of a change in control of the Company, may accelerate the vesting of the awards. This provision requires both a change in control of the Company and a subsequent specified termination of employment for vesting to be accelerated.

The 2011 Plan retains the remaining share authority of the two previous plans as of the date the 2011 Plan was approved by stockholders. Thus, approximately 23.2 million shares of common stock, plus shares remaining unused under the previous plans, are available for awards over the life of the 2011 Plan.

The current practice is to grant non-qualified stock options, restricted stock units and/or performance stock units ("PSUs") on an annual basis to senior executives and a limited number of other employees as part of their total compensation. Restricted stock units are also granted to new hires or as retention awards for certain employees. Restricted stock has not been granted since 2005.

Stock Options: Options granted under the 2011 Plan may be designated as either incentive stock options or non-qualified stock options. The Compensation Committee determines the terms and conditions of the option, including the time or times at which an option may be exercised, the methods by which such exercise price may be paid, and the form of such payment. 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 annum and have a contractual term of 10 years.

The estimated fair value of options granted is calculated using the Black-Scholes option pricing valuation model. This model takes into account several factors and assumptions. The risk-free interest rate is based on the yield on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumption at the time of grant. The expected life (estimated period of time outstanding) is estimated using the contractual term of the option and the effects of employees' expected exercise and post-vesting employment termination behavior. The Company uses a blended volatility rate based on the following: (i) volatility derived from daily closing price observations for the 10-year period ended on the valuation date, (ii) implied volatility derived from traded options for the period one week before the valuation date and (iii) average volatility for the 10-year periods ended on 15 anniversaries prior to the valuation date, using daily closing price observations. The expected dividend yield is based on expected dividends for the expected term of the stock options.

The assumptions used in the Black-Scholes option pricing valuation model for options granted by the Company in 2019, 2018 and 2017 are as follows:

	2019			2018			2017
Risk-free interest rate	2.51	%		2.73	%		2.09	%
Expected life (in years)	6.0			6.0			6.0
Expected volatility	20.93	%		23.23	%		23.23	%
Expected dividend yield	1.82	%		1.81	%		1.86	%

A summary of the status of the Company’s stock option awards as of December 31, 2019 and changes during the year then ended is presented below:

	Shares			Weighted Average Exercise Price				Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Balance at January 1, 2019	9,968,038			$	53.94
Granted	1,661,590			$	91.15
Exercised	(2,655,288	)		$	40.10
Forfeited	(115,212	)		$	82.96
Balance at December 31, 2019	8,859,128			$	64.69			6.2 years		$	414,756
Options vested or expected to vest at December 31, 2019	8,714,264			$	64.43			6.1 years		$	410,231
Options exercisable at December 31, 2019	5,133,064			$	52.36			4.7 Years		$	303,612

In the above table, forfeited options are unvested options whose requisite service period has not been met. Expired options are vested options that were not exercised. The weighted-average grant-date fair value of the Company's option awards granted during the years ended December 31, 2019, 2018 and 2017 was $17.87, $18.29 and $15.01, respectively. The total intrinsic value of options exercised during the same periods was $136.7 million, $72.9 million and $195.3 million, respectively.

As of December 31, 2019, there was $19.0 million of unrecognized compensation cost related to the Company's option awards. The weighted-average period over which that cost is expected to be recognized is approximately 1.25 years. Cash received from the exercise of stock options for the years ended December 31, 2019, 2018 and 2017 was $106.5 million, $46.7 million and $126.7 million, respectively.

The Company's policy is to issue treasury shares upon option exercises or share unit conversion. The Company intends to issue treasury shares as long as an adequate number of those shares is available.

Restricted Stock Units and Performance Stock Units: Restricted stock units may be awarded under the Company's 2011 Incentive and Stock Award 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. Awards to senior executives and other employees may include three-year performance-based restricted stock units and three-year service-based restricted stock units. The payout of performance stock units (payable in shares of the Company's common stock) ranges, generally, from 0-200% of the number of units granted, based on the achievement of objective, pre-determined Company performance measure(s), generally, over a three-year performance period. The Company accounts for these awards as performance condition restricted stock units. The performance condition is not considered in the determination of grant date fair value of such awards. Compensation cost is recognized over the performance period based on management's estimate of the number of units expected to vest and shares to be paid and is adjusted to reflect the actual number of shares paid out at the end of the three-year performance period. Dividend equivalents are not paid out unless and until such time that the award vests and shares are distributed.

A summary of the status of the Company's restricted stock units and performance stock units as of December 31, 2019 and changes during the period then ended is presented below:

	Restricted Stock Units						Performance Stock Units
	Shares		Weighted Average Grant Date Fair Value				Shares		Weighted Average Grant Date Fair Value
Non-vested balance at January 1, 2019	4,330,231		$	76.49			698,798		$	70.33
Granted	4,266,983		$	92.50			245,065		$	91.17
Vested	(2,023,355	)	$	72.96			(262,820	)	$	57.50
Forfeited	(616,122	)	$	89.55			(30,496	)	$	83.30
Non-vested balance at December 31, 2019	5,957,737		$	87.80			650,547		$	82.75

The weighted-average grant-date fair value of the Company's restricted stock units granted during the years ended December 31, 2018 and 2017 was $83.05 and $73.23, respectively. The weighted average grant date fair value of the Company's performance stock units granted during the years ended December 31, 2018 and 2017 was $83.05 and $73.20, respectively. The total fair value of the shares distributed during the years ended December 31, 2019, 2018 and 2017 in connection with the Company's non-option equity awards was $211.9 million, $170.3 million and $117.1 million, respectively.

The payout of shares in 2019 with respect to the PSUs awarded in 2016 was 97% of target based on performance for the three-year performance period. In aggregate, 254,993 shares became distributable in respect to PSUs vested in 2019.

As of December 31, 2019, there was $357 million of unrecognized compensation cost related to the Company's restricted stock units and performance stock unit awards. The weighted-average period over which that cost is expected to be recognized is approximately 1.11 years.

Marsh & McLennan Companies Stock Purchase Plans

In May 1999, the Company's stockholders approved an employee stock purchase plan (the "1999 Plan") to replace the 1994 Employee Stock Purchase Plan (the "1994 Plan"), which terminated on September 30, 1999 following its fifth annual offering. Under the current terms of the Plan, shares are purchased four times during the plan year at a price that is 95% of the average market price on each quarterly purchase date. Under the 1999 Plan, after including the available remaining unused shares in the 1994 Plan and reducing the shares available by 10,000,000 consistent with the Company's Board of Directors' action in March 2007 and the addition of 4,750,000 shares due to a shareholder action in May 2018, no more than 40,350,000 shares of the Company's common stock may be sold. Employees purchased 405,872 shares during the year ended December 31, 2019 and at December 31, 2019, 5,272,708 shares were available for issuance under the 1999 Plan. Under the 1995 Company Stock Purchase Plan for International Employees (the "International Plan"), after reflecting the additional 5,000,000 shares of common stock for issuance approved by the Company's Board of Directors in July 2002, the addition of 4,000,000 shares due to a shareholder action in May 2007 and reducing the shares available by 1,000,000 consistent with the Company's Board of Directors' action in March 2018, no more than 11,000,000 shares of the Company's common stock may be sold. Employees purchased 103,635 shares during the year ended December 31, 2019 and there were 1,271,213 shares available for issuance at December 31, 2019 under the International Plan. The plans are considered non-compensatory.

10. Fair Value Measurements

Fair Value Hierarchy

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

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

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

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

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

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

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

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

Assets and liabilities using Level 2 inputs include treasury locks and 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 (certain commercial mortgage whole loans, and long-dated or complex derivatives including certain foreign exchange options and long-dated options on gas and power).

Assets and liabilities using Level 3 inputs include liabilities for contingent purchase consideration and the deal contingent foreign exchange contract (the "FX Contract").

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 using a valuation technique that results in price per share at $1.00.

Treasury Locks - Level 2

In connection with the JLT Transaction, to hedge the risk of increases in future interest rates prior to its issuance of fixed rate debt in the fourth quarter of 2018, the Company entered into Treasury locks related to $2 billion of expected issuances of senior notes in January 2019. The fair value at December 31, 2018 was based on the published treasury rate plus forward premium as of December 31, 2018 compared to the all in rate at the inception of the contract. These treasury locks were settled during the first quarter of 2019.

Contingent Purchase Consideration Liability - Level 3

Purchase consideration for some acquisitions made by the Company includes contingent consideration arrangements. These arrangements typically provide for the payment of additional consideration if earnings and revenue targets are met over periods from two to four years. The fair value of contingent consideration is estimated as the present value of future cash flows resulting from the projected revenue and earnings of the acquired entities.

Foreign Exchange Forward Contract Liabilities - Level 3

In connection with the JLT Transaction, the Company entered into the FX Contract, to hedge the risk of appreciation of the GBP-denominated purchase price. The Company settled the FX contract on April 1, 2019, upon completion of the JLT Transaction.

The fair value at December 31, 2018, was determined using the probability distribution approach, comparing the all in forward rate to the foreign exchange rate for possible dates the JLT Transaction could close, discounted to the valuation date and adjusted for the fair value of the deal contingency feature. Determining the fair value of the FX Contract required significant management judgments or estimates about the potential closing dates of the transaction and remaining value of the deal contingency feature.

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, 2019 and 2018:

(In millions of dollars)	Identical Assets (Level 1)								Observable Inputs (Level 2)								Unobservable Inputs (Level 3)								Total
	12/31/19				12/31/18				12/31/19				12/31/18				12/31/19				12/31/18				12/31/19				12/31/18
Assets:
Financial instruments owned:
Exchange traded equity securities (a)	$	4			$	133			$	—			$	—			$	—			$	—			$	4			$	133
Mutual funds(a)	166				151				—				—				—				—				166				151
Money market funds(b)	55				118				—				—				—				—				55				118
Other equity investment(a)	—				—				8				8				—				—				8				8
Contingent purchase consideration asset(a)	—				—				—				—				84				—				84				—
Total assets measured at fair value	$	225			$	402			$	8			$	8			$	84			$	—			$	317			$	410
Fiduciary Assets:
Money market funds	$	360			$	80			$	—			$	—			$	—			$	—			$	360			$	80
U.S. Treasury Bills	40				20				—				—				—				—				40				20
Total fiduciary assets measured at fair value	$	400			$	100			$	—			$	—			$	—			$	—			$	400			$	100
Liabilities:
Contingent purchase consideration liability(c)	$	—			$	—			$	—			$	—			$	225			$	183			$	225			$	183
Acquisition related derivative contracts	—				—				—				116				—				325				—				441
Total liabilities measured at fair value	$	—			$	—			$	—			$	116			$	225			$	508			$	225			$	624

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

The level 3 assets in the above chart reflects contingent purchase consideration from the sale of businesses during 2019, including accretion of approximately $2 million.

During the year ended December 31, 2019, there were no assets or liabilities that were transferred between any of the levels.

The table below sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities for the years ended December 31, 2019 and December 31, 2018.

(In millions)	2019				2018
Balance at January 1,	$	508			$	189
Additions	36				54
Payments	(63		)		(91		)
Revaluation Impact	70				32
Change in fair value of acquisition related derivative contracts	(325		)		325
Other (a)	(1		)		(1		)
Balance at December 31,	$	225			$	508

(a) Primarily reflects the impact of foreign exchange.

The fair value of the contingent purchase consideration asset and liability is based on projections of revenue and earnings for the acquired or disposed entities that are reassessed on a quarterly basis. As set forth in the table above, based on the Company's ongoing assessment of the fair value of contingent consideration, the Company recorded a net increase in the estimated fair value of such liabilities for prior period acquisitions of $70 million for the year ended December 31, 2019. A 5% increase in the above mentioned projections would increase the liability by approximately $25 million. A 5% decrease in the above mentioned projections would decrease the liability by approximately $28 million.

Long-Term Investments

The Company holds investments in certain private equity investments, public companies and private companies that are accounted for using the equity method of accounting. The carrying value of these investments was $434 million and $287 million at December 31, 2019 and 2018, respectively.

Investments Accounted For Using the Equity Method of Accounting

Investments in Public and Private Companies

Alexander Forbes: The Company owns approximately 34% of the common stock of Alexander Forbes, a South African company listed on the Johannesburg Stock Exchange, which it purchased in 2014 for 7.50 South African Rand per share. In the third quarter of 2018, the Company concluded the decline in value of the investment was other than temporary and recorded a charge of $83 million in 2018. As of December 31, 2019, the carrying value of the Company’s investment in Alexander Forbes was approximately $144 million. As of December 31, 2019, the market value of the approximately 443 million shares of Alexander Forbes owned by the Company, based on the December 31, 2019 closing share price of 5.55 South African Rand per share, was approximately $173 million. See Note 5 to the consolidated financial statements for additional information regarding the pending sale of the Company's remaining investment in AF.

The Company has other investments in private insurance and consulting companies with a carrying value of $183 million and $61 million at December 31, 2019 and December 31, 2018, respectively.

The Company’s investment in Alexander Forbes and its other equity investments in private insurance and consulting companies are accounted for using the equity method of accounting, the results of which are included in revenue in the consolidated income statements 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 on a one quarter lag basis.

Private Equity Investments

The Company's investments in private equity funds were $107 million and $82 million at December 31, 2019 and December 31, 2018, 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, investment gains/losses for its proportionate share of the change in fair value of the funds. These investments are included in other assets in the consolidated balance sheets. The Company recorded net investment

income of $13 million and $16 million for the years ended December 31, 2019 and 2018, respectively, related to these investments.

Other Investments

At December 31, 2019 and December 31, 2018 the Company held certain equity investments with readily determinable market values of $19 million and $146 million, respectively. In 2019 and 2018, the Company recorded investment gains of $10 million and $54 million, respectively, which reflects the mark-to-market changes in equity securities. The Company also held investments without readily determinable market values of $67 million and $75 million at December 31, 2019 and 2018, respectively. The Company recorded a net loss of approximately $1 million in 2019 and a net gain of approximately $1 million in 2018 on these investments. In March 2019, the Company disposed of its investment in BenefitFocus for total proceeds of approximately $132 million. The Company received $115 million in the first quarter of 2019 and $17 million in April 2019 as final settlement on the sale. During the second quarter of 2019, the Company disposed of its investment in Payscale and received proceeds of approximately $47 million.

The summarized financial information presented below reflects the aggregated financial information of all equity method investees as of and for the twelve months ended September 30 of each year (or portion of those twelve months the Company owned its investment), consistent with the Company’s recognition of the results of its equity method investments on a one quarter lag. The investment income information presented below reflects the net realized and unrealized gains/losses, net of expenses, related to the Company's investment in Alexander Forbes and several private equity funds. Certain of the Company’s equity method investments, including Alexander Forbes, have unclassified balance sheets. Therefore, the asset and liability information presented below are not split between current and non-current.

Below is a summary of the financial information for the Company's equity method investees:

For the Twelve Months Ended September 30,
(In millions of dollars)		2019				2018				2017
Revenue		$	719			$	733			$	628
Net investment income (a)		$	959			$	1,699			$	1,834
Net income		$	482			$	554			$	476

As of September 30,
(In millions of dollars)		2019				2018
Total assets		$	23,366			$	24,644
Total liabilities		$	21,013			$	22,257
Non-controlling interests		$	23			$	22

(a) Net investment income in 2019, 2018 and 2017 includes approximately $645 million, $1.2 billion and $1.5 billion, respectively, related to Alexander Forbes, substantially all of which is credited to policy holders.

11. Derivatives

On September 20, 2018, the Company entered into the FX Contract to purchase £5.2 billion at a contracted exchange rate, to hedge the risk of appreciation of the GBP-denominated purchase price of JLT, which was settled on April 1, 2019 upon the closing of the JLT Transaction. The FX Contract did not qualify for hedge accounting treatment under applicable accounting guidance, which required the Company to record the change in the fair value of the FX Contract on each reporting date to the statement of income. The Company recorded a gain of $31 million in the consolidated statement of income for the year ended December 31, 2019, related to the FX Contract. An unrealized loss of $325 million related to the change in fair value of the FX contract was recorded in the consolidated statement of income during 2018.

In connection with the JLT Transaction, to hedge the economic risk of changes in future interest rates prior to its issuance of fixed rate debt, in the fourth quarter of 2018, the Company entered into Treasury locks related to $2 billion of senior notes issued in January 2019. The fair value of the Treasury locks at

December 31, 2018 was based on the published treasury rate plus the forward premium as of December 31, 2018 compared to the all in rate at the inception of the contract. The contracts were not designated as an accounting hedge. The Company recorded an unrealized loss of $116 million related to the change in the fair value of this derivative in the consolidated statement of income for the twelve months ended December 31, 2018. In January 2019, upon issuance of the $5 billion of senior notes, the Company settled the treasury lock derivatives and made a payment to its counter party for $122 million. An additional charge of $6 million was recorded in the first quarter of 2019 related to the settlement of the Treasury lock derivatives.

In March 2019, the Company issued €1.1 billion of senior notes related to the JLT Transaction. See Note 14 for additional information related to the Euro senior note issuances. In connection with the senior note issuances, the Company entered into a forward exchange contract to hedge the economic risk of changes in foreign exchange rates from the issuance date to settlement date of the Euro senior notes. The Company recorded a charge of $7.3 million in the consolidated statement of income for the year ended December 31, 2019, related to the settlement of this contract.

Acquired JLT Derivatives and Hedging Activity

A significant portion of JLT's outstanding senior notes at the time of completion of the Transaction were denominated in U.S. dollars. In order to hedge its exposure against the risk of fluctuations between the GBP and the U.S. dollar, JLT entered into foreign exchange contracts and interest rate swaps, which were designated as fair value hedges. In June, 2019, the Company redeemed these U.S. dollar denominated senior notes and settled the related derivative contracts. The offsetting changes in fair value of the debt and the change in fair value of the derivative contracts were recorded in the consolidated statement of income for the year ended December 31, 2019.

JLT also had a number of foreign exchange contracts to hedge the risk of foreign exchange movements between the U.S. dollar and the GBP, related to JLT’s U.S. dollar denominated revenue in the U.K. Prior to the acquisition, these derivative contracts were designated as cash flow hedges. Upon completion of the JLT Transaction, these derivative contracts were not re-designated as cash flow hedges by the Company. The contracts were settled in June 2019. The change in fair value between the acquisition date and the settlement date resulted in a charge of $26 million for the year ended December 31, 2019. The charge is recorded as a change in fair value of acquisition related derivative contracts in the consolidated statement of income.

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 will be recorded in foreign currency translation gains (losses) in the consolidated balance sheet. The Company concluded that the hedge continues to be highly effective as of December 31, 2019. During 2019, the U.S. dollar value of the euro notes decreased $28 million through December 31, 2019 due to the impact of foreign exchange rates, with a corresponding increase to foreign currency translation gains (losses).

12. 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. For operating leases entered into prior to January 1, 2019, the ROU assets and operating lease liabilities are recognized in the balance sheet based on the present value of the remaining future minimum payments over the lease term from the implementation date of the standard, January 1, 2019. The ROU asset was adjusted for unamortized lease incentives and restructuring liabilities that were reported, prior to January 1, 2019, as other liabilities in the consolidated balance sheet. For leases entered into subsequent to January 1, 2019, the operating

lease ROU asset and operating lease liabilities are based on the present value of minimum payments over the lease term at the commencement date of the lease.

The Company uses discount rates to determine the present value of future lease payments. The Company primarily uses its incremental borrowing rate adjusted to reflect a secured rate, based on the information available for leases, including the lease term and interest rate environment in the country in which the lease exists. The lease terms used to calculate the ROU asset and lease liability may include options to extend or terminate when it is reasonably certain that the Company will exercise that option.

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. 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. None of the Company’s leases restrict the payment of dividends or the incurrence of debt or additional lease obligations, or contain significant purchase options. In addition to the base rental costs, our lease agreements generally provide for rent escalations resulting from increased assessments for real estate taxes and other charges. A portion of our real estate lease portfolio contains base rents subject to annual changes in the Consumer Price Index ("CPI") as well as charges for operating expenses which are reimbursable to the landlord based on actual usage. Changes to the CPI and payments for such reimbursable operating expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.

As a practical expedient, the Company has elected an accounting policy not to separate non-lease components from lease components and instead, accounts for these components as a single lease component. The Company has made an accounting policy election not to recognize ROU assets and lease liabilities for leases that, at the commencement date, are for 12 months or less. 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.

On April 1, 2019, the Company assumed approximately $400 million, of ROU assets and lease liabilities from the JLT Transaction. As part of the Company's real estate rationalization plan related to the JLT Transaction, the Company has determined that approximately $9 million of its ROU assets have been impaired, and therefore, recorded a charge to the consolidated statement of income for the twelve month period ended December 31, 2019, with an offsetting reduction to ROU assets. The Company expects additional impairments as it continues to assess its future real estate requirements.

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

For the Year Ended December 31, 2019 (In millions)
Lease Cost:
Operating lease cost	$	371
Short-term lease cost	8
Variable lease cost	150
Sublease income	(18		)
Net lease cost	$	511
Other information:
Operating cash outflows from operating leases	$	392
Right of use assets obtained in exchange for new operating lease liabilities	$	140
Weighted-average remaining lease term – real estate	8.78 years
Weighted-average discount rate – real estate leases	3.10		%

Future minimum lease payments for the Company’s operating leases as of December 31, 2019 are as follows:

Payment Dates (In millions)	Real Estate Leases
2020	$	413
2021	359
2022	335
2023	288
2024	241
Subsequent years	974
Total future lease payments	2,610
Less: Imputed interest	(342		)
Total	2,268
Current lease liabilities	342
Long-term lease liabilities	1,926
Total lease liabilities	$	2,268

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

As of December 31, 2019, the Company had additional operating real estate leases that had not yet commenced of $45 million. These operating leases will commence over the next 12 months.

The consolidated statements of income include net rental costs of $383 million and $354 million in 2018 and 2017, respectively, after deducting rentals from subleases ($8 million in 2018 and 2017). These net rental costs exclude rental costs and sublease income for previously accrued restructuring charges related to vacated space.

At December 31, 2018, the aggregate future minimum rental commitments under all non-cancelable operating lease agreements were:

For the Years Ended December 31,	Gross Rental Commitments				Rentals from Subleases				Net Rental Commitments
(In millions of dollars)
2019	$	361			$	32			$	329
2020	$	340			$	31			$	309
2021	$	277			$	12			$	265
2022	$	252			$	10			$	242
2023	$	214			$	9			$	205
Subsequent years	$	753			$	32			$	721

13. Debt

The Company’s outstanding debt is as follows:

December 31,
(In millions)	2019				2018
Short-term:
Current portion of long-term debt	1,215				$	314
	1,215				314
Long-term:
Senior notes – 2.35% due 2019	—				300
Senior notes – 2.35% due 2020	500				499
Senior notes – 3.50% due 2020	698				—
Senior notes – 4.80% due 2021	499				499
Senior notes – Floating rate due 2021	298				—
Senior notes – 2.75% due 2022	498				497
Senior notes – 3.30% due 2023	349				348
Senior notes – 4.05% due 2023	249				249
Senior notes – 3.50% due 2024	597				597
Senior notes – 3.875% due 2024	994				—
Senior notes – 3.50% due 2025	497				496
Senior notes – 1.349% due 2026	609				—
Senior notes – 3.75% due 2026	597				596
Senior notes – 4.375% due 2029	1,499				—
Senior notes – 1.979% due 2030	607				—
Senior notes – 5.875% due 2033	298				297
Senior notes – 4.75% due 2039	494				—
Senior notes – 4.35% due 2047	492				492
Senior notes – 4.20% due 2048	592				592
Senior notes – 4.90% due 2049	1,237				—
Mortgage – 5.70% due 2035	345				358
Other	7				4
	11,956				5,824
Less current portion	1,215				314
	$	10,741			$	5,510

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

The Company has established a short-term debt financing program of up to $1.5 billion through the issuance of commercial paper. The proceeds from the issuance of commercial paper are used for general corporate purposes. The Company had no commercial paper outstanding at December 31, 2019.

Bridge Loan Financing

On September 18, 2018, the Company entered into a bridge loan agreement to finance the JLT acquisition. The bridge loan agreement provided for commitments in the aggregate principal amount of £5.2 billion. In 2018, the Company paid approximately $35 million of customary upfront fees related to the bridge loan at the inception of the loan commitment, of which $30 million was amortized in 2018 and $5 million in the first quarter of 2019 as interest expense. The Company terminated its bridge loan agreement on April 1, 2019.

Senior Notes

In January 2020, the Company closed on $500 million one-year and $500 million two-year term loan facilities. The interest rate on these facilities is based on LIBOR plus a fixed margin which varies with the Company's credit ratings. The facilities require the Company to maintain coverage ratios and leverage ratios consistent with the revolving credit facility discussed below. The Company has no current borrowings outstanding under these facilities. The facility includes a provision for determining a LIBOR successor rate in the event LIBOR reference rates are no longer available, which is expected to occur by the end of 2021.These facilities are expected to expire on or around the time that LIBOR is expected to be replaced by a successor rate.

In September 2019, the Company repaid $300 million of maturing senior notes.

In connection with the closing of the JLT Transaction, the Company assumed approximately $1 billion of historical JLT indebtedness. In April and June of 2019, the Company repaid approximately $450 million and $553 million, respectively, representing all of JLT's debt it acquired upon the closing of the JLT Transaction. The Company incurred debt extinguishment costs of $32 million due to the debt repayments.

In March 2019, the Company closed on $300 million one-year and $300 million three-year term loan facilities. The interest rate on these facilities was based on LIBOR plus a fixed margin which varies with the Company's credit ratings. In August 2019, the Company terminated the $300 million three-year term facility. The Company had $300 million of borrowings outstanding under the one-year term facility at September 30, 2019, which was repaid and terminated in December 2019.

Also in March 2019, the Company issued €550 million of 1.349% Senior Notes due 2026 and €550 million of 1.979% Senior Notes due 2030. In addition, in March 2019, the Company issued an additional $250 million of 4.375% Senior Notes due 2029. These notes constitute a further issuance of the 4.375% Senior Notes due 2029, of which $1.25 billion aggregate principal amount was issued in January 2019 (see above). After giving effect to the issuance of the notes, the Company has $1.5 billion aggregate principal amount of 4.375% Senior Notes due 2029. The Company used part of the net proceeds from these offerings, along with the $5 billion of Senior Notes issued in January 2019 (discussed above) primarily to fund the acquisition of JLT, including the payment of related fees and expenses, and to repay certain JLT indebtedness, as well as for general corporate purposes.

In January 2019, the Company issued $700 million of 3.50% Senior Notes due 2020, $1.0 billion of 3.875% Senior Notes due 2024, $1.25 billion of 4.375% Senior Notes due 2029, $500 million of 4.75% Senior Notes due 2039, $1.25 billion of 4.90% Senior Notes due 2049 and $300 million of Floating Rate Senior Notes due 2021. The floating rate notes are based on LIBOR plus a fixed margin. These notes are due prior to the date that LIBOR is expected to be replaced by a successor rate.

In October 2018 the Company repaid $250 million of maturing senior notes.

In March 2018, the Company issued $600 million of 4.20% senior notes due 2048. The Company used the net proceeds for general corporate purposes.

Other Credit Facilities

In October 2018, the Company and certain of its foreign subsidiaries increased its multi-currency five-year unsecured revolving credit facility from $1.5 billion to $1.8 billion. The interest rate on this facility is based on LIBOR plus a fixed margin which varies with the Company's credit ratings. This facility expires in October 2023 and requires the Company to maintain certain coverage and leverage ratios which are tested quarterly. There were no borrowings outstanding under this facility at December 31, 2019. The facility includes a provision for determining a LIBOR successor rate in the event LIBOR reference rates are no longer available. In such case, the rate would be determined using an alternate reference rate that has been broadly accepted by the syndicated loan market in the United States in lieu of LIBOR (the “LIBOR successor rate”). If no LIBOR successor rate has been determined, the rate will be based on the higher of the rate announced publicly by Citibank, New York, NY, as its base rate or the fed funds rate plus a fixed margin.

Additional credit facilities, guarantees and letters of credit are maintained with various banks, primarily related to operations located outside the United States, aggregating $598 million at December 31, 2019

and $594 million at December 31, 2018. There were no outstanding borrowings under these facilities at December 31, 2019 and December 31, 2018.

Scheduled repayments of long-term debt in 2020 and in the four succeeding years are $1.2 billion, $815 million, $515 million, $617 million and $1.6 billion, respectively.

Fair value of Short-term and Long-term Debt

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

	December 31, 2019								December 31, 2018
(In millions of dollars)	Carrying Amount				Fair Value				Carrying Amount				Fair Value
Short-term debt	$	1,215			$	1,229			$	314			$	313
Long-term debt	$	10,741			$	11,953			$	5,510			$	5,437

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. Integration and Restructuring Costs

JLT Related Integration and Restructuring

The Company is currently integrating JLT, which will involve combining the business practices and co-locating colleagues in most geographies, rationalization of real estate leases around the world, realization of synergies and migration of legacy JLT systems onto the Company's information technology environment and security protocols, consulting fees related to integration management processes and legal fees related to the rationalization of legal entity structures that will reduce costs, mitigate risks and improve operational transparency.

Costs will be recognized based on applicable accounting guidance which includes accounting for disposal or exit activities, guidance related to impairment of long lived assets (for right of use assets related to real estate leases), as well as other costs resulting from accelerated depreciation or amortization of leasehold improvements and other property and equipment. Based on its current estimates, the Company expects to incur costs of approximately $700 million in connection with the integration and restructuring of the combined businesses, primarily related to severance, real estate rationalization, information technology rationalization, consulting fees related to the management of the integration processes and legal fees related to the rationalization of legal entity structures. The Company has incurred $335 million in 2019 and expects most of the remaining costs to be incurred in 2020, with a modest amount in 2021. These integration and restructuring plans are still being finalized, which may change our current cost and related savings estimates, as the Company continues to refine its detailed plans for each business and location.

In connection with the JLT integration and restructuring, for the twelve month period ended December 31, 2019, costs incurred were $229 million in RIS, $18 million in Consulting, and $88 million in Corporate. The severance and related costs were included in compensation and benefits and the other costs were included in other operating expenses in the consolidated statement of income.

Details of the JLT integration and restructuring activity from January 1, 2019 through December 31, 2019, are as follows:

(In millions)	Severance				Real Estate Related Costs (a)				Information Technology (a)				Consulting and Other Outside Services (b)				Total
Liability at 1/1/19	$	—			$	—			$	—			$	—			$	—
2019 Charges	154				38				45				98				335
Cash payments	(112		)		(14		)		(45		)		(94		)		(265		)
Non-cash charges	—				(19		)		—				(4		)		(23		)
Liability at 12/31/19	$	42			$	5			$	—			$	—			$	47

(a) Includes data center contract termination costs and temporary infrastructure leasing costs.

(b) Includes consulting fees related to the management of the integration processes and legal fees related to the rationalization of legal entity structures.

Other Restructuring

During 2018 and 2019, Marsh initiated programs to simplify its organization structure and realign and rebrand certain of its businesses. The Company incurred severance and consulting costs of $34 million for the twelve month period ended December 31, 2019, related to these initiatives.

During the fourth quarter of 2018, Mercer initiated a program to restructure its business to further optimize the way Mercer operates, setting up the Company for a more fluid and nimble structure and operating model for the future. The Company incurred restructuring severance and consulting costs of $56 million for the twelve month period ended December 31, 2019 related to this initiative.

In addition to the changes discussed above, the Company incurred at Corporate $22 million of restructuring costs primarily related to future rent under non-cancelable leases.

Details of the restructuring liability activity from January 1, 2018 through December 31, 2019, including actions taken prior to 2019, are as follows:

(In millions)	Balance at 1/1/18				Amounts Accrued				Cash Paid				Other				Liability at 12/31/18				Amounts Accrued				Cash Paid				Other				Balance at 12/31/19
Severance	$	15			$	137			$	(77	)		$	(2	)		$	73			$	73			$	(91	)		$	(4	)		$	51
Future rent under non-cancelable leases and other costs	50				24				(37		)		2				39				39				(21		)		(6		)		51
Total	$	65			$	161			$	(114	)		$	—			$	112			$	112			$	(112	)		$	(10	)		$	102

As of January 1, 2017, the liability balance related to restructuring activity was $93 million. In 2017, the Company accrued $40 million and had cash payments and other adjustments of $68 million related to restructuring activities that resulted in the liability balance at December 31, 2017 reported above.

The expenses associated with the above 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. These programs are substantially completed as of December 31, 2019.

15. Common Stock

During 2019, the Company repurchased 4.8 million shares of its common stock for total consideration of $485 million. In November 2019, the Board of Directors of the Company authorized the Company to repurchase up to $2.5 billion of the Company's common stock, which superseded any prior authorizations. The Company remains authorized to purchase additional shares of its common stock up to

a value of approximately $2.4 billion. There is no time limit on the authorization. During 2018, the Company purchased 8.2 million shares of its common stock for total consideration of $675 million.

The Company issued approximately 4.6 million and 3.3 million shares related to stock compensation and employee stock purchase plans during the years ended December 31, 2019 and 2018, respectively.

16. Claims, Lawsuits and Other Contingencies

Acquisition of Jardine Lloyd Thompson Group plc

On April 1, 2019, the Company completed its previously announced acquisition of all of the outstanding shares of JLT. See Note 5 to the consolidated financial statements for additional information. Upon the consummation of the acquisition of JLT, the Company assumed the legal liabilities and became responsible for JLT’s litigation and regulatory exposures as of April 1, 2019.

Litigation Matters

The Company and its subsidiaries are 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 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 may seek damages, including punitive and treble damages, in amounts that could be significant. In establishing liabilities for errors and omissions claims in accordance with FASB guidance on Contingencies - Loss Contingencies, the Company uses case level reviews by inside and outside counsel, and internal actuarial analysis by Oliver Wyman Group, a subsidiary of the Company, and other methods to estimate potential losses. A liability is established when a loss is both probable and reasonably estimable. The liability is reviewed quarterly and adjusted as developments warrant. In many cases, the Company has not recorded a liability, other than for legal fees to defend the claim, because we are unable, at the present time, to make a determination that a loss is both probable and reasonably estimable. To the extent that expected losses exceed our deductible in any policy year, the Company also records an asset for the amount that we expect to recover under any available third-party insurance programs. The Company has varying levels of third-party insurance coverage, with policy limits and coverage terms varying significantly by policy year.

Governmental Inquiries and Enforcement Matters

Our activities are regulated under the laws of the United States and its various states, the European Union and its member states, and the other jurisdictions in which the Company operates.

Risk and Insurance Services Segment

In April 2017, the Financial Conduct Authority in the United Kingdom (the "FCA") commenced a civil competition investigation into the aviation insurance and reinsurance sector. In connection with that investigation, the FCA carried out an on-site inspection at the London offices of Marsh Limited, our Marsh and Guy Carpenter operating subsidiary in the United Kingdom, and JLT Specialty Ltd., JLT's U.K. operating subsidiary. The FCA indicated that it had reasonable grounds for suspecting that Marsh Limited, JLT Specialty Ltd. and other participants in the market had been sharing competitively sensitive information within the aviation insurance and reinsurance broking sector.

In October 2017, the Company received a notice that the Directorate-General for Competition of the European Commission had commenced a civil investigation of a number of insurance brokers, including both Marsh and JLT, regarding "the exchange of commercially sensitive information between competitors in relation to aviation and aerospace insurance and reinsurance broking products and services in the European Economic Area ("EEA"), as well as possible coordination between competitors." In light of the action taken by the European Commission, the FCA informed Marsh Limited and JLT Specialty Ltd. that it had discontinued its investigation under U.K. competition law. In May 2018, the FCA advised that it would not be taking any further action with Marsh Limited or JLT Specialty Ltd. in connection with this matter.

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.

We are cooperating with these investigations and are conducting our own reviews. At this time, we are unable to predict their likely timing, outcome or ultimate impact. There can be no assurance that the ultimate resolution of these or any related matters will not have a material adverse effect on our consolidated results of operations, financial condition or cash flows.

Consulting Segment

In 2014, the FCA conducted a thematic review of the suitability of financial advice provided to individuals by a number of firms, including JLT’s employee benefits business, relating to enhanced transfer value ("ETV") pension transfers. In January 2015, the FCA notified JLT that it was commissioning a Skilled Person review of JLT’s ETV advice. In February 2019, prior to the completion of the acquisition, JLT recorded a gross liability of approximately £59 million (or approximately $77 million) arising from the Skilled Person report and ETV review. Pending the outcome of the FCA’s review, and based on our review as of December 31, 2019, the Company has a gross liability of approximately £65 million (or approximately $85 million) recorded on its consolidated balance sheet for the estimated liabilities and costs arising from this matter. We expect this gross liability to be partially offset by insurance and indemnification claims under existing arrangements.

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 were reinsured up to £40 million by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by segregated assets held in a trust. As of December 31, 2019, the reinsurance coverage exceeded the best estimate of the projected liability of the policies covered by the guarantee. To the extent River Thames or the reinsurer is unable to meet its obligations under those policies, a claimant may seek to recover from the Company under the guarantee.

From 1980 to 1983, the Company owned indirectly the English & American Insurance Company ("E&A"), which was a member of the ILU. The ILU required the Company to guarantee a portion of E&A's obligations. After E&A became insolvent in 1993, the ILU agreed to discharge the guarantee in exchange for the Company's agreement to post an evergreen letter of credit that is available to pay claims by policyholders on certain E&A policies issued through the ILU and incepting between July 3, 1980 and October 6, 1983. Certain claims have been paid under the letter of credit and the Company anticipates that additional claimants may seek to recover against the letter of credit.

---

The pending proceedings described above and other matters not explicitly described in this Note 16 on Claims, Lawsuits and Other Contingencies may expose the Company or its subsidiaries to liability for significant monetary damages, fines, penalties or other forms of relief. Where a loss is both probable and reasonably estimable, the Company establishes liabilities in accordance with FASB guidance on Contingencies - Loss Contingencies. Except as described above, the Company is not able at this time to provide a reasonable estimate of the range of possible loss attributable to these matters or the impact they may have on the Company's consolidated results of operations, financial position or cash flows. This is primarily because these matters are still developing and involve complex issues subject to inherent uncertainty. Adverse determinations in one or more of these matters could have a material impact on the Company's consolidated results of operations, financial condition or cash flows in a future period.

17. Segment Information

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

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

▪	Consulting, comprising Mercer and Oliver Wyman Group

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

Prior to being acquired by the Company, JLT operated in three segments: Specialty, Reinsurance and Employee Benefits. JLT operated in 41 countries, with significant revenue in the United Kingdom, Pacific, Asia and the United States. As of April 1, 2019, the historical JLT businesses were combined into MMC operations as follows: JLT Specialty is included by geography within Marsh, JLT Reinsurance is included in Guy Carpenter and the majority of JLT's Employee Benefits business was included in Mercer Health and Wealth.

Selected information about the Company’s segments and geographic areas of operation are as follows:

For the Year Ended December 31, (In millions of dollars)	Revenue				Operating Income (Loss)				Total Assets				Depreciation and Amortization				Capital Expenditures
2019 –
Risk and Insurance Services	$	9,599		(a)	$	1,833			$	26,098		(d)	$	416			$	184
Consulting	7,143			(b)	1,210				9,722			(e)	156				150
Total Segments	16,742				3,043				35,820				572				334
Corporate/Eliminations	(90		)		(366		)		(4,463		)	(c)	75				87
Total Consolidated	$	16,652			$	2,677			$	31,357			$	647			$	421
2018 –
Risk and Insurance Services	$	8,228		(a)	$	1,864			$	15,868		(d)	$	290			$	158
Consulting	6,779			(b)	1,099				8,003			(e)	130				97
Total Segments	15,007				2,963				23,871				420				255
Corporate/Eliminations	(57		)		(202		)		(2,293		)	(c)	74				59
Total Consolidated	$	14,950			$	2,761			$	21,578			$	494			$	314
2017 –
Risk and Insurance Services	$	7,630		(a)	$	1,731			$	16,490		(d)	$	282			$	139
Consulting	6,444			(b)	1,110				8,200			(e)	129				88
Total Segments	14,074				2,841				24,690				411				227
Corporate/Eliminations	(50		)		(186		)		(4,261		)	(c)	70				75
Total Consolidated	$	14,024			$	2,655			$	20,429			$	481			$	302

(a)	Includes inter-segment revenue of $8 million, $6 million and $5 million in 2019, 2018 and 2017, respectively, interest income on fiduciary funds of $105 million, $65 million and $39 million in 2019, 2018 and 2017, respectively, and equity method income of $25 million, $13 million and $14 million in 2019, 2018 and 2017, respectively and $40 million related to the sale of business in 2018.

(b)	Includes inter-segment revenue of $82 million, $51 million and $45 million in 2019, 2018 and 2017, respectively, interest income on fiduciary funds of $4 million, $3 million and $4 million in 2019, 2018 and 2017, respectively, and equity method income of $16 million, $8 million and $17 million in 2019, 2018 and 2017, respectively.

(c)	Corporate assets primarily include insurance recoverables, pension related assets, the owned portion of the Company headquarters building and intercompany eliminations.

(d)	Includes equity method investments of $179 million, $57 million and $60 million at December 31, 2019, 2018 and 2017, respectively.

(e)	Includes equity method investments of $149 million, $148 million and $269 million at December 31, 2019, 2018 and 2017, respectively.

Details of operating segment revenue are as follows:

For the Years Ended December 31,
(In millions of dollars)	2019				2018				2017
Risk and Insurance Services
Marsh	$	8,085			$	6,923			$	6,433
Guy Carpenter	1,514				1,305				1,197
Total Risk and Insurance Services	9,599				8,228				7,630
Consulting
Mercer	5,021				4,732				4,528
Oliver Wyman Group	2,122				2,047				1,916
Total Consulting	7,143				6,779				6,444
Total Segments	16,742				15,007				14,074
Corporate/Eliminations	(90		)		(57		)		(50		)
Total	$	16,652			$	14,950			$	14,024

Information by geographic area is as follows:

For the Years Ended December 31,
(In millions of dollars)	2019				2018				2017
Revenue
United States	$	7,840			$	7,219			$	6,870
United Kingdom	2,679				2,243				2,112
Continental Europe	2,837				2,694				2,197
Asia Pacific	2,001				1,616				1,517
Other	1,385				1,235				1,378
	16,742				15,007				14,074
Corporate/Eliminations	(90		)		(57		)		(50		)
Total	$	16,652			$	14,950			$	14,024

For the Years Ended December 31,
(In millions of dollars)	2019				2018				2017
Fixed Assets, Net
United States	$	462			$	403			$	399
United Kingdom	149				91				91
Continental Europe	68				59				57
Asia Pacific	101				74				78
Other	78				74				87
Total	$	858			$	701			$	712

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, 2019 and 2018, the related consolidated statements of income, comprehensive income, cash flows, and equity for each of the three years in the period ended December 31, 2019, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 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, 2019, 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 20, 2020, 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 Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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.

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 and management’s independent review of case level estimates provided by inside and outside counsel, as applicable.

•	For selected E&O matters, we made inquiries of the Company’s inside and outside counsel, as applicable, 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, 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.

Other Intangible Assets - Valuation of Customer Relationship Intangible Assets for the Jardine Lloyd Thompson Group plc (“JLT”) Transaction - Refer to Note 5 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of JLT for approximately $5.6 billion on April 1, 2019. The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including customer relationship intangible assets of $1,435 million. Management estimated the fair value of customer relationship intangible assets using the income approach, which determines the fair value as the present value of future cash flows over the remaining economic life of the asset. The fair value determination of customer relationship intangible assets involves significant estimates and assumptions related to future cash flows and the selection of the respective discount rates.

Given that the fair value determination of customer relationship intangible assets requires management to make significant estimates and assumptions in determining the forecasted future cash flows and the selection of discount rates, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our valuation specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination of future cash flows and the selection of the discount rates relating to the customer relationship intangible assets included the following, among others:

•	We tested the effectiveness of internal controls over the assumptions related to the determination of forecasted future cash flows, selection of the discount rates and the valuation methodology used.

•	With the assistance of our valuation specialists, we evaluated the reasonableness of the determination of the forecasted future cash flows, discount rates and valuation methodology by:

–	Testing the source information underlying the determination of the discount rates and testing the mathematical accuracy of the calculations.

–	Developing a range of independent estimates of discount rates for each selected customer relationship intangible asset and comparing those to the respective discount rates utilized by management.

–	Evaluating the reasonableness of the estimated economic life of each selected customer relationship intangible asset.

•

When assessing the reasonableness of assumptions related to future cash flows for each selected customer relationship intangible asset, specifically the assumptions relating to revenue growth, attrition rates and earnings margins, we evaluated whether the assumptions used were reasonable considering the past performance of the acquired company and the Company’s historical experience related to similar acquisitions.

•	We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit, such as assumptions utilized by the Company in the determination of their budget.

/s/ Deloitte & Touche LLP

New York, New York

February 20, 2020

We have served as the Company’s auditor since 1989.

Marsh & McLennan Companies, Inc. and Subsidiaries

SELECTED QUARTERLY FINANCIAL DATA AND

SUPPLEMENTAL INFORMATION (UNAUDITED)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
(In millions, except per share figures)
2019:
Revenue	$	4,071			$	4,349			$	3,968			$	4,264
Operating income	$	938			$	680			$	467			$	592
Net income before non-controlling interests	$	727			$	344			$	306			$	396
Net income attributable to the Company	$	716			$	332			$	303			$	391
Basic Per Share Data:
Net income attributable to the Company	$	1.42			$	0.66			$	0.60			$	0.77
Diluted Per Share Data:
Net income attributable to the Company	$	1.40			$	0.65			$	0.59			$	0.76
Dividends Paid Per Share	$	0.415			$	0.415			$	0.455			$	0.455
2018:
Revenue	$	4,000			$	3,734			$	3,504			$	3,712
Operating income	$	908			$	691			$	541			$	621
Net income before non-controlling interests	$	696			$	536			$	279			$	159
Net income attributable to the Company	$	690			$	531			$	276			$	153
Basic Per Share Data:
Net income attributable to the Company	$	1.36			$	1.05			$	0.55			$	0.30
Diluted Per Share Data:
Net income attributable to the Company	$	1.34			$	1.04			$	0.54			$	0.30
Dividends Paid Per Share	$	0.375			$	0.375			$	0.415			$	0.415

As of February 18, 2020, there were 4,875 stockholders of record.