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)						2020						2019						2018
Revenue						$	17,224					$	16,652					$	14,950
Expense:
Compensation and benefits						10,129						9,734						8,605
Other operating expenses						4,029						4,241						3,584
Operating expenses						14,158						13,975						12,189
Operating income						3,066						2,677						2,761
Other net benefits credits						257						265						215
Interest income						7						39						11
Interest expense						(515)						(524)						(290)
Cost of extinguishment of debt						—						(32)						—
Investment (loss) income						(22)						22						(12)
Acquisition related derivative contracts						—						(8)						(441)
Income before income taxes						2,793						2,439						2,244
Income tax expense						747						666						574
Net income before non-controlling interests						2,046						1,773						1,670
Less: Net income attributable to non-controlling interests						30						31						20
Net income attributable to the Company						$	2,016					$	1,742					$	1,650
Net income per share attributable to the Company
– Basic						$	3.98					$	3.44					$	3.26
– Diluted						$	3.94					$	3.41					$	3.23
Average number of shares outstanding
– Basic						506						506						506
– Diluted						512						511						511
Shares outstanding at December 31,						508						504						504

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)			2020						2019						2018
Net income before non-controlling interests			$	2,046					$	1,773					$	1,670
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments			559						148						(529)
Loss related to pension and post-retirement plans			(784)						(702)						(91)
Other comprehensive loss, before tax			(225)						(554)						(620)
Income tax credit on other comprehensive loss			(170)						(146)						(30)
Other comprehensive loss, net of tax			(55)						(408)						(590)
Comprehensive income			1,991						1,365						1,080
Less: Comprehensive income attributable to non-controlling interests			30						31						20
Comprehensive income attributable to the Company			$	1,961					$	1,334					$	1,060

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)			2020						2019
ASSETS
Current assets:
Cash and cash equivalents			$	2,089					$	1,155
Receivables
Commissions and fees			4,679						4,608
Advanced premiums and claims			112						123
Other			677						645
			5,468						5,376
Less-allowance for credit losses			(142)						(140)
Net receivables			5,326						5,236
Other current assets			740						677
Total current assets			8,155						7,068
Goodwill			15,517						14,671
Other intangible assets			2,699						2,774
Fixed assets, net			856						858
Pension related assets			1,768						1,632
Right of use assets			1,894						1,921
Deferred tax assets			702						676
Other assets			1,458						1,757
			$	33,049					$	31,357
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt			$	517					$	1,215
Accounts payable and accrued liabilities			3,050						2,746
Accrued compensation and employee benefits			2,400						2,197
Current lease liabilities			342						342
Accrued income taxes			247						179
Total current liabilities			6,556						6,679
Fiduciary liabilities			8,585						7,344
Less – cash and investments held in a fiduciary capacity			(8,585)						(7,344)
			—						—
Long-term debt			10,796						10,741
Pension, postretirement and postemployment benefits			2,662						2,336
Long-term lease liabilities			1,924						1,926
Liability for errors and omissions			366						335
Other liabilities			1,485						1,397
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, 2020 and December 31, 2019			561						561
Additional paid-in capital			943						862
Retained earnings			16,272						15,199
Accumulated other comprehensive loss			(5,110)						(5,055)
Non-controlling interests			156						150
			12,822						11,717
Less – treasury shares, at cost, 52,914,550 shares at December 31, 2020 and 57,013,097 shares at December 31, 2019			(3,562)						(3,774)
Total equity			9,260						7,943
			$	33,049					$	31,357

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)			2020						2019						2018
Operating cash flows:
Net income before non-controlling interests			$	2,046					$	1,773					$	1,670
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization of fixed assets and capitalized software			390						333						311
Amortization of intangible assets			351						314						183
Non cash lease expense			355						315						—
Adjustments and payments related to contingent consideration liability			(22)						27						(4)
Loss on deconsolidation of entity			—						—						11
Charge for early extinguishment of debt			—						32						—
Provision (benefit) for deferred income taxes			40						84						(39)
Loss (gain) on investments			22						(22)						12
Loss (gain) on disposition of assets			24						56						(48)
Share-based compensation expense			290						252						193
Change in fair value of acquisition-related derivative contracts			—						8						441
Changes in assets and liabilities:
Net receivables			(75)						(130)						(78)
Other current assets			(66)						(13)						26
Other assets			86						(1)						(37)
Accounts payable and accrued liabilities			241						120						23
Accrued compensation and employee benefits			207						154						68
Accrued income taxes			60						42						(40)
Contributions to pension and other benefit plans and current year credit			(356)						(369)						(291)
Other liabilities			108						(172)						9
Operating lease liabilities			(351)						(327)						—
Effect of exchange rate changes			32						(115)						18
Net cash provided by operations			3,382						2,361						2,428
Financing cash flows:
Purchase of treasury shares			—						(485)						(675)
Net increase in short term borrowings			1,000						300						—
Proceeds from issuance of debt			737						6,459						591
Repayments of debt			(2,515)						(1,064)						(263)
Payment of bridge loan fees			—						—						(35)
Payments for early extinguishment of debt			—						(585)						—
Purchase of non-controlling interests			(3)						(80)						—
Acquisition-related derivative payments			—						(337)						—
Shares withheld for taxes on vested units – treasury shares			(132)						(89)						(67)
Issuance of common stock from treasury shares			132						158						93
Payments of deferred and contingent consideration for acquisitions			(122)						(65)						(117)
Distributions of non-controlling interests			(34)						(16)						(30)
Dividends paid			(943)						(890)						(807)
Net cash (used for) provided by financing activities			(1,880)						3,306						(1,310)
Investing cash flows:
Capital expenditures			(348)						(421)						(314)
Net sales (purchases) of long-term investments			107						183						4
Purchase of equity investment			—						(91)						—
Proceeds from sales of fixed assets			6						10						3
Dispositions			98						229						110
Acquisitions			(668)						(5,505)						(884)
Other, net			(9)						(76)						(8)
Net cash used for investing activities			(814)						(5,671)						(1,089)
Effect of exchange rate changes on cash and cash equivalents			246						93						(168)
Increase (decrease) in cash and cash equivalents			934						89						(139)
Cash and cash equivalents at beginning of year			1,155						1,066						1,205
Cash and cash equivalents at end of year			$	2,089					$	1,155					$	1,066

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)			2020						2019						2018
COMMON STOCK
Balance, beginning and end of year			$	561					$	561					$	561
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year			$	862					$	817					$	784
Change in accrued stock compensation costs			75						89						66
Issuance of shares under stock compensation plans and employee stock purchase plans			7						(44)						(35)
Other			(1)						—						2
Balance, end of year			$	943					$	862					$	817
RETAINED EARNINGS
Balance, beginning of year			$	15,199					$	14,347					$	13,140
Net income attributable to the Company			2,016						1,742						1,650
Cumulative effect of adoption of the revenue recognition standard (See Note 1)			—						—						364
Dividend equivalents declared and paid - (per share amounts: $1.84 in 2020, $1.74 in 2019, and $1.58 in 2018)			(11)						(10)						(7)
Dividends declared and paid – (per share amounts: $1.84 in 2020, $1.74 in 2019, and $1.58 in 2018)			(932)						(880)						(800)
Balance, end of year			$	16,272					$	15,199					$	14,347
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance, beginning of year			$	(5,055)					$	(4,647)					$	(4,043)
Cumulative effect of adoption of the financial instruments standard (See Note 1)			—						—						(14)
Other comprehensive loss, net of tax			(55)						(408)						(590)
Balance, end of year			$	(5,110)					$	(5,055)					$	(4,647)
TREASURY SHARES
Balance, beginning of year			$	(3,774)					$	(3,567)					$	(3,083)
Issuance of shares under stock compensation plans and employee stock purchase plans			212						278						191
Purchase of treasury shares			—						(485)						(675)
Balance, end of year			$	(3,562)					$	(3,774)					$	(3,567)
NON-CONTROLLING INTERESTS
Balance, beginning of year			$	150					$	73					$	83
Net income attributable to non-controlling interests			30						31						20
Distributions and other changes			(21)						(27)						(30)
Net non-controlling interests acquired			(3)						73						—
Balance, end of year			$	156					$	150					$	73
TOTAL EQUITY			$	9,260					$	7,943					$	7,584

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.

Business Update Related To COVID-19

In March 2020, the World Health Organization declared the Coronavirus (COVID-19) a pandemic. The pandemic has impacted essentially every geography in which the Company operates. Governments implemented various restrictions around the world, including closure of non-essential businesses, travel, shelter-in-place requirements for citizens and other restrictions. The Company has taken a number of precautionary steps to safeguard its businesses and colleagues from COVID-19, including implementing travel restrictions, arranging work from home capabilities and flexible work policies. In the second and third quarters of 2020, the Company began re-opening offices in various locations around the world, while ensuring that it continued to adhere to guidelines and orders issued by national, state and local governments. The timing of additional office re-openings will vary based on the conditions and restrictions in each location. In the fourth quarter, there was a surge in COVID-19 infections in many parts of the world, leading to renewed lock-downs and increased government restrictions. The safety and well-being of our colleagues continues to be our first priority. Several vaccines have been or are in various stages of approval. However, the speed of distribution and the impact on colleagues' ability to return to the office remains uncertain. The vast majority of the Company’s colleagues have continued and will continue working in a remote work environment for most of 2021. The Company expects it will continue its ability to service clients effectively while colleagues remain in a remote work environment.

For the year ended December 31, 2020, the COVID-19 pandemic had an adverse impact on the Company’s revenue growth, primarily in our businesses that are discretionary in nature, which was partly mitigated through disciplined expense management by implementing restrictions on travel and other cost containment measures. However, the ultimate extent of the COVID-19 impact to the Company will depend on numerous evolving factors and future developments that it is not able to predict.

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 year ended 2018 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. As of December 31, 2020, the Company has substantially integrated JLT into all of its business operations.

Principles of Consolidation: The accompanying consolidated financial statements include all wholly-owned and majority-owned subsidiaries. All significant inter-company transactions and balances have been eliminated.

Revenue: The Company provides detailed discussion regarding its revenue policies in Note 2 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, 2020, the Company maintained $270 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)						2020						2019
Furniture and equipment						$	1,326					$	1,268
Land and buildings						379						377
Leasehold and building improvements						1,310						1,214
						3,015						2,859
Less-accumulated depreciation and amortization						(2,159)						(2,001)
						$	856					$	858

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

The Company holds investments in certain private equity funds. Investments in private equity funds are accounted for 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 2020, the Company recorded an investment loss of $22 million compared to investment income of $22 million in 2019 and investment loss of $12 million in 2018. The net investment loss in 2020 is primarily due to the $23 million loss from the sale of shares of AF during the second quarter of 2020. 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 AF. 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.

Goodwill and Other Intangible Assets: Goodwill represents acquisition costs in excess of the fair value of net assets acquired. Goodwill is assessed at least annually for impairment. The Company performs an annual impairment test for each of its reporting units during the third quarter of each year. 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, a company may elect to proceed directly to the quantitative goodwill impairment test. When a quantitative test is performed, fair values of the reporting units are estimated using either a market approach or a discounted cash flow model. Carrying values for the reporting units are based on balances at the prior quarter-end and include directly identified assets and liabilities as well as an allocation of those assets and liabilities not recorded at the reporting unit level. As discussed in Note 6, the Company elected to perform a qualitative impairment assessment during 2020. Other intangible assets, which primarily consist of acquired customer lists, that are not deemed to have an indefinite life, are amortized over their estimated lives, typically ranging from 10 to 15 years, and assessed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. The Company had no indefinite lived identified intangible assets at December 31, 2020 and 2019.

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 $481 million and $496 million, net of accumulated amortization of $1.6 billion and $1.4 billion as of December 31, 2020 and 2019, 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, 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.

As of December 31, 2020, the Company’s liability for errors and omissions was $639 million, compared to $484 million at December 31, 2019, of which $271 million and $149 million, respectively, were included in accounts payable and accrued liabilities in the Consolidated Balance Sheets.

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

The legal and other contingent liabilities described above are not discounted.

Income Taxes: The Company's effective tax rate reflects its income, statutory tax rates and tax planning in the various jurisdictions in which it operates. Significant judgment is required in determining the annual tax provision and in evaluating uncertain tax positions and the ability to realize deferred tax assets.

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

their applicability to the facts and circumstances of the tax position. If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50 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 is calculated by dividing the after-tax income attributable to the Company by the weighted average number of outstanding shares of the Company’s common stock.

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

Basic and Diluted EPS Calculation
(In millions, except per share figures)			2020						2019						2018
Net income before non-controlling interests			$	2,046					$	1,773					$	1,670
Less: Net income attributable to non-controlling interests			30						31						20
Net income attributable to the Company			$	2,016					$	1,742					$	1,650
Basic weighted average common shares outstanding			506						506						506
Dilutive effect of potentially issuable common shares			6						5						5
Diluted weighted average common shares outstanding			512						511						511
Average stock price used to calculate common stock equivalents			$	109.12					$	97.23					$	83.13

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 $46 million, $105 million and $65 million in 2020, 2019 and 2018, respectively. The Consulting segment recorded fiduciary interest income of $1 million, $4 million and $3 million in 2020, 2019 and 2018, 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 $11.2 billion and $8.9 billion at December 31, 2020 and 2019, respectively. The Company is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Accordingly, net uncollected premiums and claims and the related payables are not assets and liabilities of the Company and are not included in the accompanying consolidated balance sheets.

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

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.

Estimates: The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The estimates are based on historical experience and on various other assumptions that the Company believes are reasonable. Such matters include:

• the allowance for current expected credit losses on receivables,

• estimates of revenue,

• impairment assessments and charges,

• recoverability of long-lived assets,

• liabilities for errors and omissions,

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

• share-based and incentive compensation expense,

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

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

The Company believes these estimates are reasonable based on information currently available at the time they are made. In most situations where estimates, fair values or recoverability of assets is dependent upon short or long term projections of cash flows, revenues or earnings before interest, taxes, depreciation and amortization ("EBITDA"), the Company has based its projections assuming the gradual lifting of global lockdowns during 2021. The Company has also considered potential impacts to its customer base in various industries and geographies. The ultimate extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s businesses, results of operations and financial condition will depend on future developments that are highly uncertain, including new information that may emerge concerning COVID-19 and the actions taken to contain it or treat it, and the economic impact on local, regional, national and international customers and markets. Actual results may differ from these estimates.

New Accounting Pronouncements Adopted Effective January 1, 2021

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

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

New Accounting Pronouncements Adopted Effective January 1, 2020:

In August 2018, the FASB issued new guidance that amends required fair value measurement disclosures. The guidance adds new requirements, eliminates some current disclosures and modifies other required disclosures. The new disclosure requirements, along with modifications made to disclosures as a result of the change in requirements for narrative descriptions of measurement uncertainty, must be applied on a prospective basis. The effects of all other amendments included in the guidance must be applied retrospectively for all periods presented. The adoption of this guidance impacted disclosures only and did not have an impact on the Company's financial position or results of operations.

In August 2018, the FASB issued new guidance that amends disclosures related to Defined Benefit Plans. The guidance removes disclosures that no longer are considered cost-beneficial, clarifies the specific

requirements of certain disclosures, and adds disclosure requirements identified as relevant. The guidance must be applied on a retrospective basis. Adoption of this guidance impacted disclosures only and did not have an impact on the Company's financial position or results of operations.

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

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

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 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.

2. Revenue

The core principle of the revenue recognition guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that principle, the entity applies the following steps: identify the contract(s) with the customer, identify the performance obligations in the contract(s), determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In accordance with the accounting guidance, a performance obligation is satisfied either at a “point in time” or “over time” depending on the nature of the product or service provided, and the specific terms of the contract with customers.

Other revenue included in the consolidated statements of income that is not from contracts with customers is less than 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 Group, 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 Group typically bills its clients 30-60 days in arrears with payment due upon receipt of the invoice.

Health brokerage and consulting services are components of both Marsh, which includes MMA, and Mercer, with approximately 60% of such revenues reported in Mercer. Health contracts typically involve a series of distinct services that are treated as a single performance obligation. Revenue for these services is recognized over time based on the amount of remuneration the Company expects to be entitled in exchange for these services. Payments for health brokerage and consulting services are typically paid monthly in arrears from carriers based on insured lives under the contract.

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

						For the Years Ended December 31,
						2020						2019						2018
Marsh:
EMEA						$	2,575					$	2,482					$	2,132
Asia Pacific						1,059						953						683
Latin America						424						460						400
Total International						4,058						3,895						3,215
U.S./Canada						4,537						4,119						3,662
Total Marsh						8,595						8,014						6,877
Guy Carpenter						1,696						1,480						1,286
Subtotal						10,291						9,494						8,163
Fiduciary interest income						46						105						65
Total Risk and Insurance Services						$	10,337					$	9,599					$	8,228
Mercer:
Wealth						$	2,348					$	2,369					$	2,185
Health						1,793						1,796						1,735
Career						787						856						812
Total Mercer						4,928						5,021						4,732
Oliver Wyman Group						2,048						2,122						2,047
Total Consulting						$	6,976					$	7,143					$	6,779

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

(In millions)						December 31, 2020						December 31, 2019						December 31, 2018
Contract assets						$	236					$	207					$	112
Contract liabilities						$	676					$	593					$	545

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, 2020 to December 31, 2020 is primarily due to $311 million of additions during the period, partly offset by $284 million transferred to accounts receivables, as the rights to bill and collect became unconditional. The change in contract assets from January 1, 2019 to December 31, 2019 is primarily due to $437 million of additions during the period offset by $342 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, 2020 to December 31, 2020 includes cash received for performance obligations not yet fulfilled of $615 million offset by revenue recognized in 2020 of $527 million that was included in the contract liability balance at the beginning of the year. The Company recognized revenue of $531 million in 2019 that was included in the contract liability balance at January 1, 2019.

The Company recognizes commission revenue from arrangements for a significant portion of its brokerage arrangements at a point in time at effective date of the underlying policy. Commission revenue is estimated using historical information about the risks to be covered over the policy period, some of which are dependent on variable factors such as number of employees covered, covered payroll, airline passenger miles flown, shipped tonnage of marine cargo and others. For the year ended December 31, 2020, the Company recorded a revenue reduction of $42 million for estimated commission revenue accounted for on a point in time basis. The reduction primarily relates to policy inception periods from the third quarter of 2019 through the second quarter of 2020.

The amount of revenue recognized in 2020 and 2019 from performance obligations satisfied in previous periods, mainly due to variable consideration from contracts with insurers, quota share business and consulting contracts previously considered constrained was $97 million and $79 million, respectively.

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 $38 million for Marsh, $184 million for Mercer and $6 million for Oliver Wyman Group. The Company expects revenue in 2021, 2022, 2023, 2024 and 2025 and beyond of $135 million, $64 million, $22 million, $6 million and $1 million, respectively, related to these performance obligations.

Costs to Obtain and Fulfill a Contract

The Company capitalizes the incremental costs to obtain contracts primarily related to commissions or sales bonus payments in both segments. These deferred costs are amortized over the expected life of the underlying customer relationships.

In Risk and Insurance Services, the Company capitalizes certain pre-placement costs that are considered fulfillment costs that meet the following criteria: these costs (1) relate directly to a contract, (2) enhance resources used to satisfy the Company’s performance obligation and (3) are expected to be recovered through revenue generated by the contract. These costs are amortized at a point in time when the associated revenue is recognized.

In Consulting, the Company incurs implementation costs necessary to facilitate the delivery of the contracted services. These costs are capitalized and amortized over the initial contract term plus expected renewal periods.

At December 31, 2020, the Company’s capitalized assets related to deferred implementation costs, costs to obtain and costs to fulfill were $29 million, $253 million and $296 million, respectively. 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. 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 $1.3 billion and $1.2 billion for the years ended December 31, 2020 and 2019, 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)			2020						2019						2018
Assets acquired, excluding cash			$	929					$	8,655					$	1,100
Liabilities assumed			(78)						(2,804)						(83)
Non-controlling interests assumed			—						(280)						—
Contingent and deferred purchase consideration			(183)						(66)						(133)
Net cash outflow for acquisitions			$	668					$	5,505					$	884

(In millions of dollars)			2020						2019						2018
Interest paid			$	481					$	427					$	264
Income taxes paid, net of refunds			$	673					$	661					$	632

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 $122 million in the year ended December 31, 2020, consisting of deferred purchase consideration of $68 million and contingent purchase consideration of $54 million. In the year ended December 31, 2019, the Company paid deferred and contingent consideration of $65 million, consisting of deferred purchase consideration of $43 million and contingent consideration of $22 million, and 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.

The following amounts are included in the operating section of the consolidated statements of cash flows. For the year ended December 31, 2020, the Company recorded a net charge for adjustments to acquisition related accounts of $26 million and contingent consideration payments of $48 million. 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, and 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.

The Company had non-cash issuances of common stock under its share-based payment plan of $219 million, $165 million and $130 million for the years ended December 31, 2020, 2019 and 2018, respectively. The Company recorded share-based compensation expense related to restricted stock units, performance stock units and stock options of $290 million, $252 million and $193 million for the years ended December 31, 2020, 2019 and 2018, respectively.

On 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.

Allowance for Credit Losses on Accounts Receivable

On January 1, 2020, the Company adopted the new guidance on the impairment of financial instruments. The Company’s policy for providing an allowance for credit losses on its accounts receivable is a combination of factors, including historical write-offs, aging of balances, and other qualitative and quantitative analyses.

An analysis of the allowance for credit losses for the year ended December 31, 2020 is provided below. Prior periods analysis is based on the Company's allowance for doubtful accounts model prior to adoption of the new accounting guidance discussed above:

For the Years Ended December 31,
(In millions of dollars)			2020						2019						2018
Balance at beginning of year			$	140					$	112					$	110
Provision charged to operations			47						32						34
Accounts written-off, net of recoveries			(30)						(16)						(24)
Effect of exchange rate changes and other			(15)						12						(8)
Balance at end of year			$	142					$	140					$	112

4. Accumulated Other Comprehensive Income (Loss)

The changes, net of tax, in the balances of each component of Accumulated Other Comprehensive Income ("AOCI") for the years ended December 31, 2020 and 2019, including amounts reclassified out of AOCI, are as follows:

(In millions of dollars)									Pension and Post-Retirement Plans Losses						Foreign Currency Translation Adjustments						Total
Balance as of January 1, 2020									$	(3,512)					$	(1,543)					$	(5,055)
Other comprehensive (loss) gain before reclassifications									(739)						559						(180)
Amounts reclassified from accumulated other comprehensive income (loss)									125						—						125
Net current period other comprehensive (loss) gain									(614)						559						(55)
Balance as of December 31, 2020									$	(4,126)					$	(984)					$	(5,110)

(In millions of dollars)									Pension and Post-Retirement Plans 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 income (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)

The components of other comprehensive income (loss) for the years ended December 31, 2020, 2019 and 2018 are as follows:

For the Year Ended December 31,			2020
(In millions of dollars)			Pre-Tax			Tax (Credit)			Net of Tax
Foreign currency translation adjustments			$	559		$	—		$	559
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)			161			37			124
Effect of settlement (a)			3			1			2
Subtotal			162			37			125
Net losses arising during period			(772)			(177)			(595)
Foreign currency translation adjustments			(163)			(28)			(135)
Other adjustments			(11)			(2)			(9)
Pension/post-retirement plans losses			(784)			(170)			(614)
Other comprehensive loss			$	(225)		$	(170)		$	(55)
(a) Components of net periodic pension cost are included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.

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 settlement (a)			6			1			5
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) Components of net periodic pension cost are included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.

For the Year Ended December 31,			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 gains 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) Components of net periodic pension cost are included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.

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

(In millions of dollars)			December 31, 2020						December 31, 2019
Foreign currency translation adjustments (net of deferred tax asset of $11 in 2020 and $14 in 2019, respectively)			$	(984)					$	(1,543)
Net charges related to pension/post-retirement plans (net of deferred tax asset of $1,805 and $1,635 in 2020 and 2019, respectively)			(4,126)						(3,512)
			$	(5,110)					$	(5,055)

5. Acquisitions and Dispositions

The Company’s acquisitions have been accounted for as business combinations. Net assets and results of operations are included in the Company’s consolidated financial statements commencing at the respective purchase closing dates. In connection with acquisitions, the Company records the estimated values of the net tangible assets and the identifiable intangible assets purchased, which typically consist of customer relationships, developed technology, trademarks and non-compete agreements. The valuation of purchased intangible assets involves significant estimates and assumptions. The Company estimates the fair value of purchased intangible assets, primarily using the income approach, by determining the present value of future cash flows over the remaining economic life of the respective assets. The significant estimates and assumptions used in this approach include the determination of the discount rate, economic life, future revenue growth rates, expected account attrition rates and earnings margins. Refinement and completion of final valuation of net assets acquired could affect the carrying value of tangible assets, goodwill and identifiable intangible assets.

The Risk and Insurance Services segment completed seven acquisitions during 2020.

• January – Marsh & McLennan Agency ("MMA") acquired Momentous Insurance Brokerage Inc., a California-based full-service risk management and employee benefits firm specializing in high net worth private client services and insurance solutions for the entertainment industry, and Ironwood Insurance Services, LLC, an Atlanta-based broker that provides commercial property/casualty insurance, employee benefits, and private client solutions to mid-size businesses and individuals across the U.S.

• April – MMA acquired Assurance Holdings, Inc., an Illinois-based full service brokerage providing business insurance, employee benefits, private client insurance, and retirement services to businesses and individuals across the U.S.

• June – MMA acquired Nico Insurance Services, Inc., a California-based agency providing employee benefits solutions to groups and individuals.

• December – MMA acquired Heritage Insurance Services, Inc., a Kentucky-based full service broker that provides commercial property and casualty and personal lines primarily in the trucking and transportation industry, Inspro Insurance, Inc., a Nebraska-based full service broker that provides commercial property and casualty insurance, personal lines and employee benefits services, and Compass Financial Partners, LLC, a North Carolina-based retirement consulting and investment advisory firm.

Total purchase consideration for acquisitions made during 2020 was approximately $877 million, which consisted of cash paid of $694 million and deferred purchase and estimated contingent consideration of $183 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. During 2020, the Company also paid $68 million of deferred purchase consideration and $102 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 2020 based on the estimated fair values for the acquisitions as of their respective acquisition dates:

Acquisitions for the Year-Ended December 31, 2020
(In millions)
Cash			$	694
Estimated fair value of deferred/contingent consideration			183
Total consideration			$	877
Allocation of purchase price:
Cash and cash equivalents			$	26
Accounts receivable, net			29
Fixed assets, net			16
Other intangible assets			278
Goodwill			593
Other assets			13
Total assets acquired			955
Current liabilities			25
Other liabilities			53
Total liabilities assumed			78
Net assets acquired			$	877

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

Items subject to change include:

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

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

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

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

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

The following chart provides information about intangible assets acquired during 2020:

Intangible assets through December 31, 2020 (In millions)						Amount						Weighted Average Amortization Period
Customer relationships						$	255					13.7 years
Other						23						4.3 years
						$	278

The consolidated statement of income for 2020 includes approximately $169 million of revenue and operating income of $11 million related to acquisitions made during 2020. The consolidated statement of income for 2019 includes approximately $1.2 billion of revenue and $40 million of operating loss related to acquisitions made during 2019, and 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.

In 2020, the Company incurred acquisition-related costs of $3 million, primarily related to legal fees. In 2019, the Company incurred acquisition-related costs, primarily related to legal, investment banking and U.K. stamp duty tax of $125 million, primarily related to the acquisition of JLT. Acquisition-related costs incurred in 2018 were $7 million. These costs are included in other operating expenses in the Company's consolidated statement of income.

Dispositions

During 2020, the Company sold certain businesses primarily in the U.S., U.K. and Canada for cash proceeds of approximately $98 million.

At December 31, 2019, the Company owned approximately 443 million shares of the common stock of Alexander Forbes ("AF"), a South African company listed on the Johannesburg Stock Exchange, which was accounted for under the equity method of accounting. In February 2020, the Company sold approximately 49 million shares of the common stock of AF, and in May 2020, sold an additional 193 million shares to third parties, leaving the Company with an investment of approximately 201 million shares of the common stock of AF at December 31, 2020. Upon completion of the May transaction, the investment in AF is accounted at fair value, with unrealized gains and losses recorded as investment (loss) income in the consolidated statement of income.

Prior year acquisitions

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 Transaction strengthened MMC’s leadership position in insurance and reinsurance broking and health and retirement. The addition of over 10,000 colleagues provided 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.

During 2019, the Risk and Insurance Services segment completed five other acquisitions.

*•*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 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 2019, the Company also paid $43 million of deferred purchase consideration and $63 million of contingent consideration related to acquisitions made in prior years.

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

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 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.

Pro-Forma Information

The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company during 2020, 2019 and 2018. 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, 2019 and reflects acquisitions made in 2019 as if they occurred on January 1, 2018. The 2018 information includes 2018 acquisitions as if they occurred on January 1, 2017. The pro-forma information includes the effects of amortization of acquired intangibles in all years and additional interest expense related to the issuance of debt related to the JLT Transaction in the 2018 pro-forma. 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)			2020						2019						2018
Revenue			$	17,301					$	17,323					$	17,106
Net income attributable to the Company			$	2,021					$	1,877					$	1,302
Basic net income per share attributable to the Company			$	3.99					$	3.71					$	2.58
Diluted net income per share attributable to the Company			$	3.95					$	3.67					$	2.55

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.

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 quantitative goodwill impairment test. Alternatively, the Company may elect to proceed directly to the quantitative goodwill impairment test. In 2020, the Company elected to perform a qualitative impairment assessment. As part of its assessment, the Company considered numerous factors, including:

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

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

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

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

• industry and market conditions;

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

The Company completed its qualitative assessment in the third quarter of 2020 and concluded that goodwill was not impaired.

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

Changes in the carrying amount of goodwill are as follows:

(In millions of dollars)			2020						2019
Balance as of January 1, as reported			$	14,671					$	9,599
Goodwill acquired (a)			593						5,124
Other adjustments (b)			253						(52)
Balance at December 31,			$	15,517					$	14,671

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

(b) Primarily reflects the impact of foreign exchange and dispositions.

The goodwill acquired in 2020 and 2019 included approximately $179 million and $213 million, respectively, which is deductible for tax purposes, primarily related to the Risk and Insurance Services segment.

Goodwill allocable to the Company’s reportable segments is as follows: Risk and Insurance Services, $11.7 billion and Consulting, $3.8 billion.

The gross cost and accumulated amortization of intangible assets at December 31, 2020 and 2019 are as follows:

(In millions of dollars)			2020																		2019
			Gross Cost						Accumulated Amortization						Net Carrying Amount						Gross Cost						Accumulated Amortization						Net Carrying Amount
Customer relationships			$	3,713					$	1,170					$	2,543					$	3,494					$	897					$	2,597
Other (a)			386						230						156						380						203						177
Amortized intangibles			$	4,099					$	1,400					$	2,699					$	3,874					$	1,100					$	2,774

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

Aggregate amortization expense was $351 million for the year ended December 31, 2020, $314 million for the year ended December 31, 2019 and $183 million for the year ended December 31, 2018. The estimated future aggregate amortization expense is as follows:

For the Years Ending December 31,
(In millions of dollars)
2021			$	356
2022			327
2023			300
2024			285
2025			275
Subsequent years			1,156
			$	2,699

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)			2020						2019						2018
Income before income taxes:
U.S.			$	1,075					$	657					$	460
Other			1,718						1,782						1,784
			$	2,793					$	2,439					$	2,244
The expense (benefit) for income taxes is comprised of:
Current –
U.S. Federal			$	172					$	70					$	82
Other national governments			456						455						449
U.S. state and local			79						57						82
			707						582						613
Deferred –
U.S. Federal			40						69						(30)
Other national governments			(14)						(16)						(1)
U.S. state and local			14						31						(8)
			40						84						(39)
Total income taxes			$	747					$	666					$	574

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

December 31,
(In millions of dollars)			2020						2019
Deferred tax assets:
Accrued expenses not currently deductible			$	547					$	492
Differences related to non-U.S. operations (a)			294						324
Accrued U.S. retirement benefits			494						438
Net operating losses (b)			60						70
Income currently recognized for tax			25						19
Other			43						27
			$	1,463					$	1,370

Deferred tax liabilities:
Differences related to non-U.S. operations			$	569					$	400
Depreciation and amortization			491						594
Accrued retirement & postretirement benefits - non-U.S. operations			143						151
Capitalized expenses currently recognized for tax			87						77
Other			32						37
			$	1,322					$	1,259

(a)Net of valuation allowances of $123 million in 2020 and $54 million in 2019.

(b)Net of valuation allowances of $75 million in 2020 and $72 million in 2019.

December 31,
(In millions of dollars)			2020						2019
Balance sheet classifications:
Deferred tax assets			$	702					$	676
Other liabilities			$	561					$	565

The amount of cumulative undistributed earnings that are indefinitely reinvested in non-U.S. subsidiaries is approximately $700 million as of December 31, 2020. While no additional U.S. federal income tax would be required if such earnings were repatriated, additional state and withholding taxes would apply. The amount of these additional taxes is estimated to be approximately $60 million.

Future U.S. federal tax costs related to basis differences in Non-U.S. subsidiaries would primarily be realized through the U.S. GILTI tax regime. The Company elected to recognize GILTI tax costs as a period cost and therefore, has not provided deferred tax liabilities on these basis differences.

A reconciliation from the U.S. Federal statutory income tax rate to the Company’s effective income tax rate is shown below:

For the Years Ended December 31,			2020						2019						2018
U.S. Federal statutory rate			21.0		%				21.0		%				21.0		%
U.S. state and local income taxes—net of U.S. Federal income tax benefit			2.5						3.0						2.3
Differences related to non-U.S. operations			2.3						3.0						3.3
U.S. Tax Reform			—						—						(0.3)
Equity compensation			(1.4)						(1.3)						(1.0)
Uncertain Tax Positions			1.1						—						—
Other			1.2						1.6						0.3
Effective tax rate			26.7		%				27.3		%				25.6		%

The Company’s consolidated effective tax rate was 26.7%, 27.3% and 25.6% in 2020, 2019 and 2018, respectively. The rates in all periods reflect the effects of tax planning and the ongoing impact of the Tax Cuts and Jobs Act ("TCJA"), including regulatory and other guidance as it became available. The tax rate in 2020 includes a valuation allowance for certain tax credits, the impact of uncertain tax positions, and certain tax planning benefits. The 2019 rate includes certain tax costs related to JLT integration and restructuring activity. The 2018 rate includes the effect of a charge related to the Company’s investment in Alexander Forbes.

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 $72 million, $60 million and $36 million in 2020, 2019 and 2018, respectively. Adjustments of the beginning of the year balances of valuation allowances decreased income tax expense by $14 million during 2020. There was no change to income tax expense as a result of adjustments of the beginning of the year valuation allowances in 2019, while in 2018 changes to the beginning of year valuation allowance increased income tax expense by $1 million. Approximately 58% of the Company’s net operating loss carryforwards expire from 2021 through 2037, and others are unlimited. The potential tax benefit from net operating loss carryforwards at the end of 2020 comprised federal, state and local, and non-U.S. tax benefits of $24 million, $25 million, and $94 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, 2020, 2019 and 2018:

(In millions of dollars)			2020						2019						2018
Balance at January 1,			$	86					$	78					$	71
Additions, based on tax positions related to current year			9						8						6
Additions for tax positions of prior years			25						15						6
Reductions for tax positions of prior years			(9)						(1)						—
Settlements			(4)						(1)						(2)
Lapses in statutes of limitation			(9)						(13)						(3)
Balance at December 31,			$	98					$	86					$	78

Of the total unrecognized tax benefits at December 31, 2020, 2019 and 2018, $90 million, $75 million and $64 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, 2020, 2019 and 2018, before any applicable federal benefit, was $40 million, $31 million and $15 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, 2018 and 2019 tax returns. The Company was accepted into the Bridge phase of the CAP process for tax year 2020.

New York is a significant tax jurisdiction for the Company. During 2019, New York State initiated an audit for the 2015 tax year; and during 2020 included the 2016 tax year. During 2020, New York City initiated an audit for tax years 2016 through 2018. During 2018, New York State and New York City closed the examination of tax years 2007 through 2009. In addition, New York State and New York City have continuing 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 2020						Ongoing						Concluded
Canada			2017, 2019-2020						2018						2013-2016 during 2019
France									2017-2018						2011, 2012 during 2018
Germany			2015-2018						2013-2016						2009-2012 during 2018
Italy			2017						2015-2016
Singapore			2018						2018						2016, 2017 during 2020
United Kingdom			2018						2016-2017						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 $33 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
			2020						2019						2020						2019
Weighted average assumptions:
Discount rate (for expense)			2.57		%				3.48		%				2.72		%				3.65		%
Expected return on plan assets			5.31		%				5.74		%				—						—
Rate of compensation increase (for expense)*			1.76		%				1.74		%				—						—
Discount rate (for benefit obligation)			1.92		%				2.57		%				2.42		%				2.72		%
Rate of compensation increase (for benefit obligation)*			1.85		%				1.76		%				—						—

*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 and earned benefits are not subject to final salary level adjustments.

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 2020, 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 32% equities and equity alternatives and 68% fixed income. At the end of 2020, the actual allocation for the U.K. plans was 33% equities and equity alternatives and 67% 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.

Changes to Pension Plans

As part of the JLT Transaction, the Company assumed responsibility for a number of pension plans throughout the world, the most significant of which is the 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 scheme 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)			2020						2019						2018						2020						2019						2018
Service cost			$	36					$	31					$	34					$	—					$	—					$	1
Interest cost			421						487						463						3						3						3
Expected return on plan assets			(844)						(863)						(864)						—						—						—
Amortization of prior service (credit)			—						—						(2)						(2)						(2)						(2)
Recognized actuarial loss (gain)			161						104						146						—						(1)						(1)
Net periodic benefit (credit) cost			$	(226)					$	(241)					$	(223)					$	1					$	—					$	1
Plan termination			1						—						—						—						—						—
Settlement loss			3						7						42						—						—						—
Total (credit) cost			$	(222)					$	(234)					$	(181)					$	1					$	—					$	1

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)			2020						2019			2018						2020						2019			2018
Compensation and benefits expense (Operating income)			$	36					$	31		$	34					$	—					$	—		$	1
Other net benefit (credit) cost			(258)						(265)			(215)						1						—			—
Total (credit) cost			$	(222)					$	(234)		$	(181)					$	1					$	—		$	1

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 in the consolidated statements of income for the year ended December 31, 2018, primarily related to these plans. The Company recorded $3 million and $7 million of non-cash settlement charges for the years ended December 31, 2020 and 2019, respectively, 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 29-35% for equities and equity alternatives, and 65-71% 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 AOCI, net of tax. These gains and losses are amortized prospectively out of AOCI over a period that approximates the remaining life expectancy of participants in plans where substantially all participants are inactive, or the average remaining service period of active participants for plans with active participants. The vast majority of unrecognized losses relate to inactive plans and are amortized over the remaining life expectancy of the participants.

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)			2020						2019						2020						2019
Change in benefit obligation:
Benefit obligation at beginning of year			$	6,322					$	5,529					$	31					$	32
Interest cost			213						241						1						1
Employee contributions			—						—						4						4
Plan combination			—						64						—						—
Actuarial (gain) loss			650						753						1						1
Benefits paid			(271)						(265)						(6)						(7)
Benefit obligation, December 31			$	6,914					$	6,322					$	31					$	31
Change in plan assets:
Fair value of plan assets at beginning of year			$	4,715					$	4,062					$	2					$	1
Actual return on plan assets			591						834						—						—
Employer contributions			65						35						3						4
Employee contributions			—						—						4						4
Benefits paid			(271)						(265)						(6)						(7)
Other			—						49						(1)						—
Fair value of plan assets, December 31			$	5,100					$	4,715					$	2					$	2
Net funded status, December 31			$	(1,814)					$	(1,607)					$	(29)					$	(29)
Amounts recognized in the consolidated balance sheets:
Current liabilities			$	(30)					$	(29)					$	(1)					$	(1)
Non-current liabilities			(1,784)						(1,578)						(28)						(28)
Net liability recognized, December 31			$	(1,814)					$	(1,607)					$	(29)					$	(29)
Amounts recognized in other comprehensive income (loss):
Net actuarial (loss) gain			(2,446)						(2,114)						3						4
Total recognized accumulated other comprehensive (loss) income, December 31			$	(2,446)					$	(2,114)					$	3					$	4
Cumulative employer contributions in excess of (less than) net periodic cost			632						507						(32)						(33)
Net amount recognized in consolidated balance sheet			$	(1,814)					$	(1,607)					$	(29)					$	(29)
Accumulated benefit obligation at December 31			$	6,914					$	6,322					$	—					$	—

			U.S. Pension Benefits												U.S. Post-retirement Benefits
(In millions)			2020						2019						2020						2019
Reconciliation of net actuarial (loss) gain recognized in accumulated other comprehensive income (loss):
Beginning balance			$	(2,114)					$	(1,896)					$	4					$	6
Recognized as component of net periodic benefit cost (credit)			72						44						—						(1)
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Liability experience			(650)						(753)						(1)						(1)
Asset experience			246						491						—						—
Total loss recognized as change in plan assets and benefit obligations			(404)						(262)						(1)						(1)
Net actuarial (loss) gain, December 31			$	(2,446)					$	(2,114)					$	3					$	4

For the Years Ended December 31,			U.S. Pension Benefits																		U.S. Post-retirement Benefits
(In millions)			2020						2019						2018						2020						2019						2018
Total recognized in net periodic benefit cost and other comprehensive loss			$	272					$	160					$	63					$	2					$	2					$	—

The weighted average actuarial assumptions utilized in determining expense during the year and benefit obligation at the end of the year for the U.S. defined benefit and other U.S. post-retirement plans are as follows:

			U.S. Pension Benefits												U.S. Post-retirement Benefits
			2020						2019						2020						2019
Weighted average assumptions:
Discount rate (for expense)			3.44		%				4.45		%				3.10		%				4.24		%
Expected return on plan assets			7.82		%				7.95		%				—						—
Discount rate (for benefit obligation)			2.73		%				3.44		%				2.18		%				3.10		%

The accumulated benefit obligation and aggregate fair value of plan assets for U.S. pension plans with accumulated benefit obligations in excess of plan assets were $6.9 billion and $5.1 billion, respectively, as of December 31, 2020 and $6.3 billion and $4.7 billion, respectively, as of December 31, 2019.

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 $6.9 billion and $5.1 billion, respectively, as of December 31, 2020 and $6.3 billion and $4.7 billion, respectively, as of December 31, 2019. The increase in the benefit obligation in 2020 compared to 2019 reflects the decrease in discount rates used to measure plan liabilities.

As of December 31, 2020, 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 4.6% of that plan's assets as of December 31, 2020.

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)			2020						2019						2018						2020						2019						2018
Interest cost			213						241						235						1						1						1
Expected return on plan assets			(345)						(343)						(357)						—						—						—
Recognized actuarial loss (gain)			72						44						55						—						(1)						(1)
Net periodic benefit (credit) cost			$	(60)					$	(58)					$	(67)					$	1					$	—					$	—

The assumed health care cost trend rate for Medicare eligibles and non-Medicare eligibles is approximately 5.8% in 2020, 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%.

Estimated Future Contributions

The Company expects to contribute approximately $37 million to its U.S. plans in 2021. 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)			2020						2019						2020						2019
Change in benefit obligation:
Benefit obligation at beginning of year			$	11,321					$	8,969					$	61					$	57
Service cost			36						31						—						—
Interest cost			208						246						2						2
Employee contributions			2						2						—						—
Plan combination			—						915						—						—
Actuarial loss			1,273						1,339						10						3
Plan amendments			11						(1)						—						—
Effect of settlement			(13)						(25)						—						—
Special termination benefits			1						—						—						—
Benefits paid			(402)						(364)						(2)						(3)
Foreign currency changes			561						209						2						2
Benefit obligation, December 31			$	12,998					$	11,321					$	73					$	61
Change in plan assets:
Fair value of plan assets at beginning of year			$	12,313					$	10,306					$	—					$	—
Plan combination			—						683						—						—
Actual return on plan assets			1,415						1,367						—						—
Effect of settlement			(13)						(25)						—						—
Company contributions			78						87						2						3
Employee contributions			2						2						—						—
Benefits paid			(402)						(364)						(2)						(3)
Foreign currency changes			635						257						—						—
Fair value of plan assets, December 31			$	14,028					$	12,313					$	—					$	—
Net funded status, December 31			$	1,030					$	992					$	(73)					$	(61)
Amounts recognized in the consolidated balance sheets:
Non-current assets			$	1,764					$	1,632					$	—					$	—
Current liabilities			(7)						(6)						(3)						(3)
Non-current liabilities			(727)						(634)						(70)						(58)
Net asset (liability) recognized, December 31			$	1,030					$	992					$	(73)					$	(61)
Amounts recognized in other comprehensive (loss) income:
Prior service credit			$	(13)					$	(2)					$	9					$	11
Net actuarial loss			(3,467)						(3,055)						(16)						(5)
Total recognized accumulated other comprehensive (loss) income, December 31			$	(3,480)					$	(3,057)					$	(7)					$	6
Cumulative employer contributions in excess of (less than) net periodic cost			4,510						4,049						(66)						(67)
Net asset (liability) recognized in consolidated balance sheets, December 31			$	1,030					$	992					$	(73)					$	(61)
Accumulated benefit obligation, December 31			$	12,736					$	11,079					$	—					$	—

			Non-U.S. Pension Benefits												Non-U.S. Post-retirement Benefits
(In millions)			2020						2019						2020						2019
Reconciliation of prior service (cost) credit recognized in accumulated other comprehensive income (loss):
Beginning balance			$	(2)					$	(2)					$	11					$	12
Recognized as component of net periodic benefit credit:
Amortization of prior service credit			—						—						(2)						(2)
Total recognized as component of net periodic benefit credit			—						—						(2)						(2)
Changes in plan assets and benefit obligations recognized in other comprehensive income:
Plan amendments			(11)						1						—						—
Exchange rate adjustments			—						(1)						—						1
Prior service (cost) credit, December 31			$	(13)					$	(2)					$	9					$	11

			Non-U.S. Pension Benefits												Non-U.S. Post-retirement Benefits
(In millions)			2020						2019						2020						2019
Reconciliation of net actuarial (loss) gain recognized in accumulated other comprehensive (loss) income:
Beginning balance			$	(3,055)					$	(2,568)					$	(5)					$	(1)
Recognized as component of net periodic benefit cost:
Amortization of net loss			89						60						—						—
Effect of settlement			3						7						—						—
Total recognized as component of net periodic benefit credit			92						67						—						—
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Liability experience			(1,273)						(1,339)						(10)						(3)
Asset experience			916						847						—						—
Total amount recognized as change in plan assets and benefit obligations			(357)						(492)						(10)						(3)
Exchange rate adjustments			(147)						(62)						(1)						(1)
Net actuarial loss, December 31			$	(3,467)					$	(3,055)					$	(16)					$	(5)

For the Years Ended December 31,			Non-U.S. Pension Benefits																		Non-U.S. Post-retirement Benefits
(In millions)			2020						2019						2018						2020						2019						2018
Total recognized in net periodic benefit cost and other comprehensive loss (income)			$	261					$	311					$	(147)					$	13					$	5					$	(5)

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
			2020						2019						2020						2019
Weighted average assumptions:
Discount rate (for expense)			2.09		%				2.89		%				2.53		%				3.32		%
Expected return on plan assets			4.35		%				4.87		%				—						—
Rate of compensation increase (for expense)			2.75		%				2.82		%				—						—
Discount rate (for benefit obligation)			1.49		%				2.09		%				1.96		%				2.53		%
Rate of compensation increase (for benefit obligation)			2.84		%				2.75		%				—						—

The accumulated benefit obligation and fair value of plan assets for the non-U.S. pension plans with accumulated benefit obligations in excess of plan assets were $3.1 billion and $2.5 billion, respectively, as of December 31, 2020 and $2.7 billion and $2.2 billion, respectively, as of December 31, 2019.

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 $3.3 billion and $2.6 billion, respectively, as of December 31, 2020 and $3.0 billion and $2.3 billion, respectively, as of December 31, 2019.

The increase in the benefit obligation in 2020 compared to 2019 reflects an actuarial loss primarily due to the decrease in discount rates used to measure plan liabilities.

Components of Net Periodic Benefits Costs

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

For the Years Ended December 31,			Non-U.S. Pension Benefits																		Non-U.S. Post-retirement Benefits
(In millions)			2020						2019						2018						2020						2019						2018
Service cost			$	36					$	31					$	34					$	—					$	—					$	1
Interest cost			208						246						228						2						2						2
Expected return on plan assets			(499)						(520)						(507)						—						—						—
Amortization of prior service credit			—						—						(2)						(2)						(2)						(2)
Recognized actuarial loss			89						60						91						—						—						—
Net periodic benefit (credit) cost			(166)						(183)						(156)						—						—						1
Settlement loss			3						7						42						—						—						—
Special termination benefits			1						—						—						—						—						—
Total (credit) cost			$	(162)					$	(176)					$	(114)					$	—					$	—					$	1

The assumed health care cost trend rate was approximately 4.93% in 2020, gradually declining to 4.22% in 2040. Assumed health care cost trend rates can have a significant effect on the amounts reported for the non-U.S. health care plans.

Estimated Future Contributions

The Company expects to contribute approximately $87 million to its non-U.S. pension plans in 2021. 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 JLT's Pension Scheme (JLT U.K. plan). We currently expect to pay $29 million of deficit funding in 2021, although we will also reach a new funding agreement with the trustee during 2021.

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)			U.S.						Non-U.S.						U.S.						Non-U.S.
2021			$	291					$	344					$	4					$	3
2022			$	302					$	353					$	3					$	3
2023			$	315					$	373					$	3					$	3
2024			$	321					$	382					$	3					$	3
2025			$	327					$	394					$	3					$	3
2026-2030			$	1,701					$	2,160					$	10					$	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. See Note 10 for further description of fair value hierarchy leveling.

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, 2020 and 2019:

			Fair Value Measurements at December 31, 2020
Assets (In millions)			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			$	561					$	—					$	—					$	4,298					$	4,859
Corporate obligations			—						4,707						2						—						4,709
Corporate stocks			2,737						39						1						—						2,777
Private equity/partnerships			—						—						—						1,353						1,353
Government securities			15						4,331						—						—						4,346
Real estate			—						—						—						487						487
Short-term investment funds			1,040						—						—						—						1,040
Company common stock			234						—						—						—						234
Other investments			13						7						771						—						791
Total investments			$	4,600					$	9,084					$	774					$	6,138					$	20,596
Net derivative liabilities			—						(1,522)						—						—						(1,522)
Net Investments			$	4,600					$	7,562					$	774					$	6,138					$	19,074

			Fair Value Measurements at December 31, 2019
Assets (In millions)			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

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, 2020 and December 31, 2019:

Assets (In millions)			Fair Value, January 1, 2020						Purchases						Sales						Unrealized Gain/ (Loss)						Realized Gain/ (Loss)						Exchange Rate Impact						Transfers in/(out) and Other						Fair Value, December 31, 2020
Other investments			$	682					$	20					$	(12)					$	25					$	1					$	55					$	2					$	773
Corporate stocks			1						—						—						—						—						—						—						1
Total assets			$	683					$	20					$	(12)					$	25					$	1					$	55					$	2					$	774

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.

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.

Net derivative liabilities: Includes interest rate swaps, inflation swaps, total return swaps, repurchase agreements and equity based derivatives, primarily related to the U.K. plans. These derivatives are structured to hedge interest rate, inflation and equity exposure in the U.K. plans. Fair values for interest rate, inflation and equity based derivatives are calculated using a discounted cash flow pricing model. These models use observable market data such as contractual fixed rate, spot equity price or index value and dividend data.

In the prior year, the invested assets and hedging derivatives in the U.K. plans were structured as a pooled fund and disclosed in the leveling chart in the common/collective trust category and measured at fair value based on NAV. In the fourth quarter of 2020, the Company restructured the U.K. plans' investment portfolio to segregate its asset and hedging instruments by specific investment categories.

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 ("MMC 401(k) Plan") and the Marsh & McLennan Agency Savings and Investment Plan (collectively, the "401(k) Plans"), that are qualified under U.S. tax laws. For the 401(k) Plans, eligible employees may contribute a percentage of their base salary, subject to certain limitations, and the Company matches a fixed portion of the employees’ contributions. In addition, the Company also amended the MMC 401(k) Plan for most of its U.S. employees to add an automatic Company contribution equal to 4% of eligible base pay beginning on January 1, 2017. The 401(k) Plans contain an Employee Stock Ownership Plan feature under U.S. tax law. Approximately $537 million of the 401(k) Plans' assets at December 31, 2020 and $556 million at December 31, 2019 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 $145 million in 2020, $139 million in 2019 and $133 million in 2018. 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 $121 million, $100 million and $80 million in 2020, 2019 and 2018, respectively.

9. Stock Benefit Plans

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

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

On May 21, 2020, the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan (the "2020 Plan") was approved by the Company's stockholders. The 2020 Plan replaced the Company's previous equity incentive plan (2011 Incentive and Stock Award Plan).

The types of awards permitted under the 2020 Plan include stock options, restricted stock units payable in Company common stock or cash, and other stock-based awards. Performance-based restricted stock units are referred to as performance stock units. The 2020 Plan contains a provision which, in the event of a change in control of the Company, may accelerate the vesting of awards. This provision requires both a change in control of the Company and a subsequent specified termination of employment for vesting to be accelerated. There are 20 million shares available for issuance under the 2020 plan. The total number of shares issued in connection with full-value awards may not exceed 12.5 million shares. Full-value awards include awards such as restricted stock units and performance stock units but exclude stock options.

The Company's current practice is to grant non-qualified stock options, restricted stock units ("RSUs") and/or performance stock units ("PSUs") on an annual basis to senior executives and a limited number of

other employees as part of their total compensation. RSU awards are also granted to new hires or as retention awards for certain employees.

Stock Options: The Company currently grants non-qualified stock options under the 2020 Plan. The Compensation Committee determines when the options vest and may be exercised and under what terms the options are forfeited. Options are generally granted with an exercise price equal to the market value of the Company's common stock on the date of grant. These option awards generally vest 25% per year and have a contractual term of 10 years.

The estimated fair value of options granted is calculated using the Black-Scholes option pricing valuation model. This model takes into account several factors and assumptions. The expected dividend yield is based on expected dividends for the expected life of the stock options.

The assumptions used in the Black-Scholes option pricing valuation model for options granted by the Company in 2020, 2019 and 2018 are as follows:

			2020						2019						2018
Risk-free interest rate			1.44		%				2.51		%				2.73		%
Expected life (in years)			6.0						6.0						6.0
Expected volatility			20.33		%				20.93		%				23.23		%
Expected dividend yield			1.53		%				1.82		%				1.81		%

A summary of the status of the Company’s stock option awards as of December 31, 2020 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, 2020			8,859,128						$	64.69
Granted			1,326,790						$	118.87
Exercised			(2,348,898)						$	44.72
Forfeited			(67,125)						$	96.09
Balance at December 31, 2020			7,769,895						$	79.71					6.5 years						$	285,520
Options vested or expected to vest at December 31, 2020			7,645,454						$	79.45					6.5 years						$	282,844
Options exercisable at December 31, 2020			4,299,859						$	64.71					5.2 years						$	220,402

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, 2020, 2019 and 2018 was $21.09, $17.87 and $18.29, respectively. The total intrinsic value of options exercised during the same periods was $159.3 million, $136.7 million and $72.9 million, respectively.

As of December 31, 2020, there was $17.5 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 1.23 years. Cash received from the exercise of stock options for the years ended December 31, 2020, 2019 and 2018 was $72.0 million, $106.5 million and $46.7 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: The Company currently grants RSU and PSU awards under the 2020 Plan. The Compensation Committee determines the restrictions on such units, when the restrictions lapse, when the units vest and are paid, and under what terms the units are forfeited. The cost of these awards is amortized over the vesting period, which is generally three years. Dividend equivalents are not paid out unless and until such time that the award vests and shares are

distributed. For PSU's granted prior to 2020, payout is based on the achievement of the Company's performance measures, based on adjusted EPS growth as modified for executive compensation purposes and measured on a three-year annualized growth basis, and paid out generally over the three-year performance period. The Company accounts for these awards as performance condition restricted stock units. The performance condition is not considered in the determination of grant date fair value of such awards. Compensation cost is recognized over the performance period based on management’s estimate of the number of units expected to vest and shares to be paid and is adjusted to reflect the actual number of shares paid out at the end of the three-year performance period.

The payout for PSU awards granted in 2020 is based on the achievement of the Company's adjusted EPS growth as well as a relative total stockholder return ("TSR") modifier versus the S&P 500 companies. The TSR modifier is a market condition with the grant-date fair value determined using a Monte Carlo simulation model. The Monte Carlo model takes into account several factors and assumptions including the risk-free interest rate, historical volatility of and correlations between the stock prices of the Company and the S&P 500 companies, and the Company’s relative TSR versus S&P 500 companies for the brief portion of the three-year performance period prior to the grant date. The number of shares actually earned at the end of the three-year period will vary, based on actual Company financial performance, and for 2020 PSU awards, relative TSR, from 0% to 200%% of the number of performance share units granted.

The assumptions used in the Monte Carlo simulation model for PSU's granted with the TSR modifier by the Company in 2020 include:

			2020
Risk-Free Interest Rate			1.39		%
Dividend Yield			1.8		%
Volatility			16.0		%
Initial TSR			7.9		%

A summary of the status of the Company's RSU and PSU awards as of December 31, 2020 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, 2020			5,957,737			$	87.80					650,547			$	82.75
Granted			2,156,602			$	118.20					235,432			$	127.71
Vested			(2,291,265)			$	82.96					(210,950)			$	73.20
Forfeited			(309,393)			$	96.28					(18,347)			$	97.02
Non-vested balance at December 31, 2020			5,513,681			$	101.22					656,682			$	101.54

The weighted-average grant-date fair value of the Company's RSU awards granted during the years ended December 31, 2019 and 2018 was $92.50 and $83.05, respectively. The weighted average grant date fair value of the Company's PSU awards granted during the years ended December 31, 2019 and 2018 was $91.17 and $83.05, respectively. The total fair value of the shares distributed during the years ended December 31, 2020, 2019 and 2018 in connection with the Company's non-option equity awards was $290.0 million, $211.9 million and $170.3 million, respectively.

The payout of shares in 2020 with respect to the PSU awards granted in 2017 was 168% of target based on performance for the three-year performance period. In aggregate, 354,452 shares became distributable in respect to PSUs vested in 2020.

As of December 31, 2020, there was $347.7 million of unrecognized compensation cost related to the Company's RSU and PSU awards. The weighted-average period over which that cost is expected to be recognized is approximately 1 year.

Marsh & McLennan Companies Stock Purchase Plans

In May 1999, the Company's stockholders approved an employee stock purchase plan (the "1999 Plan") to replace the 1994 Employee Stock Purchase Plan (the "1994 Plan"), which terminated on September 30, 1999 following its fifth annual offering. Under the current terms of the Plan, shares are purchased four times during the plan year at a price that is 95% of the average market price on each quarterly purchase date. Under the 1999 Plan, after including the available remaining unused shares in the 1994 Plan and reducing the shares available by 10,000,000 consistent with the Company's Board of Directors' action in March 2007 and the addition of 4,750,000 shares due to a shareholder action in May 2018, no more than 40,350,000 shares of the Company's common stock may be sold. Employees purchased 394,419 shares during the year ended December 31, 2020 and at December 31, 2020, 4,878,288 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 115,199 shares during the year ended December 31, 2020 and there were 1,156,014 shares available for issuance at December 31, 2020 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 are related to an equity security.

*Level 3.*Assets and liabilities whose values are based on prices, or valuation techniques that require inputs that are both unobservable and significant to the overall fair value

measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

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

Valuation Techniques

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

Investments for which market quotations are readily available are valued at the sale price on their principal exchange or, for certain markets, official closing bid price. Money market mutual funds are valued using a valuation technique that results in price per share at $1.00.

Contingent Purchase Consideration Assets and Liability - Level 3

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

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019:

(In millions of dollars)			Identical Assets (Level 1)												Observable Inputs (Level 2)												Unobservable Inputs (Level 3)												Total
			12/31/20						12/31/19						12/31/20						12/31/19						12/31/20						12/31/19						12/31/20						12/31/19
Assets:
Financial instruments owned:
Exchange traded equity securities (a)			$	59					$	4					$	—					$	—					$	—					$	—					$	59					$	4
Mutual funds(a)			186						166						—						—						—						—						186						166
Money market funds(b)			587						55						—						—						—						—						587						55
Other equity investment(a)			—						—						8						8						—						—						8						8
Contingent purchase consideration asset(c)			—						—						—						—						68						84						68						84
Total assets measured at fair value			$	832					$	225					$	8					$	8					$	68					$	84					$	908					$	317
Fiduciary Assets:
Money market funds			$	173					$	360					$	—					$	—					$	—					$	—					$	173					$	360
U.S. Treasury Bills			150						40						—						—						—						—						150						40
Total fiduciary assets measured at fair value			$	323					$	400					$	—					$	—					$	—					$	—					$	323					$	400
Liabilities:
Contingent purchase consideration liability(d)			$	—					$	—					$	—					$	—					$	243					$	225					$	243					$	225
Acquisition related derivative contracts			—						—						—						—						—						—						—						—
Total liabilities measured at fair value			$	—					$	—					$	—					$	—					$	243					$	225					$	243					$	225

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

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

(c) Included in other receivables at December 31, 2020 and other assets at December 31, 2019 in the consolidated balance sheets.

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

The Level 3 assets in the above chart reflect contingent purchase consideration from the sale of businesses during 2019. The change in the asset from December 31, 2019 is primarily due to the net impact of accretion and adjustments to the fair value of the acquisition related asset of approximately $15 million. A 5% increase or decrease in the projections used to estimate the contingent consideration would result in a corresponding increase or decrease of the asset of approximately $7 million.

During the year ended December 31, 2020, 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, 2020 and December 31, 2019.

(In millions)			2020						2019
Balance at January 1,			$	225					$	508
Net additions			107						36
Payments			(102)						(63)
Revaluation impact			11						70
Change in fair value of the FX contract			—						(325)
Other (a)			2						(1)
Balance at December 31,			$	243					$	225

(a) Primarily reflects the impact of foreign exchange.

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 $11 million for the year ended December 31, 2020. A 5% increase in the projections used to estimate the contingent consideration would increase the liability by approximately $12 million. A 5% decrease would decrease the liability by approximately $21 million.

Long-Term Investments

The Company holds investments in certain private equity investments and private companies that are accounted for using the equity method of accounting. The carrying value of these investments was $280 million and $434 million at December 31, 2020 and 2019, respectively.

Investments in Public and Private Companies

The Company has other investments in private insurance and consulting companies with a carrying value of $169 million and $183 million at December 31, 2020 and December 31, 2019, respectively. The Company’s equity investment in insurance and consulting companies are accounted for using the equity method of accounting, the results of which are included in revenue in the consolidated statements of income and the carrying value of which is included in other assets in the consolidated balance sheets. The Company records its share of income or loss on its equity method investments, some of which are on a one quarter lag basis.

Private Equity Investments

The Company's investments in private equity funds were $111 million and $107 million at December 31, 2020 and December 31, 2019, respectively. The carrying values of these private equity investments approximates fair value. The underlying private equity funds follow investment company accounting, where investments within the fund are carried at fair value. The Company records in earnings its proportionate share of the change in fair value of the funds on the investment income (loss) line in the consolidated statement of income. These investments are included in other assets in the consolidated balance sheets. The Company recorded net investment income of $3 million and $13 million from these investments for the years ended December 31, 2020 and 2019, respectively.

Other Investments

At December 31, 2020 and December 31, 2019 the Company held certain equity investments with readily determinable market values of $72 million and $19 million, respectively. In 2020 and 2019, the Company recorded investment losses on these investments of $27 million and gains of $10 million, respectively. The Company also held investments without readily determinable market values of $33 million and $67 million at December 31, 2020 and 2019, respectively. The Company recorded a net gain of approximately $2 million in 2020 and a net loss of approximately $1 million in 2019 on these investments.

At December 31, 2019, the Company owned approximately 443 million shares of the common stock of AF, a South African company listed on the Johannesburg Stock Exchange, which was accounted for

under the equity method of accounting. In February 2020, the Company sold approximately 49 million shares of the common stock of AF, and in May 2020, sold an additional 193 million shares to third parties, leaving the Company with an investment of approximately 201 million shares of the common stock of AF at December 31, 2020. Upon completion of the May transaction, the investment in AF was accounted at fair value, with investment gains and losses recorded as investment income (loss) in the consolidated statement of income. The fair value of AF at December 31, 2020 was $54 million.

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. During the second quarter of 2019, the Company disposed of its investment in Payscale and received approximately $47 million.

11. Derivatives

Net Investment Hedge

The Company has investments in various subsidiaries with Euro functional currencies. As a result, the Company is exposed to the risk of fluctuations between the Euro and U.S. dollar exchange rates. The Company designated its €1.1 billion senior note debt instruments ("euro notes") as a net investment hedge (the "hedge") of its Euro denominated subsidiaries. The hedge effectiveness is re-assessed each quarter to confirm that the designated equity balance at the beginning of each period continues to equal or exceed 80% of the outstanding balance of the Euro debt instrument and that all the critical terms of the hedging instrument and the hedged net investment continue to match. If the Company concludes that the hedge is highly effective, the change in the debt balance related to foreign exchange fluctuations is recorded in foreign currency translation gains (losses) in the consolidated balance sheet. The Company concluded that the hedge continues to be highly effective as of December 31, 2020. During 2020, the U.S. dollar value of the euro notes increased $124 million through December 31, 2020 due to the impact of foreign exchange rates, with a corresponding increase to accumulated other comprehensive loss.

JLT Acquisition Related 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 settlement of 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. A 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 13 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.

JLT Derivatives and Hedging Activity

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

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

12. Leases

Effective January 1, 2019 (the "implementation date"), the Company adopted new guidance intended to improve financial reporting for 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 Right-of-Use ("ROU") assets and operating lease liabilities were recognized in the balance sheet on the implementation date based on the present value of the remaining future minimum payments over the lease term from the implementation date. This ROU asset was adjusted for unamortized lease incentives and restructuring liabilities that existed on the implementation date. 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, the Company's lease agreements generally provide for rent escalations resulting from increased assessments for real estate taxes and other charges. A portion of our real estate lease portfolio contains base rents subject to annual changes in the Consumer Price Index ("CPI") as well as charges for operating expenses which are reimbursable to the landlord based on actual usage. Changes to the CPI and payments for such reimbursable operating expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred. Approximately 99% of the Company's lease obligations are for the use of office space. All of the Company's material leases are operating leases.

As a practical expedient, the Company has elected an accounting policy not to separate non-lease components from lease components and instead account as a single lease component. The Company

has also elected not to recognize ROU assets and lease liabilities for leases that, at the commencement date, are for 12 months or less.

The Company determined that $28 million and $9 million of its ROU assets were impaired, and therefore, recorded a charge to the consolidated statement of income for the year ended December 31, 2020 and 2019, respectively, with an offsetting reduction to ROU assets.

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

For the Year Ended December 31, (In millions)						2020			2019
Lease Cost:
Operating lease cost (a)						$	396		$	371
Short-term lease cost						3			8
Variable lease cost						138			150
Sublease income						(19)			(18)
Net lease cost						$	518		$	511
Other information:
Operating cash outflows from operating leases						$	420		$	392
Right of use assets obtained in exchange for new operating lease liabilities						$	261		$	140
Weighted-average remaining lease term – real estate						8.42 years			8.78 years
Weighted-average discount rate – real estate leases						2.94		%	3.10		%

(a) Excludes ROU asset impairment charges.

Future minimum lease payments for the Company’s operating leases as of December 31, 2020 are as follows:

Payment Dates (In millions)			Real Estate Leases
2021			$	410
2022			380
2023			331
2024			288
2025			256
Subsequent years			905
Total future lease payments			2,570
Less: Imputed interest			(304)
Total			2,266
Current lease liabilities			342
Long-term lease liabilities			1,924
Total lease liabilities			$	2,266

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, 2020, the Company had additional operating real estate leases that had not yet commenced of $3 million. These operating leases will commence over the next 12 months.

The consolidated statement of income in 2018 included operating lease costs of $383 million, net of subleases.

13. Debt

The Company’s outstanding debt is as follows:

December 31,
(In millions)			2020						2019
Short-term:
Current portion of long-term debt			$	517					$	1,215
			517						1,215
Long-term:
Senior notes – 2.35% due 2020			—						500
Senior notes – 3.50% due 2020			—						698
Senior notes – 4.80% due 2021			500						499
Senior notes – Floating rate due 2021			—						298
Senior notes – 2.75% due 2022			499						498
Senior notes – 3.30% due 2023			349						349
Senior notes – 4.05% due 2023			249						249
Senior notes – 3.50% due 2024			598						597
Senior notes – 3.875% due 2024			995						994
Senior notes – 3.50% due 2025			498						497
Senior notes – 1.349% due 2026			677						609
Senior notes – 3.75% due 2026			597						597
Senior notes – 4.375% due 2029			1,499						1,499
Senior notes – 1.979% due 2030			664						607
Senior notes – 2.25% due 2030			737						—
Senior notes – 5.875% due 2033			298						298
Senior notes – 4.75% due 2039			495						494
Senior notes – 4.35% due 2047			493						492
Senior notes – 4.20% due 2048			592						592
Senior notes – 4.90% due 2049			1,237						1,237
Mortgage – 5.70% due 2035			331						345
Other			5						7
			11,313						11,956
Less current portion			517						1,215
			$	10,796					$	10,741

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, 2020.

Senior Notes

In December 2020, the Company repaid $700 million of maturing Senior Notes. The Company also prepaid $300 million of floating rate notes with an original maturity of December 2021.

In May 2020, the Company issued $750 million of 2.250% Senior Notes due 2030. The Company used the net proceeds from this offering to pay outstanding borrowings under the revolving credit facility discussed above.

In March 2020, the Company repaid $500 million of maturing Senior Notes.

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

During 2019, the Company issued approximately $6.5 billion of Senior Notes to primarily 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 connection with the closing of the JLT Transaction, the Company assumed approximately $1 billion of historical JLT indebtedness, which it repaid during 2019. The Company incurred debt extinguishment costs of $32 million in regard to the repayment of this debt.

Other Credit Facilities

In January 2020, the Company closed on $500 million one-year and $500 million two-year term loan facilities. In the first quarter of 2020 the Company borrowed $1 billion against these facilities. During the third quarter of 2020, the Company repaid $500 million of borrowings from its one-year facility. In December 2020, the Company repaid $500 million of borrowings from the two year facility. These two facilities were terminated as of December 31, 2020 after repayment of the initial draw down.

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, 2020. 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.

In April 2020, the Company entered into a new 364 day $1 billion unsecured revolving credit facility with a term out option after one year. The facility has similar coverage and leverage ratios as the multi-currency five-year unsecured revolving credit facility. The Company had no borrowings outstanding under these facilities at December 31, 2020.

Additional credit facilities, guarantees and letters of credit are maintained with various banks, primarily related to operations located outside the United States, aggregating $573 million at December 31, 2020 and $598 million at December 31, 2019. There were no outstanding borrowings under these facilities at December 31, 2020 and December 31, 2019.

Scheduled repayments of long-term debt in 2021 and in the four succeeding years are $517 million, $516 million, $619 million, $1.6 billion and $518 million, respectively.

Fair value of Short-term and Long-term Debt

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

			December 31, 2020												December 31, 2019
(In millions of dollars)			Carrying Amount						Fair Value						Carrying Amount						Fair Value
Short-term debt			$	517					$	523					$	1,215					$	1,229
Long-term debt			$	10,796					$	12,858					$	10,741					$	11,953

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 completing its integration of JLT, which involves combining 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. The Company also incurred costs for consulting fees related to integration management processes and legal fees related to the rationalizing legal entity structures to reduce costs, mitigate risks and improve operational transparency.

Costs recognized are based on applicable accounting guidance which includes accounting for disposal or exit activities, guidance related to impairment of long lived assets (for right of use assets related to real estate leases), as well as other costs resulting from accelerated depreciation or amortization of leasehold improvements and other property and equipment. The Company has incurred $251 million in 2020 and $335 million in 2019.

In connection with the JLT integration and restructuring, for the year ended December 31, 2020, the Company incurred costs of $251 million: $171 million in RIS, $51 million in Consulting, $29 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, 2020, 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
2020 charges			43						69						62						77						251
Cash payments			(69)						(25)						(55)						(77)						(226)
Non-cash charges			—						(42)						(5)						—						(47)
Liability at 12/31/20			$	16					$	7					$	2					$	—					$	25

(a) Includes ROU asset impairments, data center contract termination costs and temporary infrastructure leasing costs.

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

Other Restructuring

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 completed this initiative and incurred restructuring severance and consulting costs of $54 million for the year ended December 31, 2020 related to this initiative.

In addition to the changes discussed above, the Company incurred costs of $32 million at Corporate for the year ended December 31, 2020 that reflects costs to modernize the Company's information

technology systems and security protocols, consulting costs related to the restructure of the Global HR function and adjustments to restructuring liabilities for future rent under non-cancellable leases.

The following details the other restructuring liabilities for actions initiated during 2020 and prior:

(In millions)			Liability at 1/1/19						Amounts Accrued						Cash Paid						Non-Cash/Other						Liability at 12/31/19						Amounts Accrued						Cash Paid						Non-Cash/Other						Liability at 12/31/20
Severance			$	73					$	73					$	(91)					$	(4)					$	51					$	39					$	(54)					$	—					$	36
Future rent under non-cancelable leases and other costs			39						39						(21)						(6)						51						50						(46)						(10)						45
Total			$	112					$	112					$	(112)					$	(10)					$	102					$	89					$	(100)					$	(10)					$	81

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.

15. Common Stock

The Company did not repurchase any of its common stock during 2020. 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.

The Company issued approximately 4.1 million and 4.6 million shares related to stock compensation and employee stock purchase plans during the years ended December 31, 2020 and 2019, 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.

Legal 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, 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 November 2020, the Company received a notice that the European Commission adopted a decision to close this investigation without taking any action.

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

• In 2017, JLT identified payments to a third-party introducer that had been directed to unapproved bank accounts. These payments related to reinsurance placements made on behalf of an Ecuadorian state-owned insurer between 2014 and 2017. In early 2018, JLT voluntarily reported this matter to law enforcement authorities. In February and March 2020, money laundering charges were filed in the United States against a former employee of JLT, the principals of the third-party introducer and a former official of the state-owned insurer. Three of these individuals, including the former JLT employee, have since pleaded guilty to criminal charges. We are cooperating with all ongoing investigations related to this matter.

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

Consulting Segment

In 2014, the FCA conducted an industry-wide review of the suitability of financial advice provided to individuals by a number of companies, including JLT, relating to enhanced transfer value ("ETV") defined benefit pension transfers. In January 2015, the FCA notified JLT that it was commissioning a Skilled Person review of ETV pension transfer advice given by JLT and a business acquired by JLT in 2012. Following the Skilled Person review which took place between 2015 and 2018, JLT engaged a compliance consulting firm to conduct an analysis of approximately 14,000 individual files to assess the suitability of the advice provided and, where appropriate, the amount of redress to be paid. In February 2019, prior to the completion of its acquisition by the Company, JLT recorded a gross liability of £59 million (or $77 million). This preliminary estimate by JLT, which reflected the projected redress amounts

contained in the Skilled Person report, was based on a review of a limited number of files. Thereafter, the FCA expanded the scope of the thematic review. As of December 31, 2020, the updated redress liability, including the projected costs of completing the review, increased to £155 million (or $210 million) resulting from the expansion in the scope of the review, and the significant progress made in completing the individual suitability reviews. We expect to finalize the suitability review of the limited number of files that remain outstanding and calculate all redress amounts by the end of the second quarter of 2021. We anticipate this gross liability will be partially offset by a contractual indemnity and insurance recoveries from third-party E&O insurers.

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, 2020, 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
2020 –
Risk and Insurance Services			$	10,337		(a)			$	2,346					$	20,612		(d)			$	500					$	170
Consulting			6,976			(b)			994						9,571			(e)			174						107
Total Segments			17,313						3,340						30,183						674						277
Corporate/Eliminations			(89)						(274)						2,866			(c)			67						71
Total Consolidated			$	17,224					$	3,066					$	33,049					$	741					$	348
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

(a)Includes inter-segment revenue of $5 million, $8 million and $6 million in 2020, 2019 and 2018, respectively, interest income on fiduciary funds of $46 million, $105 million and $65 million in 2020, 2019 and 2018, respectively, and equity method income of $27 million, $25 million and $13 million in 2020, 2019 and 2018 and $40 million related to the sale of business in 2018.

(b)Includes inter-segment revenue of $84 million, $82 million and $51 million in 2020, 2019 and 2018, respectively, interest income on fiduciary funds of $1 million, $4 million and $3 million in 2020, 2019 and 2018, respectively, and equity method income of $5 million, $16 million and $8 million in 2020, 2019 and 2018, 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 $165 million, $179 million and $57 million at December 31, 2020, 2019 and 2018, respectively.

(e)Includes equity method investments of $5 million, $149 million and $148 million at December 31, 2020, 2019 and 2018, respectively.

Details of operating segment revenue are as follows:

For the Years Ended December 31,
(In millions of dollars)			2020						2019						2018
Risk and Insurance Services
Marsh			$	8,628					$	8,085					$	6,923
Guy Carpenter			1,709						1,514						1,305
Total Risk and Insurance Services			10,337						9,599						8,228
Consulting
Mercer			4,928						5,021						4,732
Oliver Wyman Group			2,048						2,122						2,047
Total Consulting			6,976						7,143						6,779
Total Segments			17,313						16,742						15,007
Corporate/Eliminations			(89)						(90)						(57)
Total			$	17,224					$	16,652					$	14,950

Information by geographic area is as follows:

For the Years Ended December 31,
(In millions of dollars)			2020						2019						2018
Revenue
United States			$	8,168					$	7,840					$	7,219
United Kingdom			2,818						2,679						2,243
Continental Europe			2,881						2,837						2,694
Asia Pacific			2,093						2,001						1,616
Other			1,353						1,385						1,235
			17,313						16,742						15,007
Corporate/Eliminations			(89)						(90)						(57)
Total			$	17,224					$	16,652					$	14,950

For the Years Ended December 31,
(In millions of dollars)			2020						2019						2018
Fixed Assets, Net
United States			$	492					$	462					$	403
United Kingdom			115						149						91
Continental Europe			74						68						59
Asia Pacific			105						101						74
Other			70						78						74
Total			$	856					$	858					$	701

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, 2020 and 2019, the related consolidated statements of income, comprehensive income, cash flows, and equity for each of the three years in the period ended December 31, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, 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, 2020, 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 17, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Liability for Errors and Omissions — Refer to Notes 1 and 16 to the financial statements

Critical Audit Matter Description

The Company is subject to a significant number of claims, lawsuits and proceedings in the ordinary course of business. Such claims and lawsuits consist principally of alleged errors and omissions (“E&O”) in connection with the performance of professional services. These claims may seek damages, including punitive and treble damages, in amounts that could be significant. The Company uses case level reviews performed by inside and outside counsel, internal actuarial analysis and other methods to estimate potential losses resulting from reported and unreported claims.

Given that the determination of the liability for E&O requires management to make significant estimates and assumptions in projecting ultimate settlement values of reported and unreported claims, performing audit procedures to evaluate the reasonableness of such estimates and assumptions required a high degree of auditor judgment, including the need to involve our actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the determination of the liability for E&O included the following, among others:

• We tested the effectiveness of internal controls related to the determination of the liability for E&O, including controls over the projection of ultimate settlement values of reported and unreported claims determined through internal actuarial analyses, management’s review of the appropriateness of the assumptions used and calculation of case loss estimates, and management’s independent review of case level estimates provided by inside and outside counsel, as applicable.

• For selected E&O matters, we evaluated the reasonableness of management’s case loss estimates and, as applicable, made inquiries of the Company’s inside and outside counsel regarding the status of these matters and likelihood of settlement.

• We compared total incurred losses and current case estimates as of the balance sheet date to amounts reported in prior periods to evaluate trends and developments in reported cases.

• With the assistance of our actuarial specialists, we evaluated the reasonableness of the assumptions and methodologies involved in the development of the liability for E&O by:

–Testing the underlying data that served as the basis for the actuarial analysis, including historical claims and case loss estimates, to evaluate whether the inputs to the actuarial estimate were reasonable.

–Comparing management’s prior-year assumptions of expected development and ultimate loss to actual amounts incurred during the current year to identify potential bias in the determination of the liability for E&O.

–Developing a range of independent estimates and comparing those to the liability for E&O recorded by the Company.

/s/ Deloitte & Touche LLP

New York, New York

February 17, 2021

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)
2020:
Revenue			$	4,651					$	4,189					$	3,968					$	4,416
Operating income			$	1,070					$	885					$	540					$	571
Net income before non-controlling interests			$	767					$	580					$	320					$	379
Net income attributable to the Company			$	754					$	572					$	316					$	374
Basic Per Share Data:
Net income attributable to the Company			$	1.49					$	1.13					$	0.62					$	0.74
Diluted Per Share Data:
Net income attributable to the Company			$	1.48					$	1.12					$	0.62					$	0.73
Dividends Paid Per Share			$	0.455					$	0.455					$	0.465					$	0.465
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

As of February 12, 2021, there were 4,602 stockholders of record.