Item 1. Financial Statements.

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Item 1. Financial Statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share data)	2023		2022
Revenue	$	5,924	$	5,549
Expense:
Compensation and benefits	3,207		3,100
Other operating expenses	991		1,004
Operating expenses	4,198		4,104
Operating income	1,726		1,445
Other net benefit credits	58		62
Interest income	14		1
Interest expense	(136)		(110)

Investment income	2		26

Income before income taxes	1,664		1,424
Income tax expense	412		338


Net income before non-controlling interests	1,252		1,086
Less: Net income attributable to non-controlling interests	17		15
Net income attributable to the Company	$	1,235	$	1,071
Net income per share attributable to the Company:
– Basic	$	2.50	$	2.13

– Diluted	$	2.47	$	2.10

Average number of shares outstanding:
– Basic	495		503
– Diluted	500		509
Shares outstanding at March 31,	495		502

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

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In millions)	2023		2022
Net income before non-controlling interests	$	1,252	$	1,086
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	119		(169)

(Loss) gain related to pension/post-retirement plans	(58)		86
Other comprehensive income (loss) before tax	61		(83)
Income tax (credit) expense on other comprehensive loss	(19)		21
Other comprehensive income (loss), net of tax	80		(104)
Comprehensive income	1,332		982
Less: comprehensive income attributable to non-controlling interest	17		15
Comprehensive income attributable to the Company	$	1,315	$	967

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

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


(In millions, except share data)	(Unaudited) March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,006	$	1,442
Receivables
Commissions and fees	5,966		5,293
Advanced premiums and claims	98		103

Other	790		616
	6,854		6,012
Less-allowance for credit losses	(154)		(160)
Net receivables	6,700		5,852


Other current assets	1,407		1,005
Total current assets	9,113		8,299
Goodwill	16,300		16,251
Other intangible assets	2,452		2,537
Fixed assets (net of accumulated depreciation and amortization of $1,579 at March 31, 2023 and $1,531 at December 31, 2022)	867		871
Pension related assets	2,200		2,127
Right of use assets	1,586		1,562
Deferred tax assets	369		358
Other assets	1,471		1,449
	$	34,358	$	33,454

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

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)


(In millions, except share data)	(Unaudited) March 31, 2023		December 31, 2022
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	2,111	$	268
Accounts payable and accrued liabilities	3,406		3,278
Accrued compensation and employee benefits	1,443		3,095

Current lease liabilities	306		310
Accrued income taxes	356		221
Dividends payable	292		—
Total current liabilities	7,914		7,172
Fiduciary liabilities	10,834		10,660
Less – cash and cash equivalents held in a fiduciary capacity	(10,834)		(10,660)
	—		—
Long-term debt	10,841		11,227
Pension, post-retirement and post-employment benefits	896		921
Long-term lease liabilities	1,723		1,667
Liabilities for errors and omissions	355		355
Other liabilities	1,433		1,363
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 March 31, 2023 and December 31, 2022	561		561
Additional paid-in capital	1,064		1,179
Retained earnings	20,949		20,301
Accumulated other comprehensive loss	(5,234)		(5,314)
Non-controlling interests	243		229
	17,583		16,956
Less – treasury shares, at cost, 65,836,882 shares at March 31, 2023 and 65,855,914 shares at December 31, 2022	(6,387)		(6,207)
Total equity	11,196		10,749
	$	34,358	$	33,454

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

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


For the Three Months Ended March 31,
(In millions)	2023		2022
Operating cash flows:
Net income before non-controlling interests	$	1,252	$	1,086
Adjustments to reconcile net income provided by operations:
Depreciation and amortization of fixed assets and capitalized software	84		89
Amortization of intangible assets	85		91

Non-cash lease expense	73		77
Adjustments and payments related to contingent consideration assets and liabilities	8		10
Deconsolidation of Russian businesses	—		39


Net gain on investments	(2)		(26)
Net loss (gain) on disposition of assets	21		(1)
Share-based compensation expense	99		105

Changes in assets and liabilities:
Net receivables	(775)		(429)

Other assets	(163)		(117)

Accrued compensation and employee benefits	(1,670)		(1,528)
Provision for taxes, net of payments and refunds	189		144
Contributions to pension and other benefit plans in excess of current year credit	(75)		(125)
Other liabilities	134		(33)
Operating lease liabilities	(79)		(84)

Net cash used for operations	(819)		(702)
Financing cash flows:
Purchase of treasury shares	(300)		(500)
Net proceeds from issuance of commercial paper	594		825
Borrowings from term-loan and credit facilities	250		—
Proceeds from issuance of debt	589		—
Repayments of debt	(4)		(4)




Shares withheld for taxes on vested units – treasury shares	(136)		(134)
Issuance of common stock from treasury shares	42		34
Payments of deferred and contingent consideration for acquisitions	(13)		(16)
Receipts of contingent consideration for dispositions	2		3
Distributions of non-controlling interests	(3)		(7)
Dividends paid	(296)		(272)
Change in fiduciary liabilities	48		926
Net cash provided by financing activities	773		855
Investing cash flows:
Capital expenditures	(84)		(122)
Purchases of long term investments	(4)		(8)



Dispositions	(20)		(4)
Acquisitions, net of cash and cash held in a fiduciary capacity acquired	(263)		(24)

Other, net	3		(1)
Net cash used for investing activities	(368)		(159)
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	152		(136)
Decrease in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	(262)		(142)
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period	12,102		11,375

Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period	$	11,840	$	11,233


Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets
Balance at March 31,	2023		2022
(In millions)
Cash and cash equivalents	$	1,006	$	772
Cash and cash equivalents held in a fiduciary capacity	10,834		10,461
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	$	11,840	$	11,233

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

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share data)	2023		2022
COMMON STOCK
Balance, beginning and end of period	$	561	$	561
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of period	$	1,179	$	1,112
Change in accrued stock compensation costs	(190)		(145)
Issuance of shares under stock compensation plans and employee stock purchase plans	75		59

Balance, end of period	$	1,064	$	1,026
RETAINED EARNINGS
Balance, beginning of period	$	20,301	$	18,389


Net income attributable to the Company	1,235		1,071
Dividend equivalents declared	(4)		(4)
Dividends declared	(583)		(540)
Balance, end of period	$	20,949	$	18,916
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance, beginning of period	$	(5,314)	$	(4,575)




Other comprehensive income (loss), net of tax	80		(104)
Balance, end of period	$	(5,234)	$	(4,679)
TREASURY SHARES
Balance, beginning of period	$	(6,207)	$	(4,478)
Issuance of shares under stock compensation plans and employee stock purchase plans	120		91

Purchase of treasury shares	(300)		(500)
Balance, end of period	$	(6,387)	$	(4,887)
NON-CONTROLLING INTERESTS
Balance, beginning of period	$	229	$	213
Net income attributable to non-controlling interests	17		15


Distributions and other changes	(3)		(9)

Balance, end of period	$	243	$	219
TOTAL EQUITY	$	11,196	$	11,156
Dividends declared per share	$	1.18	$	1.07

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

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Operations

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

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

The Consulting segment includes health, wealth and career solutions and products, and specialized management, strategic, economic and brand consulting services. The Company conducts business in this segment through Mercer and Oliver Wyman Group. Mercer delivers advice and technology-driven solutions that help organizations redefine the future of work, shape retirement and investment outcomes, and advance health and well-being for a changing workforce. Oliver Wyman Group serves as critical strategic, economic and brand advisor to private sector and governmental clients.

2. Principles of Consolidation and Other Matters

The Company prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. For interim filings, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S.) have been omitted pursuant to such rules and regulations. The Company believes that the information and disclosures presented are adequate to make such information and disclosures not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Form 10-K").

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

The financial information contained herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial statements as of and for the three months ended March 31, 2023 and 2022.

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:

estimates of revenue;
impairment assessments and charges;
recoverability of long-lived assets;
liabilities for errors and omissions;
deferred tax assets, uncertain tax positions and income tax expense;
share-based and incentive compensation expense;
the allowance for current expected credit losses on receivables;
useful lives assigned to long-lived assets, and depreciation and amortization; and
fair value estimates of contingent consideration receivable or payable related to acquisitions or dispositions.

The Company believes these estimates are reasonable based on information currently available at the time they are made. The Company also considered the potential impact of macroeconomic factors including inflation, volatility in interest rates, and the war in Ukraine to its customer base in various industries and geographies. Insurance exposures subject to variable factors are subject to mid-term and end-of-term adjustments, as well as policy audits, which may reduce premiums and corresponding commissions. Estimates were updated based on internal and industry specific economic data. Actual results may differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of certificates of deposit and time deposits, with original maturities of three months or less, and money market funds. The estimated fair value of the Company's cash and cash equivalents approximates their carrying value. The Company is required to maintain operating funds primarily related to regulatory requirements outside of the U.S. or as collateral under captive insurance arrangements. At March 31, 2023, the Company maintained $401 million compared to $348 million at December 31, 2022 related to these regulatory requirements.

Allowance for Credit Losses on Accounts Receivable

The Company’s policy for providing an allowance for credit losses on its accounts receivable is based on a combination of factors, including historical write-offs, aging of balances, and other qualitative and quantitative analyses. The charge related to expected credit losses was not material to the consolidated statements of income for the three months ended March 31, 2023 and 2022, respectively.

Investments

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

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

The Company recorded net investment income of $2 million for the three months ended March 31, 2023 compared to investment income of $26 million for the three months ended March 31, 2022.

Income Taxes

The Company's effective tax rate for the three months ended March 31, 2023 was 24.7%, compared with 23.7% for the corresponding quarter of 2022.

The tax rates in both periods reflect the impact of discrete tax items such as excess tax benefits related to share-based compensation, enacted tax legislation, changes in uncertain tax positions, deferred tax adjustments, nontaxable adjustments related to contingent consideration for acquisitions, and valuation allowances for certain tax credits and/or losses. The rate in the first quarter of 2023 reflects the previously enacted change in the U.K. corporate income tax rate from 19% to 25%, effective April 1, 2023. The blended U.K. statutory tax rate for 2023 is 23.5%.

The excess tax benefit related to share-based payments is the most significant discrete item in both periods, reducing the effective tax rate by 1.3% and 1.8% for the three months ended March 31, 2023 and 2022, respectively.

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

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

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in tax returns. The Company's gross unrecognized tax benefits were $107 million at March 31, 2023, and $97 million at December 31, 2022. It is reasonably possible that the total amount of unrecognized tax benefits could decrease up to approximately $53 million within the next twelve months due to settlement of audits and expirations of statutes of limitations.

Changes in tax laws, rulings, policies, or related legal and regulatory interpretations occur frequently and may have significant favorable or adverse impacts on our effective tax rate.

On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was enacted into law. The Company evaluated the provisions of the new legislation, the most significant of which are the corporate alternative minimum tax and the share repurchase tax. The IRA was effective as of January 1, 2023 and does not have a significant impact on the Company's financial results of operations for the current year.

Restructuring Costs

Charges associated with restructuring activities are recognized in accordance with applicable accounting guidance which includes accounting for disposal or exit activities, guidance related to impairment of ROU assets related to real estate leases, as well as other costs resulting from accelerated depreciation or amortization of leasehold improvements and other property and equipment.

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

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

Other costs related to 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.

Foreign Currency

The financial statements of our international subsidiaries are translated from functional currency to U.S. dollars using month-end exchange rates for assets and liabilities, and average monthly exchange rates during the period for revenues and expenses. Translation adjustments are recorded in accumulated other comprehensive income (loss) ("AOCI") within the consolidated statements of equity. Foreign exchange transaction gains and losses resulting from the conversion of the transaction currency to functional currency are included in operating income in the consolidated statements of income.

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

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

The Company's revenue policies are provided in more detail in Note 2, Revenue, in the Form 2022 10-K.

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


	Three Months Ended March 31,
(In millions)		2023		2022
Marsh:
EMEA (a) (b)		$	932	$	869
Asia Pacific (a)		312		294
Latin America		115		104
Total International		1,359		1,267
U.S./Canada		1,385		1,279
Total Marsh		2,744		2,546
Guy Carpenter		1,071		999
Subtotal		3,815		3,545
Fiduciary interest income		91		4
Total Risk and Insurance Services		$	3,906	$	3,549

Mercer:


Wealth (c)		$	581	$	617
Health		545		524
Career		218		202
Total Mercer		1,344		1,343
Oliver Wyman Group (b)		687		667
Total Consulting		$	2,031	$	2,010

(a) Starting in the first quarter of 2023, the Company began reporting the Marsh India operations in EMEA. Prior year results for India have been reclassified from Asia Pacific to EMEA for comparative purposes.

(b) Revenue in 2022 includes the loss on deconsolidation of the Company's Russian businesses at Marsh and Oliver Wyman of $27 million and $12 million, respectively.

(c) Revenue in 2023 includes the loss on sale of a small individual financial advisory business in Canada of $19 million.

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


(In millions)	March 31, 2023		December 31, 2022
Contract assets	$	366	$	335
Contract liabilities	$	906	$	837

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 the achievement of volume or loss ratio metrics cannot be billed or collected until all related policy placements are completed and the contingency is resolved.

Contract assets are included in other current assets in the Company's consolidated balance sheets. Contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities are included in current liabilities in the Company's consolidated balance sheets. Revenue recognized for the three months ended March 31, 2023 and 2022 that was included in the contract liability balance at the beginning of each of those periods was $293 million and $280 million, respectively.

The amount of revenue recognized for the three months ended March 31, 2023 and 2022 from performance obligations satisfied in previous periods, mainly due to variable consideration from contracts with insurers, quota share business and consulting contracts previously considered constrained was $17 million and $24 million, respectively.

The Company applies the practical expedient and does not disclose the value of unsatisfied performance obligations for (1) contracts with original contract terms of one year or less and (2) contracts where the Company has the right to invoice for services performed. The revenue expected to be recognized in future periods during the non-cancellable term of existing contracts greater than one year that is related to performance obligations that are unsatisfied or partially satisfied at the end of the reporting period is approximately $236 million, primarily related to Mercer. The Company expects revenue in 2023, 2024, 2025, 2026, and 2027 and beyond of $96 million, $65 million, $42 million, $21 million and $12 million, respectively, related to these performance obligations.

4. Fiduciary Assets and Liabilities

The Company, in its capacity as an insurance broker or agent, generally collects premiums from insureds and after deducting its commissions, remits the premiums to the respective insurance underwriters. The Company also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held by the Company in a fiduciary capacity. The Company's fiduciary assets primarily include bank or short-term time deposits and liquid money market funds, classified as cash and cash equivalents. Risk and Insurance Services revenue includes interest on fiduciary funds of $91 million and $4 million for the three months ended March 31, 2023 and 2022, respectively. Since cash and cash equivalents held in a fiduciary capacity are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities.

Net uncollected premiums and claims and the related payables were $13.4 billion at March 31, 2023, and $13.0 billion at December 31, 2022. The Company is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Accordingly, net uncollected premiums and claims and the related payables are not assets and liabilities of the Company and are not included in the accompanying consolidated balance sheets.

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

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

5. 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	Three Months Ended March 31,
(In millions, except per share data)	2023		2022
Net income before non-controlling interests	$	1,252	$	1,086
Less: Net income attributable to non-controlling interests	17		15
Net income attributable to the Company	$	1,235	$	1,071
Basic weighted average common shares outstanding	495		503
Dilutive effect of potentially issuable common shares	5		6
Diluted weighted average common shares outstanding	500		509
Average stock price used to calculate common stock equivalents	$	166.93	$	157.49

6. Supplemental Disclosures to the Consolidated Statements of Cash Flows

The following table provides additional information concerning acquisitions, interest and income taxes paid for the three months ended March 31, 2023 and 2022.


(In millions)	2023		2022
Assets acquired, excluding cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	$	17	$	30
Acquisition-related deposit	252		—

Liabilities assumed	(2)		(2)


Contingent/deferred purchase consideration	(4)		(4)
Net cash outflow for acquisitions	$	263	$	24


(In millions)	2023		2022
Interest paid	$	165	$	171
Income taxes paid, net of refunds	$	223	$	201

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

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


For the Three Months Ended March 31,
(In millions)	2023		2022
Operating:

Receipt of contingent consideration for dispositions	$	1	$	—
Acquisition/disposition related net charges for adjustments	7		10


Adjustments and payments related to contingent consideration	$	8	$	10
Financing:
Contingent consideration for prior year acquisitions	$	(1)	$	(4)
Deferred consideration related to prior year acquisitions	(12)		(12)
Payments of deferred and contingent consideration for acquisitions	$	(13)	$	(16)

Receipts of contingent consideration for dispositions	$	2	$	3

The Company had non-cash issuances of common stock under its share-based payment plan of $290 million and $250 million for the three months ended March 31, 2023 and 2022, respectively. The Company recorded share-based compensation expense related to restricted stock units, performance stock units and stock options of $99 million and $105 million for the three months ended March 31, 2023 and 2022, respectively.

7. Other Comprehensive (Loss) Income

The changes, net of tax, in the balances of each component of AOCI for the three months ended March 31, 2023 and 2022, including amounts reclassified out of AOCI, are as follows:



(In millions)	Pension and Post-Retirement Plans Gains (Losses)		Foreign Currency Translation Adjustments		Total
Balance as of December 31, 2022	$	(2,721)	$	(2,593)	$	(5,314)

Other comprehensive (loss) income before reclassifications	(48)		125		77
Amounts reclassified from accumulated other comprehensive loss	3		—		3
Net current period other comprehensive (loss) income	(45)		125		80
Balance as of March 31, 2023 (a)	$	(2,766)	$	(2,468)	$	(5,234)

(a) At March 31, 2023, balances are net of deferred tax assets of $1,354 million in pension and post-retirement plans gains (losses) and net of deferred tax liability of $2 million in foreign currency translation adjustments.



(In millions)	Pension and Post-Retirement Plans Gains (Losses)		Foreign Currency Translation Adjustments		Total
Balance as of December 31, 2021	$	(3,202)	$	(1,373)	$	(4,575)

Other comprehensive income (loss) before reclassifications	35		(169)		(134)
Amounts reclassified from accumulated other comprehensive loss	30		—		30
Net current period other comprehensive income (loss)	65		(169)		(104)
Balance as of March 31, 2022 (a)	$	(3,137)	$	(1,542)	$	(4,679)

(a) At March 31, 2022, balances are net of deferred tax assets of $1,480 million in pension and post-retirement plans gains (losses) and $13 million in foreign currency translation adjustments.

The components of other comprehensive (loss) income for the three months ended March 31, 2023 and 2022 are as follows:


Three Months Ended March 31,	2023						2022
(In millions)	Pre-Tax		Tax (Credit)		Net of Tax		Pre-Tax		Tax (Credit)		Net of Tax
Foreign currency translation adjustments	$	119	$	(6)	$	125	$	(169)	$	—	$	(169)

Pension and post-retirement plans:
Amortization of losses included in net benefit (credit) cost:

Net actuarial losses (a)	5		2		3		39		9		30
Subtotal	5		2		3		39		9		30
Foreign currency translation adjustments	(63)		(15)		(48)		65		16		49




Other adjustments	—		—		—		(18)		(4)		(14)
Pension and post-retirement plans gains	(58)		(13)		(45)		86		21		65
Other comprehensive income (loss)	$	61	$	(19)	$	80	$	(83)	$	21	$	(104)

(a) Included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.

8. 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 no acquisitions during the three months ended March 31, 2023.

The Consulting segment completed one acquisition for the three months ended March 31, 2023:

March – Mercer acquired Leapgen LLC, a Minnesota-based human resources consulting technology advisory firm focused on digital strategy and transformation, workforce solutions, and improving employee experience.

Total purchase consideration for acquisitions made during the three months ended March 31, 2023 was $15 million, which consisted of cash paid of $11 million and deferred purchase and estimated contingent consideration of $4 million. Contingent consideration arrangements are generally based on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. During the three months ended March 31, 2023, the Company also paid $12 million of deferred purchase consideration and $1 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment until purchase accounting is finalized.

The following table presents the preliminary allocation of purchase consideration to the assets acquired and liabilities assumed in 2023, based on the estimated fair values for the acquisitions as of their respective acquisition dates:


Acquisitions through March 31, 2023
(In millions)
Cash	$	11
Estimated fair value of deferred/contingent consideration	4

Total consideration	$	15
Allocation of purchase price:


Net receivables	$	2

Goodwill	11
Other intangible assets	4





Total assets acquired	17
Current liabilities	2







Total liabilities assumed	2

Net assets acquired	$	15

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

Items subject to change include:

amounts of intangible assets, fixed assets, capitalized software assets and right-of-use assets, subject to finalization of valuation efforts;
amounts for contingencies, pending the finalization of the Company’s assessment of the portfolio of contingencies;
amounts for deferred tax assets and liabilities, pending the finalization of valuations of the assets acquired, liabilities assumed and associated goodwill discussed below; and
amounts for income tax assets, receivables and liabilities, pending the filing of the acquired companies' pre-acquisition income tax returns and receipt of information from taxing authorities which may change certain estimates and assumptions used.

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

The following table provides information about other intangible assets acquired in 2023:


Other intangible assets through March 31, 2023 (In millions)	Amount		Weighted Average Amortization Period
Client relationships	$	4	5.0 years

Transactions with Westpac Banking Corporation

On April 1, 2023, the Company completed the acquisition of Westpac Banking Corporation’s ("Westpac") financial advisory business, Advance Asset Management, and the transfer from Westpac of BT Financial Group's personal and corporate pension funds to the Mercer Super Trust managed by Mercer Australia (referred to collectively, as the "Transaction"). In consideration for the Transaction, on March 30, 2023, the Company transferred $252 million to a Westpac separate trust account in advance of the completion of the Transaction. For the three months ended March 31, 2023, the Company incurred approximately $17 million of integration expenses, primarily for technology, consulting, legal and people related costs.

Dispositions

In January 2023, the Company entered into an agreement for the sale of a small individual financial advisory business in Canada which is expected to be completed by the end of 2023. As a result, the Company recorded a loss of $19 million for the three months ended March 31, 2023, primarily related to the write-down of the customer relationship intangible assets. The loss is included in revenue in the consolidated statements of income.

In connection with the disposition of the Mercer U.S. affinity business in 2022, the Company transferred to the buyer an additional $20 million of cash and cash equivalents held in a fiduciary capacity in the first quarter of 2023.

Prior year acquisitions

The Risk and Insurance Services segment completed sixteen acquisitions in 2022:

January – MMA acquired Heil & Kay Insurance Agency Inc., an Illinois-based full-service broker providing business insurance, employee health benefits services and personal lines insurance.
April – Marsh acquired the business of Regional Treaty Services Corporation, a Rhode Island-based managing general underwriter, which manages reinsurance facilities for small to midsize U.S.-based insurers primarily writing personal lines, small agriculture, and main street commercial business.
June – MMA acquired Clark Insurance, a Maine-based full-service broker providing business insurance, employee health and benefits and private client services to businesses and individuals across the region.
July – MMA acquired CS Insurance Strategies, Inc., an Illinois-based full-service broker providing employee health and benefits, business insurance, and risk management consulting services to organizations of all sizes across the U.S. and Suchanek Partners LLC, an Ohio-based employee benefits insurance broker.
August – Marsh acquired Best Insurance Co. Ltd, a Japan-based insurance broker that provides affinity type schemes, general and personal lines insurance.
September – MMA acquired Steinberg & Associates, Inc., a South Carolina-based insurance broker that primarily offers employee health benefit services to group clients and Leykell, Inc., a Texas-based full-service broker that provides specialty insurance focused on trade credit.
October – MMA acquired Galbraith Group, a Texas-based employee health and benefits insurance broker.
November – MMA acquired Focus Insurance and Financial Services, a Texas-based personal insurance broker and Bradley Insurance Agency, a commercial insurance broker in Knoxville, Tennessee, with expertise serving the hospitality and construction industries. Marsh increased its ownership interest in Beassur SARL, a Morocco-based multi-line insurance broker, from 35% to 70%.
December – MMA acquired McDonald-Zaring Insurance, Inc., a Washington-based full-service broker focused on agri-business, wineries, crops and contractors, Chartwell Insurance Brokers, Inc., a Massachusetts-based full-service broker that specializes in commercial Property & Casualty insurance in the technology, financial services and non-profit space, and HMS Insurance Associates, Inc., a Maryland-based full-service broker providing commercial, surety, employee benefits, and personal lines insurance. Marsh acquired BHM Consultores S.A., d/b/a Grupo Mesos, a leading auto affinity insurance broker specialist in Chile that has extensive distribution partnerships with car dealerships, original equipment manufacturers and auto finance companies.

The Consulting segment completed four acquisitions in 2022:

February – Oliver Wyman acquired Azure Consulting, an Australia-based management consulting firm with expertise in strategy development, organizational design and operations in the industrials, energy and natural resources sectors.
March – Mercer acquired GeFi Assurances, a France-based brokerage and consulting firm specializing in collective corporate social protection.
September – Oliver Wyman acquired Booz Allen Hamilton's strategy consulting business serving the Middle East and North Africa.
November – Oliver Wyman acquired the Avascent Group Ltd, an aerospace and defense management consulting firm focused on the corporate and private equity sectors based in the U.S., U.K., Canada and France.

Total purchase consideration for acquisitions made for the three months ended March 31, 2022 was approximately $28 million, which consisted of cash paid of $24 million and deferred purchase and estimated contingent consideration of $4 million. Contingent consideration arrangements are based primarily on EBITDA or revenue targets over a period of two to four years. For the first three months of 2022, the Company also paid $12 million of deferred purchase consideration and $4 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized.

Prior year dispositions

During the first three months of 2022, Mercer sold its retirement plan administration and call center operations in Brazil for cash proceeds of approximately $4 million.

Deconsolidation of Russia

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

As a result, the Company deconsolidated its Russian businesses effective as of the end of the first quarter of 2022, and recorded a loss of $39 million included in revenue in the consolidated statements of income. The loss consisted of the reclassification of cumulative translation losses from AOCI and a charge for the write-off of the Russian businesses' net assets.

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

Pro-Forma Information

The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company in 2023 and 2022. In accordance with accounting guidance related to pro-forma disclosures, the information presented for acquisitions made in 2023 is as if they occurred on January 1, 2022, and reflects acquisitions made in 2022, as if they occurred on January 1, 2021. The unaudited pro-forma information includes the effects of amortization of acquired intangibles in all years. The unaudited pro-forma financial data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if such acquisitions had occurred on the dates indicated, nor is it necessarily indicative of future consolidated results.


	Three Months Ended March 31,
(In millions, except per share data)		2023		2022
Revenue		$	5,926	$	5,611

Net income attributable to the Company		$	1,235	$	1,083

Basic net income per share attributable to the Company		$	2.50	$	2.15


Diluted net income per share attributable to the Company		$	2.47	$	2.13

9. 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 the third quarter of 2022, the Company completed a qualitative impairment assessment and concluded that goodwill was not impaired. As part of its assessment, the Company considered numerous factors, including:

that the fair value of each reporting unit exceeds its carrying value by a substantial margin based on its most recent quantitative assessment in 2019;
whether significant acquisitions or dispositions occurred which might alter the fair value of its reporting units;
macroeconomic conditions and their potential impact on reporting unit fair values;
actual performance compared with budget and prior projections used in its estimation of reporting unit fair values;
industry and market conditions; and
the year-over-year change in the Company’s share price.

Other intangible assets that are not deemed to have an indefinite life are amortized over their estimated lives and assessed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. Based on its assessment, the Company concluded that other intangible assets were not impaired. The Company had no indefinite lived intangible assets at March 31, 2023 and December 31, 2022.

Changes in the carrying amount of goodwill are as follows:



(In millions)	2023		2022
Balance as of January 1,	$	16,251	$	16,317
Goodwill acquired	11		17
Other adjustments (a)	38		(80)
Balance at March 31,	$	16,300	$	16,254

(a) Primarily reflects the impact of foreign exchange.

The goodwill arising from acquisitions in 2023 and 2022 consists largely of the synergies and economies of scale expected from combining the operations of the Company and the acquired entities and the trained and assembled workforce acquired.

The goodwill acquired in 2023 was in the Consulting segment and is deductible for tax purposes. Goodwill allocable to the Company’s reportable segments at March 31, 2023, is $12.5 billion for Risk and Insurance Services and $3.8 billion for Consulting.

The gross cost and accumulated amortization of other identified intangible assets at March 31, 2023 and December 31, 2022 are as follows:


	March 31, 2023						December 31, 2022
(In millions)	Gross Cost		Accumulated Amortization		Net Carrying Amount		Gross Cost		Accumulated Amortization		Net Carrying Amount
Client relationships	$	3,969	$	1,561	$	2,408	$	3,993	$	1,508	$	2,485
Other (a)	361		317		44		360		308		52
Other intangible assets	$	4,330	$	1,878	$	2,452	$	4,353	$	1,816	$	2,537

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

Aggregate amortization expense for the three months ended March 31, 2023 and 2022 was $85 million and $91 million, respectively. The estimated future aggregate amortization expense is as follows:


For the Years Ending December 31,
(In millions)	Estimated Expense
2023 (excludes amortization through March 31, 2023)	$	241
2024	301
2025	268
2026	250
2027	249
Subsequent years	1,143
Total future amortization	$	2,452

10. Fair Value Measurements

Fair Value Hierarchy

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

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

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

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

a)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 Funds and Mutual Funds – Level 1

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

Contingent Purchase Consideration Assets and Liabilities – Level 3

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

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:


	Identical Assets (Level 1)				Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Total
(In millions)	03/31/23		12/31/22		03/31/23		12/31/22		03/31/23		12/31/22		03/31/23		12/31/22
Assets:
Financial instruments owned:
Exchange traded equity securities (a)	$	5	$	6	$	—	$	—	$	—	$	—	$	5	$	6
Mutual funds (a)	162		162		—		—		—		—		162		162
Money market funds (b)	130		146		—		—		—		—		130		146
Other equity investment (a)	—		—		—		13		—		—		—		13
Contingent purchase consideration assets (c)	—		—		—		—		—		3		—		3
Total assets measured at fair value	$	297	$	314	$	—	$	13	$	—	$	3	$	297	$	330
Fiduciary Assets:


U.S. treasury bills (d)	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Money market funds	67		201		—		—		—		—		67		201
Total fiduciary assets measured at fair value	$	67	$	201	$	—	$	—	$	—	$	—	$	67	$	201
Liabilities:
Contingent purchase consideration liabilities (e)	$	—	$	—	$	—	$	—	$	383	$	377	$	383	$	377

Total liabilities measured at fair value	$	—	$	—	$	—	$	—	$	383	$	377	$	383	$	377

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

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

(d) Maturity dates of three months or less.

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

The Level 3 assets in the table reflect contingent purchase consideration from the sale of businesses. The change in the contingent purchase consideration assets from December 31, 2022 is driven by cash receipts of approximately $3 million.

During the three months ended March 31, 2023 and 2022, there were no assets or liabilities that were transferred between levels.

The following table sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,
(In millions)	2023		2022
Balance at beginning of period	$	377	$	352
Net additions	—		—
Payments	(1)		(4)
Revaluation impact	7		10


Balance at March 31,	$	383	$	358

Long-Term Investments

The Company holds investments in public and private companies as well as certain private equity investments that are accounted for using the equity method of accounting. The carrying value of these investments was $214 million and $215 million at March 31, 2023 and December 31, 2022, respectively.

Investments in Public and Private Companies

The Company has investments in private insurance and consulting companies with a carrying value of $49 million and $56 million at March 31, 2023 and December 31, 2022, respectively. These investments are accounted for using the equity method of accounting, the results of which are included in revenue in the consolidated statements of income and the carrying value of which is included in other assets in the consolidated balance sheets. The Company records its share of income or loss on its equity method investments, some of which are on a one quarter lag basis.

Private Equity Investments

The Company's investments in private equity funds were $165 million and $159 million at March 31, 2023 and December 31, 2022, respectively. The carrying values of these private equity investments approximate fair value. The underlying private equity funds follow investment company accounting, where investments within the fund are carried at fair value. The Company records in earnings its proportionate share of the change in fair value of the funds on the investment income line in the consolidated statements of income. These investments are included in other assets in the consolidated balance sheets. The Company recorded net investment income from these investments of $3 million and $17 million for the three months ended March 31, 2023, and 2022, respectively.

The Company has commitments of potential future investments of approximately $159 million in private equity funds that invest primarily in financial services companies.

Other Investments

At March 31, 2023 and December 31, 2022, the Company held equity investments with readily determinable market values of $16 million and $17 million, respectively. The Company recorded mark-to-market investment losses on these investments of $1 million for the three months ended March 31, 2023. In the first quarter of 2022, the Company recorded mark-to-market investment gains of $9 million relating to its investment in Alexander Forbes, which was sold later in the year.

The Company also held investments without readily determinable market values of $43 million and $42 million at March 31, 2023 and December 31, 2022, respectively.

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 hedge is highly effective, the change in the debt balance related to foreign exchange fluctuations is recorded in accumulated other comprehensive loss in the consolidated balance sheets.

The U.S. dollar value of the Euro notes increased by $25 million through March 31, 2023, related to the change in foreign exchange rates. The Company concluded that the hedge was highly effective and recorded a loss as an increase to accumulated other comprehensive loss for the three months ended March 31, 2023.

12. Leases

The Company leases office facilities under non-cancelable operating leases with terms generally ranging between 10 and 25 years. The Company utilizes these leased office facilities for use by its employees in countries in which the Company conducts its business. The Company’s leases have no restrictions on the payment of dividends, the acquisition of debt or additional lease obligations, or entering into additional lease obligations. The leases also do not contain significant purchase options.

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

The Company determined that $8 million and $1 million of its ROU assets were impaired and recorded a charge to the consolidated statements of income for the three months ended March 31, 2023 and 2022, respectively, with an offsetting reduction to ROU assets.

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


	Three Months Ended March 31,
(In millions)		2023		2022
Lease Cost:
Operating lease cost (a)		$	80	$	90
Short-term lease cost		1		1
Variable lease cost		37		34
Sublease income		(4)		(5)
Net lease cost		$	114	$	120
Other information:
Operating cash outflows from operating leases		$	94	$	99
Right of use assets obtained in exchange for new operating lease liabilities		$	76	$	51
Weighted-average remaining lease term – real estate		8.4 years		8.7 years

Weighted-average discount rate – real estate leases		3.12%		2.75%

(a) Excludes ROU asset impairment charges.

Future minimum lease payments for the Company’s operating leases as of March 31, 2023 are as follows:


(In millions)	Real Estate Leases
Remainder of 2023	$	274
2024	338
2025	308
2026	287
2027	250
2028	180
Subsequent years	667
Total future lease payments	2,304
Less: Imputed interest	(275)
Total	$	2,029
Current lease liabilities	$	306
Long-term lease liabilities	1,723
Total lease liabilities	$	2,029

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

As of March 31, 2023, the Company had additional operating real estate leases that had not yet commenced of $59 million. These operating leases will commence over the next twelve months.

13. Retirement Benefits

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

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


Combined U.S. and significant non-U.S. Plans	Pension Benefits

March 31,	2023		2022
Weighted average assumptions:
Expected return on plan assets	5.31	%	4.56	%
Discount rate	5.16	%	2.28	%
Rate of compensation increase	3.16	%	2.16	%

The target asset allocation for the U.S. plans is 50% equities and equity alternatives and 50% fixed income. At March 31, 2023, the actual allocation for the U.S. plans was 50% equities and equity alternatives and 50% fixed income. The target allocation for the U.K. plans at March 31, 2023 is 14% equities and equity alternatives and 86% fixed income. At March 31, 2023, the actual allocation for the U.K. plans was 15% equities and equity alternatives and 85% fixed income. The Company's U.K. plans comprised approximately 79% of non-U.S. plan assets at December 31, 2022. 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 generally uses threshold-based portfolio re-balancing to ensure the actual portfolio remains consistent with target asset allocation ranges.

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


Combined U.S. and significant non-U.S. Plans	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2023		2022
Service cost	$	6	$	8
Interest cost	148		100
Expected return on plan assets	(212)		(202)

Recognized actuarial loss	6		39
Net benefit credit	$	(52)	$	(55)



Amounts recorded in the Consolidated Statements of Income
Combined U.S. and significant non-U.S. Plans	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2023		2022
Compensation and benefits expense	$	6	$	8
Other net benefit credit	(58)		(63)
Net benefit credit	$	(52)	$	(55)



U.S. Plans only	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2023		2022

Interest cost	$	65	$	48
Expected return on plan assets	(78)		(84)

Recognized actuarial loss	5		19
Net benefit credit	$	(8)	$	(17)


Significant non-U.S. Plans only	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2023		2022
Service cost	$	6	$	8
Interest cost	83		52
Expected return on plan assets	(134)		(118)

Recognized actuarial loss	1		20
Net benefit credit	$	(44)	$	(38)

The Company made contributions to its U.S. and non-U.S. defined benefit pension plans for the three months ended March 31, 2023 of approximately $21 million compared to contributions of $68 million for the corresponding quarter in the prior year. The Company expects to contribute approximately $86 million to its U.S. and non-U.S. defined benefit pension plans during the remainder of 2023.

Defined Contribution Plans

The Company maintains certain defined contribution plans ("DC Plans") for its employees, the most significant being in the U.S. and the U.K. The cost of the U.S. DC Plans was $44 million and $43 million for the three months ended March 31, 2023 and 2022, respectively. The cost of the U.K. DC Plans was $43 million and $44 million for the three months ended March 31, 2023 and 2022, respectively.

14. Debt

The Company’s outstanding debt is as follows:


(In millions)	March 31, 2023		December 31, 2022
Short-term:
Commercial paper	$	594	$	—

Revolving credit facility	250		—
Current portion of long-term debt	1,267		268
	2,111		268
Long-term:

Senior notes – 4.05% due 2023	250		250
Senior notes – 3.50% due 2024	599		599
Senior notes – 3.875% due 2024	999		998
Senior notes – 3.50% due 2025	499		499
Senior notes – 1.349% due 2026	600		587
Senior notes – 3.75% due 2026	599		598
Senior notes – 4.375% due 2029	1,499		1,499
Senior notes – 1.979% due 2030	589		576
Senior notes – 2.25% due 2030	739		739
Senior notes – 2.375% due 2031	397		397
Senior notes – 5.750% due 2032	492		493
Senior notes – 5.875% due 2033	298		298
Senior notes – 4.75% due 2039	495		495
Senior notes – 4.35% due 2047	493		493
Senior notes – 4.20% due 2048	593		593
Senior notes – 4.90% due 2049	1,238		1,238
Senior notes – 2.90% due 2051	346		346
Senior notes – 6.25% due 2052	491		492
Senior notes – 5.45% due 2053	591		—
Mortgage – 5.70% due 2035	297		301

Other	4		4
	12,108		11,495
Less: current portion	1,267		268
	$	10,841	$	11,227

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

The Company has a short-term commercial paper financing program of $2.8 billion. The program was increased from $2.0 billion in October 2022. The Company had $594 million of commercial paper outstanding at March 31, 2023, at an average effective interest rate of 5.22%.

Credit Facilities

The Company has a multi-currency unsecured $2.8 billion five-year revolving credit facility (the "Credit Facility") entered into on April 1, 2021. The interest rate on the Credit Facility is based on LIBOR plus a fixed margin which varies with the Company’s credit ratings. The Credit Facility expires in April 2026 and requires the Company to maintain certain coverage and leverage ratios which are tested quarterly. The Credit Facility includes provisions for determining a LIBOR successor rate in the event LIBOR reference rates are no longer available or in certain other circumstances which are determined to make using an alternative rate desirable. As of March 31, 2023 and December 31, 2022, the Company had no borrowings under this facility.

In connection with the Credit Facility, the Company terminated its previous multi-currency unsecured $1.8 billion five-year and its unsecured $1 billion 364-day revolving credit facilities.

In May 2022, the Company secured a $250 million uncommitted revolving credit facility. The facility expires in May 2023 and has similar coverage and leverage ratios as the Credit Facility. At March 31, 2023, the Company had $250 million borrowings outstanding under this facility with a weighted average interest rate of 5.19%. There were no borrowings outstanding under this facility at December 31, 2022.

The Company also maintains other credit and overdraft facilities with various financial institutions aggregating $112 million at March 31, 2023. There were no outstanding borrowings under these facilities at March 31, 2023 and December 31, 2022. The Company also has outstanding guarantees and letters of credit with various banks aggregating $102 million at March 31, 2023.

Senior Notes

In March 2023, the Company issued $600 million of 5.45% senior notes due 2053. The Company used the net proceeds from this issuance for general corporate purposes.

In October 2022, the Company issued $500 million of 5.75% senior notes due 2032 and $500 million of 6.25% senior notes due 2052. The Company used the net proceeds from these issuances for general corporate purposes and repaid $350 million of 3.30% senior notes in November 2022, with an original maturity date of March 2023.

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.


	March 31, 2023				December 31, 2022
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value


Short-term debt	$	2,111	$	2,102	$	268	$	265
Long-term debt	$	10,841	$	10,321	$	11,227	$	10,544

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

15. Restructuring Costs

In the fourth quarter of 2022, the Company initiated activities focused on workforce actions, rationalization of technology and functional services, and reductions in real estate. Based on current estimates, the Company anticipates total charges related to these activities to be between $375 million and $400 million. The Company has incurred $243 million of restructuring costs through March 31, 2023, primarily severance and lease exit charges, of which $24 million were for the three months ended March 31, 2023. The majority of the remaining costs are expected to be incurred in 2023. The Company's plans are still being finalized, which may change the expected timing and estimates of expected costs, as the Company continues to refine its detailed plans for each business and location.

Restructuring activities also include charges related to improving the Company's global information technology function and improving efficiencies and client services related to the Marsh operational excellence program. In 2022, costs primarily related to remaining JLT integration.

For the three months ended March 31, 2023, the Company incurred costs related to these initiatives of $53 million, reflecting $32 million in RIS, $9 million in Consulting, and $12 million in Corporate. For the first three months of 2022, the Company incurred restructuring costs of $30 million, reflecting $16 million in RIS, $6 million in Consulting, and $8 million in Corporate.

Details of the restructuring activity from January 1, 2022 through March 31, 2023, are as follows:


(In millions)	Severance		Real Estate Related Costs (a)		Information Technology		Consulting and Other Outside Services		Total
Liability at 1/1/22	$	35	$	34	$	—	$	—	$	69
2022 charges	111		195		15		106		427
Cash payments	(58)		(25)		(6)		(104)		(193)
Non-cash charges	—		(148)		(9)		—		(157)

Liability at 12/31/22	$	88	$	56	$	—	$	2	$	146
2023 charges	19		17		1		16		53
Cash payments	(45)		(17)		—		(17)		(79)
Non-cash charges	—		(7)		(1)		—		(8)
Liability at 3/31/23	$	62	$	49	$	—	$	1	$	112

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

The expenses associated with these initiatives are included in compensation and benefits and other operating expenses in the consolidated statements of income. The liabilities associated with these initiatives are classified on the consolidated balance sheets as accounts payable and accrued liabilities, other liabilities or accrued compensation and employee benefits, depending on the nature of the items.

16. Common Stock

During the first three months of 2023, the Company repurchased 1.8 million shares of its common stock for $300 million.

As of March 31, 2023, the Company remained authorized to repurchase up to approximately $4.0 billion in shares of its common stock. There is no time limit on the authorization. During the first three months of 2022, the Company repurchased 3.2 million shares of its common stock for $500 million.

The Company issued approximately 1.8 million shares related to stock compensation and employee stock purchase plans during the first three months of 2023 and 2022.

In January 2023, the Board of Directors of the Company declared a quarterly dividend of $0.59 per share on outstanding common stock, which was paid in February 2023. In March 2023, the Board of Directors of the Company declared an additional quarterly dividend of $0.59 per share on outstanding common stock, payable on May 15, 2023, to stockholders of record on April 5, 2023.

17. Claims, Lawsuits and Other Contingencies

Nature of Contingencies

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

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

Current Matters

Risk and Insurance Services Segment

In January 2019, the Company received a notice that the Administrative Council for Economic Defense anti-trust agency in Brazil had commenced an administrative proceeding against a number of insurance brokers, including both Marsh and JLT, and insurers "to investigate an alleged sharing of sensitive commercial and competitive confidential information" in the aviation insurance and reinsurance sector.
From 2014, Marsh Ltd. was engaged by Greensill Capital (UK) Limited as its insurance broker. Marsh Ltd. placed a number of trade credit insurance policies for Greensill. On March 1, 2021, Greensill filed an action against certain of its trade credit insurers in Australia seeking a mandatory injunction compelling these insurers to renew coverage under expiring policies. Later that day, the Australian court denied Greensill’s application. Since then, a number of Greensill entities have filed for, or been subject to, insolvency proceedings, and several litigations and investigations have been commenced in the U.K., Australia, Germany, Switzerland and the U.S.

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

Other Contingencies-Guarantees

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

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

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

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.

18. Segment Information

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

Risk and Insurance Services**, comprising insurance services (Marsh) and reinsurance services (Guy Carpenter); and
Consulting**, comprising Mercer and Oliver Wyman Group.

The accounting policies of the segments are the same as those used for the consolidated financial statements described in Note 1, Summary of Significant Accounting Policies, in the Company’s 2022 Form 10-K. Segment performance is evaluated based on segment operating income, which includes directly related expenses, and charges or credits related to restructuring but not the Company’s corporate-level expenses. Revenues are attributed to geographic areas on the basis of where the services are performed.

Selected information about the Company’s segments for the three months ended March 31, 2023 and 2022 is as follows:


	Three Months Ended March 31,
(In millions)	Revenue			Operating Income (Loss)
2023 –
Risk and Insurance Services	$	3,906	(a)	$	1,395
Consulting	2,031		(b)	411
Total Operating Segments	5,937			1,806
Corporate/Eliminations	(13)			(80)
Total Consolidated	$	5,924		$	1,726
2022 –
Risk and Insurance Services	$	3,549	(a)	$	1,121
Consulting	2,010		(b)	392
Total Operating Segments	5,559			1,513
Corporate/Eliminations	(10)			(68)
Total Consolidated	$	5,549		$	1,445

(a) Includes interest income on fiduciary funds of $91 million and $4 million in 2023 and 2022, respectively. Revenue in 2022 also includes the loss on deconsolidation of the Russian businesses of $27 million.

(b) Includes inter-segment revenue of $13 million and $10 million in 2023 and 2022, respectively. Revenue in 2023 also includes the loss on sale of a small individual financial advisory business in Canada of $19 million. Revenue in 2022 includes the loss on deconsolidation of the Russian businesses of $12 million.

Details of operating segment revenue for the three months ended March 31, 2023 and 2022 are as follows:


	Three Months Ended March 31,
(In millions)		2023		2022
Risk and Insurance Services
Marsh		$	2,800	$	2,549
Guy Carpenter		1,106		1,000
Total Risk and Insurance Services		3,906		3,549
Consulting
Mercer		1,344		1,343
Oliver Wyman Group		687		667
Total Consulting		2,031		2,010
Total Operating Segments		5,937		5,559
Corporate Eliminations		(13)		(10)
Total		$	5,924	$	5,549

19. New Accounting Guidance

New Accounting Pronouncement Adopted Effective January 1, 2022:

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

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