Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

Marsh & McLennan Companies, Inc., and its consolidated subsidiaries (the "Company") is a global professional services firm offering clients advice in the areas of risk, strategy and people. The Company’s more than 85,000 colleagues advise clients in over 130 countries. With annual revenue of over $20 billion, the Company helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses.

Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and identify and capitalize on emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the future of work, shape retirement and investment outcomes, and advance health and well-being for a changing workforce. Oliver Wyman Group serves as a critical strategic, economic and brand advisor to private sector and governmental clients.

The Company conducts business through two segments:

Risk and Insurance Services** includes risk management activities (risk advice, risk transfer and risk control and mitigation solutions) as well as insurance and reinsurance broking and services. The Company conducts business in this segment through Marsh and Guy Carpenter.
Consulting** includes health, wealth and career solutions and products, and specialized management, strategic, economic and brand consulting services. The Company conducts business in this segment through Mercer and Oliver Wyman Group.

The results of operations in the Management Discussion & Analysis ("MD&A") include an overview of the Company's consolidated results for the three and nine months ended September 30, 2023, compared to the corresponding periods in 2022, and should be read in conjunction with the consolidated financial statements and notes. This section also includes a discussion of the key drivers impacting the Company's financial results of operations both on a consolidated basis and by reportable segments.

We describe the primary sources of revenue and categories of expense for each segment in the discussion of segment financial results. A reconciliation of segment operating income to total operating income is included in Note 18, Segment Information, in the notes to the consolidated financial statements included in Part I, Item 1, of this report.

For information and comparability of the Company's results of operations and liquidity and capital resources for the three and nine months ended September 30, 2022, refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Form 10-Q for the quarter ended September 30, 2022.

This MD&A contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Refer to "Information Concerning Forward-Looking Statements" at the outset of this report.

Non-GAAP measures

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (U.S.), referred to as in accordance with "GAAP" or "reported" results. The Company also refers to and presents a non-GAAP financial measure in non-GAAP revenue, within the meaning of Regulation G and Item 10(e) of Regulation S-K in accordance with the Securities Exchange Act of 1934. The Company has included a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with GAAP as part of the consolidated revenue and expense discussion. Percentage changes, referred to as non-GAAP underlying revenue, are calculated by dividing the period over period change in non-GAAP revenue by the prior period non-GAAP revenue.

The Company believes this non-GAAP financial measure provides useful supplemental information that enables investors to better compare the Company’s performance across periods. Management also uses this measure internally to assess the operating performance of its businesses and to decide how to allocate resources. However, investors should not consider this non-GAAP measure in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company's non-GAAP measure includes adjustments that reflect how management views its businesses and may differ from similarly titled non-GAAP measures presented by other companies.

Financial Highlights

*•*Consolidated revenue for the three months ended September 30, 2023 was $5.4 billion, an increase of 13%, or 10% on an underlying basis. For the nine months ended September 30, 2023, consolidated revenue was $17.2 billion, an increase of 9%, or 10% on an underlying basis compared to the corresponding period in the prior year.

Consolidated operating income increased $205 million, or 26%, to $996 million for the three months ended September 30, 2023, compared to the corresponding quarter in the prior year. Net income attributable to the Company was $730 million. Earnings per share on a diluted basis increased to $1.47 from $1.08, or 36%, compared to the corresponding quarter in the prior year. For the nine months ended September 30, 2023, consolidated operating income increased $579 million, or 16% to $4.2 billion, compared to the corresponding period in the prior year. Net income attributable to the Company was $3.0 billion. Earnings per share on a diluted basis increased to $6.01 from $5.11, or 18%, compared to the corresponding period in the prior year.
Risk and Insurance Services revenue for the three months ended September 30, 2023 was $3.2 billion, an increase of 12%, or 11% on an underlying basis. Operating income was $640 million, compared with $529 million in the corresponding quarter in the prior year. For the nine months ended September 30, 2023, Risk and Insurance Services revenue was $10.8 billion, an increase of 12%, and the same on an underlying basis. Operating income was $3.2 billion, compared with $2.6 billion for the corresponding period in the prior year.
Consulting revenue for the three months ended September 30, 2023 was $2.2 billion, an increase of 13%, or 9% on an underlying basis. Operating income was $424 million, compared with $350 million in the corresponding quarter in the prior year. For the nine months ended September 30, 2023, Consulting revenue was $6.4 billion, an increase of 6%, or 7% on an underlying basis. Operating income was $1.2 billion, consistent to the corresponding period in the prior year.

*•*In April 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 "Westpac Transaction").

In August 2023, the Company acquired Graham Company, a Philadelphia-based risk management consultancy and insurance and employee benefits broker.
The Company repurchased 1.6 million shares of stock for $300 million in the third quarter of 2023. During the nine months ended September 30, 2023, the Company repurchased 5.1 million shares for $900 million.
In September 2023, the Company issued $600 million of 5.400% senior notes due 2033 and $1 billion of 5.700% senior notes due 2053. In March 2023, the Company issued $600 million of 5.45% senior notes due 2053.
In September 2023, the Board of Directors of the Company declared a dividend of $0.71 per share on outstanding common stock, payable in November of 2023.

For additional details, refer to the Consolidated Results of Operations and Liquidity and Capital Resources sections in this MD&A.

Acquisitions and dispositions impacting the Risk and Insurance Services and Consulting segments are discussed in Note 8, Acquisitions and Dispositions, in the notes to the consolidated financial statements.

Consolidated Results of Operations


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2023		2022		2023		2022
Revenue	$	5,382	$	4,770	$	17,182	$	15,698
Expense:
Compensation and benefits	3,287		2,923		9,831		9,033
Other operating expenses	1,099		1,056		3,172		3,065
Operating expenses	4,386		3,979		13,003		12,098
Operating income	$	996	$	791	$	4,179	$	3,600






Income before income taxes	$	930	$	733	$	3,978	$	3,469
Net income before non-controlling interests	$	738	$	552	$	3,037	$	2,616



Net income attributable to the Company	$	730	$	546	$	3,000	$	2,584
Net income per share attributable to the Company:
– Basic	$	1.48	$	1.10	$	6.07	$	5.16
– Diluted	$	1.47	$	1.08	$	6.01	$	5.11



Average number of shares outstanding:
– Basic	494		498		494		501
– Diluted	499		503		499		506
Shares outstanding at September 30,	493		497		493		497

Consolidated operating income increased $205 million, or 26% to $996 million for the three months ended September 30, 2023, compared to $791 million in the corresponding quarter in the prior year, reflecting a 13% increase in revenue and a 10% increase in expenses. Revenue growth was driven by increases in the Risk and Insurance Services and Consulting segments of 12% and 13%, respectively.

Consolidated operating income increased $579 million, or 16% to $4.2 billion for the nine months ended September 30, 2023, compared to $3.6 billion in the corresponding period in the prior year, reflecting a 9% increase in revenue and a 7% increase in expenses. Revenue growth was driven by increases in the Risk and Insurance Services and Consulting segments of 12% and 6%, respectively.

The increase in revenue for the three and nine months ended September 30, 2023 reflects the continued demand for our advice and services, new business and renewal growth, and solid client retention, as well as higher insurance and reinsurance rates. Results also benefited from investments in talent and increased fiduciary income due to higher interest rates.

The increase in expenses for both the three and nine months ended September 30, 2023 is primarily due to compensation and benefits driven by increased headcount and higher incentive compensation. Expenses for the nine months ended September 30, 2023 also reflect higher travel and entertainment, technology, and outside services costs, compared to the corresponding period in the prior year.

Diluted earnings per share increased to $1.47 from $1.08, or 36% for the three months ended September 30, 2023, and to $6.01 from $5.11, or 18% for the nine months ended September 30, 2023, compared to corresponding periods in the prior year. The increase for the three and nine months ended September 30, 2023 is primarily the result of higher operating income compared to the corresponding periods in the prior year.

Results for the nine months ended September 30, 2022 also include a charge of approximately $52 million for the deconsolidation of the Company's Russian businesses and other related charges in Marsh and Oliver Wyman Group recorded in the first quarter of 2022.

For the three and nine months ended September 30, 2023 and 2022, the Company's results of operations and earnings per share were impacted by the following items:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2023		2022		2023		2022
Restructuring, excluding JLT	$	46	$	32	$	148	$	78
Changes in contingent consideration	4		11		21		38
JLT integration and restructuring costs	6		6		22		18
JLT legacy legal charges	—		—		(51)		3
Disposal of business	—		—		17		(114)
Westpac acquisition related costs	5		—		32		—
JLT acquisition related retention costs	—		4		—		28
Legal claims and other	—		—		—		39






Deconsolidation of Russian businesses and other related charges	—		—		—		52
Other	2		7		2		—
Impact on income before taxes	$	63	$	60	$	191	$	142

Restructuring, excluding JLT:** In 2023, costs primarily include severance and lease exit charges for activities focused on workforce actions, rationalization of technology and functional resources, and reductions in real estate. Costs also reflect charges for Marsh's operational excellence program. These costs are discussed in more detail in Note 15, Restructuring Costs, in the notes to the consolidated financial statements.
Changes in contingent consideration:** Includes the change in fair value of contingent consideration related to acquisitions and dispositions measured each quarter.
JLT integration and restructuring:** In 2023, reflects adjustments to restructuring liabilities for lease exit charges for a legacy JLT U.K. location.
JLT legacy legal charges:** Reflects insurance and indemnity recoveries for a legacy JLT Errors and Omissions ("E&O") matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K.
Disposal of Business:** Loss on sale of an individual financial advisory business in Canada in 2023. In 2022, the amount reflects a gain of $112 million on the sale of the Mercer U.S. affinity business. These amounts are reflected as a component of revenue in the consolidated statements of income and excluded from non-GAAP revenue.
Legal claims:** The Company recorded settlement and legal costs related to strategic recruiting.
Deconsolidation of Russian businesses and other related charges:** The loss on deconsolidation of the Company's Russian businesses of $39 million is reflected as a component of revenue in the consolidated statements of income and excluded from non-GAAP revenue. The remaining expenses of $13 million are included in other operating expenses in the consolidated statements of income.

Consolidated Revenue and Expense

Revenue – Non-GAAP Revenue and Components of Change

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period over period comparisons of revenue. Non-GAAP revenue measures the change in revenue from one period to the next by isolating these impacts on an underlying revenue basis. Percentage changes, referred to as non-GAAP underlying revenue, are calculated by dividing the period over period change in non-GAAP revenue by the prior period non-GAAP revenue.

The non-GAAP revenue measure is presented on a constant currency basis excluding the impact of foreign currency fluctuations. The Company isolates the impact of foreign exchange rate movements period over period, by translating the current period foreign currency GAAP revenue into U.S. Dollars based on the difference in the current and corresponding prior period exchange rates.

The percentage change for acquisitions, dispositions, and other includes the impact of current and prior year items excluded from the calculation of non-GAAP underlying revenue for comparability purposes. Details on these items are provided in the reconciliation of non-GAAP revenue to GAAP revenue tables.

The following tables present the Company's non-GAAP revenue for the three and nine months ended September 30, 2023 and 2022 and the related non-GAAP underlying revenue change:


Three Months Ended September 30, (In millions, except percentages)	GAAP Revenue				% Change GAAP Revenue*			Non-GAAP Revenue				Non-GAAP Underlying Revenue*
2023	2022				2023		2022
Risk and Insurance Services
Marsh	$	2,700	$	2,470	9	%		$	2,654	$	2,468	8	%
Guy Carpenter	359		328		9	%		353		328		8	%
Subtotal	3,059		2,798		9	%		3,007		2,796		8	%
Fiduciary interest income	131		40					131		40
Total Risk and Insurance Services	3,190		2,838		12	%		3,138		2,836		11	%
Consulting
Mercer	1,425		1,284		11	%		1,404		1,305		8	%
Oliver Wyman Group	781		667		17	%		745		667		12	%
Total Consulting	2,206		1,951		13	%		2,149		1,972		9	%
Corporate Eliminations	(14)		(19)					(14)		(19)
Total Revenue	$	5,382	$	4,770	13	%		$	5,273	$	4,789	10	%

The following table provides more detailed revenue information for certain of the components presented in the previous table:


Three Months Ended September 30, (In millions, except percentages)	GAAP Revenue				% Change GAAP Revenue*			Non-GAAP Revenue				Non-GAAP Underlying Revenue*
2023	2022				2023		2022
Marsh:
EMEA (a)	$	692	$	615	13	%		$	667	$	614	9	%
Asia Pacific (a)	311		286		9	%		316		286		10	%
Latin America	134		118		14	%		134		118		14	%
Total International	1,137		1,019		12	%		1,117		1,018		10	%
U.S./Canada	1,563		1,451		8	%		1,537		1,450		6	%
Total Marsh	$	2,700	$	2,470	9	%		$	2,654	$	2,468	8	%
Mercer:
Wealth	$	635	$	561	13	%		$	623	$	582	7	%
Health	496		451		10	%		490		451		8	%
Career	294		272		8	%		291		272		7	%
Total Mercer	$	1,425	$	1,284	11	%		$	1,404	$	1,305	8	%

(a) 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.


Nine Months Ended September 30, (In millions, except percentages)	GAAP Revenue				% Change GAAP Revenue*			Non-GAAP Revenue				Non-GAAP Underlying Revenue*
2023	2022				2023		2022
Risk and Insurance Services
Marsh	$	8,482	$	7,794	9	%		$	8,485	$	7,809	9	%
Guy Carpenter	2,006		1,849		8	%		2,008		1,830		10	%
Subtotal	10,488		9,643		9	%		10,493		9,639		9	%
Fiduciary interest income	330		57					332		57
Total Risk and Insurance Services	10,818		9,700		12	%		10,825		9,696		12	%
Consulting
Mercer	4,143		4,016		3	%		4,198		3,924		7	%
Oliver Wyman Group	2,266		2,029		12	%		2,194		2,040		8	%
Total Consulting	6,409		6,045		6	%		6,392		5,964		7	%
Corporate Eliminations	(45)		(47)					(45)		(47)
Total Revenue	$	17,182	$	15,698	9	%		$	17,172	$	15,613	10	%

The following table provides more detailed revenue information for certain of the components presented in the previous table:


Nine Months Ended September 30, (In millions, except percentages)	GAAP Revenue				% Change GAAP Revenue*			Non-GAAP Revenue				Non-GAAP Underlying Revenue*
2023	2022				2023		2022
Marsh:
EMEA (a)	$	2,482	$	2,264	10	%		$	2,508	$	2,280	10	%
Asia Pacific (a)	980		927		6	%		1,011		927		9	%
Latin America	386		340		13	%		387		340		14	%
Total International	3,848		3,531		9	%		3,906		3,547		10	%
U.S./Canada	4,634		4,263		9	%		4,579		4,262		7	%
Total Marsh	$	8,482	$	7,794	9	%		$	8,485	$	7,809	9	%
Mercer:
Wealth	$	1,853	$	1,775	4%			$	1,896	$	1,820	4	%
Health	1,559		1,562		—			1,568		1,425		10	%
Career	731		679		8	%		734		679		8	%
Total Mercer	$	4,143	$	4,016	3	%		$	4,198	$	3,924	7	%

Rounded to whole percentages.

Revenue – Reconciliation of Non-GAAP Measures

The following tables provide the reconciliation of GAAP revenue to Non-GAAP revenue for the three and nine months ended September 30, 2023 and 2022:


	2023								2022
Three Months Ended September 30, (In millions)	GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue		GAAP Revenue		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue
Risk and Insurance Services
Marsh	$	2,700	$	(15)	$	(31)	$	2,654	$	2,470	$	(2)	$	2,468
Guy Carpenter	359		(3)		(3)		353		328		—		328
Subtotal	3,059		(18)		(34)		3,007		2,798		(2)		2,796
Fiduciary interest income	131		—		—		131		40		—		40
Total Risk and Insurance Services	3,190		(18)		(34)		3,138		2,838		(2)		2,836
Consulting
Mercer (a)	1,425		(17)		(4)		1,404		1,284		21		1,305
Oliver Wyman Group	781		(15)		(21)		745		667		—		667
Total Consulting	2,206		(32)		(25)		2,149		1,951		21		1,972
Corporate Eliminations	(14)		—		—		(14)		(19)		—		(19)
Total Revenue	$	5,382	$	(50)	$	(59)	$	5,273	$	4,770	$	19	$	4,789

The following table provides more detailed revenue information for certain of the components presented in the previous table:


	2023								2022
Three Months Ended September 30, (In millions)	GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue		GAAP Revenue		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue
Marsh:
EMEA (b)	$	692	$	(23)	$	(2)	$	667	$	615	$	(1)	$	614
Asia Pacific (b)	311		6		(1)		316		286		—		286
Latin America	134		(1)		1		134		118		—		118
Total International	1,137		(18)		(2)		1,117		1,019		(1)		1,018
U.S./Canada	1,563		3		(29)		1,537		1,451		(1)		1,450
Total Marsh	$	2,700	$	(15)	$	(31)	$	2,654	$	2,470	$	(2)	$	2,468
Mercer:
Wealth (a)	$	635	$	(11)	$	(1)	$	623	$	561	$	21	$	582
Health	496		(6)		—		490		451		—		451
Career	294		—		(3)		291		272		—		272
Total Mercer	$	1,425	$	(17)	$	(4)	$	1,404	$	1,284	$	21	$	1,305

(a)Acquisitions, dispositions, and other in 2022 includes revenue from the Westpac Transaction in Wealth.

(b)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.


	2023								2022
Nine Months Ended September 30, (In millions)	GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue		GAAP Revenue		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue
Risk and Insurance Services
Marsh (a)	$	8,482	$	82	$	(79)	$	8,485	$	7,794	$	15	$	7,809
Guy Carpenter	2,006		20		(18)		2,008		1,849		(19)		1,830
Subtotal	10,488		102		(97)		10,493		9,643		(4)		9,639
Fiduciary interest income	330		2		—		332		57		—		57
Total Risk and Insurance Services	10,818		104		(97)		10,825		9,700		(4)		9,696
Consulting
Mercer (b)	4,143		44		11		4,198		4,016		(92)		3,924
Oliver Wyman Group (a)	2,266		(1)		(71)		2,194		2,029		11		2,040
Total Consulting	6,409		43		(60)		6,392		6,045		(81)		5,964
Corporate Eliminations	(45)		—		—		(45)		(47)		—		(47)
Total Revenue	$	17,182	$	147	$	(157)	$	17,172	$	15,698	$	(85)	$	15,613

The following table provides more detailed revenue information for certain of the components presented in the previous table:


	2023								2022
Nine Months Ended September 30, (In millions)	GAAP Revenue		Currency Impact		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue		GAAP Revenue		Acquisitions/ Dispositions/ Other Impact		Non-GAAP Revenue
Marsh:
EMEA (a) (c)	$	2,482	$	32	$	(6)	$	2,508	$	2,264	$	16	$	2,280
Asia Pacific (c)	980		35		(4)		1,011		927		—		927
Latin America	386		—		1		387		340		—		340
Total International	3,848		67		(9)		3,906		3,531		16		3,547
U.S./Canada	4,634		15		(70)		4,579		4,263		(1)		4,262
Total Marsh	$	8,482	$	82	$	(79)	$	8,485	$	7,794	$	15	$	7,809
Mercer:
Wealth (b)	$	1,853	$	24	$	19	$	1,896	$	1,775	$	45	$	1,820
Health (b)	1,559		10		(1)		1,568		1,562		(137)		1,425
Career	731		10		(7)		734		679		—		679
Total Mercer	$	4,143	$	44	$	11	$	4,198	$	4,016	$	(92)	$	3,924

(a)Acquisitions, dispositions, and other in 2022 includes the loss on deconsolidation of the Company's Russian businesses of $27 million and Oliver Wyman Group of $12 million.

(b)Acquisitions, dispositions, and other in 2022 includes revenue from the Westpac Transaction in Wealth and a gain from the sale of the Mercer U.S. affinity business of $112 million in Health. Results for 2023 in Wealth include the loss on sale of an individual financial advisory business in Canada of $17 million.

(c)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.

Consolidated Revenue

Consolidated revenue increased $612 million, or 13% to $5.4 billion for the three months ended September 30, 2023, compared to $4.8 billion for the three months ended September 30, 2022. Consolidated revenue increased 10% on an underlying basis, 2% from acquisitions and 1% from the impact of foreign currency translation. On an underlying basis, revenue increased 11% and 9% for the three months ended September 30, 2023 in the Risk and Insurance Services and Consulting segments, respectively.

Consolidated revenue increased $1.5 billion, or 9% to $17.2 billion for the nine months ended September 30, 2023, compared to $15.7 billion for the nine months ended September 30, 2022. Consolidated revenue increased 10% on an underlying basis, partially offset by a decrease of 1% from the impact of foreign currency translation. On an underlying basis, revenue increased 12% and 7% for the nine months ended September 30, 2023 in the Risk and Insurance Services and Consulting segments, respectively.

Underlying revenue growth in the Risk and Insurance Services and Consulting segments for the three and nine months ended September 30, 2023 was driven by the continued demand for our advice and services, as well as growth in renewal and new business. In Risk and Insurance Services, renewal growth was driven by client retention, exposure growth and higher insurance and reinsurance rates. Revenue growth also benefited from investments in talent and increased fiduciary income due to higher interest rates. In Consulting, revenue growth reflected continued demand for our product solutions and consulting services.

Consolidated Operating Expenses

Consolidated operating expenses increased $407 million, or 10% to $4.4 billion for the three months ended September 30, 2023, compared to $4.0 billion for the three months ended September 30, 2022. Expenses reflect increases of 2% from both acquisitions and the impact of foreign currency translation. Expenses, excluding the impact from acquisitions and foreign currency translation, increased 7% for the three months ended September 30, 2023, with increases of 8% and 6% in the Risk and Insurance Services and Consulting segments, respectively.

Consolidated operating expenses increased $905 million, or 7% to $13.0 billion for the nine months ended September 30, 2023, compared to $12.1 billion for the nine months ended September 30, 2022. Expenses reflect a 2% increase from acquisitions and a decrease of 1% from the impact of foreign currency translation. Expenses, excluding the impact from acquisitions and foreign currency translation, increased 7% for the nine months ended September 30, 2023, with increases of 8% and 6% in the Risk and Insurance Services and Consulting segments, respectively.

The increase in expenses for the three and nine months ended September 30, 2023 is primarily due to compensation and benefits driven by increased headcount and higher incentive compensation. Expenses for the nine months ended September 30, 2023 also reflect higher travel and entertainment, technology and outside services costs, compared to the corresponding period in the prior year.

In the fourth quarter of 2022, the Company initiated activities focused on workforce actions, rationalization of technology and functional services, and reductions in real estate. The Company anticipates total charges related to these activities to be between $425 million and $475 million. The Company has incurred approximately $325 million of restructuring costs through September 30, 2023, primarily severance and lease exit charges, of which $37 million and $109 million were incurred for the three and nine months ended September 30, 2023, respectively. The majority of the remaining costs are expected to be incurred by the end of 2023. Related estimated savings are expected to be approximately $400 million, with $225 million to be realized in 2023. The majority of the remaining savings are expected to be realized in 2024. The Company continues to refine its detailed plans for each business and location, which may change the expected timing, estimates of expected costs and related savings.

Risk and Insurance Services

In the Risk and Insurance Services segment, the Company’s subsidiaries and other affiliated entities act as brokers, agents or consultants for insureds, insurance underwriters and other brokers in the areas of risk management, insurance broking, insurance program management, risk consulting, analytical modeling and alternative risk financing services, primarily under the brand of Marsh, and engage in specialized reinsurance broking, strategic advisory services and analytics solutions, primarily under the brand of Guy Carpenter.

The results of operations for the Risk and Insurance Services segment are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions, except percentages)	2023			2022			2023			2022
Revenue	$	3,190		$	2,838		$	10,818		$	9,700
Compensation and benefits	1,900			1,688			5,703			5,239
Other operating expenses	650			621			1,923			1,844
Operating expenses	2,550			2,309			7,626			7,083
Operating income	$	640		$	529		$	3,192		$	2,617
Operating income margin	20.0		%	18.7		%	29.5		%	27.0		%

Revenue

Revenue in the Risk and Insurance Services segment increased $352 million, or 12% to $3.2 billion for the three months ended September 30, 2023, compared to $2.8 billion for the three months ended September 30, 2022. Revenue increased 11% on an underlying basis and 1% each from acquisitions and the impact of foreign currency translation. Interest earned on fiduciary funds increased $91 million to $131 million for the three months ended September 30, 2023, compared to $40 million for the corresponding quarter in the prior year.

Revenue in the Risk and Insurance Services segment increased $1.1 billion, or 12% to $10.8 billion for the nine months ended September 30, 2023, compared to $9.7 billion for the nine months ended September 30, 2022. Revenue increased 12% on an underlying basis and 1% from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation. Interest earned on fiduciary funds increased by $273 million to $330 million for the nine months ended September 30, 2023, compared to $57 million for the corresponding period in the prior year.

The increase in revenue on an underlying basis in the Risk and Insurance Services segment for the three and nine months ended September 30, 2023 was primarily due to strong growth in renewals and solid new business. Renewal growth was driven by solid client retention, as well as higher insurance and reinsurance rates. Results also benefited from increased fiduciary income, driven by higher interest rates compared to the corresponding periods in the prior year.

Marsh's revenue increased $230 million, or 9% to $2.7 billion for the three months ended September 30, 2023, compared to $2.5 billion for the three months ended September 30, 2022. This reflects increases of 8% on an underlying basis and 1% from both acquisitions and the impact of foreign currency translation. On an underlying basis, U.S./Canada rose 6%. International operations produced underlying revenue growth of 10%, reflecting growth of 14% in Latin America, 10% in Asia Pacific and 9% in EMEA.

Marsh's revenue increased $688 million, or 9% to $8.5 billion for the nine months ended September 30, 2023, compared to $7.8 billion for the nine months ended September 30, 2022. This reflects increases of 9% on an underlying basis and 1% from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation. On an underlying basis, U.S./Canada rose 7%. Total International operations produced underlying revenue growth of 10%, reflecting growth of 14% in Latin America, 10% in EMEA, and 9% in Asia Pacific.

Results for the nine months ended September 30, 2022, also included a charge of approximately $27 million related to the loss on deconsolidation of the Company's Russian businesses.

Guy Carpenter's revenue increased $31 million, or 9% to $359 million for the three months ended September 30, 2023, compared to $328 million for the three months ended September 30, 2022. This reflects increases of 8% on an underlying basis and 1% each from acquisitions and the impact of foreign currency translation.

Guy Carpenter's revenue increased $157 million, or 8% to $2.0 billion for the nine months ended September 30, 2023, compared to $1.8 billion for the nine months ended September 30, 2022. This reflects an increase of 10% on an underlying basis, partially offset by a decrease of 1% from the impact of foreign currency translation.

The Risk and Insurance Services segment completed eight acquisitions during the nine months ended September 30, 2023. Information regarding these acquisitions is included in Note 8, Acquisitions and Dispositions, in the notes to the consolidated financial statements.

Operating Expenses

Expenses in the Risk and Insurance Services segment increased $241 million, or 10% to $2.6 billion for the three months ended September 30, 2023, compared to $2.3 billion for the three months ended September 30, 2022. Expenses reflect a 1% increase from acquisitions and a 2% increase from the impact of foreign currency translation.

Expenses in the Risk and Insurance Services segment increased $543 million, or 8% to $7.6 billion for the nine months ended September 30, 2023, compared to $7.1 billion for the nine months ended September 30, 2022. Expenses reflect a 1% increase from acquisitions offset by a decrease of 1% from the impact of foreign currency translation.

The increase in expenses excluding the impact from acquisitions and foreign currency translation for the three and nine months ended September 30, 2023 is primarily due to compensation and benefits driven by increased headcount and higher incentive compensation. Expenses for the nine months ended September 30, 2023 also reflect higher travel and entertainment, technology and outside services costs compared to the corresponding period in the prior year.

For the three and nine months ended September 30, 2023, the Company incurred $26 million and $89 million of restructuring costs in the Risk and Insurance Services segment, respectively, of which $16 million and $49 million, respectively, were primarily for severance and lease exit charges related to the Company's activities focused on workforce actions, rationalization of technology and functional services, and reductions in real estate.

Consulting

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

The results of operations for the Consulting segment are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions, except percentages)	2023			2022			2023			2022
Revenue	$	2,206		$	1,951		$	6,409		$	6,045
Compensation and benefits	1,251			1,107			3,690			3,416
Other operating expenses	531			494			1,496			1,412
Operating expenses	1,782			1,601			5,186			4,828
Operating income	$	424		$	350		$	1,223		$	1,217
Operating income margin	19.2		%	17.9		%	19.1		%	20.1		%

Revenue

Consulting revenue increased $255 million, or 13% to $2.2 billion for the three months ended September 30, 2023, compared to $2.0 billion for the three months ended September 30, 2022. This reflects increases of 9% on an underlying basis and 2% each from acquisitions and the impact of foreign currency translation.

Consulting revenue increased $364 million, or 6% to $6.4 billion for the nine months ended September 30, 2023, compared to $6.0 billion for the nine months ended September 30, 2022. This reflects an increase of 7% on an underlying basis, partially offset by a decrease of 1% from the impact of foreign currency translation.

Mercer's revenue increased $141 million, or 11% to $1.4 billion for the three months ended September 30, 2023, compared to $1.3 billion for the three months ended September 30, 2022. This reflects increases of 8% on an underlying basis, 2% from acquisitions and 1% from the impact of foreign currency translation. On an underlying basis, revenue increased 8% for Health and 7% each for Career and Wealth, compared to the corresponding quarter in the prior year.

Mercer's revenue increased $127 million, or 3% to $4.1 billion for the nine months ended September 30, 2023, compared to $4.0 billion for the nine months ended September 30, 2022. This reflects an increase of 7% on an underlying basis, offset by decreases of 3% primarily from the disposition of businesses and 1% from the impact of foreign currency translation. On an underlying basis, revenue for Health, Career and Wealth increased 10%, 8%, and 4%, respectively, as compared to the corresponding period in the prior year.

The increase in revenue on an underlying basis at Mercer for the three and nine months ended September 30, 2023 was primarily due to the continued demand for our advice and services. Health continued to benefit from growth in new business, higher retention, enrolled lives, and medical inflation. The increase in Career products and services was due to continued demand in rewards and talent strategy. Revenue in Wealth on an underlying basis grew in defined benefit consulting and investment management fees due to a rebound in capital markets and positive net flows.

Results for the nine months ended September 30, 2023 included a loss of $17 million related to the sale of an individual financial advisory business in Canada. Results for the nine months ended September 30, 2022 also included a gain of $112 million from the sale of the Mercer U.S. affinity business.

Oliver Wyman Group's revenue increased $114 million, or 17% to $781 million for the three months ended September 30, 2023, compared to $667 million for the three months ended September 30, 2022. This reflects increases of 12% on an underlying basis, 3% from acquisitions and 2% from the impact of foreign currency translation.

Oliver Wyman Group's revenue increased $237 million, or 12% to $2.3 billion for the nine months ended September 30, 2023, compared to $2.0 billion for the nine months ended September 30, 2022. This reflects an increase of 8% on an underlying basis and 4% from acquisitions.

The increase in underlying revenue at Oliver Wyman Group for the three and nine months ended September 30, 2023 was driven by growth across all practice groups. Results for the nine months ended September 30, 2022, also included a charge of approximately $12 million related to the loss on the deconsolidation of the Company's Russian businesses.

The Consulting segment completed four acquisitions during the nine months ended September 30, 2023. Information regarding these acquisitions are included in Note 8, Acquisitions and Dispositions, in the notes to the consolidated financial statements.

Operating Expenses

Expenses in the Consulting segment increased $181 million, or 11% to $1.8 billion for the three months ended September 30, 2023, compared to $1.6 billion for the three months ended September 30, 2022. Expenses reflect increases of 3% from acquisitions and 2% from the impact of foreign currency translation.

Expenses in the Consulting segment increased $358 million, or 7% to $5.2 billion for the nine months ended September 30, 2023, compared to $4.8 billion for the nine months ended September 30, 2022. Expenses reflect an increase of 2% from acquisitions offset by a decrease of 1% from the impact of foreign currency translation.

The increase in expenses excluding the impact from acquisitions and foreign currency translation for the three and nine months ended September 30, 2023 is primarily due to compensation and benefits driven by increased headcount. The increase in expenses for the nine months ended September 30, 2023 is partially offset by $51 million of insurance recoveries for a legacy JLT E&O matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K.

For the three and nine months ended September 30, 2023, the Company incurred $17 million and $33 million of restructuring costs in the Consulting segment, respectively, of which $16 million and $28 million, respectively, were primarily for severance and lease exit charges, related to the Company's activities focused on workforce actions, rationalization of technology and functional services, and reductions in real estate. The remaining restructuring costs relate primarily to adjustments to restructuring liabilities for future rent under non-cancellable leases.

Corporate and Other

Corporate expenses decreased $20 million, or 23% to $68 million for the three months ended September 30, 2023, compared to $88 million for the three months ended September 30, 2022.

Corporate expenses increased $2 million, or 1% to $236 million for the nine months ended September 30, 2023, compared to $234 million for the nine months ended September 30, 2022.

The decrease in expenses for the three months ended September 30, 2023 is driven primarily by lower compensation and benefits costs and outside services, as compared to the corresponding period in the prior year.

Interest

Interest expense was $145 million for the three months ended September 30, 2023, compared to $118 million for the three months ended September 30, 2022. Interest expense was $427 million for the nine months ended September 30, 2023, compared to $342 million for the nine months ended September 30, 2022.

Interest expense for the three and nine months ended September 30, 2023, increased $27 million and $85 million, respectively, due to an increase in long term debt and higher interest rates. Interest expense for the nine months ended September 30, 2023 also reflects higher interest rates on the Company's short term borrowings in 2023, compared to the corresponding period in the prior year.

Investment Income

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

The Company recorded net investment income of $1 million and $6 million for the three and nine months ended September 30, 2023, respectively, compared to net investment loss of $1 million and net investment income of $27 million, respectively, for the corresponding periods in the prior year. The decrease in the nine months ended results in 2023 is primarily driven by lower mark-to-market gains from the Company's private equity investments compared to the corresponding period in the prior year.

Income and Other Taxes

The Company's effective tax rate for the three months ended September 30, 2023 was 20.6%, compared with 24.6% for the corresponding quarter of 2022. The effective tax rate for the nine months ended September 30, 2023 and 2022 were 23.7% and 24.6%, respectively.

The tax rate in each period reflects 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 and non-taxable adjustments related to contingent consideration for acquisitions, and valuation allowances for certain tax credits and attributes. The rate for the three and nine months ended September 30, 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%.

During the third quarter of 2023, the Company released a valuation allowance related to the realizability of deferred tax assets for its non-U.S. operations of $48 million as a discrete tax benefit, primarily due to the sustained profitability of its operations. This was the most significant discrete item for the quarter, reducing the effective tax rate by 4.8%. For the three months ended September 30, 2023, the effective tax rate was also reduced by 1.0% from the impact of the excess tax benefit related to share-based payments. For the nine months ended September 30, 2023, the valuation allowance release and the excess tax benefit related to share-based payments were the most significant discrete items, reducing the effective tax rate by 1.1% and 1.2%, respectively.

The excess tax benefit related to share-based payments was the most significant discrete item for the three and nine months ended September 30, 2022, reducing the effective tax rate by 0.9% and 1.2%, respectively.

The effective tax rate may vary significantly from period to period. The effective tax rate is sensitive to the geographic mix and repatriation of the Company's earnings, which may result in higher or lower effective tax rates. Therefore, a shift in the mix of profits among jurisdictions, or changes in the Company's repatriation strategy to access offshore cash, can affect the effective tax rate.

In addition, losses in certain jurisdictions cannot be offset by earnings from other operations and may require valuation allowances that affect the rate in a particular period, depending on estimates of the value of associated deferred tax assets which can be realized. A valuation allowance was recorded to reduce deferred tax assets to the amount that the Company believes is more likely than not to be realized. The effective tax rate is also sensitive to changes in unrecognized tax benefits, including the impact of settled tax audits and expired statutes of limitations.

The Company has established liabilities for uncertain tax positions in relation to potential assessments in the jurisdictions in which it operates. The Company believes the resolution of tax matters will not have a material effect on the consolidated financial position of the Company, although a resolution of tax matters could have a material impact on the Company's net income or cash flows and on its effective tax rate in a particular future period. It is reasonably possible that the total amount of unrecognized tax benefits could decrease up to approximately $79 million within the next twelve months due to settlement of audits and expiration 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.

As a U.S. domiciled parent holding company, the Company is the issuer of essentially all the Company's external indebtedness, and incurs the related interest expense in the U.S. The Company’s interest expense deductions are not currently limited. Further, most senior executive and oversight functions are conducted in the U.S. and the associated costs are incurred primarily in the U.S. Some of these expenses may not be deductible in the U.S., which may impact the effective tax rate.

Changes to the U.S. tax law in recent years have allowed the Company to repatriate foreign earnings without incurring additional U.S. federal income tax costs as foreign income is generally already taxed in the U.S. However, permanent reinvestment continues to be a component of the Company's global capital strategy. The Company continues to evaluate its global investment and repatriation strategy in light of our capital requirements and potential costs of repatriation, which are generally limited to local country withholding taxes.

In addition to U.S. tax law changes, the Company's global operations make the tax rate sensitive to significant foreign tax law changes. A number of countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development's ("OECD") international tax framework, including the Pillar 2 minimum tax regime with effect from January 1, 2024.

In July 2023, the U.K. enacted legislation to implement Pillar 2 of the OECD framework, effective from January 1, 2024. The implementation of the OECD framework in the U.K. will impose additional reporting and compliance obligations. This minimum tax will be treated as a period cost in future years and will not impact operating results for 2023. The Company is continuing to monitor legislative developments, especially in the European Union (E.U.) countries, and is in the process of evaluating the potential impact of the U.K. and other legislation on its results of future operations.

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.

Liquidity and Capital Resources

The Company is organized as a legal entity separate and distinct from its operating subsidiaries. As the Company does not have significant operations of its own, the Company is dependent upon dividends and other payments from its operating subsidiaries to pay principal and interest on its outstanding debt obligations, pay dividends to stockholders, repurchase its shares and pay corporate expenses. The Company can also provide financial support to its operating subsidiaries for acquisitions, investments and certain parts of their business that require liquidity, such as the capital markets business of Guy Carpenter. Other sources of liquidity include borrowing facilities discussed in financing cash flows.

The Company derives a significant portion of its revenue and operating profit from operating subsidiaries located outside of the U.S. Funds from those operating subsidiaries are regularly repatriated to the U.S. out of annual earnings. At September 30, 2023, the Company had approximately $1.6 billion of cash and cash equivalents in its foreign operations, which includes $425 million of operating funds required to be maintained for regulatory requirements or as collateral under certain captive insurance arrangements. The Company expects to continue its practice of repatriating available funds from its non-U.S. operating subsidiaries out of current annual earnings. Where appropriate, a portion of the current year earnings will continue to be permanently reinvested.

For the nine months ended September 30, 2023, the Company recorded foreign currency translation adjustments which decreased net equity by $151 million. Continued strengthening of the U.S. dollar against foreign currencies would further decrease the translated U.S. dollar value of the Company’s net investments in its non-U.S. subsidiaries, as well as the translated U.S. dollar value of cash repatriations from those subsidiaries.

Cash and cash equivalents on our consolidated balance sheets includes funds available for general corporate purposes. Fiduciary assets are shown separately in the consolidated balance sheets as cash and cash equivalents held in a fiduciary capacity, with a corresponding amount in current liabilities. Fiduciary assets cannot be used for general corporate purposes, and should not be considered as a source of liquidity for the Company.

Operating Cash Flows

The Company provided $2.5 billion of cash from operations for the nine months ended September 30, 2023, compared to $2.0 billion provided by operations in the first nine months of 2022. These amounts reflect the net income of the Company during those periods, excluding gains or losses from investments, adjusted for non-cash charges and changes in working capital which relate primarily to the timing of payments of accrued liabilities, including incentive compensation, or receipts of receivables and pension plan contributions. The Company used cash of $215 million and $124 million related to its restructuring activities for the nine months ended September 30, 2023 and 2022, respectively.

Pension Related Items

Contributions

The Company's policy for funding its tax-qualified defined benefit plans is to contribute amounts at least sufficient to meet the funding requirements set forth in accordance with applicable law. For the three and nine months ended September 30, 2023, the Company contributed $8 million and $23 million, respectively, to its U.S. defined benefit pension plans and $18 million and $50 million to its non-U.S. defined benefit pension plans, respectively. For the three and nine months ended September 30, 2022, the Company contributed $8 million and $23 million to its U.S. defined benefit pension plans, respectively, $20 million and $118 million to its non-U.S. defined benefit pension plans, respectively.

In the U.S., contributions to the tax-qualified defined benefit plans are based on Employee Retirement Income Security Act ("ERISA") guidelines and the Company generally expects to maintain a funded status of 80% or more of the liability determined in accordance with the ERISA guidelines. During the three and nine months ended September 30, 2023, the Company made $8 million and $23 million, respectively, of contributions to its non-qualified plans and expects to fund approximately an additional $8 million over the remainder of 2023. The Company is not required to make any contributions to its U.S. qualified plans in 2023.

Outside the U.S., the Company has a large number of non-U.S. defined benefit pension plans, the largest of which are in the U.K., which comprise approximately 79% of non-U.S. plan assets at December 31, 2022. Contribution rates for non-U.S. plans are generally based on local funding practices and statutory requirements, which may differ significantly from measurements in accordance with U.S. GAAP.

In the U.K., the assumptions used to determine pension contributions are the result of legally-prescribed negotiations between the Company and the plans' trustee that typically occur every 3 years in conjunction with the actuarial valuation of the plans. Currently, this results in a lower funded status compared to U.S. GAAP and may result in contributions irrespective of the U.S. GAAP funded status.

In 2021, the JLT Pension Scheme was merged into the MMC UK Pension Fund with a new segregated JLT section created. During the first nine months of 2023, the Company made deficit contributions of $31 million to its U.K. plans, all in respect of the JLT section, and is expected to make $10 million of contributions in the remainder of 2023.

For the MMC UK Pension Fund, excluding the JLT section, an agreement was reached with the trustee in the fourth quarter of 2022 based on the surplus funding position at December 31, 2021. In accordance with the agreement, no deficit funding is required until 2026 at the earliest. The funding level will be re-assessed during 2025 as part of the December 31, 2024 actuarial valuation to determine if contributions are required in 2026. As part of a long term strategy which depends on having greater influence over asset allocation and overall investment decisions, in December 2022, the Company renewed its agreement to support annual deficit contributions by the U.K. operating companies under certain circumstances, up to £450 million (or $546 million) over a seven-year period.

The Company expects to fund an additional $27 million to its non-U.S. defined benefit plans over the remainder of 2023, comprising approximately $10 million to the U.K. plans and $17 million to plans outside of the U.K.

Financing Cash Flows

Net cash provided by financing activities was $1.2 billion for the nine months ended September 30, 2023, compared with $28 million provided by financing activities for the corresponding period in 2022.

Credit Facilities

In October 2023, the Company increased its multi-currency unsecured $2.8 billion five-year revolving credit facility capacity to $3.5 billion and extended the expiration to October 2028 (the "Credit Facility"). The interest rate on the Credit Facility was initially based on LIBOR plus a fixed margin which varied with the Company's credit rating. In the second quarter of 2023, the Credit Facility was amended that borrowings under the Credit Facility bear interest at a rate per annum equal, at the borrower's option, either at (a) SOFR benchmark rate for U.S. dollar borrowings, or (b) a currency specific benchmark rate, plus an applicable margin which varies with the Company's credit ratings. The Company is required to maintain certain coverage and leverage ratios for the Credit Facility, which are tested quarterly.

The Credit Facility includes provisions for determining a benchmark replacement rate in the event existing benchmark rates are no longer available or in certain other circumstances, in which an alternative rate may be required. As of September 30, 2023 and December 31, 2022, the Company had no borrowings under this facility.

In October 2023, the Company terminated its one-year $200 million uncommitted revolving credit facility ("Uncommitted Credit Facility"). In the third quarter of 2023, the Company repaid $200 million borrowings outstanding under the Uncommitted Credit Facility with a weighted average interest rate of 5.50%. There were no borrowings outstanding under the Uncommitted Credit Facility at September 30, 2023 and December 31, 2022.

The Company also maintains other credit and overdraft facilities with various financial institutions aggregating $112 million at September 30, 2023. There were no outstanding borrowings under these facilities at September 30, 2023 and December 31, 2022. The Company also has outstanding guarantees and letters of credit with various banks aggregating $131 million at September 30, 2023.

Debt

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 no commercial paper outstanding at September 30, 2023.

In October 2023, the Company repaid $250 million of 4.05% senior notes that matured.

In September 2023, the Company issued $600 million of 5.400% senior notes due 2033 and $1 billion of 5.700% senior notes due 2053. The Company intends to use the net proceeds from these issuances for general corporate purposes.

In March 2023, the Company issued $600 million of 5.450% 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.

The Company's senior debt is currently rated A- by Standard & Poor's ("S&P"), A3 by Moody's and A- by Fitch. The Company's short-term debt is currently rated A-2 by S&P, P-2 by Moody's and F-2 by Fitch. The Company carries a Stable outlook with S&P, Moody's and Fitch.

Share Repurchases

During the first nine months of 2023, the Company repurchased 5.1 million shares of its common stock for $900 million. As of September 30, 2023, the Company remained authorized to repurchase up to approximately $3.4 billion in shares of its common stock. There is no time limit on the authorization.

During the first nine months of 2022, the Company repurchased 10.1 million shares of its common stock for $1.6 billion.

Dividends

The Company paid dividends on its common stock shares of $944 million ($1.89 per share) during the first nine months of 2023, as compared with $840 million ($1.66 per share) during the first nine months of 2022. In September 2023, the Board of Directors of the Company declared a quarterly dividend of $0.71 per share on outstanding common stock, payable in November of 2023.

Contingent and Deferred Payments Related to Acquisitions

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

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


For the Nine Months Ended September 30
(In millions)	2023		2022
Operating:
Contingent consideration payments for prior year acquisitions	$	(41)	$	(38)
Receipt of contingent consideration for dispositions	1		—
Acquisition/disposition related net charges for adjustments	21		38


Adjustments and payments related to contingent consideration	$	(19)	$	—
Financing:
Contingent consideration for prior year acquisitions	$	(135)	$	(28)
Deferred consideration related to prior year acquisitions	(52)		(116)
Payments of deferred and contingent consideration for acquisitions	$	(187)	$	(144)

Receipt of contingent consideration for dispositions	$	2	$	3

For acquisitions completed during the first nine months of 2023 and in prior years, remaining estimated future contingent payments of $231 million and deferred consideration payments of $107 million, are recorded in accounts payable and accrued liabilities or other liabilities in the consolidated balance sheet at September 30, 2023.

Derivatives - Net Investment Hedge

The Company has investments in various subsidiaries with Euro functional currencies. As a result, the Company is exposed to the risk of fluctuations between the Euro and U.S. dollar exchange rates. As part of its risk management program, the Company issued €1.1 billion Senior Notes, and designated the debt instruments as a net investment hedge of its Euro denominated subsidiaries. The hedge is re-assessed each quarter to confirm that the designated equity balance at the beginning of each period continues to equal or exceed 80% of the outstanding balance of the Euro debt instrument and that all the critical terms of the hedging instrument and the hedged net investment continue to match. If the hedge is highly effective, the change in the debt balance related to foreign exchange fluctuations is recorded in accumulated other comprehensive loss in the consolidated balance sheets.

The U.S. dollar value of the Euro notes decreased by $12 million through September 30, 2023, related to the change in foreign exchange rates. The Company concluded that the hedge was highly effective and recorded a decrease to accumulated other comprehensive loss for the nine months ended September 30, 2023.

Purchase of remaining non-controlling interest

In the second quarter of 2023, the Company purchased the remaining interest in a subsidiary for $139 million.

Fiduciary Liabilities

Since fiduciary assets are not available for corporate use, they are shown separately in the consolidated balance sheets as cash and cash equivalents held in a fiduciary capacity, with a corresponding amount in current liabilities. Financing cash flows reflect an increase of $1.2 billion and $2.1 billion for the nine months ended September 30, 2023 and 2022, respectively, related to fiduciary liabilities.

Investing Cash Flows

Net cash used for investing activities amounted to $943 million for the first nine months of 2023, compared with $363 million used for investing activities for the corresponding period in 2022.

The Company paid $619 million and $213 million, net of cash, cash equivalents and cash and cash equivalents held in a fiduciary capacity acquired, for acquisitions it made during the first nine months of 2023 and 2022, respectively. The outflow of funds in 2023 primarily relates to the completion of the Westpac Transaction for $233 million and the Graham Company acquisition for $307 million.

In connection with the disposition of Mercer's 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 during the first quarter of 2023.

During the first nine months of 2022, the Company sold certain businesses, primarily Mercer's U.S. affinity business, for cash proceeds of approximately $147 million.

In the third quarter of 2022, the Company sold certain investments, primarily the investment in the common stock of Alexander Forbes, for cash proceeds of approximately $62 million.

The Company's additions to fixed assets and capitalized software, which amounted to $296 million during the first nine months of 2023, and $367 million during the first nine months of 2022, related primarily to computer equipment purchases, the refurbishing and modernizing of office facilities, and software development costs.

Cash used for long term investments in the first nine months of 2023 is due to investments in private equity funds. As of September 30, 2023, the Company has commitments for potential future investments of approximately $131 million in private equity funds that invest primarily in financial services companies, including a $80 million commitment to invest in a private equity fund entered into on April 1, 2022.

Commitments and Obligations

The following sets forth the Company’s future contractual obligations by the type as of September 30, 2023:


	Payment due by Period
(In millions)	Total		Within 1 Year		1-3 Years		4-5 Years		After 5 Years



Current portion of long-term debt	$	1,869	$	1,869	$	—	$	—	$	—
Long-term debt	11,879		—		1,717		42		10,120
Interest on long-term debt	8,630		555		978		915		6,182
Net operating leases	2,206		360		639		485		722
Service agreements	317		148		153		16		—
Other long-term obligations (a)	369		195		152		22		—


Total	$	25,270	$	3,127	$	3,639	$	1,480	$	17,024

(a)Primarily reflects the future payments of deferred and contingent purchase consideration.

The table does not include the liability for unrecognized tax benefits of $134 million as the Company is unable to reasonably predict the timing of settlement of these liabilities, other than approximately $71 million that may become payable within one year. The table also does not include the remaining transitional tax payments related to the Tax Cuts and Jobs Act ("the TCJA") of $58 million, which will be paid in installments from 2024 through 2026.

Management’s Discussion of Critical Accounting Policies and Estimates

The Company’s discussion of critical accounting policies and estimates that place the most significant demands on management’s judgment and requires management to make significant estimates about matters that are inherently uncertain are discussed in the MD&A in the 2022 Form 10-K.

New Accounting Guidance

Note 20, New Accounting Guidance, in the notes to the consolidated financial statements in this report, contains a discussion of recently issued accounting guidance and their impact or potential future impact on the Company’s financial results, if determinable.

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