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 in the areas of risk, strategy and people. The Company helps clients build the confidence to thrive through the power of perspective of its four market-leading businesses. With annual revenue of $23 billion, the Company has more than 85,000 colleagues advising clients in over 130 countries.

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 pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, shape retirement and investment outcomes, and unlock 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 four businesses also collaborate together to deliver new solutions to help clients manage complex and interconnected risks.

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 advice, 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 months ended March 31, 2024, compared to the corresponding period in 2023, 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 months ended March 31, 2023, 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 March 31, 2023.

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 March 31, 2024 was $6.5 billion, an increase of 9%, on a reported and underlying basis.

• Consolidated operating income increased $199 million, or 12% to $1.9 billion for the three months ended March 31, 2024, compared to the corresponding quarter in the prior year. Net income attributable to the Company was $1.4 billion. Earnings per share on a diluted basis increased to $2.82 from $2.47, or 14%, compared to the corresponding quarter in the prior year.

• Risk and Insurance Services revenue for the three months ended March 31, 2024 was $4.3 billion, an increase of 9%, on a reported and underlying basis. Operating income was $1.6 billion, compared with $1.4 billion for the corresponding quarter in the prior year.

• Consulting revenue for the three months ended March 31, 2024 was $2.2 billion, an increase of 9%, on a reported and underlying basis. Operating income was $432 million, compared with $411 million for the corresponding quarter in the prior year.

• The Company completed 6 acquisitions in the first quarter of 2024, the largest being the acquisition of Vanguard's Institutional Advisory Services business unit ("Vanguard") in the Consulting segment and the acquisition of Louisiana-based insurance brokers, Querbes & Nelson and Louisiana Companies in the Risk and Insurance Services segment.

• On January 1, 2024, the Company completed the sale of its Mercer U.K. pension administration and U.S. health and benefits administration businesses for approximately $114 million, and recorded a net gain of $21 million.

• In February 2024, the Company issued $500 million of 5.150% senior notes due 2034 and $500 million of 5.450% senior notes due 2054.

• In March 2024, the Company repaid $1 billion of 3.875% senior notes at maturity.

• In the first quarter of 2024, the Company repurchased 1.5 million shares of stock for $300 million.

• In March 2024, the Board of Directors of the Company declared a dividend of $0.71 per share on outstanding common stock, payable in May of 2024.

The macroeconomic and geopolitical environment including multiple major wars, escalating conflict throughout the Middle East and rising tension in the South China Sea, slower GDP growth or recession, lower interest rates, capital markets volatility and inflation could impact our business, financial condition, results of operations and cash flows. For more information about these risks, please see "Part I, Item 1A. Risk Factors" in our annual Report on Form 10-K for the year ended December 31, 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 March 31,
(In millions, except per share data)			2024						2023
Revenue			$	6,473					$	5,924
Expense:
Compensation and benefits			3,470						3,207
Other operating expenses			1,078						991
Operating expenses			4,548						4,198
Operating income			$	1,925					$	1,726
Income before income taxes			$	1,871					$	1,664
Net income before non-controlling interests			$	1,424					$	1,252
Net income attributable to the Company			$	1,400					$	1,235
Net income per share attributable to the Company:
– Basic			$	2.84					$	2.50
– Diluted			$	2.82					$	2.47
Average number of shares outstanding:
– Basic			492						495
– Diluted			497						500
Shares outstanding at March 31,			493						495

Consolidated operating income increased $199 million, or 12% to $1.9 billion for the three months ended March 31, 2024, compared to $1.7 billion for the corresponding quarter in the prior year, reflecting a 9% increase in revenue and an 8% increase in expenses. Revenue growth was driven by increases in both the Risk and Insurance Services and Consulting segments of 9%.

The increase in revenue for the three months ended March 31, 2024 reflects the continued demand for our advice and solutions, and growth in new business and renewals. Results also continued to benefit from growth in the global economy, inflation, higher insurance and reinsurance pricing, and an increase in fiduciary income due to higher funds and interest rates. In Consulting, revenue growth reflects the continued demand for our health and wealth solutions, and consulting services.

Expenses increased for the three months ended March 31, 2024 primarily due to compensation and benefits, driven by higher base salary and incentive compensation. Expenses in 2023 also included $51 million of insurance and indemnity recoveries for a legacy Jardine Lloyd Thompson Group plc ("JLT") errors and omissions ("E&O") matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the United Kingdom (U.K).

Diluted earnings per share increased to $2.82 from $2.47, or 14% for the three months ended March 31, 2024, compared to corresponding quarter in the prior year. The increase is primarily the result of higher operating income for the three months ended March 31, 2024, compared to the corresponding quarter in the prior year.

Consolidated Revenue and Expense

Revenue – Non-GAAP Revenue and Components of Change

The Company advises clients in over 130 countries. As a result, foreign exchange rate movements may impact period over 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 months ended March 31, 2024 and 2023 and the related non-GAAP underlying revenue change:

Three Months Ended March 31, (In millions, except percentages)			GAAP Revenue						% Change GAAP Revenue*						Non-GAAP Revenue						Non-GAAP Underlying Revenue*
2024			2023						2024			2023
Risk and Insurance Services
Marsh			$	3,003		$	2,744		9		%				$	2,970		$	2,744		8		%
Guy Carpenter			1,148			1,071			7		%				1,143			1,059			8		%
Subtotal			4,151			3,815			9		%				4,113			3,803			8		%
Fiduciary interest income			122			91									121			91
Total Risk and Insurance Services			4,273			3,906			9		%				4,234			3,894			9		%
Consulting
Mercer			1,425			1,344			6		%				1,405			1,320			6		%
Oliver Wyman Group			789			687			15		%				775			686			13		%
Total Consulting			2,214			2,031			9		%				2,180			2,006			9		%
Corporate Eliminations			(14)			(13)									(14)			(13)
Total Revenue			$	6,473		$	5,924		9		%				$	6,400		$	5,887		9		%

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

Three Months Ended March 31, (In millions, except percentages)			GAAP Revenue						% Change GAAP Revenue*						Non-GAAP Revenue						Non-GAAP Underlying Revenue*
2024			2023						2024			2023
Marsh:
EMEA			$	1,025		$	932		10		%				$	1,014		$	932		9		%
Asia Pacific			336			312			8		%				330			312			6		%
Latin America			125			115			8		%				124			115			8		%
Total International			1,486			1,359			9		%				1,468			1,359			8		%
U.S./Canada			1,517			1,385			10		%				1,502			1,385			8		%
Total Marsh			$	3,003		$	2,744		9		%				$	2,970		$	2,744		8		%
Mercer:
Wealth			$	672		$	581		16		%				$	612		$	582		5		%
Health			538			545			(1)		%				572			520			10		%
Career			215			218			(1)		%				221			218			1		%
Total Mercer			$	1,425		$	1,344		6		%				$	1,405		$	1,320		6		%

(*) 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 months ended March 31, 2024 and 2023:

			2024																								2023
Three Months Ended March 31, (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			$	3,003					$	6					$	(39)					$	2,970					$	2,744					$	—					$	2,744
Guy Carpenter			1,148						(2)						(3)						1,143						1,071						(12)						1,059
Subtotal			4,151						4						(42)						4,113						3,815						(12)						3,803
Fiduciary interest income			122						—						(1)						121						91						—						91
Total Risk and Insurance Services			4,273						4						(43)						4,234						3,906						(12)						3,894
Consulting
Mercer (a)			1,425						8						(28)						1,405						1,344						(24)						1,320
Oliver Wyman Group			789						(4)						(10)						775						687						(1)						686
Total Consulting			2,214						4						(38)						2,180						2,031						(25)						2,006
Corporate Eliminations			(14)						—						—						(14)						(13)						—						(13)
Total Revenue			$	6,473					$	8					$	(81)					$	6,400					$	5,924					$	(37)					$	5,887

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

			2024																								2023
Three Months Ended March 31, (In millions)			GAAP Revenue						Currency Impact						Acquisitions/ Dispositions/ Other Impact						Non-GAAP Revenue						GAAP Revenue						Acquisitions/ Dispositions/ Other Impact						Non-GAAP Revenue
Marsh:
EMEA			$	1,025					$	(10)					$	(1)					$	1,014					$	932					$	—					$	932
Asia Pacific			336						13						(19)						330						312						—						312
Latin America			125						3						(4)						124						115						—						115
Total International			1,486						6						(24)						1,468						1,359						—						1,359
U.S./Canada			1,517						—						(15)						1,502						1,385						—						1,385
Total Marsh			$	3,003					$	6					$	(39)					$	2,970					$	2,744					$	—					$	2,744
Mercer:
Wealth (a)			$	672					$	2					$	(62)					$	612					$	581					$	1					$	582
Health (a)			538						2						32						572						545						(25)						520
Career			215						4						2						221						218						—						218
Total Mercer			$	1,425					$	8					$	(28)					$	1,405					$	1,344					$	(24)					$	1,320

(a) Acquisitions, dispositions and other in 2024 includes a net gain of $21 million from the sale of the U.K. pension administration and U.S. health and benefits administration businesses, that comprised of a $66 million gain in Wealth, offset by a $45 million loss in Health.

Consolidated Revenue

Consolidated revenue increased $549 million, or 9% to $6.5 billion for the three months ended March 31, 2024, compared to $5.9 billion for the three months ended March 31, 2023. Consolidated revenue increased 9% on an underlying basis and 1% from acquisitions. On an underlying basis, revenue increased 9% for the three months ended March 31, 2024 in both the Risk and Insurance Services and Consulting segments.

Underlying revenue growth in the Risk and Insurance Services and Consulting segments for the three months ended March 31, 2024 reflects the continued demand for our advice and solutions. In Risk and Insurance Services, the increase in underlying revenue was primarily due to strong growth in new business and solid renewals. Results also continued to benefit from growth in the global economy, inflation, higher insurance and reinsurance pricing, and an increase in fiduciary income due to higher funds and interest rates. In Consulting, revenue growth reflects the continued demand for our health and wealth solutions, and consulting services.

Consolidated Operating Expenses

Consolidated operating expenses increased $350 million, or 8% to $4.5 billion for the three months ended March 31, 2024, compared to $4.2 billion for the three months ended March 31, 2023. Expenses reflect a 1% increase from acquisitions. Expenses, excluding the impact from acquisitions, increased 8% for the three months ended March 31, 2024, with increases of 6% and 11% in the Risk and Insurance Services and Consulting segments, respectively.

Expenses increased for the three months ended March 31, 2024 primarily due to compensation and benefits driven by higher base salaries and incentive compensation. Expenses in 2023 also included $51 million of insurance and indemnity 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.

Restructuring activities

The Company incurred a total of $42 million for restructuring activities for the three months ended March 31, 2024, compared to $53 million for the corresponding quarter 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. For the three months ended March 31, 2024, the Company has incurred $30 million of restructuring costs related to these activities, primarily severance. Any remaining costs are expected to be incurred by the end of 2024.

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 expertise, 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 March 31,
(In millions, except percentages)															2024						2023
Revenue															$	4,273					$	3,906
Compensation and benefits (a)															2,118						1,931
Other operating expenses (a)															590						580
Operating expenses															2,708						2,511
Operating income															$	1,565					$	1,395
Operating income margin															36.6		%				35.7		%

(a)The Company reclassified certain prior period amounts between Compensation and benefits and Other operating expenses for each reporting segment for comparability purposes. The reclassification had no impact on consolidated or reporting segment total expenses.

Revenue

Revenue in the Risk and Insurance Services segment increased $367 million, or 9% to $4.3 billion for the three months ended March 31, 2024, compared to $3.9 billion for the three months ended March 31, 2023. Revenue increased 9% on an underlying basis and 1% from acquisitions. Interest earned on fiduciary funds increased by $31 million to $122 million for the three months ended March 31, 2024, compared to $91 million for the corresponding quarter in the prior year.

The increase in revenue on an underlying basis in the Risk and Insurance Services segment for the three months ended March 31, 2024 was primarily due to strong growth in new business and solid renewals. Results also continued to benefit from growth in the global economy, inflation, higher insurance and reinsurance pricing, and an increase in fiduciary income due to higher funds and interest rates compared to the corresponding period in the prior year.

Marsh's revenue increased $259 million, or 9% to $3.0 billion for the three months ended March 31, 2024, compared to $2.7 billion for the three months ended March 31, 2023. This reflects increases of 8% on an underlying basis and 1% from acquisitions. U.S./Canada rose 8% on an underlying basis. Total International operations produced underlying revenue growth of 8%, reflecting growth of 9% in EMEA, 8% in Latin America, and 6% in Asia Pacific.

Guy Carpenter's revenue increased $77 million, or 7% to $1.1 billion for the three months ended March 31, 2024, compared to the corresponding quarter in the prior year. This reflects an increase of 8% on an underlying basis, partially offset by a decrease of 1% from acquisitions.

The Risk and Insurance Services segment completed 2 acquisitions for the three months ended March 31, 2024. 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 $197 million, or 8% to $2.7 billion for the three months ended March 31, 2024, compared to $2.5 billion for the three months ended March 31, 2023. Expenses reflect a 2% increase from acquisitions.

Expenses for the three months ended March 31, 2024 increased primarily due to compensation and benefits driven by increased headcount, and higher base salary and incentive compensation.

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 world of work, reshape retirement and investment outcomes, and unlock 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 March 31,
(In millions, except percentages)															2024						2023
Revenue															$	2,214					$	2,031
Compensation and benefits (a)															1,314						1,235
Other operating expenses (a)															468						385
Operating expenses															1,782						1,620
Operating income															$	432					$	411
Operating income margin															19.5		%				20.2		%

(a)The Company reclassified certain prior period amounts between Compensation and benefits and Other operating expenses for each reporting segment for comparability purposes. The reclassification had no impact on consolidated or reporting segment total expenses.

Revenue

Consulting revenue increased $183 million, or 9% to $2.2 billion for the three months ended March 31, 2024, compared to $2.0 billion for the three months ended March 31, 2023. This reflects an increase of 9% on an underlying basis and 1% primarily from the disposition of businesses.

Mercer's revenue increased $81 million, or 6% to $1.4 billion for the three months ended March 31, 2024, compared to $1.3 billion for the three months ended March 31, 2023. This reflects an increase of 6% on an underlying basis, partially offset by a decrease of 1% from the impact of foreign currency translation. On an underlying basis, revenue for Health, Wealth and Career increased 10%, 5%, and 1%, respectively, as compared to the corresponding quarter in the prior year.

The increase in revenue on an underlying basis at Mercer for the three months ended March 31, 2024 was primarily due to the continued demand for our health and wealth solutions. Health continued to benefit from growth in new business, strong retention, enrolled lives, and medical inflation. Revenue in Wealth on an underlying basis was driven by defined benefit consulting and investment management. The increase in investment management was primarily due to higher assets under management as a result of the Westpac and Vanguard acquisitions, a rebound in capital markets, and positive net flows.

Revenue for the three months ended March 31, 2024, includes a net gain of $21 million from the sale of the Mercer U.K. pension administration and U.S. health and benefits administration businesses. Results for 2023 include the loss on sale of an individual financial advisory business in Canada of $19 million.

Oliver Wyman Group's revenue increased $102 million, or 15% to $789 million for the three months ended March 31, 2024, compared to $687 million for the three months ended March 31, 2023. This reflects an increase of 13% on an underlying basis and 1% from both acquisitions and the impact of foreign currency translation.

The increase in underlying revenue at Oliver Wyman Group for the three months ended March 31, 2024 was driven by growth across all regions.

The Consulting segment completed 4 acquisitions for the three months ended March 31, 2024. 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 $162 million, or 10% to $1.8 billion for the three months ended March 31, 2024, compared to $1.6 billion for the three months ended March 31, 2023. Expenses reflect a 1% decrease from dispositions.

Expenses for the three months ended March 31, 2024 increased primarily due to compensation and benefits driven by higher base salaries and incentive compensation. Expenses in 2023 also included $51 million of insurance and indemnity 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 months ended March 31, 2024, expenses also reflect acquisition and disposition costs of $21 million, primarily related to exit costs for the disposition of the Mercer U.K. pension administration and U.S. health benefits administration businesses in 2024. For the three months ended March 31, 2023, the Company incurred integration costs of $17 million, related to the Westpac Transaction.

Corporate and Other

Corporate expenses decreased $8 million, or 9% to $72 million for the three months ended March 31, 2024, compared to $80 million for the three months ended March 31, 2023.

Interest Income

Interest income was $37 million for the three months ended March 31, 2024, compared to $14 million for the three months ended March 31, 2023. Interest income increased $23 million due to higher corporate funds and interest rates compared to the corresponding quarter in the prior year.

Interest Expense

Interest expense was $159 million for the three months ended March 31, 2024, compared to $136 million for the three months ended March 31, 2023.

Interest expense for the three months ended March 31, 2024, increased $23 million, due to an increase in long term debt and higher interest rates.

Investment Income

The caption "Investment income" 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 for the three months ended March 31, 2024, compared to net investment income of $2 million, for the corresponding quarter in the prior year.

Income and Other Taxes

The Company's effective tax rate for the three months ended March 31, 2024 was 23.9%, compared with 24.7% for the corresponding quarter of 2023.

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, non-taxable adjustments related to contingent consideration for acquisitions, and valuation allowances for certain tax credits and attributes. The rate for the three months ended March 31, 2024 reflects the previously enacted change in the U.K. corporate income tax rate from 19% to 25%, which was effective April 1, 2023. The blended U.K. statutory tax rate for 2023 was 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 2.3% and 1.3% for the three months ended March 31, 2024 and 2023, 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 $66 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. In 2021, the Organization for Economic Cooperation and Development ("OECD") released model rules for a 15% global minimum tax, known as Pillar Two. Pillar Two has now been enacted by approximately 30 countries, including the U.K. and Ireland. This minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on the Company's financial results of operations for the current period. The Company is monitoring legislative developments, as well as additional guidance from countries that have enacted legislation. We anticipate further legislative activity and administrative guidance in 2024.

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. However, the Company may not be able to fully deduct intercompany interest on loans used to finance the Company's foreign operations. 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.

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 March 31, 2024, the Company had approximately $1.2 billion of cash and cash equivalents in its foreign operations, which includes $456 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 three months ended March 31, 2024, the Company recorded foreign currency translation adjustments which decreased net equity by $218 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 used $781 million of cash from operations for the three months ended March 31, 2024, compared to $819 million used for operations in the first three months of 2023. 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 $88 million and $79 million related to its restructuring activities for the three months ended March 31, 2024 and 2023, 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. During the first three months ended March 31, 2024, the Company contributed $8 million to its U.S. defined benefit pension plans and $16 million to its non-U.S. defined benefit pension plans. For the three months ended March 31, 2023, the Company contributed $8 million to its U.S. defined benefit pension plans and $13 million to its non-U.S. defined benefit pension plans.

In the U.S., contributions to the tax-qualified defined benefit plans are based on Employee Retirement Income Security Act ("ERISA") guidelines and the Company generally expects to maintain a funded status of 80% or more of the liability determined in accordance with the ERISA guidelines. During the three months ended March 31, 2024, the Company made $8 million of contributions to its non-qualified plans and expects to contribute approximately an additional $23 million over the remainder of 2024. The Company is also required to make $2 million of contributions to its U.S. qualified plans in 2024.

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, 2023. 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 U.K. Pension Fund with a new segregated JLT section created (referred to as the "JLT section"). For the first three months of 2024, the Company made deficit contributions of $10 million to the JLT section of its U.K. plans, and is expected to make $10 million of contributions in the remainder of 2024.

For the MMC U.K. Pension Fund, excluding the JLT section, an agreement was reached with the trustee in the fourth quarter of 2022, based on the surplus funding position at December 31, 2021. In accordance with the agreement, no deficit funding is required at the earliest until 2026. The funding level will be re-assessed during 2025 as part of the December 31, 2024 actuarial valuation to determine if contributions are required in 2026. In December 2022, the Company renewed its agreement to support annual deficit contributions that may be required by the U.K. operating companies under certain circumstances, up to £450 million (or $569 million) over a seven year period. This is part of an agreement which gives the Company greater influence over asset allocation and overall investment decisions.

The Company expects to fund an additional $44 million to its non-U.S. defined benefit plans over the remainder of 2024, comprising approximately $10 million to the U.K. plans and $34 million to plans outside of the U.K.

Financing Cash Flows

Net cash provided by financing activities was $135 million for the three months ended March 31, 2024, compared with $773 million provided by financing activities for the corresponding period in 2023.

Credit Facilities

In October 2023, the Company increased its multi-currency unsecured $2.8 billion five-year revolving credit facility (the "Credit Facility") capacity to $3.5 billion and extended the expiration to October 2028. 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 Company'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 evaluated 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. At March 31, 2024 and December 31, 2023, the Company had no borrowings under this facility.

In October 2023, the Company terminated its one-year uncommitted revolving credit facility ("Uncommitted 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%.

The Company also maintains other credit and overdraft facilities with various financial institutions aggregating $114 million and $113 million, at March 31, 2024 and December 31, 2023, respectively. There were no outstanding borrowings under these facilities at March 31, 2024 and December 31, 2023.

The Company also has outstanding guarantees and letters of credit with various banks aggregating $128 million and $139 million, at March 31, 2024 and December 31, 2023, respectively.

Debt

The Company had $50 million of commercial paper outstanding at March 31, 2024, at an average effective interest rate of 5.450%.

In March 2024, the Company repaid $1 billion of 3.875% senior notes at maturity.

In February 2024, the Company issued $500 million of 5.150% senior notes due 2034 and $500 million of 5.450% senior notes due 2054. The Company intends to use the net proceeds from these issuances for general corporate purposes.

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

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 5.450% senior notes due 2053. The Company used the net proceeds from this issuance for general corporate purposes.

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 three months of 2024, the Company repurchased 1.5 million shares of its common stock for $300 million. At March 31, 2024, the Company remained authorized to repurchase up to approximately $2.9 billion in shares of its common stock. There is no time limit on the authorization. During the first three months of 2023, the Company repurchased 1.8 million shares of its common stock for $300 million.

Dividends

The Company paid dividends on its common stock shares of $354 million ($0.71 per share) during the first three months of 2024, as compared with $296 million ($0.59 per share) during the first three months of 2023.

In March 2024, the Board of Directors of the Company declared a quarterly dividend of $0.71 per share on outstanding common stock, payable in May 2024. In February 2024, the Company paid the quarterly dividend declared in January 2024 by the Company's Board of Directors of $0.71 per share on outstanding common stock.

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 Three Months Ended March 31,
(In millions)			2024						2023
Operating:
Contingent consideration payments for prior year acquisitions			$	(14)					$	—
Receipt of contingent consideration for dispositions			—						1
Acquisition/disposition related net charges for adjustments			6						7
Adjustments and payments related to contingent consideration			$	(8)					$	8
Financing:
Contingent consideration for prior year acquisitions			$	(12)					$	(1)
Deferred consideration related to prior year acquisitions			(3)						(12)
Payments of deferred and contingent consideration for acquisitions			$	(15)					$	(13)
Receipt of contingent consideration for dispositions			$	—					$	2

For acquisitions completed during the first three months of 2024 and in prior years, remaining estimated future contingent payments of $242 million and deferred consideration payments of $125 million, are recorded in accounts payable and accrued liabilities or other liabilities in the consolidated balance sheet at March 31, 2024.

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 $31 million through March 31, 2024, 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 three months ended March 31, 2024.

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 $829 million and $48 million for the three months ended March 31, 2024 and 2023, respectively, related to fiduciary liabilities.

Investing Cash Flows

Net cash used for investing activities amounted to $368 million for the first three months of 2024, compared with $368 million used for investing activities for the corresponding period in 2023.

The Company paid $301 million and $263 million, net of cash, cash equivalents and cash and cash equivalents held in a fiduciary capacity acquired, for acquisitions it made during the first three months of 2024 and 2023, respectively.

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. The consideration transferred is included as a cash outflow in acquisitions, net of cash and cash equivalents held in a fiduciary capacity acquired, in the consolidated statements of cash flows.

On January 1, 2024, the Company sold its Mercer U.K pension administration and U.S. health and benefits administration businesses for approximately $114 million, comprising of cash proceeds of $30 million and deferred consideration of $84 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.

The Company's additions to fixed assets and capitalized software, which amounted to $87 million for the first three months of 2024, and $84 million for the first three months of 2023, related primarily to software development costs, the refurbishing and modernizing of office facilities, and technology equipment purchases.

Cash used for long-term investments in the first three months of 2024 is due to investments in private equity funds. At March 31, 2024, the Company has commitments for potential future investments of approximately $109 million in private equity funds that invest primarily in financial services companies.

Commitments and Obligations

The following sets forth the Company’s future contractual obligations by the type at March 31, 2024:

			Payment due by Period
(In millions)			Total						Within 1 Year						1-3 Years						4-5 Years						After 5 Years
Commercial paper			$	50					$	50					$	—					$	—					$	—
Current portion of long-term debt			1,120						1,120						—						—						—
Long-term debt			12,406						—						1,236						1,543						9,627
Interest on long-term debt			9,419						576						1,064						1,021						6,758
Net operating leases			2,170						371						654						456						689
Service agreements			558						271						213						74						—
Other long-term obligations (a)			437						219						184						30						4
Total			$	26,160					$	2,607					$	3,351					$	3,124					$	17,078

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

The table does not include the liability for unrecognized tax benefits of $127 million as the Company is unable to reasonably predict the timing of settlement of these liabilities, other than approximately $54 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 2023 Form 10-K.

New Accounting Pronouncements

Note 19, New Accounting Pronouncements, 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.