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 in the areas of risk, strategy and people, advising clients in 130 countries across four busineses: Marsh, Guy Carpenter, Mercer and Oliver Wyman Group. With annual revenue of $23 billion and more than 85,000 colleagues, Marsh McLennan helps build the confidence to thrive through the power of perspective.

The Company conducts business through two segments:

Risk and Insurance Services (RIS)** 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 and six months ended June 30, 2024, compared to the corresponding periods 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 and six months ended June 30, 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 June 30, 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 June 30, 2024 was $6.2 billion, an increase of 6%, on a reported and underlying basis. For the six months ended June 30, 2024, consolidated revenue was $12.7 billion, an increase of 8%, on a reported and underlying basis compared to the corresponding period in the prior year.
Consolidated operating income increased $185 million, or 13% to $1.6 billion for the three months ended June 30, 2024, compared to the corresponding quarter in the prior year. Net income attributable to the Company was $1.1 billion. Earnings per share on a diluted basis increased to $2.27 from $2.07, or 10%, compared to the corresponding quarter in the prior year. For the six months ended June 30, 2024, consolidated operating income increased $384 million, or 12% to $3.6 billion, compared to the corresponding period in the prior year. Net income attributable to the Company was $2.5 billion. Earnings per share on a diluted basis increased to $5.08 from $4.55, or 12%, compared to the corresponding period in the prior year.
Risk and Insurance Services revenue for the three months ended June 30, 2024 was $4.0 billion, an increase of 8%, or 7% on an underlying basis. Operating income was $1.3 billion, compared with $1.2 billion for the corresponding quarter in the prior year. For the six months ended June 30, 2024, Risk and Insurance Services revenue was $8.3 billion, an increase of 9%, or 8% on an underlying basis. Operating income was $2.9 billion, compared with $2.6 billion for the corresponding period in the prior year.
Consulting revenue for the three months ended June 30, 2024 was $2.2 billion, an increase of 2%, or 4% on an underlying basis. Operating income was $410 million, compared with $388 million for the corresponding quarter in the prior year. For the six months ended June 30, 2024, Consulting revenue was $4.4 billion, an increase of 5%, or 6% on an underlying basis. Operating income was $842 million, compared with $799 million for the corresponding period in the prior year.
The increase in underlying revenue for the three and six months ended June 30, 2024, reflects the continued demand for our advice and solutions.
In Risk and Insurance Services, underlying revenue growth for the three and six months ended June 30, 2024 was driven by strong new business and solid renewals at Marsh, as well as growth across most geographies and specialties in Guy Carpenter. Results also continued to benefit from continued economic growth in most major markets, inflation, and an increase in fiduciary income due to higher average funds and interest rates.
In Consulting, for the three months ended June 30, 2024, underlying revenue growth was primarily driven by growth at Mercer. For the six months ended June 30, 2024, underlying revenue growth was driven by growth at both Mercer and Oliver Wyman Group. Underlying revenue growth at Mercer included continued strong growth in Health and steady growth in Wealth. Health reflected growth across all regions. Wealth growth was driven by both defined benefit consulting and investment management. The increase in investment management was driven by the impact of the capital markets and positive net flows. Career revenue continued the trend of modest growth following a two-year stretch of strong growth and demand. The increase in underlying revenue growth at Oliver Wyman Group was driven primarily by the Middle East and Asia.
Expenses increased for the three and six months ended June 30, 2024, primarily due to compensation and benefits, driven by higher base salary and incentive compensation.
The Company completed 3 acquisitions in the second quarter of 2024, the largest being the acquisition of Fisher Brown Bottrell Insurance, Inc., by Marsh McLennan Agency ("MMA") in Risk and Insurance Services.
In June 2024, the Company repaid $600 million of 3.50% senior notes at maturity.
The Company repurchased 1.5 million shares for $300 million in the second quarter of 2024. During the six months ended June 30, 2024, the Company repurchased 3.0 million shares for $600 million.
In July 2024, the Board of Directors of the Company declared a dividend of $0.815 per share on outstanding common stock, payable in August 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, inflation and changes in insurance premium rates 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 June 30,				Six Months Ended June 30,
(In millions, except per share data)	2024		2023		2024		2023
Revenue	$	6,221	$	5,876	$	12,694	$	11,800
Expense:
Compensation and benefits	3,454		3,337		6,924		6,544
Other operating expenses	1,125		1,082		2,203		2,073
Operating expenses	4,579		4,419		9,127		8,617
Operating income	$	1,642	$	1,457	$	3,567	$	3,183






Income before income taxes	$	1,565	$	1,384	$	3,436	$	3,048
Net income before non-controlling interests	$	1,140	$	1,047	$	2,564	$	2,299



Net income attributable to the Company	$	1,125	$	1,035	$	2,525	$	2,270
Net income per share attributable to the Company:
– Basic	$	2.28	$	2.09	$	5.13	$	4.59
– Diluted	$	2.27	$	2.07	$	5.08	$	4.55



Average number of shares outstanding:
– Basic	492		495		492		495
– Diluted	496		499		497		499
Shares outstanding at June 30,	492		494		492		494

Consolidated operating income increased $185 million, or 13% to $1.6 billion for the three months ended June 30, 2024, compared to $1.5 billion for the corresponding quarter in the prior year, reflecting a 6% increase in revenue and a 4% increase in expenses. Revenue growth was driven by increases in the Risk and Insurance Services and Consulting segments of 8% and 2%, respectively.

Consolidated operating income increased $384 million, or 12% to $3.6 billion for the six months ended June 30, 2024, compared to $3.2 billion in the corresponding period in the prior year, reflecting an 8% increase in revenue and a 6% increase in expenses. Revenue growth was driven by increases in the Risk and Insurance Services and Consulting segments of 9% and 5%, respectively.

Consolidated Revenue and Expense

Revenue – Non-GAAP Revenue and Components of Change

The Company advises clients in 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 and six months ended June 30, 2024 and 2023 and the related non-GAAP underlying revenue change:


Three Months Ended June 30, (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	$	3,265	$	3,038	8	%		$	3,234	$	3,037	7	%
Guy Carpenter	632		576		10	%		638		576		11	%
Subtotal	3,897		3,614		8	%		3,872		3,613		7	%
Fiduciary interest income	125		108					126		108
Total Risk and Insurance Services	4,022		3,722		8	%		3,998		3,721		7	%
Consulting
Mercer	1,379		1,374		—			1,370		1,306		5	%
Oliver Wyman Group	837		798		5	%		821		798		3	%
Total Consulting	2,216		2,172		2	%		2,191		2,104		4	%
Corporate Eliminations	(17)		(18)					(17)		(18)
Total Revenue	$	6,221	$	5,876	6	%		$	6,172	$	5,807	6	%

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


Three Months Ended June 30, (In millions, except percentages)	GAAP Revenue				% Change GAAP Revenue*			Non-GAAP Revenue				Non-GAAP Underlying Revenue*
2024	2023				2024		2023
Marsh:
EMEA	$	912	$	858	6	%		$	916	$	857	7	%
Asia Pacific	391		357		9	%		383		357		7	%
Latin America	137		137		1	%		147		137		8	%
Total International	1,440		1,352		7	%		1,446		1,351		7	%
U.S./Canada	1,825		1,686		8	%		1,788		1,686		6	%
Total Marsh	$	3,265	$	3,038	8	%		$	3,234	$	3,037	7	%
Mercer:
Wealth	$	612	$	637	(4)	%		$	604	$	588	3	%
Health	547		518		6	%		544		499		9	%
Career	220		219		1	%		222		219		2	%
Total Mercer	$	1,379	$	1,374	—			$	1,370	$	1,306	5	%

(*) Rounded to whole percentages.


Six Months Ended June 30, (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	$	6,268	$	5,782	8	%		$	6,204	$	5,781	7	%
Guy Carpenter	1,780		1,647		8	%		1,781		1,635		9	%
Subtotal	8,048		7,429		8	%		7,985		7,416		8	%
Fiduciary interest income	247		199					247		199
Total Risk and Insurance Services	8,295		7,628		9	%		8,232		7,615		8	%
Consulting
Mercer	2,804		2,718		3	%		2,775		2,626		6	%
Oliver Wyman Group	1,626		1,485		9	%		1,596		1,484		8	%
Total Consulting	4,430		4,203		5	%		4,371		4,110		6	%
Corporate Eliminations	(31)		(31)					(31)		(31)
Total Revenue	$	12,694	$	11,800	8	%		$	12,572	$	11,694	8	%

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


Six Months Ended June 30, (In millions, except percentages)	GAAP Revenue				% Change GAAP Revenue*			Non-GAAP Revenue				Non-GAAP Underlying Revenue*
2024	2023				2024		2023
Marsh:
EMEA	$	1,937	$	1,790	8	%		$	1,930	$	1,789	8	%
Asia Pacific	727		669		9	%		713		669		7	%
Latin America	262		252		4	%		271		252		8	%
Total International	2,926		2,711		8	%		2,914		2,710		8	%
U.S./Canada	3,342		3,071		9	%		3,290		3,071		7	%
Total Marsh	$	6,268	$	5,782	8	%		$	6,204	$	5,781	7	%
Mercer:
Wealth	$	1,284	$	1,218	5	%		$	1,216	$	1,170	4	%
Health	1,085		1,063		2	%		1,116		1,019		10	%
Career	435		437		—			443		437		2	%
Total Mercer	$	2,804	$	2,718	3	%		$	2,775	$	2,626	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 and six months ended June 30, 2024 and 2023:


	2024								2023
Three Months Ended June 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	$	3,265	$	33	$	(64)	$	3,234	$	3,038	$	(1)	$	3,037
Guy Carpenter	632		6		—		638		576		—		576
Subtotal	3,897		39		(64)		3,872		3,614		(1)		3,613
Fiduciary interest income	125		1		—		126		108		—		108
Total Risk and Insurance Services	4,022		40		(64)		3,998		3,722		(1)		3,721
Consulting
Mercer	1,379		17		(26)		1,370		1,374		(68)		1,306
Oliver Wyman Group	837		3		(19)		821		798		—		798
Total Consulting	2,216		20		(45)		2,191		2,172		(68)		2,104
Corporate Eliminations	(17)		—		—		(17)		(18)		—		(18)
Total Revenue	$	6,221	$	60	$	(109)	$	6,172	$	5,876	$	(69)	$	5,807

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


	2024								2023
Three Months Ended June 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	$	912	$	5	$	(1)	$	916	$	858	$	(1)	$	857
Asia Pacific	391		12		(20)		383		357		—		357
Latin America	137		14		(4)		147		137		—		137
Total International	1,440		31		(25)		1,446		1,352		(1)		1,351
U.S./Canada	1,825		2		(39)		1,788		1,686		—		1,686
Total Marsh	$	3,265	$	33	$	(64)	$	3,234	$	3,038	$	(1)	$	3,037
Mercer:
Wealth	$	612	$	4	$	(12)	$	604	$	637	$	(49)	$	588
Health	547		7		(10)		544		518		(19)		499
Career	220		6		(4)		222		219		—		219
Total Mercer	$	1,379	$	17	$	(26)	$	1,370	$	1,374	$	(68)	$	1,306

Note: Amounts in the tables above are rounded to whole numbers.


	2024								2023
Six Months Ended June 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	$	6,268	$	39	$	(103)	$	6,204	$	5,782	$	(1)	$	5,781
Guy Carpenter	1,780		4		(3)		1,781		1,647		(12)		1,635
Subtotal	8,048		43		(106)		7,985		7,429		(13)		7,416
Fiduciary interest income	247		1		(1)		247		199		—		199
Total Risk and Insurance Services	8,295		44		(107)		8,232		7,628		(13)		7,615
Consulting
Mercer (a)	2,804		25		(54)		2,775		2,718		(92)		2,626
Oliver Wyman Group	1,626		(1)		(29)		1,596		1,485		(1)		1,484
Total Consulting	4,430		24		(83)		4,371		4,203		(93)		4,110
Corporate Eliminations	(31)		—		—		(31)		(31)		—		(31)
Total Revenue	$	12,694	$	68	$	(190)	$	12,572	$	11,800	$	(106)	$	11,694

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


	2024								2023
Six Months Ended June 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	$	1,937	$	(5)	$	(2)	$	1,930	$	1,790	$	(1)	$	1,789
Asia Pacific	727		25		(39)		713		669		—		669
Latin America	262		17		(8)		271		252		—		252
Total International	2,926		37		(49)		2,914		2,711		(1)		2,710
U.S./Canada	3,342		2		(54)		3,290		3,071		—		3,071
Total Marsh	$	6,268	$	39	$	(103)	$	6,204	$	5,782	$	(1)	$	5,781
Mercer:
Wealth (a)	$	1,284	$	6	$	(74)	$	1,216	$	1,218	$	(48)	$	1,170
Health (a)	1,085		9		22		1,116		1,063		(44)		1,019
Career	435		10		(2)		443		437		—		437
Total Mercer	$	2,804	$	25	$	(54)	$	2,775	$	2,718	$	(92)	$	2,626

(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.

Note: Amounts in the tables above are rounded to whole numbers.

Consolidated Revenue

Consolidated revenue increased $345 million, or 6% to $6.2 billion for the three months ended June 30, 2024, compared to $5.9 billion for the three months ended June 30, 2023. Consolidated revenue also increased 6% 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, revenue increased 7% and 4% for the three months ended June 30, 2024 in the Risk and Insurance Services and Consulting segments, respectively.

Consolidated revenue increased $894 million, or 8% to $12.7 billion for the six months ended June 30, 2024, compared to $11.8 billion for the six months ended June 30, 2023. Consolidated revenue also increased 8% 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, revenue increased 8% and 6% for the six months ended June 30, 2024 in the Risk and Insurance Services and Consulting segments, respectively.

Consolidated Operating Expenses

Consolidated operating expenses increased $160 million, or 4% to $4.6 billion for the three months ended June 30, 2024, compared to $4.4 billion for the three months ended June 30, 2023. Expenses reflect an increase of 1% from acquisitions, offset by a decrease of 1% from the impact of foreign currency translation.

Consolidated operating expenses increased $510 million, or 6% to $9.1 billion for the six months ended June 30, 2024, compared to $8.6 billion for the six months ended June 30, 2023. Expenses reflect an increase of 1% from acquisitions, offset by a decrease of 1% from the impact of foreign currency translation.

Restructuring Activities

The Company incurred a total of $44 million and $86 million for restructuring activities for the three and six months ended June 30, 2024, compared to $65 million and $118 million for the corresponding quarter in the prior year.

Additional details are included in Note 15, Restructuring Costs, in the notes to the consolidated financial statements.

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 June 30,						Six Months Ended June 30,
(In millions, except percentages)	2024			2023			2024			2023
Revenue	$	4,022		$	3,722		$	8,295		$	7,628
Compensation and benefits (a)	2,108			1,965			4,226			3,896
Other operating expenses (a)	617			600			1,207			1,180
Operating expenses	2,725			2,565			5,433			5,076
Operating income	$	1,297		$	1,157		$	2,862		$	2,552
Operating income margin	32.2		%	31.1		%	34.5		%	33.5		%

(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 $300 million, or 8% to $4.0 billion for the three months ended June 30, 2024, compared to $3.7 billion for the three months ended June 30, 2023. Revenue increased 7% on an underlying basis and 2% from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation. Interest earned on fiduciary funds increased $17 million to $125 million for the three months ended June 30, 2024, compared to $108 million for the corresponding quarter in the prior year.

Revenue in the Risk and Insurance Services segment increased $667 million, or 9% to $8.3 billion for the six months ended June 30, 2024, compared to $7.6 billion for the six months ended June 30, 2023. Revenue increased 8% 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 $48 million to $247 million for the six months ended June 30, 2024, compared to $199 million for the corresponding period in the prior year.

Marsh's revenue increased $227 million, or 8% to $3.3 billion for the three months ended June 30, 2024, compared to $3.0 billion for the three months ended June 30, 2023. This reflects increases of 7% on an underlying basis and 2% from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation. U.S./Canada rose 6% on an underlying basis. Total International operations produced underlying revenue growth of 7%, reflecting growth of 8% in Latin America, and 7% in both Asia Pacific and EMEA.

Marsh's revenue increased $486 million, or 8% to $6.3 billion for the six months ended June 30, 2024, compared to $5.8 billion for the six months ended June 30, 2023. This reflects increases of 7% on an underlying basis and 2% from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation. U.S./Canada rose 7% on an underlying basis. Total International operations produced underlying revenue growth of 8%, reflecting growth of 8% in both EMEA and Latin America, and 7% in Asia Pacific.

Guy Carpenter's revenue increased $56 million, or 10% to $632 million for the three months ended June 30, 2024, compared to $576 million for the three months ended June 30, 2023. This reflects an increase of 11% on an underlying basis, partially offset by a decrease of 1% from the impact of foreign currency translation.

Guy Carpenter's revenue increased $133 million, or 8% to $1.8 billion for the six months ended June 30, 2024, compared to $1.6 billion for the six months ended June 30, 2023. This reflects an increase of 9% on an underlying basis, partially offset by a decrease of 1% from acquisitions.

The Risk and Insurance Services segment completed 5 acquisitions for the six months ended June 30, 2024. Information regarding these acquisitions is included in Note 8, Acquisitions and Dispositions, in the notes to the consolidated financial statements.

Operating Expenses

In the Risk and Insurance Services segment, expenses increased $160 million, or 6% to $2.7 billion for the three months ended June 30, 2024, compared to $2.6 billion for the three months ended June 30, 2023. Expenses reflect a 2% increase from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation.

Expenses in the Risk and Insurance Services segment increased $357 million, or 7% to $5.4 billion for the six months ended June 30, 2024, compared to $5.1 billion for the six months ended June 30, 2023. Expenses reflect a 2% increase from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation.

Expenses for the three and six months ended June 30, 2024 increased primarily due to compensation and benefits driven by 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 a 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 June 30,						Six Months Ended June 30,
(In millions, except percentages)	2024			2023			2024			2023
Revenue	$	2,216		$	2,172		$	4,430		$	4,203
Compensation and benefits (a)	1,314			1,336			2,628			2,571
Other operating expenses (a)	492			448			960			833
Operating expenses	1,806			1,784			3,588			3,404
Operating income	$	410		$	388		$	842		$	799
Operating income margin	18.5		%	17.9		%	19.0		%	19.0		%

Revenue

Consulting revenue increased $44 million, or 2% to $2.2 billion for the three months ended June 30, 2024, compared to the corresponding quarter in the prior year. This reflects an increase of 4% on an underlying basis, partially offset by decreases of 1% from both acquisitions and the impact of foreign currency translation.

Consulting revenue increased $227 million, or 5% to $4.4 billion for the six months ended June 30, 2024, compared to $4.2 billion for the six months ended June 30, 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.

Mercer's revenue increased $5 million to $1.4 billion for the three months ended June 30, 2024, compared to the corresponding quarter in the prior year. This reflects an increase of 5% on an underlying basis, offset by decreases of 3% from acquisitions and 1% from the impact of foreign currency translation. On an underlying basis, revenue for Health, Wealth and Career increased 9%, 3%, and 2%, respectively, as compared to the corresponding quarter in the prior year.

Mercer's revenue increased $86 million, or 3% to $2.8 billion for the six months ended June 30, 2024, compared to $2.7 billion for the six months ended June 30, 2023. This reflects an increase of 6% on an underlying basis, partially offset by decreases of 1% from acquisitions and 1% from the impact of foreign currency translation. On an underlying basis, revenue for Health, Wealth and Career increased 10%, 4%, and 2%, respectively, as compared to the corresponding period in the prior year.

Revenue for the six months ended June 30, 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 the six months ended June 30, 2023 include the loss on sale of an individual financial advisory business in Canada of $17 million.

Oliver Wyman Group's revenue increased $39 million, or 5% to $837 million for the three months ended June 30, 2024, compared to $798 million for the three months ended June 30, 2023. This reflects increases of 3% on an underlying basis and 2% from acquisitions.

Oliver Wyman Group's revenue increased $141 million, or 9% to $1.6 billion for the six months ended June 30, 2024, compared to $1.5 billion for the six months ended June 30, 2023. This reflects increases of 8% on an underlying basis and 2% from acquisitions.

The Consulting segment completed 4 acquisitions for the six months ended June 30, 2024. Information regarding these acquisitions is included in Note 8, Acquisitions and Dispositions, in the notes to the consolidated financial statements.

Operating Expenses

In the Consulting segment, expenses increased $22 million, or 1% to $1.8 billion for the three months ended June 30, 2024, compared to the corresponding quarter in the prior year. Expenses reflect decreases of 2% from dispositions, related to the sale of the Mercer U.K. pension administration and U.S. health and benefits administration business, and 1% from the impact of foreign currency translation.

Expenses in the Consulting segment increased $184 million, or 5% to $3.6 billion for the six months ended June 30, 2024, compared to $3.4 billion for the six months ended June 30, 2023. Expenses reflect a 1% decrease from dispositions.

Expenses for the six months ended June 30, 2024 increased primarily due to compensation and benefits driven by higher base salaries and incentive compensation. Expenses for the six months ended June 30, 2023 also included benefit of $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.

Corporate and Other

Corporate expenses decreased $23 million, or 27% to $65 million for the three months ended June 30, 2024, compared to $88 million for the three months ended June 30, 2023.

Corporate expenses decreased $31 million, or 18% to $137 million for the six months ended June 30, 2024, compared to $168 million for the six months ended June 30, 2023.

Corporate expenses for the three and six months ended June 30, 2024 decreased primarily due to lower restructuring costs compared to the corresponding periods in the prior year.

Interest Income

Interest income was $12 million for the three months ended June 30, 2024, compared to $10 million for the three months ended June 30, 2023.

Interest income was $49 million for the six months ended June 30, 2024, compared to $24 million for the six months ended June 30, 2023.

Interest income for the three and six months ended June 30, 2024 increased $2 million and $25 million, respectively, due to higher average corporate funds and interest rates compared to the corresponding periods in the prior year.

Interest Expense

Interest expense was $156 million for the three months ended June 30, 2024, compared to $146 million for the three months ended June 30, 2023.

Interest expense was $315 million for the six months ended June 30, 2024, compared to $282 million for the six months ended June 30, 2023.

Interest expense for the three and six months ended June 30, 2024, increased $10 million and $33 million, respectively, reflecting higher levels of debt and higher interest rates, compared to the corresponding periods in the prior year.

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 and $2 million for the three and six months ended June 30, 2024, compared to net investment income of $3 million and $5 million, respectively, for the corresponding periods in the prior year.

Income and Other Taxes

The Company's effective tax rate for the three months ended June 30, 2024 was 27.1%, compared with 24.4% for the corresponding quarter of 2023. The effective tax rates for the six months ended June 30, 2024 and 2023 were 25.4% 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, non-taxable adjustments related to contingent consideration for acquisitions, and valuation allowances for certain tax credits and attributes. The rate for the three and six months ended June 30, 2024 reflects the previously enacted change in the United Kingdom (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 0.7% and 1.2% for the three months ended June 30, 2024 and 2023, respectively, and by 1.6% and 1.3% for the six months periods ended June 30, 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 35 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 the Financing Cash Flows section.

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 June 30, 2024, the Company had approximately $1.3 billion of cash and cash equivalents in its foreign operations, which includes $481 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 six months ended June 30, 2024, the Company recorded foreign currency translation adjustments which decreased net equity by $241 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 $434 million of cash from operations for the six months ended June 30, 2024, compared to $665 million provided by operations in the first six months of 2023. These amounts reflect the net income of the Company during the 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 $153 million and $151 million related to its restructuring activities for the six months ended June 30, 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. For the three and six months ended June 30, 2024, the Company contributed $9 million and $17 million, respectively, to its U.S. defined benefit pension plans and $18 million and $34 million to its non-U.S. defined benefit pension plans, respectively. For the three and six months ended June 30, 2023, the Company contributed $7 million and $15 million to its U.S. defined benefit pension plans, respectively, and $19 million and $32 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. For the three and six months ended June 30, 2024, the Company made contributions of $9 million and $17 million, respectively, to its non-qualified plans, and expects to contribute approximately an additional $14 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 six months of 2024, the Company made deficit contributions of $21 million to the JLT section of its U.K. plans, and does not expect to make any additional contributions for 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 $568 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 $27 million to its non-U.S. defined benefit plans over the remainder of 2024, comprising approximately $1 million to the U.K. plans and $26 million to plans outside of the U.K.

Financing Cash Flows

Net cash used for financing activities was $384 million for the six months ended June 30, 2024, compared with $227 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 so 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 June 30, 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 June 30, 2023, the Company had $200 million borrowings outstanding under this facility with a

weighted average interest rate of 5.50%.

The Company also maintains other credit and overdraft facilities with various financial institutions aggregating $118 million and $113 million, at June 30, 2024 and December 31, 2023, respectively. There were no outstanding borrowings under these facilities at June 30, 2024 and December 31, 2023.

The Company also has outstanding guarantees and letters of credit with various banks aggregating $143 million and $139 million, at June 30, 2024 and December 31, 2023, respectively.

Debt

The Company had $749 million of commercial paper outstanding at June 30, 2024, at an average effective interest rate of 5.498%.

In June 2024, the Company repaid $600 million of 3.50% senior notes at maturity.

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 used 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

For the first six months of 2024, the Company repurchased 3.0 million shares of its common stock for $600 million. At June 30, 2024, the Company remained authorized by the Board of Directors to repurchase up to approximately $2.6 billion in shares of its common stock. There is no time limit on the authorization. For the first six months of 2023, the Company repurchased 3.5 million shares of its common stock for $600 million.

Dividends

The Company paid dividends on its common stock shares of $706 million ($1.42 per share) for the first six months of 2024, as compared with $591 million ($1.18 per share) for the first six months of 2023.

In July 2024, the Board of Directors of the Company declared a quarterly dividend of $0.815 per share on outstanding common stock, payable in August 2024.

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 Six Months Ended June 30,
(In millions)	2024		2023
Operating:
Contingent consideration payments for prior year acquisitions	$	(90)	$	(41)
Receipt of contingent consideration for dispositions	—		1
Acquisition/disposition related net charges for adjustments	15		17


Adjustments and payments related to contingent consideration	$	(75)	$	(23)
Financing:
Contingent consideration for prior year acquisitions	$	(71)	$	(134)
Deferred consideration related to prior year acquisitions	(10)		(51)
Payments of deferred and contingent consideration for acquisitions	$	(81)	$	(185)

Receipt of contingent consideration for dispositions	$	1	$	2

For acquisitions completed during the first six months of 2024 and in prior years, remaining estimated future contingent payments of $121 million and deferred consideration payments of $116 million, are recorded in accounts payable and accrued liabilities or other liabilities in the consolidated balance sheet at June 30, 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 $47 million through June 30, 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 six months ended June 30, 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 $901 million and $682 million for the six months ended June 30, 2024 and 2023, respectively, related to fiduciary liabilities.

Investing Cash Flows

Net cash used for investing activities amounted to $783 million for the first six months of 2024, compared with $501 million used for investing activities for the corresponding period in 2023.

The Company paid $644 million and $292 million, net of cash, cash equivalents and cash and cash equivalents held in a fiduciary capacity acquired, for acquisitions it made during the first six months of 2024 and 2023, respectively. The outflow of funds in 2024 relates primarily to the acquisitions of Vanguard's Institutional Advisory

Services business unit ("Vanguard") and Fischer Brown Bottrell Insurance Inc., for $469 million. The outflow of funds in 2023 primarily relates to the completion of the Westpac Transaction for $233 million.

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 $167 million for the first six months of 2024, and $185 million for the first six 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 for the first six months of 2024 is due to investments in private equity funds. At June 30, 2024, the Company has commitments for potential future investments of approximately $114 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 June 30, 2024:


	Payment due by Period
(In millions)	Total		Within 1 Year		1-3 Years		4-5 Years		After 5 Years
Commercial paper	$	749	$	749	$	—	$	—	$	—


Current portion of long-term debt	519		519		—		—		—
Long-term debt	12,384		—		1,227		1,544		9,613
Interest on long-term debt	9,356		565		1,063		1,021		6,707
Net operating leases	2,153		363		651		443		696
Service agreements	479		227		188		64		—
Other long-term obligations (a)	300		109		155		34		2


Total	$	25,940	$	2,532	$	3,284	$	3,106	$	17,018

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

The table does not include the liability for unrecognized tax benefits of $119 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 $48 million, which will be paid in installments from 2025 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.

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