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 (Marsh McLennan or 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 its four market-leading businesses. With annual revenue of $24 billion, the Company has more than 90,000 colleagues advising clients in 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, 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 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 (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 months ended March 31, 2025, compared to the corresponding period in 2024, 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 reportable 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, 2024, 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, 2024.

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, 2025 was $7.1 billion, an increase of 9%, or 4% on an underlying basis.
Consolidated operating income for the three months ended March 31, 2025 increased $80 million, or 4% to $2.0 billion, compared to the corresponding period in the prior year. Net income attributable to the Company was $1.4 billion. Earnings per share on a diluted basis decreased to $2.79 from $2.82, or 1%, compared to the corresponding period in the prior year.
Risk and Insurance Services revenue for the three months ended March 31, 2025 was $4.8 billion, an increase of 11%, or 4% on an underlying basis. Operating income was $1.6 billion, consistent with the corresponding period in the prior year.
Marsh's revenue for the three months ended March 31, 2025 was $3.5 billion, an increase of 15%, or 5% on an underlying basis. Guy Carpenter's revenue for the three months ended March 31, 2025 was $1.2 billion, an increase of 5% on both a reported and underlying basis.
Consulting revenue for the three months ended March 31, 2025 was $2.3 billion, an increase of 5%, or 4% on an underlying basis. Operating income was $456 million, compared with $432 million for the corresponding period in the prior year.
Mercer's revenue for the three months ended March 31, 2025 was $1.5 billion, an increase of 5%, or 4% on an underlying basis. Oliver Wyman Group's revenue for the three months ended March 31, 2025 was $818 million, an increase of 4% on both a reported and an underlying basis.
The Company completed 3 acquisitions in the first quarter of 2025 for total purchase consideration of $62 million in the RIS segment.
In March 2025, the Company repaid $500 million of 3.50% senior notes at maturity.
For the three months ended March 31, 2025, the Company repurchased 1.3 million shares for $300 million.
In March 2025, the Board of Directors of the Company declared a quarterly dividend of $0.815 per share on outstanding common stock, payable in May 2025.

The macroeconomic and geopolitical environment including multiple major wars and global conflicts, tariffs or changes in trade policies, 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, 2024.

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)	2025		2024
Revenue	$	7,061	$	6,473
Expense:
Compensation and benefits	3,850		3,470
Other operating expenses	1,206		1,078
Operating expenses	5,056		4,548
Operating income	$	2,005	$	1,925






Income before income taxes	$	1,827	$	1,871
Net income before non-controlling interests	$	1,412	$	1,424



Net income attributable to the Company	$	1,381	$	1,400
Net income per share attributable to the Company:
– Basic	$	2.81	$	2.84
– Diluted	$	2.79	$	2.82



Average number of shares outstanding:
– Basic	492		492
– Diluted	495		497
Shares outstanding at March 31,	493		493

Consolidated operating income increased $80 million, or 4% to $2.0 billion for the three months ended March 31, 2025, compared to $1.9 billion for the corresponding period in the prior year, reflecting a 9% increase in revenue and an 11% increase in expenses. Revenue growth was driven by increases in the Risk and Insurance Services and Consulting segments of 11% and 5%, respectively.

The Company's revenue and expenses for the three months ended March 31, 2025, include the results of operations of McGriff Insurance Services, LLC ("McGriff'") in the Risk and Insurance Services segment.

For the three months ended March 31, 2025, operating income was impacted by foreign exchange movements across both segments due to the strengthening of the U.S. dollar, compared to the corresponding period in the prior year.

Diluted earnings per share decreased to $2.79 from $2.82, or 1% from the prior year. The decrease is the result of lower income before taxes driven primarily by higher interest expense for the three months ended March 31, 2025, compared to the corresponding period in the prior year.

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 months ended March 31, 2025 and 2024, 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*
2025	2024				2025		2024
Risk and Insurance Services
Marsh	$	3,453	$	3,003	15	%		$	3,141	$	2,995	5	%
Guy Carpenter	1,206		1,148		5	%		1,204		1,148		5	%
Subtotal	4,659		4,151		12	%		4,345		4,143		5	%
Fiduciary interest income	103		122					99		122
Total Risk and Insurance Services	4,762		4,273		11	%		4,444		4,265		4	%
Consulting
Mercer	1,496		1,425		5	%		1,458		1,403		4	%
Oliver Wyman Group	818		789		4	%		817		785		4	%
Total Consulting	2,314		2,214		5	%		2,275		2,188		4	%
Corporate Eliminations	(15)		(14)					(15)		(14)
Total Revenue	$	7,061	$	6,473	9	%		$	6,704	$	6,439	4	%

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*
2025	2024				2025		2024
Marsh:
EMEA	$	1,059	$	1,025	3	%		$	1,089	$	1,024	6	%
Asia Pacific	335		336		—			343		332		4	%
Latin America	124		125		(1)	%		135		125		8	%
Total International	1,518		1,486		2	%		1,567		1,481		6	%
U.S./Canada	1,935		1,517		28	%		1,574		1,514		4	%
Total Marsh	$	3,453	$	3,003	15	%		$	3,141	$	2,995	5	%
Mercer:
Wealth	$	670	$	672	—			$	625	$	606	3	%
Health	608		538		13	%		620		582		7	%
Career	218		215		2	%		213		215		(1)	%
Total Mercer	$	1,496	$	1,425	5	%		$	1,458	$	1,403	4	%

(*) 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, 2025 and 2024:


	2025								2024
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 (a)	$	3,453	$	53	$	(365)	$	3,141	$	3,003	$	(8)	$	2,995
Guy Carpenter	1,206		13		(15)		1,204		1,148		—		1,148
Subtotal	4,659		66		(380)		4,345		4,151		(8)		4,143
Fiduciary interest income	103		1		(5)		99		122		—		122
Total Risk and Insurance Services	4,762		67		(385)		4,444		4,273		(8)		4,265
Consulting
Mercer (b)	1,496		32		(70)		1,458		1,425		(22)		1,403
Oliver Wyman Group	818		8		(9)		817		789		(4)		785
Total Consulting	2,314		40		(79)		2,275		2,214		(26)		2,188
Corporate Eliminations	(15)		—		—		(15)		(14)		—		(14)
Total Revenue	$	7,061	$	107	$	(464)	$	6,704	$	6,473	$	(34)	$	6,439

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


	2025								2024
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	$	1,059	$	28	$	2	$	1,089	$	1,025	$	(1)	$	1,024
Asia Pacific	335		8		—		343		336		(4)		332
Latin America	124		11		—		135		125		—		125
Total International	1,518		47		2		1,567		1,486		(5)		1,481
U.S./Canada (a)	1,935		6		(367)		1,574		1,517		(3)		1,514
Total Marsh	$	3,453	$	53	$	(365)	$	3,141	$	3,003	$	(8)	$	2,995
Mercer:
Wealth (b)	$	670	$	15	$	(60)	$	625	$	672	$	(66)	$	606
Health (b)	608		12		—		620		538		44		582
Career	218		5		(10)		213		215		—		215
Total Mercer	$	1,496	$	32	$	(70)	$	1,458	$	1,425	$	(22)	$	1,403

(a)Acquisitions, dispositions and other in 2025 includes the impact of McGriff.

(b)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 $588 million, or 9%, to $7.1 billion for the three months ended March 31, 2025, compared to $6.5 billion for the three months ended March 31, 2024. Consolidated revenue increased 4% on an underlying basis and 7% from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation. On an underlying basis, revenue increased 4% for the three months ended March 31, 2025, in both the Risk and Insurance Services and Consulting segments.

Consolidated revenue growth for the three months ended March 31, 2025 reflects continued demand for our advice and solutions.

Consolidated Operating Expenses

Consolidated operating expenses increased $508 million, or 11%, to $5.1 billion for the three months ended March 31, 2025, compared to $4.5 billion for the three months ended March 31, 2024. Expenses reflect a 9% increase from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation.

Consolidated operating expenses for the three months ended March 31, 2025 increased due to compensation and benefits, primarily in RIS, driven by higher base salaries and incentive compensation.

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)		2025			2024
Revenue		$	4,762		$	4,273
Compensation and benefits		2,451			2,118
Other operating expenses		698			590
Operating expenses		3,149			2,708
Operating income		$	1,613		$	1,565
Operating income margin		33.9		%	36.6		%

Revenue

Revenue in the Risk and Insurance Services segment increased $489 million, or 11%, to $4.8 billion for the three months ended March 31, 2025, compared to $4.3 billion for the three months ended March 31, 2024. Revenue increased 4% on an underlying basis and 9% from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation. Interest earned on fiduciary funds decreased $19 million to $103 million for the three months ended March 31, 2025, compared to $122 million for the three months ended March 31, 2024, due to lower average interest rates compared to the corresponding period in the prior year.

In Risk and Insurance Services, underlying revenue growth for the three months ended March 31, 2025 was driven by retention and new business growth at Marsh and Guy Carpenter.

Marsh's revenue increased $450 million, or 15%, to $3.5 billion for the three months ended March 31, 2025, compared to $3.0 billion for the three months ended March 31, 2024. This reflects an increase of 5% on an underlying basis and 12% from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation. U.S./Canada rose 4% on an underlying basis. Total International operations produced underlying revenue growth of 6%, reflecting growth of 8% in Latin America, 6% in EMEA, and 4% in Asia Pacific.

Guy Carpenter's revenue increased $58 million, or 5%, to $1.2 billion for the three months ended March 31, 2025, compared to $1.1 billion for the three months ended March 31, 2024. This reflects an increase of 5% on an underlying basis and 1% from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation.

At Guy Carpenter, underlying revenue growth for the three months ended March 31, 2025 was driven by growth across all regions and global specialties.

The Risk and Insurance Services segment completed 3 acquisitions for the three months ended March 31, 2025. 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 Insurances Services segment increased $441 million, or 16%, to $3.1 billion for the three months ended March 31, 2025, compared to $2.7 billion for the three months ended March 31, 2024. Expenses reflect a 12% increase from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation.

Expenses for the three months ended March 31, 2025 increased primarily due to compensation and benefits driven by higher base salaries and incentive compensation. Expenses also include integration and retention related costs of $69 million and higher intangibles amortization cost of $41 million primarily related to the acquisition of McGriff.

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 March 31,
(In millions, except percentages)		2025			2024
Revenue		$	2,314		$	2,214
Compensation and benefits		1,363			1,314
Other operating expenses		495			468
Operating expenses		1,858			1,782
Operating income		$	456		$	432
Operating income margin		19.7		%	19.5		%

Revenue

Consulting revenue increased $100 million, or 5%, to $2.3 billion for the three months ended March 31, 2025, compared to $2.2 billion for the three months ended March 31, 2024. This reflects an increase of 4% on an underlying basis and 2% from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation.

In Consulting, underlying revenue growth for the three months ended March 31, 2025 was driven by both Mercer and Oliver Wyman Group.

Mercer's revenue increased $71 million, or 5%, to $1.5 billion for the three months ended March 31, 2025, compared to $1.4 billion for the three months ended March 31, 2024. This reflects an increase of 4% on an underlying basis and 3% from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation. On an underlying basis, revenue for Health and Wealth increased 7% and 3%, respectively, and decreased 1% in Career, as compared to the corresponding period in the prior year.

Underlying revenue growth at Mercer was driven by continued solid growth in Health and continued demand in Wealth. Health reflected growth across all regions. Wealth growth was driven by investment management. Career revenue benefited from growth in international offset by slower demand in the U.S.

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.

Oliver Wyman Group's revenue increased $29 million, or 4%, to $818 million for the three months ended March 31, 2025, compared to $789 million for the three months ended March 31, 2024. This reflects an increase of 4% on an underlying basis and 1% from acquisitions, partially offset by a decrease of 1% from the impact of foreign currency translation.

The increase in underlying revenue growth at Oliver Wyman Group for the three months ended March 31, 2025 was led by the U.S.

Operating Expenses

In the Consulting segment, expenses increased $76 million, or 4%, to $1.9 billion for the three months ended March 31, 2025, compared to $1.8 billion for the three months ended March 31, 2024. Expenses reflect a 4% increase from acquisitions, partially offset by a decrease of 2% from the impact of foreign currency translation.

Expenses for the three months ended March 31, 2025 increased primarily due to compensation and benefits driven by higher base salaries and incentive compensation.

For the three months ended March 31, 2024, expenses also reflected 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.

Corporate and Other

Corporate expenses decreased $8 million, or 12%, to $64 million for the three months ended March 31, 2025, compared to $72 million for the three months ended March 31, 2024, primarily due to lower restructuring costs compared to the corresponding period in the prior year.

Interest Income

Interest income was $19 million for the three months ended March 31, 2025, compared to $37 million for the three months ended March 31, 2024. Interest income decreased $18 million for the three months ended March 31, 2025, due to lower average corporate funds compared to the corresponding period in the prior year.

Interest Expense

Interest expense was $245 million for the three months ended March 31, 2025, compared to $159 million for the three months ended March 31, 2024. Interest expense increased $86 million for the three months ended March 31, 2025, reflecting higher levels of debt and higher interest rates, compared to the corresponding period 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 $5 million for the three months ended March 31, 2025 compared to net investment income of $1 million for the three months ended March 31, 2024.

Income and Other Taxes

The Company's effective tax rate for the three months ended March 31, 2025 was 22.7%, compared with 23.9% for the corresponding period of 2024.

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 excess tax benefit related to share-based payments is the most significant discrete item in both periods, reducing the effective tax rate for the three months ended March 31, 2025 and 2024, by 2.1% and 2.3%, 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. In 2024, the Company received closure notices and assessments from the U.K. tax authority in relation to its 2016-2020 examinations which disallowed certain interest expense deductions. The Company has appealed the assessments and resolving this matter through litigation or alternative dispute resolution may take several years. The Company believes the resolution of tax matters will not have a material effect on the consolidated financial position of the Company. However, an adverse 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 $70 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 most key non-U.S. jurisdictions where the Company operates, including the U.K. and Ireland. Parts of the minimum tax rules were applicable in 2024, with the remaining provisions becoming fully effective for 2025. This minimum tax is treated as a period cost and does not have a material impact on the Company's financial results from operations for the current period. The Company continues to monitor legislative developments, as well as additional guidance from countries that have enacted Pillar Two legislation, and will ensure it complies with any changes.

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 March 31, 2025, the Company had approximately $1.5 billion of cash and cash equivalents in its foreign operations, which includes $476 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, 2025, the Company recorded foreign currency translation adjustments which increased net equity by $335 million. Continued weakening of the U.S. dollar against foreign currencies would further increase 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 $622 million of cash from operations for the three months ended March 31, 2025, compared to $781 million for the first three months of 2024. 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 $57 million and $88 million related to its restructuring activities for the three months ended March 31, 2025 and 2024, 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 months ended March 31, 2025, the Company contributed $11 million to its U.S. defined benefit pension plans and $7 million to its non-U.S. defined benefit pension plans. For the 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.

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 months ended March 31, 2025, the Company made contributions of $2 million to its qualified plans and $9 million to its non-qualified plans, and expects to contribute approximately an additional $26 million over the remainder of 2025.

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 78% of non-U.S. plan assets at December 31, 2024. 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"). The Company is not required to make any deficit contributions to the JLT section in 2025. 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.

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 $583 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 $36 million to its non-U.S. defined benefit plans over the remainder of 2025, comprising approximately $1 million to the U.K. plans and $35 million to plans outside of the U.K.

Financing Cash Flows

Net cash used for financing activities was $138 million for the three months ended March 31, 2025, compared with $135 million provided by financing activities for the corresponding period in 2024.

Credit Facilities

The Company has a $3.5 billion multi-currency unsecured five-year credit facility (the "Credit Facility") expiring October 2028. Borrowings under the Credit Facility bear interest at a rate per annum, equal, at the Company's option, either at (a) the Securities Overnight Financing Rate ("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, 2025 and December 31, 2024, the Company had no borrowings under this facility.

The Company also maintains other credit and overdraft facilities with various financial institutions aggregating $122 million and $123 million, at March 31, 2025 and December 31, 2024, respectively. There were no outstanding borrowings under these facilities at March 31, 2025 and December 31, 2024.

The Company also has outstanding guarantees and letters of credit with various banks aggregating $180 million and $163 million, at March 31, 2025 and December 31, 2024, respectively.

Debt

The Company has a $3.5 billion short-term debt financing program through the issuance of commercial paper. The proceeds from the issuance of commercial paper are used for general corporate purposes. The Company had $1.0 billion of commercial paper outstanding at March 31, 2025, at an average effective interest rate of 4.65%. The Company did not have any commercial paper outstanding at December 31, 2024.

In March 2025, the Company repaid $500 million of 3.50% senior notes at maturity.

In November 2024, the Company issued $7.25 billion in senior notes as follows:

$950 million 4.550% senior notes due 2027;
$1 billion 4.650% senior notes due 2030;
$1 billion 4.850% senior notes due 2031;
$2 billion 5.000% senior notes due 2035;
$500 million 5.350% senior notes due 2044;
$1.5 billion 5.400% senior notes due 2055; and
$300 million floating rate senior notes due 2027 (the "Floating Notes"), collectively referred to as the "November 2024 Notes".

For the Floating Notes, interest is calculated based on a compounded SOFR benchmark rate plus 0.700%.

The Company used the net proceeds from the November 2024 Notes offering to fund, in part, the McGriff acquisition, including the payment of related fees and expenses, as well as for general corporate purposes.

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.

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 three months ended March 31, 2025, the Company repurchased 1.3 million shares of its common stock for $300 million. At March 31, 2025, the Company remained authorized by the Board of Directors to repurchase up to approximately $2.0 billion in shares of its common stock. There is no time limit on the authorization. For the three months ended March 31, 2024, the Company repurchased 1.5 million shares of its common stock for $300 million.

Dividends

The Company paid dividends on its common stock shares of $405 million ($0.815 per share) for the three months ended March 31, 2025, as compared with $354 million (0.71 per share) for the first three months of 2024.

In March 2025, the Board of Directors of the Company declared a quarterly dividend of $0.815 per share on outstanding common stock, payable in May 2025. In February 2025, the Company paid the quarterly dividend declared in January 2025 by the Company's Board of Directors of $0.815 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)	2025		2024
Operating:
Contingent consideration payments for prior year acquisitions	$	(14)	$	(14)

Acquisition/disposition related net charges for adjustments	9		6


Adjustments and payments related to contingent consideration	$	(5)	$	(8)
Financing:
Contingent consideration for prior year acquisitions	$	(5)	$	(12)
Deferred consideration related to prior year acquisitions	(27)		(3)
Payments of deferred and contingent consideration for acquisitions	$	(32)	$	(15)

For acquisitions completed during the first three months of 2025 and in prior years, remaining estimated future contingent payments of $160 million and deferred consideration payments of $157 million, are recorded in accounts payable and accrued liabilities or other liabilities in the consolidated balance sheet at March 31, 2025.

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 designated its €1.1 billion senior note debt instruments ("Euro notes") as a net investment hedge (the "hedge") of its Euro denominated subsidiaries. The hedge is re-assessed each quarter to confirm that the designated equity balance at the beginning of each period continues to equal or exceed 80% of the outstanding balance of the Euro debt instrument and that all the critical terms of the hedging instrument and the hedged net investment continue to match. If the hedge is highly effective, the change in the debt balance related to foreign exchange fluctuations is recorded in accumulated other comprehensive loss in the consolidated balance sheets.

The U.S. dollar value of the Euro notes increased by $41 million through March 31, 2025, due to the change in foreign exchange rates. The Company concluded that the hedge was highly effective and recorded an increase to accumulated other comprehensive loss for the three months ended March 31, 2025.

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 $86 million and $829 million for the three months ended March 31, 2025 and 2024, respectively, related to fiduciary liabilities.

Investing Cash Flows

Net cash provided by investing activities amounted to $26 million for the first three months of 2025, compared with $368 million used for investing activities for the corresponding period in 2024.

The Company paid $18 million and $301 million, net of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity acquired, for acquisitions it made in the first three months of 2025 and 2024, respectively.

In the first quarter of 2025, the Company sold Marsh McLennan Agency's ("MMA") Technology Consulting and Administrative Solutions ("TCAS") business for approximately $25 million, and recorded a gain of $15 million, which is included in revenue in the consolidated statements of income.

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.

The Company's additions to fixed assets and capitalized software, which amounted to $55 million for the three months ended March 31, 2025, and $87 million for the three months ended March 31, 2024, related primarily to software development costs, the refurbishing and modernizing of office facilities, and technology equipment purchases.

Cash from the sale of long-term investments for the three months ended March 31, 2025 is due to the disposal of an investment in a unit trust fund.

Cash used for long-term investments for the three months ended March 31, 2025 is due to investments in private equity funds. At March 31, 2025, the Company has commitments for potential future investments of approximately $105 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, 2025:


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



Commercial paper	1,048		1,048		`	—		—		—
Current portion of long-term debt	619		619			—		—		—
Long-term debt	19,032		—			1,885		3,139		14,008
Interest on long-term debt	13,548		904			1,747		1,558		9,339
Net operating leases	2,152		386			664		427		675
Service agreements	456		278			140		36		2
Other long-term obligations (a)	403		93			277		30		3


Total	$	37,258	$	3,328		$	4,713	$	5,190	$	24,027

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

The table does not include the liability for unrecognized tax benefits of $117 million as the Company is unable to reasonably predict the timing of settlement of these liabilities, other than approximately $58 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 in the remainder of 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 2024 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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