Business Wire | Oct 21, 2021 07:00AM EDT

Marsh McLennan Reports Third Quarter 2021 Results

Oct. 21, 2021

NEW YORK--(BUSINESS WIRE)--Oct. 21, 2021--Marsh McLennan (NYSE: MMC), the world's leading professional services firm in the areas of risk, strategy and people, today reported financial results for the third quarter ended September 30, 2021.

Dan Glaser, President and CEO, said: "We delivered another quarter of excellent results. For the second consecutive quarter, underlying growth was at the highest level in over two decades. We grew underlying revenue by 13%, adjusted operating income by 19%, and adjusted EPS by 32%. For the first nine months of 2021, we achieved 10% underlying revenue growth, 21% adjusted operating income growth, and 28% adjusted EPS growth."

"Given the outstanding quarter and year-to-date performance, we are on track for a terrific year."

Consolidated Results

Consolidated revenue in the third quarter of 2021 was $4.6 billion, an increase of 16% compared with the third quarter of 2020. On an underlying basis, revenue increased 13%. Operating income was $740 million, an increase of 37% from the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 19% to $759 million. Net income attributable to the Company was $537 million, or $1.05 per diluted share, compared with $0.62 in the third quarter of 2020. Adjusted earnings per share rose 32% to $1.08 per diluted share compared with $0.82 for the prior year period.

For the nine months ended September 30, 2021, consolidated revenue was $14.7 billion, an increase of 15%, or 10% on an underlying basis compared to the prior period. Operating income was $3.3 billion, an increase of 33% from the prior year period. Adjusted operating income rose 21% to $3.4 billion. Net income attributable to the Company was $2.3 billion. Fully diluted earnings per share was $4.56 compared with $3.21 in the first nine months of 2020. Adjusted earnings per share increased 28% to $4.82 compared with $3.77 for the comparable period in 2020.

Risk & Insurance Services

Risk & Insurance Services revenue was $2.7 billion in the third quarter of 2021, an increase of 17%, or 13% on an underlying basis. Operating income rose 21% to $403 million, and adjusted operating income was $469 million, an increase of 21% from the prior year period. For the nine months ended September 30, 2021, revenue was $9.0 billion, an increase of 16%, or 11% on an underlying basis. Operating income rose 28% to $2.4 billion, and adjusted operating income was $2.5 billion, an increase of 20% from the prior year period.

Marsh's revenue in the third quarter was $2.4 billion, an increase of 13% on an underlying basis. In U.S./Canada, underlying revenue rose 16%. International operations produced underlying revenue growth of 9%, reflecting 12% growth in Latin America, 9% growth in Asia Pacific, and 8% growth in EMEA. For the nine months ended September 30, 2021, Marsh's underlying revenue growth was 12% compared to the prior period a year ago.

Guy Carpenter's revenue in the third quarter was $314 million, an increase of 15% on an underlying basis. For the nine months ended September 30, 2021, Guy Carpenter's underlying revenue growth was 10%.

Consulting

Consulting revenue in the third quarter was $1.9 billion, an increase of 13% or 12% on an underlying basis compared to the same period a year ago. Operating income increased 45% to $404 million, and adjusted operating income increased 15% to $350 million. For the first nine months of 2021, revenue was $5.7 billion, an increase of 12%, or an increase of 9% on an underlying basis. Operating income of $1.1 billion increased 36% and adjusted operating income increased 25% to $1.1 billion.

Mercer's revenue was $1.3 billion in the third quarter, an increase of 7% on an underlying basis. Career revenue of $253 million was up 13% on an underlying basis. Wealth revenue of $613 million increased 6% on an underlying basis, and Health revenue of $449 million increased 4% on an underlying basis. For the nine months ended September 30, 2021, Mercer's revenue was $3.9 billion, an increase of 4% on an underlying basis compared to the same period a year ago.

Oliver Wyman's revenue was $610 million in the third quarter, an increase of 25% on an underlying basis. For the first nine months ended September 30, 2021, Oliver Wyman's revenue was $1.8 billion, an increase of 21% on an underlying basis.

Other Items

The Company repurchased 1.9 million shares of stock for $300 million in the third quarter. Through nine months, the Company has repurchased 5.3 million shares for $734 million.

Conference Call

A conference call to discuss third quarter 2021 results will be held today at 8:30 a.m. Eastern time. To participate in the teleconference, please dial +1 866 437 7574. Callers from outside the United States should dial +1 409 220 9376. The access code for both numbers is 4336169. The live audio webcast may be accessed at marshmclennan.com. A replay of the webcast will be available approximately two hours after the event.

About Marsh McLennan

Marsh McLennan (NYSE: MMC) is the world's leading professional services firm in the areas of risk, strategy and people. The Company's 81,000 colleagues advise clients in 130 countries. With annual revenue over $19 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and 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 serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit marshmclennan.com, follow us on LinkedIn and Twitter or subscribe to BRINK.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would".

Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:

* the increasing prevalence of ransomware, supply chain and other forms of cyber attacks, and their potential to disrupt our operations and result in the disclosure of confidential client or company information; * the impact from lawsuits or investigations arising from errors and omissions, breaches of fiduciary duty or other claims against us in our capacity as a broker or investment advisor; * increased regulatory activity and scrutiny by regulatory or law enforcement authorities; * the financial and operational impact of complying with laws and regulations where we operate and the risks of noncompliance with such laws by us or third-party providers, including anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act and cybersecurity and data privacy regulations such as the E.U.'s General Data Protection Regulation; * the impact of COVID-19, including emerging vaccine mandates, on our business operations, results of operations, cash flows and financial position; * our ability to compete effectively and adapt to changes in the competitive environment, including to respond to technological change, disintermediation, digital disruption and other types of innovation; * our ability to manage risks associated with our investment management and related services business, particularly in the context of uncertain equity markets, including our ability to execute timely trades in light of increased trading volume and to manage potential conflicts of interest; * our ability to attract and retain industry leading talent; * the impact of changes in tax laws, guidance and interpretations, or disagreements with tax authorities; and * the regulatory, contractual and reputational risks that arise based on insurance placement activities and insurer revenue streams.

The factors identified above are not exhaustive. Marsh McLennan and its subsidiaries operate in a dynamic business environment in which new risks emerge frequently. Accordingly, we caution readers not to place undue reliance on any forward-looking statements, which are based only on information currently available to us and speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made.

Further information concerning Marsh McLennan and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the Company's filings with the Securities and Exchange Commission, including the "Risk Factors" section and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our most recently filed Annual Report on Form 10-K.

Marsh & McLennan Companies, Inc.Consolidated Statements of Income(In millions, except per share data)(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Revenue $ 4,583 $ 3,968 $ 14,683 $ 12,808

Expense:

Compensation and 2,853 2,495 8,520 7,479 benefits

Other operating 990 933 2,837 2,834 expenses

Operating expenses 3,843 3,428 11,357 10,313

Operating income 740 540 3,326 2,495

Other net benefit 69 60 211 187 credits

Interest income 1 1 2 5

Interest expense (107 ) (128 ) (335 ) (387 )

Investment income 13 (14 ) 43 (47 ) (loss)

Income before income 716 459 3,247 2,253 taxes

Income tax expense 174 139 880 586

Net income beforenon-controlling 542 320 2,367 1,667 interests

Less: Net incomeattributable to 5 4 27 25 non-controllinginterests

Net incomeattributable to the $ 537 $ 316 $ 2,340 $ 1,642 Company

Net income per shareattributable to the Company:

- Basic $ 1.06 $ 0.62 $ 4.61 $ 3.25

- Diluted $ 1.05 $ 0.62 $ 4.56 $ 3.21

Average number of shares outstanding

- Basic 506 507 508 506

- Diluted 513 512 513 511

Shares outstanding at 505 507 505 507 September 30

Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Three Months Ended September 30(Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

Components of Revenue Change*

Three Months Ended Acquisitions September 30, % / Change Currency Dispositions Underlying GAAP Impact / Revenue 2021 2020 Revenue Other Impact

Risk andInsurance Services

Marsh $ 2,352 $ 2,009 17 % 2 % 3 % 13 %

Guy 314 274 15 % - - 15 %Carpenter

Subtotal 2,666 2,283 17 % 1 % 2 % 13 %

Fiduciaryinterest 4 8 income

Total Riskand 2,670 2,291 17 % 1 % 2 % 13 %InsuranceServices

Consulting

Mercer 1,315 1,216 8 % 2 % (1 ) 7 % %

Oliver Wyman 610 480 27 % 1 % - 25 %Group

Total 1,925 1,696 13 % 2 % - 12 %Consulting

Corporate (12 ) (19 ) Eliminations

Total $ 4,583 $ 3,968 16 % 2 % 1 % 13 %Revenue

Revenue Details

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

Components of Revenue Change*

Three Months Ended Acquisitions September 30, % / Change Currency Dispositions Underlying GAAP Impact / Revenue 2021 2020 Revenue Other Impact

Marsh:

EMEA $ 600 $ 536 12 % 4 % - 8 %

Asia Pacific 281 254 10 % 2 % - 9 %

Latin America 105 93 13 % 1 % - 12 %

Total 986 883 12 % 3 % - 9 %International

U.S./Canada 1,366 1,126 21 % - 4 % 16 %

Total Marsh $ 2,352 $ 2,009 17 % 2 % 3 % 13 %

Mercer:

Wealth $ 613 $ 566 9 % 3 % (1) % 6 %

Health 449 430 4 % 1 % (1) % 4 %

Career 253 220 15 % 1 % - 13 %

Total Mercer $ 1,315 $ 1,216 8 % 2 % (1) % 7 %

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Nine Months Ended September 30(Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Nine Months Ended September 30(Millions) (Unaudited)

The Company conducts business in 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to the next by isolating these impacts.

Components of Revenue Change*

Nine Months Ended Acquisitions September 30, % / Change Currency Dispositions Underlying GAAP Impact / Revenue 2021 2020 Revenue Other Impact

Risk andInsurance Services

Marsh $ 7,327 $ 6,231 18 % 3 % 3 % 12 %

Guy 1,697 1,534 11 % 1 % - 10 %Carpenter

Subtotal 9,024 7,765 16 % 3 % 2 % 11 %

Fiduciaryinterest 12 40 income

Total Riskand 9,036 7,805 16 % 3 % 2 % 11 %InsuranceServices

Consulting

Mercer 3,877 3,616 7 % 4 % (1 )% 4 %

Oliver Wyman 1,813 1,458 24 % 3 % - 21 %Group

Total 5,690 5,074 12 % 4 % (1 )% 9 %Consulting

Corporate (43 ) (71 ) Eliminations

Total $ 14,683 $ 12,808 15 % 3 % 1 % 10 %Revenue







Revenue Details

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

Components of Revenue Change*

Nine Months Ended Acquisitions September 30, % / Change Currency Dispositions Underlying GAAP Impact / Revenue 2021 2020 Revenue Other Impact

Marsh:

EMEA $ 2,233 $ 1,887 18 % 6 % 2 % 10 %

Asia Pacific 902 790 14 % 6 % - 9 %

Latin America 298 283 5 % (1) % - 6 %

Total 3,433 2,960 16 % 5 % 1 % 9 %International

U.S./Canada 3,894 3,271 19 % 1 % 5 % 14 %

Total Marsh $ 7,327 $ 6,231 18 % 3 % 3 % 12 %

Mercer:

Wealth $ 1,861 $ 1,719 8 % 6 % (1) % 4 %

Health 1,398 1,348 4 % 2 % (1) % 3 %

Career 618 549 13 % 3 % - 10 %

Total Mercer $ 3,877 $ 3,616 7 % 4 % (1) % 4 %

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three Months Ended September 30 (Millions) (Unaudited)

* Components of revenue change may not add due to rounding.

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three Months Ended September 30 (Millions) (Unaudited)

Overview

The Company reports its financial results in accordance with accountingprinciples generally accepted in the United States (referred to in this releaseas in accordance with "GAAP" or "reported" results). The Company also refers toand presents certain additional non-GAAP financial measures, within the meaningof Regulation G under the Securities Exchange Act of 1934. These measures are:adjusted operating income (loss), adjusted operating margin, adjusted income,net of tax and adjusted earnings per share (EPS). The Company has includedreconciliations of these non-GAAP financial measures to the most directlycomparable financial measure calculated in accordance with GAAP in thefollowing tables.

The Company believes these non-GAAP financial measures provide usefulsupplemental information that enables investors to better compare the Company'sperformance across periods. Management also uses these measures internally toassess the operating performance of its businesses, to assess performance foremployee compensation purposes, and to decide how to allocate resources.However, investors should not consider these non-GAAP measures in isolationfrom, or as a substitute for, the financial information that the Companyreports in accordance with GAAP. The Company's non-GAAP measures includeadjustments that reflect how management views its businesses, and may differfrom similarly titled non-GAAP measures presented by other companies.

Adjusted Operating Income (Loss) and Adjusted Operating Margin

Adjusted operating income (loss) is calculated by excluding the impact ofcertain noteworthy items from the Company's GAAP operating income (loss). Thefollowing tables identify these noteworthy items and reconcile adjustedoperating income (loss) to GAAP operating income (loss), on a consolidated andreportable segment basis, for the three and nine months ended September 30,2021 and 2020. The following tables also present adjusted operating margin. Forthe three and nine months ended September 30, 2021 and 2020, adjusted operatingmargin is calculated by dividing the sum of adjusted operating income andidentified intangible asset amortization by consolidated or segment adjustedrevenue.

Risk & Insurance Services

Consulting

Corporate/ Eliminations

Total

Three Months Ended September 30, 2021

Operating income (loss)

$

403

$

404

$

(67

)

$

740

Operating margin

15.1

%

21.0

%

N/A

16.1

%

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT (a)

7

-

5

12

Changes in contingent consideration (b)

17

1

-

18

JLT integration and restructuring costs (c)

11

9

(1

)

19

JLT acquisition-related costs (d)

10

-

1

11

JLT legacy E&O provision (e)

-

(63

)

-

(63

)

Legal claims and other (f)

21

(1

)

2

22

Operating income adjustments

66

(54

)

7

19

Adjusted operating income (loss)

$

469

$

350

$

(60

)

$

759

Total identified intangible amortization expense

$

75

$

14

$

-

$

89

Adjusted operating margin

20.4

%

18.9

%

N/A

18.5

%

Three Months Ended September 30, 2020

Operating income (loss)

$

333

$

278

$

(71

)

$

540

Operating margin

14.5

%

16.4

%

N/A

13.6

%

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT (a)

-

11

12

23

Changes in contingent consideration (b)

15

1

-

16

JLT integration and restructuring costs (c)

25

14

5

44

JLT acquisition-related costs (d)

15

1

(1

)

15

Other

-

1

(1

)

-

Operating income adjustments

55

28

15

98

Adjusted operating income (loss)

$

388

$

306

$

(56

)

$

638

Total identified intangible amortization expense

$

75

$

16

$

-

$

91

Adjusted operating margin

20.2

%

18.9

%

N/A

18.4

%

Risk & Corporate/ Insurance Consulting Eliminations Total Services

Three Months Ended September 30, 2021

Operating income (loss) $ 403 $ 404 $ (67 ) $ 740

Operating margin 15.1 % 21.0 % N/A 16.1 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT 7 - 5 12 (a)

Changes in contingent 17 1 - 18 consideration (b)

JLT integration and 11 9 (1 ) 19 restructuring costs (c)

JLT acquisition-related costs 10 - 1 11 (d)

JLT legacy E&O provision (e) - (63 ) - (63 )

Legal claims and other (f) 21 (1 ) 2 22

Operating income adjustments 66 (54 ) 7 19

Adjusted operating income $ 469 $ 350 $ (60 ) $ 759 (loss)

Total identified intangible $ 75 $ 14 $ - $ 89 amortization expense

Adjusted operating margin 20.4 % 18.9 % N/A 18.5 %





Three Months Ended September 30, 2020

Operating income (loss) $ 333 $ 278 $ (71 ) $ 540

Operating margin 14.5 % 16.4 % N/A 13.6 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT - 11 12 23 (a)

Changes in contingent 15 1 - 16 consideration (b)

JLT integration and 25 14 5 44 restructuring costs (c)

JLT acquisition-related costs 15 1 (1 ) 15 (d)

Other - 1 (1 ) -

Operating income adjustments 55 28 15 98

Adjusted operating income $ 388 $ 306 $ (56 ) $ 638 (loss)

Total identified intangible $ 75 $ 16 $ - $ 91 amortization expense

Adjusted operating margin 20.2 % 18.9 % N/A 18.4 %



(a) Primarily includes restructuring expenses associated with the Company's global information technology and HR functions and adjustments to restructuring liabilities for future rent under non-cancellable leases.

(b) Primarily includes the change in fair value of contingent consideration related to acquisitions and dispositions measured each quarter.

(c) Includes costs incurred for staff reductions, lease related exit costs, technology and consulting costs related to the Jardine Lloyd Thompson ("JLT") integration.

(d) Reflects retention costs related to the closing of the acquisition of JLT.

(e) Reflects a reduction in the liability for a legacy JLT E&O relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K., as well as recoveries under indemnities and insurance.

(f) Primarily reflects settlement charges and legal costs related to strategic recruiting.

(a) Primarily includes restructuring expenses associated with the Company'sglobal information technology and HR functions and adjustments to restructuringliabilities for future rent under non-cancellable leases.

(b) Primarily includes the change in fair value of contingent considerationrelated to acquisitions and dispositions measured each quarter.

(c) Includes costs incurred for staff reductions, lease related exit costs,technology and consulting costs related to the Jardine Lloyd Thompson ("JLT")integration.

(d) Reflects retention costs related to the closing of the acquisition of JLT.

(e) Reflects a reduction in the liability for a legacy JLT E&O relating tosuitability of advice provided to individuals for defined benefit pensiontransfers in the U.K., as well as recoveries under indemnities and insurance.

(f) Primarily reflects settlement charges and legal costs related to strategicrecruiting.

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Nine Months Ended September 30(Millions) (Unaudited)

Risk & Insurance Services

Consulting

Corporate/ Eliminations

Total

Nine Months Ended September 30, 2021

Operating income (loss)

$

2,413

$

1,109

$

(196)

$

3,326

Operating margin

26.7

%

19.5

%

N/A

22.7

%

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT (a)

12

8

15

35

Changes in contingent consideration (b)

18

(4)

(3)

11

JLT integration and restructuring costs (c)

38

21

2

61

JLT acquisition-related costs (d)

32

2

1

35

JLT legacy E&O provision (e)

-

(63)

-

(63)

Legal claims and other (f)

27

-

2

29

Disposal of businesses (g)

(52)

3

-

(49)

Operating income adjustments

75

(33)

17

59

Adjusted operating income (loss)

$

2,488

$

1,076

$

(179)

$

3,385

Total identified intangible amortization expense

$

236

$

42

$

-

$

278

Adjusted operating margin

30.3

%

19.6

%

N/A

25.0

%

Nine Months Ended September 30, 2020

Operating income (loss)

$

1,883

$

815

$

(203)

$

2,495

Operating margin

24.1

%

16.1

%

N/A

19.5

%

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT (a)

2

17

24

43

Changes in contingent consideration (b)

22

(2)

2

22

JLT integration and restructuring costs (c)

125

31

25

181

JLT acquisition-related costs (d)

39

2

-

41

Disposal of business (g)

6

(4)

-

2

Other

5

1

(1)

5

Operating income adjustments

199

45

50

294

Adjusted operating income (loss)

$

2,082

$

860

$

(153)

$

2,789

Total identified intangible amortization expense

$

222

$

43

$

-

$

265

Adjusted operating margin

29.5

%

17.8

%

N/A

23.8

%

Marsh & McLennan Companies, Inc.Reconciliation of Non-GAAP MeasuresNine Months Ended September 30(Millions) (Unaudited)

Risk & Corporate/ Insurance Consulting Eliminations Total Services

Nine Months Ended September 30, 2021

Operating income (loss) $ 2,413 $ 1,109 $ (196) $ 3,326

Operating margin 26.7 % 19.5 % N/A 22.7 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT 12 8 15 35 (a)

Changes in contingent 18 (4) (3) 11 consideration (b)

JLT integration and 38 21 2 61 restructuring costs (c)

JLT acquisition-related costs 32 2 1 35 (d)

JLT legacy E&O provision (e) - (63) - (63)

Legal claims and other (f) 27 - 2 29

Disposal of businesses (g) (52) 3 - (49)

Operating income adjustments 75 (33) 17 59

Adjusted operating income $ 2,488 $ 1,076 $ (179) $ 3,385 (loss)

Total identified intangible $ 236 $ 42 $ - $ 278 amortization expense

Adjusted operating margin 30.3 % 19.6 % N/A 25.0 %



Nine Months Ended September 30, 2020

Operating income (loss) $ 1,883 $ 815 $ (203) $ 2,495

Operating margin 24.1 % 16.1 % N/A 19.5 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT 2 17 24 43 (a)

Changes in contingent 22 (2) 2 22 consideration (b)

JLT integration and 125 31 25 181 restructuring costs (c)

JLT acquisition-related costs 39 2 - 41 (d)

Disposal of business (g) 6 (4) - 2

Other 5 1 (1) 5

Operating income adjustments 199 45 50 294

Adjusted operating income $ 2,082 $ 860 $ (153) $ 2,789 (loss)

Total identified intangible $ 222 $ 43 $ - $ 265 amortization expense

Adjusted operating margin 29.5 % 17.8 % N/A 23.8 %

(a) Primarily includes restructuring expenses associated with the Company's global information technology and HR functions and adjustments to restructuring liabilities for future rent under non-cancellable leases. Consulting charges in 2020 reflect severance and real estate exit costs related to the Mercer restructuring program completed in 2020.

(b) Primarily includes the change in fair value of contingent consideration related to acquisitions and dispositions as measured each quarter.

(c) Includes costs incurred for staff reductions, lease related exit costs, technology and consulting costs related to the JLT integration.

(d) Reflects retention costs related to the closing of the acquisition of JLT.

(e) Reflects a reduction in the liability for a legacy JLT E&O relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K., as well as recoveries under indemnities and insurance.

(f) Primarily reflects settlement charges and legal costs related to strategic recruiting.

(g) Primarily reflects a gain on the sale of the U.K. commercial networks business that provided broking and back-office solutions for small independent brokers during the second quarter of 2021. 2020 reflects net loss on disposal of specialty businesses sold in the U.S., U.K. and Canada, previously acquired as part of the JLT Transaction. These amounts are reflected as an increase or decrease of other revenue, which is reflected as part of revenue in the consolidated statements of income. These items are removed from GAAP revenue in the calculation of adjusted operating margin.

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three and Nine Months Ended September 30(Millions) (Unaudited)

(a) Primarily includes restructuring expenses associated with the Company'sglobal information technology and HR functions and adjustments to restructuringliabilities for future rent under non-cancellable leases. Consulting charges in2020 reflect severance and real estate exit costs related to the Mercerrestructuring program completed in 2020.

(b) Primarily includes the change in fair value of contingent considerationrelated to acquisitions and dispositions as measured each quarter.

(c) Includes costs incurred for staff reductions, lease related exit costs,technology and consulting costs related to the JLT integration.

(d) Reflects retention costs related to the closing of the acquisition of JLT.

(e) Reflects a reduction in the liability for a legacy JLT E&O relating tosuitability of advice provided to individuals for defined benefit pensiontransfers in the U.K., as well as recoveries under indemnities and insurance.

(f) Primarily reflects settlement charges and legal costs related to strategicrecruiting.

(g) Primarily reflects a gain on the sale of the U.K. commercial networksbusiness that provided broking and back-office solutions for small independentbrokers during the second quarter of 2021. 2020 reflects net loss on disposalof specialty businesses sold in the U.S., U.K. and Canada, previously acquiredas part of the JLT Transaction. These amounts are reflected as an increase ordecrease of other revenue, which is reflected as part of revenue in theconsolidated statements of income. These items are removed from GAAP revenue inthe calculation of adjusted operating margin.

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three and Nine Months Ended September 30(Millions) (Unaudited)

Adjusted income, net of tax is calculated as the Company's GAAP income fromcontinuing operations, adjusted to reflect the after tax impact of theoperating income adjustments in the preceding tables and the additional itemslisted below. Adjusted EPS is calculated by dividing the Company's adjustedincome, net of tax, by average number of shares outstanding-diluted for therelevant period. The following tables reconcile adjusted income, net of tax toGAAP income from continuing operations and adjusted EPS to GAAP EPS for thethree and nine month periods ended September 30, 2021 and 2020.

Three Months Ended September 30, 2021

Three Months Ended September 30, 2020

Amount

Adjusted EPS

Amount

Adjusted EPS

Net income before non-controlling interests, as reported

$

542

$

320

Less: Non-controlling interest, net of tax

5

4

Subtotal

$

537

$

1.05

$

316

$

0.62

Operating income adjustments

$

19

$

98

Investments adjustment (a)

(1

)

16

Pension settlement adjustment

2

-

Income tax effect of adjustments (b)

(10

)

(12

)

Impact of U.K. tax rate change (c)

5

-

15

0.03

102

0.20

Adjusted income, net of tax

$

552

$

1.08

$

418

$

0.82

Nine Months Ended September 30, 2021

Nine Months Ended September 30, 2020

Amount

Adjusted EPS

Amount

Adjusted EPS

Net income before non-controlling interests, as

reported

$

2,367

$

1,667

Less: Non-controlling interest, net of tax

27

25

Subtotal

$

2,340

$

4.56

$

1,642

$

3.21

Operating income adjustments

$

59

$

294

Investments adjustment (a)

(2

)

42

Pension settlement adjustment

2

-

Income tax effect of adjustments (b)

(31

)

(50

)

Impact of U.K. tax rate change (c)

105

-

133

0.26

286

0.56

Adjusted income, net of tax

$

2,473

$

4.82

$

1,928

$

3.77



Three Months Ended Three Months Ended September 30, 2021 September 30, 2020

Amount Adjusted Amount Adjusted EPS EPS

Net incomebeforenon-controlling $ 542 $ 320 interests, asreported

Less:Non-controlling 5 4 interest, netof tax

Subtotal $ 537 $ 1.05 $ 316 $ 0.62

Operatingincome $ 19 $ 98 adjustments

Investments (1 ) 16 adjustment (a)

Pensionsettlement 2 - adjustment

Income taxeffect of (10 ) (12 ) adjustments (b)

Impact of U.K.tax rate change 5 - (c)

15 0.03 102 0.20

Adjustedincome, net of $ 552 $ 1.08 $ 418 $ 0.82 tax



Nine Months Ended September 30, Nine Months Ended September 30, 2021 2020

Amount Adjusted Amount Adjusted EPS EPS

Net incomebeforenon-controlling $ 2,367 $ 1,667 interests, as

reported

Less:Non-controlling 27 25 interest, netof tax

Subtotal $ 2,340 $ 4.56 $ 1,642 $ 3.21

Operatingincome $ 59 $ 294 adjustments

Investments (2 ) 42 adjustment (a)

Pensionsettlement 2 - adjustment

Income taxeffect of (31 ) (50 ) adjustments (b)

Impact of U.K.tax rate change 105 - (c)

133 0.26 286 0.56

Adjustedincome, net of $ 2,473 $ 4.82 $ 1,928 $ 3.77 tax



(a) Represents mark-to-market gains in 2021 and losses in 2020, primarily related to the Company's investment in Alexander Forbes ("AF").

(b) For items with an income tax impact, the tax effect was calculated using an effective tax rate based on the tax jurisdiction for each item.

(c) Reflects the re-measurement of the Company's U.K. deferred tax assets and liabilities upon enactment of legislation that increased the corporate income tax rate applicable to U.K. based entities from 19% to 25%, effective April 1, 2023.

(a) Represents mark-to-market gains in 2021 and losses in 2020, primarilyrelated to the Company's investment in Alexander Forbes ("AF").

(b) For items with an income tax impact, the tax effect was calculated using aneffective tax rate based on the tax jurisdiction for each item.

(c) Reflects the re-measurement of the Company's U.K. deferred tax assets andliabilities upon enactment of legislation that increased the corporate incometax rate applicable to U.K. based entities from 19% to 25%, effective April 1,2023.

Marsh & McLennan Companies, Inc.

Supplemental Information

Three and Nine Months Ended September 30

(Millions) (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Consolidated

Compensation and benefits

$

2,853

$

2,495

$

8,520

$

7,479

Other operating expenses

990

933

2,837

2,834

Total expenses

$

3,843

$

3,428

$

11,357

$

10,313

Depreciation and amortization expense

$

90

$

94

$

291

$

282

Identified intangible amortization expense

89

91

278

265

Total

$

179

$

185

$

569

$

547

Stock option expense

$

4

$

4

$

29

$

25

Risk and Insurance Services

Compensation and benefits

$

1,634

$

1,400

$

4,876

$

4,234

Other operating expenses

633

558

1,747

1,688

Total expenses

$

2,267

$

1,958

$

6,623

$

5,922

Depreciation and amortization expense

$

44

$

49

$

152

$

146

Identified intangible amortization expense

75

75

236

222

Total

$

119

$

124

$

388

$

368

Consulting

Compensation and benefits

$

1,103

$

980

$

3,287

$

2,911

Other operating expenses

418

438

1,294

1,348

Total expenses

$

1,521

$

1,418

$

4,581

$

4,259

Depreciation and amortization expense

$

29

$

29

$

87

$

86

Identified intangible amortization expense

14

16

42

43

Total

$

43

$

45

$

129

$

129

Marsh & McLennan Companies, Inc.

Supplemental Information

Three and Nine Months Ended September 30

(Millions) (Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Consolidated

Compensation and benefits $ 2,853 $ 2,495 $ 8,520 $ 7,479

Other operating expenses 990 933 2,837 2,834

Total expenses $ 3,843 $ 3,428 $ 11,357 $ 10,313



Depreciation and amortization $ 90 $ 94 $ 291 $ 282 expense

Identified intangible 89 91 278 265 amortization expense

Total $ 179 $ 185 $ 569 $ 547



Stock option expense $ 4 $ 4 $ 29 $ 25



Risk and Insurance Services

Compensation and benefits $ 1,634 $ 1,400 $ 4,876 $ 4,234

Other operating expenses 633 558 1,747 1,688

Total expenses $ 2,267 $ 1,958 $ 6,623 $ 5,922



Depreciation and amortization $ 44 $ 49 $ 152 $ 146 expense

Identified intangible 75 75 236 222 amortization expense

Total $ 119 $ 124 $ 388 $ 368



Consulting

Compensation and benefits $ 1,103 $ 980 $ 3,287 $ 2,911

Other operating expenses 418 438 1,294 1,348

Total expenses $ 1,521 $ 1,418 $ 4,581 $ 4,259



Depreciation and amortization $ 29 $ 29 $ 87 $ 86 expense

Identified intangible 14 16 42 43 amortization expense

Total $ 43 $ 45 $ 129 $ 129

Marsh & McLennan Companies, Inc.

Consolidated Balance Sheets

(Millions)

(Unaudited)September 30,2021

December 31, 2020

ASSETS

Current assets:

Cash and cash equivalents

$

1,398

$

2,089

Net receivables

5,624

5,326

Other current assets

855

740

Total current assets

7,877

8,155

Goodwill and intangible assets

18,235

18,216

Fixed assets, net

824

856

Pension related assets

1,935

1,768

Right of use assets

1,899

1,894

Deferred tax assets

692

702

Other assets

1,520

1,458

TOTAL ASSETS

$

32,982

$

33,049

LIABILITIES AND EQUITY

Current liabilities:

Short-term debt

$

516

$

517

Accounts payable and accrued liabilities

2,833

3,050

Accrued compensation and employee benefits

2,365

2,400

Current lease liabilities

339

342

Accrued income taxes

333

247

Dividends payable

273

-

Total current liabilities

6,659

6,556

Fiduciary liabilities

10,408

8,585

Less - cash and investments held in a fiduciary capacity

(10,408

)

(8,585

)

-

-

Long-term debt

10,228

10,796

Pension, post-retirement and post-employment benefits

2,387

2,662

Long-term lease liabilities

1,900

1,924

Liabilities for errors and omissions

356

366

Other liabilities

1,564

1,485

Total equity

9,888

9,260

TOTAL LIABILITIES AND EQUITY

$

32,982

$

33,049

Marsh & McLennan Companies, Inc.

Consolidated Balance Sheets

(Millions)

(Unaudited) September December 31, 30, 2020 2021

ASSETS

Current assets:

Cash and cash equivalents $ 1,398 $ 2,089

Net receivables 5,624 5,326

Other current assets 855 740

Total current assets 7,877 8,155



Goodwill and intangible assets 18,235 18,216

Fixed assets, net 824 856

Pension related assets 1,935 1,768

Right of use assets 1,899 1,894

Deferred tax assets 692 702

Other assets 1,520 1,458

TOTAL ASSETS $ 32,982 $ 33,049



LIABILITIES AND EQUITY

Current liabilities:

Short-term debt $ 516 $ 517

Accounts payable and accrued liabilities 2,833 3,050

Accrued compensation and employee benefits 2,365 2,400

Current lease liabilities 339 342

Accrued income taxes 333 247

Dividends payable 273 -

Total current liabilities 6,659 6,556



Fiduciary liabilities 10,408 8,585

Less - cash and investments held in a fiduciary (10,408 ) (8,585 ) capacity

- -

Long-term debt 10,228 10,796

Pension, post-retirement and post-employment 2,387 2,662 benefits

Long-term lease liabilities 1,900 1,924

Liabilities for errors and omissions 356 366

Other liabilities 1,564 1,485



Total equity 9,888 9,260

TOTAL LIABILITIES AND EQUITY $ 32,982 $ 33,049

Marsh & McLennan Companies, Inc.

Consolidated Statements of Cash Flows

(Millions) (Unaudited)

Nine Months EndedSeptember 30,

2021

2020

Operating cash flows:

Net income before non-controlling interests

$

2,367

$

1,667

Adjustments to reconcile net income to cash used for operations:

Depreciation and amortization

569

547

Non cash lease expense

241

241

Share-based compensation expense

263

219

Net (gain) loss on investments, disposition of assets and other

(89

)

48

Changes in Assets and Liabilities:

Accrued compensation and employee benefits

(53

)

(431

)

Net receivables

(336

)

77

Other changes to assets and liabilities

(299

)

135

Contributions to pension and other benefit plans in excess of current year credit

(282

)

(240

)

Operating lease liabilities

(262

)

(254

)

Effect of exchange rate changes

(45

)

(10

)

Net cash provided by operations

2,074

1,999

Financing cash flows:

Purchase of treasury shares

(734

)

-

Borrowings from term-loan and credit facilities

-

1,000

Proceeds from issuance of debt

-

737

Repayments of debt

(512

)

(1,011

)

Net issuance of common stock from treasury shares

16

(33

)

Net distributions of non-controlling interests and deferred/contingent consideration

(66

)

(154

)

Dividends paid

(750

)

(702

)

Net cash used for financing activities

(2,046

)

(163

)

Investing cash flows:

Capital expenditures

(268

)

(278

)

Net (purchase) sale of long-term investments and other

(4

)

98

Dispositions

84

93

Acquisitions

(401

)

(559

)

Net cash used for investing activities

(589

)

(646

)

Effect of exchange rate changes on cash and cash equivalents

(130

)

43

(Decrease) increase in cash and cash equivalents

(691

)

1,233

Cash and cash equivalents at beginning of period

2,089

1,155

Cash and cash equivalents at end of period

$

1,398

$

2,388

View source version on businesswire.com: https://www.businesswire.com/news/home/20211021005533/en/

CONTACT: Media Contact: Erick R. Gustafson Marsh McLennan +1 202 263 7788 erick.gustafson@mmc.com

CONTACT: Investor Contact: Sarah DeWitt Marsh McLennan +1 212 345 6750 sarah.dewitt@mmc.com