Business Wire | Jan 27, 2022 07:03AM EST

Marsh McLennan Reports Fourth Quarter and Full-year 2021 Results

Jan. 27, 2022

NEW YORK--(BUSINESS WIRE)--Jan. 27, 2022--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 fourth quarter and year ended December 31, 2021.

Dan Glaser, President and CEO, said: "In our 150th year, we produced one of the finest results in our Company's history. We generated underlying revenue growth of 10% and adjusted EPS growth of 24%, both the highest in over two decades. We also grew our adjusted operating income by 18% and expanded adjusted margins for the 14th consecutive year. I am proud of our colleagues' hard work, dedication and unwavering focus in achieving these results. With this outstanding year, we enter 2022 well positioned for continued growth."

Consolidated Results

Consolidated revenue in the fourth quarter of 2021 was $5.1 billion, an increase of 16% compared with the fourth quarter of 2020, or 10% on an underlying basis. Operating income was $986 million compared with $571 million in the prior year period. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, was $905 million, compared with $855 million in the prior year period. Net income attributable to the Company was $803 million, or $1.57 per diluted share, compared with $0.73 in the fourth quarter of 2020. Adjusted earnings per share was $1.36, compared with $1.19 for the prior year period.

For the year 2021, revenue was $19.8 billion, an increase of 15% compared with 2020, or 10% on an underlying basis. Operating income was $4.3 billion, and adjusted operating income rose 18% to $4.3 billion. Net income attributable to the Company was $3.1 billion. Earnings per share increased 56% to $6.13. Adjusted earnings per share increased 24% to $6.17 compared with $4.97 in 2020.

Risk & Insurance Services

Risk & Insurance Services revenue was $3.0 billion in the fourth quarter of 2021, an increase of 20%, or 9% on an underlying basis. Operating income was $667 million, compared with $463 million in the fourth quarter of 2020. Adjusted operating income increased 6% to $557 million. For the year 2021, revenue was $12.1 billion, an increase of 17%, or 10% on an underlying basis. Operating income was $3.1 billion, compared to $2.3 billion in 2020. Adjusted operating income rose 17% to $3.0 billion.

Marsh's revenue in the fourth quarter of 2021 was $2.9 billion, an increase of 22%, or 9% on an underlying basis. In U.S./Canada, underlying revenue rose 11%. International operations underlying revenue increased 7% compared to the prior year period, reflecting underlying growth of 14% in Latin America, 10% in Asia Pacific and 5% in EMEA. For the year 2021, Marsh's revenue growth was 19%, or 11% on an underlying basis.

Guy Carpenter's fourth quarter revenue was $170 million, an increase of 4%, or 5% on an underlying basis. For the year 2021, Guy Carpenter's revenue grew 10% compared to a year ago, or 9% on an underlying basis.

Consulting

Consulting revenue was $2.1 billion in the fourth quarter of 2021, an increase of 10%, or 11% on an underlying basis. Operating income increased 120% to $395 million, compared with $179 million in the fourth quarter of 2020. Adjusted operating income was $410 million, an increase of 6% compared with $387 million in the fourth quarter of 2020. For the year 2021, revenue was $7.8 billion, an increase of 12%, or 10% on an underlying basis. Operating income was $1.5 billion, compared with $1.0 billion in 2020. Adjusted operating income increased 19% to $1.5 billion.

Mercer's revenue was $1.4 billion in the fourth quarter of 2021, an increase of 5%, or 6% on an underlying basis. Wealth, with revenue of $648 million, increased 4% on an underlying basis. Health, with revenue of $457 million, increased 4% on an underlying basis. Career revenue of $272 million increased 15% on an underlying basis. For the year 2021, Mercer's revenue increased 7%, or 5% on an underlying basis.

Oliver Wyman's revenue was $722 million in the fourth quarter of 2021, an increase of 22% on an underlying basis. For the year 2021, Oliver Wyman's revenue was $2.5 billion, an increase of 21% on an underlying basis.

Other Items

For the year 2021, Marsh McLennan Agency (MMA) completed 11 transactions with approximately $170 million of combined revenue, including the acquisition of PayneWest, one of the largest independent agencies in the U.S.

Marsh announced in December that it increased its stake in Marsh India Insurance Brokers Pvt. Ltd. from 49% to 92%.

The Company repurchased 2.6 million shares of stock for $425 million in the fourth quarter. For the year 2021, the Company repurchased 7.9 million shares for $1.2 billion.

In the fourth quarter of 2021, the Company raised $750 million of senior notes and repaid $500 million of senior notes due in January 2022.

Conference Call

A conference call to discuss fourth 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 8019728. 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 83,000 colleagues advise clients in 130 countries. With annual revenue of nearly $20 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 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; * 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 financial and operational impact of complying with laws and regulations, including anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act and cybersecurity and data privacy regulations, in an environment of increased regulatory activity and enforcement; * our ability to attract, retain and fully develop industry leading talent; * the impact of and uncertainty around COVID-19; * the impact of macroeconomic, political or market conditions on us, our clients and the industries in which we operate, including from inflation, foreign exchange and interest rate fluctuations; * 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; * 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 Twelve Months Ended December 31, December 31,

2021 2020 2021 2020

Revenue $ 5,137 $ 4,416 $ 19,820 $ 17,224

Expense:

Compensation and benefits 2,905 2,650 11,425 10,129

Other operating expenses 1,246 1,195 4,083 4,029

Operating expenses 4,151 3,845 15,508 14,158

Operating income 986 571 4,312 3,066

Other net benefit credits 66 70 277 257

Interest income - 2 2 7

Interest expense (109 ) (128 ) (444 ) (515 )

Investment income (loss) 18 25 61 (22 )

Income before income taxes 961 540 4,208 2,793

Income tax expense 154 161 1,034 747

Net income before 807 379 3,174 2,046 non-controlling interests

Less: net income attributable 4 5 31 30 to non-controlling interests

Net income attributable to $ 803 $ 374 $ 3,143 $ 2,016 the Company

Net income per share attributable to the Company

- Basic $ 1.59 $ 0.74 $ 6.20 $ 3.98

- Diluted $ 1.57 $ 0.73 $ 6.13 $ 3.94

Average number of shares outstanding

- Basic 504 507 507 506

- Diluted 511 513 513 512

Shares outstanding at 504 508 504 508 December 31

Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Three Months Ended December 31(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/ December 31, Change Currency Underlying Dispositions/ GAAP Impact Revenue 2021 2020 Other Impact Revenue

Risk andInsurance Services

Marsh $ 2,876 $ 2,364 22 % - 13 % 9 %

Guy 170 162 4 % (1 )% - 5 %Carpenter

Subtotal 3,046 2,526 21 % - 12 % 9 %

FiduciaryInterest 3 6 Income

Total Riskand 3,049 2,532 20 % - 12 % 9 %InsuranceServices

Consulting

Mercer 1,377 1,312 5 % - (1 )% 6 %

Oliver Wyman 722 590 22 % (1 )% 1 % 22 %Group

Total 2,099 1,902 10 % - - 11 %Consulting

Corporate (11 ) (18 ) Eliminations

Total $ 5,137 $ 4,416 16 % - 7 % 10 %Revenue

Revenue Details

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

Components of Revenue Change*

Three Months % Acquisitions Ended / Change Currency Underlying December 31, Dispositions GAAP Impact / Revenue

2021 2020 Revenue Other Impact

Marsh:

EMEA $ 713 $ 688 4 % (1 )% (1 )% 5 %

Asia Pacific 560 269 109 % (1 )% 100 % 10 %

Latin America 155 141 10 % (4 )% - 14 %

Total 1,428 1,098 30 % (1 )% 24 % 7 %International

U.S./Canada 1,448 1,266 14 % - 3 % 11 %

Total Marsh $ 2,876 $ 2,364 22 % - 13 % 9 %

Mercer:

Wealth $ 648 $ 629 3 % - (1 )% 4 %

Health 457 445 3 % (1 )% (1 )% 4 %

Career 272 238 14 % (1 )% - 15 %

Total Mercer $ 1,377 $ 1,312 5 % - (1 )% 6 %

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

Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Twelve Months Ended December 31(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 Twelve Months Ended December 31(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*

Twelve Months Ended % Acquisitions/ December 31, Change Currency Underlying Dispositions/ GAAP Impact Revenue 2021 2020 Other Impact Revenue

Risk andInsurance Services

Marsh $ 10,203 $ 8,595 19 % 2 % 6 % 11 %

Guy 1,867 1,696 10 % 1 % - 9 %Carpenter

Subtotal 12,070 10,291 17 % 2 % 5 % 11 %

FiduciaryInterest 15 46 Income

Total Riskand 12,085 10,337 17 % 2 % 5 % 10 %InsuranceServices

Consulting

Mercer 5,254 4,928 7 % 3 % (1 )% 5 %

Oliver Wyman 2,535 2,048 24 % 2 % - 21 %Group

Total 7,789 6,976 12 % 3 % - 10 %Consulting

Corporate (54 ) (89 ) Eliminations

Total $ 19,820 $ 17,224 15 % 2 % 3 % 10 %Revenue

Revenue Details

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

Components of Revenue Change*

Twelve Months % Ended Acquisitions/ Change Currency Underlying December 31, Dispositions/ GAAP Impact Revenue Other Impact 2021 2020 Revenue

Marsh:

EMEA $ 2,946 $ 2,575 14 % 4 % 1 % 9 %

Asia Pacific 1,462 1,059 38 % 4 % 25 % 9 %

Latin America 453 424 7 % (2 )% - 9 % Total 4,861 4,058 20 % 4 % 7 % 9 %International

U.S./Canada 5,342 4,537 18 % 1 % 4 % 13 %

Total Marsh $ 10,203 $ 8,595 19 % 2 % 6 % 11 %

Mercer:

Wealth $ 2,509 $ 2,348 7 % 4 % (1 )% 4 %

Health 1,855 1,793 3 % 1 % (1 )% 3 %

Career 890 787 13 % 2 % - 12 %

Total Mercer $ 5,254 $ 4,928 7 % 3 % (1 )% 5 %

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

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three Months Ended December 31(Millions) (Unaudited)

Overview

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as in accordance with "GAAP" or "reported" results). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G in accordance with 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 included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables.

The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company's performance across periods. Management also uses these measures internally to assess the operating performance of its businesses, to assess performance for employee compensation, and to decide how to allocate resources. However, investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company's non-GAAP measures include adjustments that reflect how management views its businesses, and may differ from 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 of certain noteworthy items from the Company's GAAP operating income (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income (loss), on a consolidated and reportable segment basis, for the three and twelve month periods ended December 31, 2021 and 2020. The following tables also present adjusted operating margin. For the three and twelve months ended December 31, 2021 and 2020, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue.

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

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures Three Months Ended December 31(Millions) (Unaudited)

Overview

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (referred to in this release as in accordance with "GAAP" or "reported" results). The Company also refers to and presents certain additional non-GAAP financial measures, within the meaning of Regulation G in accordance with 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 included reconciliations of these non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP in the following tables.

The Company believes these non-GAAP financial measures provide useful supplemental information that enables investors to better compare the Company's performance across periods. Management also uses these measures internally to assess the operating performance of its businesses, to assess performance for employee compensation, and to decide how to allocate resources. However, investors should not consider these non-GAAP measures in isolation from, or as a substitute for, the financial information that the Company reports in accordance with GAAP. The Company's non-GAAP measures include adjustments that reflect how management views its businesses, and may differ from 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 of certain noteworthy items from the Company's GAAP operating income (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income (loss), on a consolidated and reportable segment basis, for the three and twelve month periods ended December 31, 2021 and 2020. The following tables also present adjusted operating margin. For the three and twelve months ended December 31, 2021 and 2020, adjusted operating margin is calculated by dividing the sum of adjusted operating income and identified intangible asset amortization by consolidated or segment adjusted revenue.

Risk & Corporate/ Insurance Consulting Total Eliminations Services

Three Months Ended December 31, 2021

Operating income (loss) $ 667 $ 395 $ (76 ) $ 986

Operating margin 21.9 % 18.8 % N/A 19.2 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT 19 4 12 35 (a)

Changes in contingent 45 1 - 46 consideration (b)

JLT integration and 15 15 2 32 restructuring costs (c)

JLT acquisition-related costs 45 1 - 46 and other (d)

JLT legacy E&O provision (e) - (6 ) - (6 )

Legal claims (f) 33 - - 33

Gain on consolidation of (267 ) - - (267 )business (g)

Operating income adjustments (110 ) 15 14 (81 )

Adjusted operating income $ 557 $ 410 $ (62 ) $ 905 (loss)

Total identified intangible $ 73 $ 14 $ - $ 87 amortization expense

Adjusted operating margin 22.7 % 20.2 % N/A 20.4 %





Three Months Ended December 31, 2020

Operating income (loss) $ 463 $ 179 $ (71 ) $ 571

Operating margin 18.3 % 9.4 % N/A 12.9 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT 1 37 8 46 (a)

Changes in contingent 3 1 - 4 consideration (b)

JLT integration and 46 20 4 70 restructuring costs (c)

JLT acquisition-related costs 11 1 1 13 and other (d)

JLT legacy E&O provision (e) - 161 - 161

Disposal of businesses (h) 1 (11 ) - (10 )

Other - (1 ) 1 -

Operating income adjustments 62 208 14 284

Adjusted operating income $ 525 $ 387 $ (57 ) $ 855 (loss)

Total identified intangible $ 70 $ 16 $ - $ 86 amortization expense

Adjusted operating margin 23.5 % 21.4 % N/A 21.3 %



(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. RIS in 2021 also includes costs related to a Marsh operational excellence program to improve efficiencies and client service. 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)

Includes retention and legal charges related to the acquisition of JLT.

(e)

Reflects recoveries under indemnities for a legacy JLT E&O matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K. For the year-ended 2021, there was a reduction of $69 million in the liability including recoveries, following an increase of $161 million in the recorded liability related to this matter in 2020.

(f)

Settlement charges and legal costs related to strategic recruiting.

(g)

Reflects a gain from the fair value re-measurement of the Company's previously held equity method investment in Marsh India upon the Company increasing its ownership interest from 49% to 92%. The gain is reflected in revenue and excluded from underlying revenue calculations and adjusted operating margin.

(h)

Consulting in 2020 includes a contingent gain adjustment, included in revenue from Mercer's U.S. large market health and defined benefit administration business sold in 2019. This amount is removed from GAAP revenue in the calculation of adjusted operating margin.

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. RIS(a) in 2021 also includes costs related to a Marsh operational excellence program to improve efficiencies and client service. 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) Includes retention and legal charges related to the acquisition of JLT.

Reflects recoveries under indemnities for a legacy JLT E&O matter relating to suitability of advice provided to individuals for defined benefit(e) pension transfers in the U.K. For the year-ended 2021, there was a reduction of $69 million in the liability including recoveries, following an increase of $161 million in the recorded liability related to this matter in 2020.

(f) Settlement charges and legal costs related to strategic recruiting.

Reflects a gain from the fair value re-measurement of the Company's previously held equity method investment in Marsh India upon the Company(g) increasing its ownership interest from 49% to 92%. The gain is reflected in revenue and excluded from underlying revenue calculations and adjusted operating margin.

Consulting in 2020 includes a contingent gain adjustment, included in(h) revenue from Mercer's U.S. large market health and defined benefit administration business sold in 2019. This amount is removed from GAAP revenue in the calculation of adjusted operating margin.

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Twelve Months Ended December 31

(Millions) (Unaudited)

Risk & Insurance

Services

Consulting

Corporate/

Eliminations

Total

Twelve Months Ended December 31, 2021

Operating income (loss)

$

3,080

$

1,504

$

(272

)

$

4,312

Operating margin

25.5

%

19.3

%

N/A

21.8

%

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT (a)

31

12

27

70

Changes in contingent consideration (b)

63

(3

)

(3

)

57

JLT integration and restructuring costs (c)

53

36

4

93

JLT acquisition-related costs and other (d)

77

3

1

81

JLT legacy E&O provision (e)

-

(69

)

-

(69

)

Legal claims (f)

60

-

2

62

Gain on consolidation of business (g)

(267

)

-

-

(267

)

Disposal of businesses (h)

(52

)

3

-

(49

)

Operating income adjustments

(35

)

(18

)

31

(22

)

Adjusted operating income (loss)

$

3,045

$

1,486

$

(241

)

$

4,290

Total identified intangible amortization expense

$

309

$

56

$

-

$

365

Adjusted operating margin

28.5

%

19.8

%

N/A

23.9

%

Twelve Months Ended December 31, 2020

Operating income (loss)

$

2,346

$

994

$

(274

)

$

3,066

Operating margin

22.7

%

14.3

%

N/A

17.8

%

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT (a)

3

54

32

89

Changes in contingent consideration (b)

25

(1

)

2

26

JLT integration and restructuring costs (c)

171

51

29

251

JLT acquisition-related costs and other (d)

50

3

1

54

JLT legacy E&O provision (e)

-

161

-

161

Disposal of businesses (h)

7

(15

)

-

(8

)

Other

5

-

-

5

Operating income adjustments

261

253

64

578

Adjusted operating income (loss)

$

2,607

$

1,247

$

(210

)

$

3,644

Total identified intangible amortization expense

$

292

$

59

$

-

$

351

Adjusted operating margin

28.0

%

18.8

%

N/A

23.2

%

Marsh & McLennan Companies, Inc.

Reconciliation of Non-GAAP Measures

Twelve Months Ended December 31

(Millions) (Unaudited)

Risk & Corporate/ Insurance Consulting Total Eliminations Services

Twelve Months Ended December 31, 2021

Operating income (loss) $ 3,080 $ 1,504 $ (272 ) $ 4,312

Operating margin 25.5 % 19.3 % N/A 21.8 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT 31 12 27 70 (a)

Changes in contingent 63 (3 ) (3 ) 57 consideration (b)

JLT integration and 53 36 4 93 restructuring costs (c)

JLT acquisition-related costs 77 3 1 81 and other (d)

JLT legacy E&O provision (e) - (69 ) - (69 )

Legal claims (f) 60 - 2 62

Gain on consolidation of (267 ) - - (267 )business (g)

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

Operating income adjustments (35 ) (18 ) 31 (22 )

Adjusted operating income $ 3,045 $ 1,486 $ (241 ) $ 4,290 (loss)

Total identified intangible $ 309 $ 56 $ - $ 365 amortization expense

Adjusted operating margin 28.5 % 19.8 % N/A 23.9 %



Twelve Months Ended December 31, 2020

Operating income (loss) $ 2,346 $ 994 $ (274 ) $ 3,066

Operating margin 22.7 % 14.3 % N/A 17.8 %

Add (deduct) impact of noteworthy items:

Restructuring, excluding JLT 3 54 32 89 (a)

Changes in contingent 25 (1 ) 2 26 consideration (b)

JLT integration and 171 51 29 251 restructuring costs (c)

JLT acquisition-related costs 50 3 1 54 and other (d)

JLT legacy E&O provision (e) - 161 - 161

Disposal of businesses (h) 7 (15 ) - (8 )

Other 5 - - 5

Operating income adjustments 261 253 64 578

Adjusted operating income $ 2,607 $ 1,247 $ (210 ) $ 3,644 (loss)

Total identified intangible $ 292 $ 59 $ - $ 351 amortization expense

Adjusted operating margin 28.0 % 18.8 % N/A 23.2 %



(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. RIS in 2021 also includes costs related to a Marsh operational excellence program to improve efficiencies and client service. 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)

Includes retention and legal charges related to the acquisition of JLT.

(e)

For the year-ended 2021, there was a reduction of $69 million in the liability including recoveries under indemnities for a legacy JLT E&O matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K. The Company increased the recorded liability by $161 million related to this matter in 2020.

(f)

Settlement charges and legal costs related to strategic recruiting.

(g)

Reflects a gain from the fair value re-measurement of the Company's previously held equity method investment in Marsh India upon the Company increasing its ownership interest from 49% to 92%. The gain is reflected in revenue and excluded from underlying revenue calculations and adjusted operating margin.

(h)

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 a net loss on disposal of specialty businesses sold in the U.S., U.K. and Canada. Consulting in 2020 includes a contingent gain adjustment from Mercer's U.S. large market health and defined benefit administration business sold in 2019. 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 Twelve Months Ended December 31(Unaudited)

Adjusted income, net of tax is calculated as the Company's GAAP income from continuing operations, adjusted to reflect the after tax impact of the operating income adjustments in the preceding tables and the additional items listed below. Adjusted EPS is calculated by dividing the Company's adjusted income, net of tax, by average number of shares outstanding-diluted for the relevant period. The following tables reconcile adjusted income, net of tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for the three and twelve month periods ended December 31, 2021 and 2020.

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. RIS(a) in 2021 also includes costs related to a Marsh operational excellence program to improve efficiencies and client service. 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) Includes retention and legal charges related to the acquisition of JLT.

For the year-ended 2021, there was a reduction of $69 million in the liability including recoveries under indemnities for a legacy JLT E&O(e) matter relating to suitability of advice provided to individuals for defined benefit pension transfers in the U.K. The Company increased the recorded liability by $161 million related to this matter in 2020.

(f) Settlement charges and legal costs related to strategic recruiting.

Reflects a gain from the fair value re-measurement of the Company's previously held equity method investment in Marsh India upon the Company(g) increasing its ownership interest from 49% to 92%. The gain is reflected in revenue and excluded from underlying revenue calculations and adjusted operating margin.

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 a net loss on disposal of specialty businesses sold in the U.S., U.K. and Canada.(h) Consulting in 2020 includes a contingent gain adjustment from Mercer's U.S. large market health and defined benefit administration business sold in 2019. 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 Twelve Months Ended December 31(Unaudited)

Adjusted income, net of tax is calculated as the Company's GAAP income from continuing operations, adjusted to reflect the after tax impact of the operating income adjustments in the preceding tables and the additional items listed below. Adjusted EPS is calculated by dividing the Company's adjusted income, net of tax, by average number of shares outstanding-diluted for the relevant period. The following tables reconcile adjusted income, net of tax to GAAP income from continuing operations and adjusted EPS to GAAP EPS for the three and twelve month periods ended December 31, 2021 and 2020.

Three Months Ended Three Months Ended December 31, 2021 December 31, 2020

(In millions, Adjusted Adjustedexcept per Amount Amount share data) EPS EPS

Net incomebeforenon-controlling $ 807 $ 379 interests, asreported

Less:Non-controlling 4 5 interest, netof tax

Subtotal $ 803 $ 1.57 $ 374 $ 0.73

Operatingincome $ (81 ) $ 284 adjustments

Investments (4 ) (14 ) adjustment (a)

Pensionsettlement 3 3 charges (b)

Income taxeffect of (33 ) (35 ) adjustments (c)

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

(110 ) (0.21 ) 238 0.46

Adjustedincome, net of $ 693 $ 1.36 $ 612 $ 1.19tax



Twelve Months Ended Twelve Months Ended December 31, 2021 December 31, 2020

(In millions, Adjusted Adjustedexcept per Amount Amount share data) EPS EPS

Net incomebeforenon-controlling $ 3,174 $ 2,046 interests, asreported

Less:Non-controlling 31 30 interest, netof tax

Subtotal $ 3,143 $ 6.13 $ 2,016 $ 3.94

Operatingincome $ (22 ) $ 578 adjustments

Investments (6 ) 28 adjustment (a)

Pensionsettlement 5 3 charges (b)

Income taxeffect of (64 ) (85 ) adjustments (c)

Impact of U.K.tax rate change 110 - (d)

23 0.04 524 1.03

Adjustedincome, net of $ 3,166 $ 6.17 $ 2,540 $ 4.97tax

(a)

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

(b)

Charges resulting from lump sum pension settlements elected by participants.

(c)

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.

(d)

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) losses primarily related to the Company's investment in Alexander Forbes ("AF").

(b) Charges resulting from lump sum pension settlements elected by participants.

(c) 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.

Reflects the re-measurement of the Company's U.K. deferred tax assets and(d) 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.

Marsh & McLennan Companies, Inc.

Supplemental Information

Three and Twelve Months Ended December 31

(Millions) (Unaudited)

Three Months Ended

December 31,

Twelve Months Ended

December 31,

2021

2020

2021

2020

Consolidated

Compensation and benefits

$

2,905

$

2,650

$

11,425

$

10,129

Other operating expenses

1,246

1,195

4,083

4,029

Total expenses

$

4,151

$

3,845

$

15,508

$

14,158

Depreciation and amortization expense

$

91

$

108

$

382

$

390

Identified intangible amortization expense

87

86

365

351

Total

$

178

$

194

$

747

$

741

Stock option expense

$

3

$

3

$

32

$

28

Risk and Insurance Services

Compensation and benefits

$

1,630

$

1,456

$

6,506

$

5,690

Other operating expenses

752

613

2,499

2,301

Total expenses

$

2,382

$

2,069

$

9,005

$

7,991

Depreciation and amortization expense

$

44

$

62

$

196

$

208

Identified intangible amortization expense

73

70

309

292

Total

$

117

$

132

$

505

$

500

Consulting

Compensation and benefits

$

1,148

$

1,084

$

4,435

$

3,995

Other operating expenses

556

639

1,850

1,987

Total expenses

$

1,704

$

1,723

$

6,285

$

5,982

Depreciation and amortization expense

$

28

$

29

$

115

$

115

Identified intangible amortization expense

14

16

56

59

Total

$

42

$

45

$

171

$

174

Marsh & McLennan Companies, Inc.

Supplemental Information

Three and Twelve Months Ended December 31

(Millions) (Unaudited)

Three Months Twelve Months Ended Ended December 31, December 31,

2021 2020 2021 2020

Consolidated

Compensation and benefits $ 2,905 $ 2,650 $ 11,425 $ 10,129

Other operating expenses 1,246 1,195 4,083 4,029

Total expenses $ 4,151 $ 3,845 $ 15,508 $ 14,158



Depreciation and amortization expense $ 91 $ 108 $ 382 $ 390

Identified intangible amortization 87 86 365 351expense

Total $ 178 $ 194 $ 747 $ 741



Stock option expense $ 3 $ 3 $ 32 $ 28



Risk and Insurance Services

Compensation and benefits $ 1,630 $ 1,456 $ 6,506 $ 5,690

Other operating expenses 752 613 2,499 2,301

Total expenses $ 2,382 $ 2,069 $ 9,005 $ 7,991



Depreciation and amortization expense $ 44 $ 62 $ 196 $ 208

Identified intangible amortization 73 70 309 292expense

Total $ 117 $ 132 $ 505 $ 500



Consulting

Compensation and benefits $ 1,148 $ 1,084 $ 4,435 $ 3,995

Other operating expenses 556 639 1,850 1,987

Total expenses $ 1,704 $ 1,723 $ 6,285 $ 5,982



Depreciation and amortization expense $ 28 $ 29 $ 115 $ 115

Identified intangible amortization 14 16 56 59expense

Total $ 42 $ 45 $ 171 $ 174

Marsh & McLennan Companies, Inc.

Consolidated Balance Sheets

(Millions) (Unaudited)

December 31,

2021

December 31,

2020

ASSETS

Current assets:

Cash and cash equivalents

$

1,752

$

2,089

Net receivables

5,586

5,326

Other current assets

926

740

Total current assets

8,264

8,155

Goodwill and intangible assets

19,127

18,216

Fixed assets, net

847

856

Pension related assets

2,270

1,768

Right of use assets

1,868

1,894

Deferred tax assets

551

702

Other assets

1,461

1,458

TOTAL ASSETS

$

34,388

$

33,049

LIABILITIES AND EQUITY

Current liabilities:

Short-term debt

$

17

$

517

Accounts payable and accrued liabilities

3,165

3,050

Accrued compensation and employee benefits

2,942

2,400

Current lease liabilities

332

342

Accrued income taxes

198

247

Total current liabilities

6,654

6,556

Fiduciary liabilities

9,622

8,585

Less - cash and cash equivalents held in a fiduciary capacity

(9,622

)

(8,585

)

-

-

Long-term debt

10,933

10,796

Pension, post-retirement and post-employment benefits

1,632

2,662

Long-term lease liabilities

1,880

1,924

Liabilities for errors and omissions

355

366

Other liabilities

1,712

1,485

Total equity

11,222

9,260

TOTAL LIABILITIES AND EQUITY

$

34,388

$

33,049

Marsh & McLennan Companies, Inc.

Consolidated Balance Sheets

(Millions) (Unaudited)



December December 31, 31,

2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 1,752 $ 2,089

Net receivables 5,586 5,326

Other current assets 926 740

Total current assets 8,264 8,155



Goodwill and intangible assets 19,127 18,216

Fixed assets, net 847 856

Pension related assets 2,270 1,768

Right of use assets 1,868 1,894

Deferred tax assets 551 702

Other assets 1,461 1,458

TOTAL ASSETS $ 34,388 $ 33,049



LIABILITIES AND EQUITY

Current liabilities:

Short-term debt $ 17 $ 517

Accounts payable and accrued liabilities 3,165 3,050

Accrued compensation and employee benefits 2,942 2,400

Current lease liabilities 332 342

Accrued income taxes 198 247

Total current liabilities 6,654 6,556



Fiduciary liabilities 9,622 8,585

Less - cash and cash equivalents held in a fiduciary (9,622 ) (8,585 )capacity

- -

Long-term debt 10,933 10,796

Pension, post-retirement and post-employment benefits 1,632 2,662

Long-term lease liabilities 1,880 1,924

Liabilities for errors and omissions 355 366

Other liabilities 1,712 1,485



Total equity 11,222 9,260

TOTAL LIABILITIES AND EQUITY $ 34,388 $ 33,049

Marsh & McLennan Companies, Inc.

Consolidated Statements of Cash Flows (a)

(Millions) (Unaudited)

For the Years Ended

December 31,

2021

2020

Operating cash flows:

Net income before non-controlling interests

$

3,174

$

2,046

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization

747

741

Non cash lease expense

327

355

Gain on consolidation of entity

(267

)

-

Share-based compensation expense

348

290

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

(130

)

64

Changes in assets and liabilities:

Accrued compensation and employee benefits

527

207

Net receivables

(252

)

(75

)

Other changes to assets and liabilities

(199

)

429

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

(372

)

(356

)

Operating lease liabilities

(349

)

(351

)

Effect of exchange rate changes

(38

)

32

Net cash provided by operations

3,516

3,382

Financing cash flows:

Purchase of treasury shares

(1,159

)

-

Borrowings from term-loan and credit facilities

-

1,000

Proceeds from issuance of debt

743

737

Repayments of debt

(1,016

)

(2,515

)

Net issuance of common stock from treasury shares

60

-

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

(82

)

(159

)

Dividends paid

(1,026

)

(943

)

Increase in fiduciary liabilities

1,183

955

Net cash used for financing activities

(1,297

)

(925

)

Investing cash flows:

Capital expenditures

(406

)

(348

)

Net sales of long-term investments and other

17

104

Dispositions

84

98

Acquisitions, net of cash and cash held in a fiduciary capacity acquired

(859

)

(647

)

Net cash used for investing activities

(1,164

)

(793

)

Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

(355

)

511

Increase in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

700

2,175

Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period

10,674

8,499

Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period

$

11,374

$

10,674

Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets

For the Years Ended December 31,

2021

2020

(In millions of dollars)

Cash and cash equivalents

$

1,752

$

2,089

Cash and cash equivalents held in a fiduciary capacity

9,622

8,585

Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity

$

11,374

$

10,674

Marsh & McLennan Companies, Inc.

Consolidated Statements of Cash Flows^ (a)

(Millions) (Unaudited)

For the Years Ended

December 31,

2021 2020

Operating cash flows:

Net income before non-controlling interests $ 3,174 $ 2,046

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization 747 741

Non cash lease expense 327 355

Gain on consolidation of entity (267 ) -

Share-based compensation expense 348 290

Net (gain) loss on investments, disposition of assets (130 ) 64 and other

Changes in assets and liabilities:

Accrued compensation and employee benefits 527 207

Net receivables (252 ) (75 )

Other changes to assets and liabilities (199 ) 429

Contributions to pension and other benefit plans in (372 ) (356 )excess of current year credit

Operating lease liabilities (349 ) (351 )

Effect of exchange rate changes (38 ) 32

Net cash provided by operations 3,516 3,382

Financing cash flows:

Purchase of treasury shares (1,159 ) -

Borrowings from term-loan and credit facilities - 1,000

Proceeds from issuance of debt 743 737

Repayments of debt (1,016 ) (2,515 )

Net issuance of common stock from treasury shares 60 -

Net distributions from non-controlling interests and (82 ) (159 )deferred/contingent consideration

Dividends paid (1,026 ) (943 )

Increase in fiduciary liabilities 1,183 955

Net cash used for financing activities (1,297 ) (925 )

Investing cash flows:

Capital expenditures (406 ) (348 )

Net sales of long-term investments and other 17 104

Dispositions 84 98

Acquisitions, net of cash and cash held in a fiduciary (859 ) (647 )capacity acquired

Net cash used for investing activities (1,164 ) (793 )

Effect of exchange rate changes on cash, cashequivalents, and cash and cash equivalents held in a (355 ) 511 fiduciary capacity

Increase in cash, cash equivalents, and cash and cash 700 2,175 equivalents held in a fiduciary capacity

Cash, cash equivalents, and cash and cash equivalents 10,674 8,499 held in a fiduciary capacity at beginning of period

Cash, cash equivalents, and cash and cash equivalents $ 11,374 $ 10,674 held in a fiduciary capacity at end of period

Reconciliation of cash, cash equivalents, and cash and cash equivalents held ina fiduciary capacity to the Consolidated Balance Sheets

For the Years Ended December 31, 2021 2020

(In millions of dollars)

Cash and cash equivalents $ 1,752 $ 2,089

Cash and cash equivalents held in a fiduciary capacity 9,622 8,585

Total cash, cash equivalents, and cash and cash $ 11,374 $ 10,674 equivalents held in a fiduciary capacity

(a) The Company revised the Statements of Cash Flows presentation to include cash and cash equivalents held in a fiduciary capacity as a component of total cash, presented as cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity. The Company revised the 2020 presentation for comparable purposes.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220126006013/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