Business Wire | Oct 29, 2020 07:00AM EDT

Marsh & McLennan Reports Third Quarter 2020 Results

Oct. 29, 2020

NEW YORK--(BUSINESS WIRE)--Oct. 29, 2020--Marsh & McLennan Companies, Inc. (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, 2020.

Dan Glaser, President and CEO, said: "Marsh & McLennan's strong performance in this period of uncertainty demonstrates our continued excellent execution and the resilience of our business. In the third quarter, we generated 9% adjusted operating income growth and 6% growth in adjusted EPS, despite a modest decline in underlying revenue. For the first nine months of 2020, we achieved 1% underlying revenue growth, 12% adjusted operating income growth and 9% adjusted EPS growth.

"I am proud of the extraordinary dedication of our colleagues in serving our clients and supporting each other."

Consolidated Results

Consolidated revenue in the third quarter of 2020 was $4.0 billion, flat compared with the third quarter of 2019. Underlying revenue declined 1% compared to the prior period. Operating income was $540 million compared with $467 million in the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 9% to $638 million. Net income attributable to the Company was $316 million, or $0.62 per diluted share, compared with $0.59 in the third quarter of 2019. Adjusted earnings per share increased 6% to $0.82 compared with $0.77 for the prior year period.

For the nine months ended September 30, 2020, consolidated revenue was $12.8 billion, an increase of 3%, or 1% on an underlying basis. Operating income was $2.5 billion, while adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 12% to $2.8 billion. Net income attributable to the Company was $1.6 billion. Fully diluted earnings per share was $3.21 compared with $2.64 in the first nine months of 2019. Adjusted earnings per share increased 9% to $3.77 compared with $3.47 for the comparable period in 2019.

Risk & Insurance Services

Risk & Insurance Services revenue was $2.3 billion in the third quarter of 2020, an increase of 4%, or 2% on an underlying basis. Operating income was $333 million compared with $218 million in the third quarter of 2019. Adjusted operating income was $388 million, an increase of 24% compared with $313 million in the prior year period. For the nine months ended September 30, 2020, revenue was $7.8 billion, an increase of 8%, or 3% on an underlying basis. Operating income increased 28% to $1.9 billion, and adjusted operating income rose 20% to $2.1 billion.

Marsh's revenue in the third quarter was $2.0 billion, an increase of 3% on an underlying basis. In US/Canada, underlying revenue rose 5%. International operations produced 2% underlying revenue growth with 4% growth in Asia Pacific, 2% growth in Latin America and flat in EMEA on an underlying basis. For the nine months ended September 30, 2020, Marsh's underlying revenue growth was 3%.

Guy Carpenter's revenue in the third quarter was $274 million, flat on an underlying basis, compared with the third quarter 2019. For the nine months ended September 30, 2020, Guy Carpenter's underlying revenue growth was 6%.

Consulting

Consulting revenue in the third quarter was $1.7 billion, a decrease of 5%, or 4% decline on an underlying basis. Operating income decreased 12% to $278 million, and adjusted operating income decreased 5% to $306 million. For the first nine months of 2020, revenue was $5.1 billion, a decrease of 4%, or 2% decline on an underlying basis. Operating income of $815 million decreased 7%, and adjusted operating income decreased 6% to $860 million.

Mercer's revenue was $1.2 billion in the third quarter, a decrease of 3% on an underlying basis. Health, with revenue of $430 million, was flat on an underlying basis compared with third quarter 2019. Wealth revenue of $566 million decreased 3% on an underlying basis, and Career revenue of $220 million was down 11% on an underlying basis. For the nine months ended September 30, 2020, Mercer's revenue was $3.6 billion, a decrease of 1% on an underlying basis.

Oliver Wyman's revenue was $480 million in the third quarter, a decrease of 6% on an underlying basis. For the first nine months ended September 30, 2020, Oliver Wyman's revenue was $1.5 billion, down 6% on an underlying basis.

Conference Call

A conference call to discuss third quarter 2020 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 8343803. The live audio webcast will be accessible at mmc.com, and a replay will be available approximately two hours after the event.

About Marsh & McLennan Companies

Marsh & McLennan (NYSE: MMC) is the world's leading professional services firm in the areas of risk, strategy and people. The Company's 76,000 colleagues advise clients in over 130 countries. With annual revenue of $17 billion, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh advises individual and commercial clients of all sizes on insurance broking and innovative risk management solutions. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and solutions to help organizations reshape work, retirement, investment and health outcomes 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 mmc.com, follow us on LinkedIn and Twitter @mmc_global 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 financial and operational impact of COVID-19 on our revenue and ability to generate new business, our overall level of profitability and cash flow, and our liquidity, including the timeliness and collectability of our receivables; * the impact of disruption in the credit or financial markets, or changes to our credit ratings, including as a result of COVID-19, on our ability to access capital or repay our significant outstanding indebtedness on favorable terms and our compliance with the covenants contained in the agreements that govern our indebtedness; * the impact from lawsuits, other contingent liabilities and loss contingencies arising from errors and omissions, breach of fiduciary duty or other claims against us, including claims related to pandemic coverage; * the impact of investigations, reviews, or other activity by regulatory or law enforcement authorities, including the ongoing U.K. FCA review of legacy JLT enhanced transfer value advice; * the financial and operational impact of complying with laws and regulations where we operate and the risks of noncompliance with such laws, including anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act, trade sanctions regimes and cybersecurity and data privacy regulations such as the E.U.'s General Data Protection Regulation; * our ability to manage risks associated with our investment management and related services business, particularly in the context of volatile equity markets caused by COVID-19, including our ability to execute timely trades in light of increased trading volume and to manage potential conflicts of interest between investment consulting and fiduciary management services; * 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 attract and retain industry leading talent; * our ability to maintain adequate safeguards to protect the security of our information systems and confidential, personal or proprietary information, including those in the existing JLT information systems, particularly given the increased risk of phishing and other cybersecurity attacks or unauthorized dissemination of information caused by remote work arrangements; * the regulatory, contractual and reputational risks that arise based on insurance placement activities and various insurer revenue streams; * our ability to successfully recover if we experience a business continuity problem due to cyberattack, natural disaster or otherwise; and * the impact of changes in tax laws, guidance and interpretations, or disagreements with tax authorities.

The factors identified above are not exhaustive. Marsh & McLennan Companies 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 Companies 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 figures)(Unaudited)

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

2020 2019 2020 2019

Revenue $ 3,968 $ 3,968 $ 12,808 $ 12,388

Expense:

Compensation and Benefits 2,495 2,437 7,479 7,256

Other Operating Expenses 933 1,064 2,834 3,047

Operating Expenses 3,428 3,501 10,313 10,303

Operating Income 540 467 2,495 2,085

Other Net Benefit Credits 60 69 187 203

Interest Income 1 4 5 34

Interest Expense (128 ) (133 ) (387 ) (394 )

Cost of Early Extinguishment - - - (32 )of Debt

Investment (Loss) Income (14 ) 7 (47 ) 20

Acquisition Related - - - (8 )Derivative Contracts

Income Before Income Taxes 459 414 2,253 1,908

Income Tax Expense 139 108 586 531

Net Income Before 320 306 1,667 1,377 Non-Controlling Interests

Less: Net Income Attributable 4 3 25 26 to Non-Controlling Interests

Net Income Attributable to $ 316 $ 303 $ 1,642 $ 1,351 the Company

Net Income Per Share Attributable to the Company:

- Basic $ 0.62 $ 0.60 $ 3.25 $ 2.67

- Diluted $ 0.62 $ 0.59 $ 3.21 $ 2.64

Average Number of Shares Outstanding

- Basic 507 506 506 506

- Diluted 512 511 511 511

Shares Outstanding at 507 505 507 505 September 30

The Company acquired JLT on April 1, 2019 and JLT's results are included in the Company's consolidated results of operations from that date.

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

The Company conducts business in more than 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as the revenue impact of 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 2020 2019 Revenue Other Impact

Risk andInsurance Services

Marsh $ 2,009 $ 1,902 6 % - 3 % 3 %

Guy 274 273 - - 1 % - Carpenter

Subtotal 2,283 2,175 5 % - 2 % 3 %

FiduciaryInterest 8 31 Income

Total Riskand 2,291 2,206 4 % - 2 % 2 %InsuranceServices

Consulting

Mercer 1,216 1,280 (5) % 1 % (2) % (3) %

Oliver Wyman 480 505 (5) % 1 % - (6) %

Total 1,696 1,785 (5) % 1 % (2) % (4) %Consulting

Corporate/ (19 ) (23 ) Eliminations

Total $ 3,968 $ 3,968 - - 1 % (1) %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 September 30, GAAP Impact Dispositions Revenue Revenue / 2020 2019 Other Impact

Marsh:

EMEA $ 536 $ 536 - 1 % (1) % -

Asia Pacific 254 242 5 % 1 % 1 % 4 %

Latin America 93 110 (15) % (12) % (5) % 2 %

Total 883 888 - (1) % (1) % 2 %International

U.S./Canada 1,126 1,014 11 % - 6 % 5 %

Total Marsh $ 2,009 $ 1,902 6 % - 3 % 3 %

Mercer:

Wealth 566 592 (4) % 2 % (3) % (3) %

Health 430 441 (3) % - (3) % -

Career 220 247 (11) % - - (11) %

Total Mercer $ 1,216 $ 1,280 (5) % 1 % (2) % (3) %

* 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 more than 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as the revenue impact of 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.

The calculation of underlying revenue growth for the nine months ended September 30, 2020 includes the results of JLT. The column "2019 Including JLT" includes JLT's prior year first quarter revenue (See reconciliation of non-GAAP measures on page 14).

* 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 more than 130 countries. As a result, foreign exchange rate movements may impact period-to-period comparisons of revenue. Similarly, certain other items such as the revenue impact of 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.

The calculation of underlying revenue growth for the nine months ended September 30, 2020 includes the results of JLT. The column "2019 Including JLT" includes JLT's prior year first quarter revenue (See reconciliation of non-GAAP measures on page 14).

Components of Revenue Change Including JLT*

Nine Months Ended % Acquisitions September 30, % 2019 Change / Change Including Including Currency Dispositions Underlying GAAP JLT JLT in Impact / Revenue 2020 2019 Revenue 2019 Other Impact

Risk andInsurance Services

Marsh $ 6,231 $ 5,795 8 % $ 6,027 3 % (1) % 2 % 3 %

Guy 1,534 1,328 15 % 1,446 6 % - - 6 %Carpenter

Subtotal 7,765 7,123 9 % 7,473 4 % (1) % 1 % 4 %

Fiduciary Interest 40 80 85 Income

Total Riskand 7,805 7,203 8 % 7,558 3 % (1) % 1 % 3 %InsuranceServices

Consulting

Mercer 3,616 3,695 (2) % 3,769 (4) % (1) % (2) % (1) %

Oliver Wyman 1,458 1,563 (7) % 1,563 (7) % - - (6) %

Total 5,074 5,258 (4) % 5,332 (5) % (1) % (2) % (2) %Consulting

Corporate/ (71 ) (73 ) (73 ) Eliminations

Total $ 12,808 $ 12,388 3 % $ 12,817 - (1) % - 1 %Revenue

Revenue Details

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

Components of Revenue Change Including JLT*

Nine Months Ended Acquisitions September 30, % 2019 % Change / Change Including Including Currency Dispositions Underlying GAAP JLT JLT in Impact / Revenue 2020 2019 Revenue 2019 Other Impact

Marsh:

EMEA $ 1,887 $ 1,821 4 % $ 1,928 (2) % (1) % (1) % 1 %

Asia Pacific 790 698 13 % 764 3 % (1) % - 4 %

Latin America 283 304 (7) % 326 (13) % (12) % (4) % 3 %

Total 2,960 2,823 5 % 3,018 (2) % (2) % (1) % 2 %International

U.S./Canada 3,271 2,972 10 % 3,009 9 % - 5 % 4 %

Total Marsh $ 6,231 $ 5,795 8 % $ 6,027 3 % (1) % 2 % 3 %

Mercer:

Wealth 1,719 1,748 (2) % 1,803 (5) % (1) % (3) % (1) %

Health 1,348 1,341 1 % 1,360 (1) % (1) % (3) % 3 %

Career 549 606 (9) % 606 (9) % (1) % - (9) %

Total Mercer $ 3,616 $ 3,695 (2) % $ 3,769 (4) % (1) % (2) % (1) %

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

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures - Actual as Reported 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 - Actual as Reported 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 "GAAP" or "reported" results). The Company also refers to and presents belowcertain additional non-GAAP financial measures, within the meaning ofRegulation 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 our 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 or (loss).The following tables identify these noteworthy items and reconcile adjustedoperating income (loss) to GAAP operating income or loss, on a consolidated andsegment basis, for the three and nine months ended September 30, 2020 and 2019.The following tables also present adjusted operating margin. In 2019, theCompany changed its methodology for calculating adjusted operating margin dueto the significant amount of identified intangible asset amortization relatedto the JLT Transaction, on April 1, 2019. For the three and nine months endedSeptember 30, 2020 and 2019, adjusted operating margin is calculated bydividing the sum of adjusted operating income plus identified intangible assetamortization by consolidated or segment adjusted revenue.

Risk & Insurance Services

Consulting

Corporate/Eliminations

Total

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

%

As Reported Results

Three Months Ended September 30, 2019

Operating income (loss), as reported

$

218

$

317

$

(68

)

$

467

Operating margin

9.9

%

17.7

%

N/A

11.8

%

Add (Deduct) impact of Noteworthy Items:

Restructuring, excluding JLT (a)

-

10

2

12

Changes in contingent consideration (b)

5

1

-

6

JLT integration and restructuring costs (c)

58

5

14

77

JLT acquisition-related costs (d)

16

1

4

21

Disposal of businesses (e)

13

(14

)

-

(1

)

Other

3

-

-

3

Operating income adjustments

95

3

20

118

Adjusted operating income (loss)

$

313

$

320

$

(48

)

$

585

Total identified intangible amortization expense

$

73

$

11

$

-

$

84

Adjusted operating margin

17.4

%

18.7

%

N/A

16.9

%

Risk & Corporate/ Insurance Consulting Eliminations Total Services

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 %



As Reported Results

Three Months Ended September 30, 2019

Operating income (loss), as $ 218 $ 317 $ (68 ) $ 467 reported

Operating margin 9.9 % 17.7 % N/A 11.8 %

Add (Deduct) impact of Noteworthy Items:

Restructuring, excluding JLT - 10 2 12 (a)

Changes in contingent 5 1 - 6 consideration (b)

JLT integration and 58 5 14 77 restructuring costs (c)

JLT acquisition-related costs 16 1 4 21 (d)

Disposal of businesses (e) 13 (14 ) - (1 )

Other 3 - - 3

Operating income adjustments 95 3 20 118

Adjusted operating income $ 313 $ 320 $ (48 ) $ 585 (loss)

Total identified intangible $ 73 $ 11 $ - $ 84 amortization expense

Adjusted operating margin 17.4 % 18.7 % N/A 16.9 %



(a) Corporate charges in 2020 primarily reflect restructuring costs related to the Company's corporate led initiatives. Consulting charges in both 2020 and 2019 reflect severance related to the Mercer restructuring program.

(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 as well as legal and consulting costs related to the JLT integration.

(d) Reflects retention costs in both 2020 and 2019 and legal fees related to the closing of the JLT Transaction in 2019.

(e) Reflects the loss on the sale in 2019 of a U.S. Specialty business at Marsh and a gain on the sale of Mercer's stand-alone U.S. large market health and defined benefit administration business, which are both included in revenue. These amounts are removed from GAAP revenue in the calculation of adjusted operating income.

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

The information presented below represents the actual as reported data for the nine months ended September 30, 2020 and 2019. Results for the nine months ended September 30, 2019 do not include JLT's results of operations for the period January 1, 2019 through March 31, 2019.

(a) Corporate charges in 2020 primarily reflect restructuring costs related tothe Company's corporate led initiatives. Consulting charges in both 2020 and2019 reflect severance related to the Mercer restructuring program.

(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 aswell as legal and consulting costs related to the JLT integration.

(d) Reflects retention costs in both 2020 and 2019 and legal fees related tothe closing of the JLT Transaction in 2019.

(e) Reflects the loss on the sale in 2019 of a U.S. Specialty business at Marshand a gain on the sale of Mercer's stand-alone U.S. large market health anddefined benefit administration business, which are both included in revenue.These amounts are removed from GAAP revenue in the calculation of adjustedoperating income.

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

The information presented below represents the actual as reported data for the nine months ended September 30, 2020 and 2019. Results for the nine months ended September 30, 2019 do not include JLT's results of operations for the period January 1, 2019 through March 31, 2019.



Risk & Corporate/ Insurance Consulting Eliminations Total Services

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 businesses (e) 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 %



As Reported Results

Nine Months Ended September 30, 2019

Operating income (loss), as $ 1,468 $ 874 $ (257 ) $ 2,085 reported

Operating margin 20.4 % 16.6 % N/A 16.8 %

Add (Deduct) impact of Noteworthy Items:

Restructuring, excluding JLT 6 43 7 56 (a)

Changes in contingent 24 2 - 26 consideration (b)

JLT integration and 134 10 48 192 restructuring costs (c)

JLT acquisition-related costs 81 1 51 133 (d)

Disposal of business (f) 13 (14 ) - (1 )

Other 3 - 1 4

Operating income adjustments 261 42 107 410

Adjusted operating income $ 1,729 $ 916 $ (150 ) $ 2,495 (loss)

Total identified intangible $ 194 $ 41 $ - $ 235 amortization expense

Adjusted operating margin 26.6 % 18.3 % N/A 22.0 %

(a) Corporate charges in 2020 reflect restructuring and consulting costs related to the Company's corporate led initiatives, including adjustments to restructuring liabilities for future rent under non-cancellable leases. Risk & Insurance Services reflects severance and related charges from non-JLT merger integration costs. Consulting reflects severance related to the Mercer restructuring program.

(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 as well as legal and consulting costs related to the JLT integration.

(d) Reflects retention costs in 2020 and in 2019 retention costs, advisor fees, stamp duty taxes and legal fees related to the closing of the JLT Transaction. 2019 also includes the loss on the sale of JLT's aerospace business, included in revenue. This loss is removed from GAAP revenue in the calculation of adjusted operating income.

(e) 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.

(f) Reflects the loss on the sale in 2019 of a U.S. Specialty business at Marsh and a gain on the sale of Mercer's stand-alone U.S. large market health and defined benefit administration business, which are both included in revenue. These amounts are removed from GAAP revenue in the calculation of adjusted operating income.

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

(a) Corporate charges in 2020 reflect restructuring and consulting costsrelated to the Company's corporate led initiatives, including adjustments torestructuring liabilities for future rent under non-cancellable leases. Risk &Insurance Services reflects severance and related charges from non-JLT mergerintegration costs. Consulting reflects severance related to the Mercerrestructuring program.

(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 aswell as legal and consulting costs related to the JLT integration.

(d) Reflects retention costs in 2020 and in 2019 retention costs, advisor fees,stamp duty taxes and legal fees related to the closing of the JLT Transaction.2019 also includes the loss on the sale of JLT's aerospace business, includedin revenue. This loss is removed from GAAP revenue in the calculation ofadjusted operating income.

(e) 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.

(f) Reflects the loss on the sale in 2019 of a U.S. Specialty business at Marshand a gain on the sale of Mercer's stand-alone U.S. large market health anddefined benefit administration business, which are both included in revenue.These amounts are removed from GAAP revenue in the calculation of adjustedoperating income.

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 set forth in the preceding tables and investmentsgains or losses related to the impact of mark-to-market adjustments on certainequity securities. Adjustments also include JLT acquisition related items,including change in fair value of derivative contracts, financing costs andinterest income on funds held in escrow. Adjusted EPS is calculated by dividingthe Company's adjusted income, net of tax, by MMC's average number of sharesoutstanding-diluted for the relevant period. The following tables reconcileadjusted income, net of tax to GAAP income from continuing operations andadjusted EPS to GAAP EPS for the three and nine month periods ended September30, 2020 and 2019. The information presented below represents the actual asreported results for the three and nine month periods ended September 30, 2020and 2019. Results for the nine months ended September 30, 2019 do not includeJLT's results of operations for the period January 1, 2019 through March 31,2019.

Three Months EndedSeptember 30, 2020

Three Months Ended September 30, 2019

Amount

Adjusted EPS

Amount

Adjusted EPS

Net income before non-controlling interests, as reported

$

320

$

306

Less: Non-controlling interest, net of tax

4

3

Subtotal

$

316

$

0.62

$

303

$

0.59

Operating income adjustments

$

98

$

118

Investments adjustment (a)

16

(4

)

Pension settlement adjustment

-

(2

)

Impact of income taxes on above items

(12

)

(23

)

102

0.20

89

0.18

Adjusted income, net of tax

$

418

$

0.82

$

392

$

0.77

Nine Months EndedSeptember 30, 2020

Nine Months Ended September 30, 2019

Amount

Adjusted EPS

Amount

Adjusted EPS

Net income before non-controlling interests, as reported

$

1,667

$

1,377

Less: Non-controlling interest, net of tax

25

26

Subtotal

$

1,642

$

3.21

$

1,351

$

2.64

Operating income adjustments

$

294

$

410

Investments adjustment (a)

42

(10

)

Pension settlement adjustment

-

(2

)

Change in fair value of acquisition related derivative contracts (b)

-

8

Financing costs (c)

-

53

Interest on funds held in escrow (d)

-

(25

)

Early extinguishment of debt

-

32

Impact of income taxes on above items

(50

)

(45

)

286

0.56

421

0.83

Adjusted income, net of tax

$

1,928

$

3.77

$

1,772

$

3.47



Three Months Ended Three Months Ended September 30, 2020 September 30, 2019

Amount Adjusted Amount Adjusted EPS EPS

Net income beforenon-controlling $ 320 $ 306 interests, asreported

Less:Non-controlling 4 3 interest, net oftax

Subtotal $ 316 $ 0.62 $ 303 $ 0.59

Operating income $ 98 $ 118 adjustments

Investments 16 (4 ) adjustment (a)

Pension settlement - (2 ) adjustment

Impact of incometaxes on above (12 ) (23 ) items

102 0.20 89 0.18

Adjusted income, $ 418 $ 0.82 $ 392 $ 0.77net of tax



Nine Months Ended Nine Months Ended September 30, 2020 September 30, 2019

Amount Adjusted Amount Adjusted EPS EPS

Net income beforenon-controlling $ 1,667 $ 1,377 interests, asreported

Less:Non-controlling 25 26 interest, net oftax

Subtotal $ 1,642 $ 3.21 $ 1,351 $ 2.64

Operating income $ 294 $ 410 adjustments

Investments 42 (10 ) adjustment (a)

Pension settlement - (2 ) adjustment

Change in fairvalue ofacquisition related - 8 derivativecontracts (b)

Financing costs (c) - 53

Interest on funds - (25 ) held in escrow (d)

Earlyextinguishment of - 32 debt

Impact of incometaxes on above (50 ) (45 ) items

286 0.56 421 0.83

Adjusted income, $ 1,928 $ 3.77 $ 1,772 $ 3.47net of tax



(a) The Company recorded mark-to-market losses of $1 million and gains of $4 million for the three month periods ended September 30, 2020 and September 30, 2019, respectively, and losses of $4 million and gains of $10 million for the nine month periods ended September 30, 2020 and September 30, 2019, respectively, which are included in investment (loss) income in the consolidated statements of income.

During the second quarter of 2020, the Company sold a portion of its investment in Alexander Forbes ("AF"). The Company no longer accounts for this investment under the equity method, and records the change in fair value in each subsequent period as an investment gain or loss in the consolidated statement of income. The Company recorded a loss of $15 million in the third quarter of 2020 related to the change in the market value of AF from June 30, 2020. The nine month period ended September 30, 2020 also reflects a loss of $23 million on the portion of AF sold in the second quarter of 2020.

(b) Reflects the change in fair value of derivatives that were not redesignated as accounting hedges following the JLT acquisition, a deal contingent foreign exchange contract and derivative contracts related to debt issuances.

(c) Reflects interest expense on debt issuances and amortization of bridge financing fees related to the acquisition of JLT (prior to April 1, 2019).

(d) Interest income earned on funds held in escrow related to the JLT acquisition (prior to April 1, 2019).

(a) The Company recorded mark-to-market losses of $1 million and gains of $4million for the three month periods ended September 30, 2020 and September 30,2019, respectively, and losses of $4 million and gains of $10 million for thenine month periods ended September 30, 2020 and September 30, 2019,respectively, which are included in investment (loss) income in theconsolidated statements of income.

During the second quarter of 2020, the Company sold a portion of its investmentin Alexander Forbes ("AF"). The Company no longer accounts for this investmentunder the equity method, and records the change in fair value in eachsubsequent period as an investment gain or loss in the consolidated statementof income. The Company recorded a loss of $15 million in the third quarter of2020 related to the change in the market value of AF from June 30, 2020. Thenine month period ended September 30, 2020 also reflects a loss of $23 millionon the portion of AF sold in the second quarter of 2020.

(b) Reflects the change in fair value of derivatives that were not redesignatedas accounting hedges following the JLT acquisition, a deal contingent foreignexchange contract and derivative contracts related to debt issuances.

(c) Reflects interest expense on debt issuances and amortization of bridgefinancing fees related to the acquisition of JLT (prior to April 1, 2019).

(d) Interest income earned on funds held in escrow related to the JLTacquisition (prior to April 1, 2019).

Marsh & McLennan Companies, Inc.Supplemental InformationThree and Nine Months Ended September 30,(Millions) (Unaudited)Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Consolidated

Compensation and Benefits

$

2,495

$

2,437

$

7,479

$

7,256

Other Operating Expenses

933

1,064

2,834

3,047

Total Expenses

$

3,428

$

3,501

$

10,313

$

10,303

Depreciation and amortization expense

$

94

$

85

$

282

$

245

Identified intangible amortization expense

91

84

265

235

Total

$

185

$

169

$

547

$

480

Stock option expense

$

4

$

4

$

25

$

23

Risk and Insurance Services

Compensation and Benefits

$

1,400

$

1,373

$

4,234

$

4,012

Other Operating Expenses

558

615

1,688

1,723

Total Expenses

$

1,958

$

1,988

$

5,922

$

5,735

Depreciation and amortization expense

$

49

$

43

$

146

$

114

Identified intangible amortization expense

75

73

222

194

Total

$

124

$

116

$

368

$

308

Consulting

Compensation and Benefits

$

980

$

967

$

2,911

$

2,932

Other Operating Expenses

438

501

1,348

1,452

Total Expenses

$

1,418

$

1,468

$

4,259

$

4,384

Depreciation and amortization expense

$

29

$

24

$

86

$

75

Identified intangible amortization expense

16

11

43

41

Total

$

45

$

35

$

129

$

116

The Company acquired JLT on April 1, 2019 and JLT's results are included in the Company's consolidated results of operations from that date.

Marsh & McLennan Companies, Inc.Supplemental InformationThree and Nine Months Ended September 30,(Millions) (Unaudited) Three Months Nine Months Ended Ended September 30, September 30,

2020 2019 2020 2019

Consolidated

Compensation and Benefits $ 2,495 $ 2,437 $ 7,479 $ 7,256

Other Operating Expenses 933 1,064 2,834 3,047

Total Expenses $ 3,428 $ 3,501 $ 10,313 $ 10,303



Depreciation and amortization expense $ 94 $ 85 $ 282 $ 245

Identified intangible amortization 91 84 265 235expense

Total $ 185 $ 169 $ 547 $ 480



Stock option expense $ 4 $ 4 $ 25 $ 23



Risk and Insurance Services

Compensation and Benefits $ 1,400 $ 1,373 $ 4,234 $ 4,012

Other Operating Expenses 558 615 1,688 1,723

Total Expenses $ 1,958 $ 1,988 $ 5,922 $ 5,735



Depreciation and amortization expense $ 49 $ 43 $ 146 $ 114

Identified intangible amortization 75 73 222 194expense

Total $ 124 $ 116 $ 368 $ 308



Consulting

Compensation and Benefits $ 980 $ 967 $ 2,911 $ 2,932

Other Operating Expenses 438 501 1,348 1,452

Total Expenses $ 1,418 $ 1,468 $ 4,259 $ 4,384



Depreciation and amortization expense $ 29 $ 24 $ 86 $ 75

Identified intangible amortization 16 11 43 41expense

Total $ 45 $ 35 $ 129 $ 116

The Company acquired JLT on April 1, 2019 and JLT's results are included in the Company's consolidated results of operations from that date.

Marsh & McLennan Companies, Inc.Consolidated Balance Sheets(Millions)

(Unaudited) December September 31, 30, 2019 2020

ASSETS

Current assets:

Cash and cash equivalents $ 2,388 $ 1,155

Net receivables 5,236 5,236

Other current assets 688 677

Total current assets 8,312 7,068



Goodwill and intangible assets 17,745 17,445

Fixed assets, net 864 858

Pension related assets 1,825 1,632

Right of use assets 1,884 1,921

Deferred tax assets 623 676

Other assets 1,505 1,757

TOTAL ASSETS $ 32,758 $ 31,357



LIABILITIES AND EQUITY

Current liabilities:

Short-term debt $ 1,216 $ 1,215

Accounts payable and accrued liabilities 2,662 2,746

Accrued compensation and employee benefits 1,762 2,197

Current lease liabilities 335 342

Accrued income taxes 318 179

Dividends payable 237 -

Total current liabilities 6,530 6,679



Fiduciary liabilities 8,765 7,344

Less - cash and investments held in a fiduciary (8,765 ) (7,344 )capacity

- -

Long-term debt 11,532 10,741

Pension, post-retirement and post-employment 2,163 2,336 benefits

Long-term lease liabilities 1,902 1,926

Liabilities for errors and omissions 352 335

Other liabilities 1,450 1,397



Total equity 8,829 7,943

TOTAL LIABILITIES AND EQUITY $ 32,758 $ 31,357

Marsh & McLennan Companies, Inc. Consolidated Statements of Cash Flows(Millions) (Unaudited)

Nine Months Ended September 30,

2020

2019

Operating cash flows:

Net income before non-controlling interests

$

1,667

$

1,377

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization

547

480

Non cash lease expense

241

236

Charge for early extinguishment of debt

-

32

Share-based compensation expense

219

184

Change in fair value of acquisition-related derivative contracts and other

48

110

Changes in Assets and Liabilities:

Accrued compensation and employee benefits

(431

)

(281

)

Net receivables

77

(84

)

Other changes to assets and liabilities

58

(184

)

Contributions to pension & other benefit plans in excess of current year expense/credit

(240

)

(269

)

Operating lease liabilities

(254

)

(240

)

Effect of exchange rate changes

67

(70

)

Net cash provided by operations

1,999

1,291

Financing cash flows:

Purchase of treasury shares

-

(300

)

Net borrowings from term-loan and credit facilities

1,000

300

Net increase in commercial paper

-

325

Proceeds from issuance of debt

737

6,459

Repayments of debt

(1,011

)

(760

)

Payments for early extinguishment of debt

-

(585

)

Acquisition-related derivative payments

-

(337

)

Net issuance of common stock from treasury shares

(33

)

43

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

(154

)

(153

)

Dividends paid

(702

)

(655

)

Net cash provided by financing activities

(163

)

4,337

Investing cash flows:

Capital expenditures

(278

)

(284

)

Net sales of long-term investments and other

98

55

Dispositions

93

225

Acquisitions

(559

)

(5,500

)

Net cash used for investing activities

(646

)

(5,504

)

Effect of exchange rate changes on cash and cash equivalents

43

23

Increase in cash and cash equivalents

1,233

147

Cash and cash equivalents at beginning of period

1,155

1,066

Cash and cash equivalents at end of period

$

2,388

$

1,213

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures - 2019 Revenue Including JLT Nine Months Ended September 30, 2019(Millions) (Unaudited)

On April 1, 2019, the Company completed its previously announced acquisition of Jardine Lloyd Thompson Group, plc. JLT's results of operations for the three and nine month periods ended September 30, 2020 are included in the Company's results of operations for 2020. The Company's prior period 2019 results of operations do not include JLT's results for the three months ended March 31, 2019. Prior to being acquired by the Company, JLT operated in three segments, Specialty, Reinsurance and Employee Benefits. As of April 1, 2019, the historical JLT businesses were combined into MMC operations as follows: JLT Specialty was included by geography within Marsh, JLT Reinsurance was included within Guy Carpenter and the majority of the JLT Employee Benefits business was included in Mercer Health and Wealth.

The JLT Transaction had a significant impact on the Company's results of operations in 2019. The Company believes that in addition to the change in reported GAAP revenue, a comparison of 2020 revenue to the combined 2019 revenue of MMC and JLT would provide investors useful information about the year-over-year results.

The table below sets forth revenue information as if the companies were combined on January 1, 2019. Consolidated revenue in 2019 for the nine months ended September 30, 2019 "MMC as previously reported" does not include JLT revenue for the period from January 1 to March 31, 2019. The "2019 Including JLT" revenue information set forth in the table below presents revenue information as if the companies were combined on January 1, 2019 and is not necessarily indicative of what the results would have been had we operated the business since January 1, 2019.

The MMC revenue amounts are as previously reported by the Company in its quarterly filings on Form 10-Q for the applicable periods. JLT 2019 revenue information is derived using the same policies and adjustments as the "JLT Supplemental Information - Revenue Analysis" furnished to the SEC on June 6, 2019 on Form 8-K, and includes the revenue from JLT's aerospace business.

Marsh & McLennan Companies, Inc.Consolidated Statements of Cash Flows(Millions) (Unaudited)

Nine Months Ended September 30,

2020 2019

Operating cash flows:

Net income before non-controlling interests $ 1,667 $ 1,377

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization 547 480

Non cash lease expense 241 236

Charge for early extinguishment of debt - 32

Share-based compensation expense 219 184

Change in fair value of acquisition-related derivative 48 110 contracts and other



Changes in Assets and Liabilities:

Accrued compensation and employee benefits (431 ) (281 )

Net receivables 77 (84 )

Other changes to assets and liabilities 58 (184 )

Contributions to pension & other benefit plans in excess (240 ) (269 )of current year expense/credit

Operating lease liabilities (254 ) (240 )

Effect of exchange rate changes 67 (70 )

Net cash provided by operations 1,999 1,291

Financing cash flows:

Purchase of treasury shares - (300 )

Net borrowings from term-loan and credit facilities 1,000 300

Net increase in commercial paper - 325

Proceeds from issuance of debt 737 6,459

Repayments of debt (1,011 ) (760 )

Payments for early extinguishment of debt - (585 )

Acquisition-related derivative payments - (337 )

Net issuance of common stock from treasury shares (33 ) 43

Net distributions of non-controlling interests and (154 ) (153 )deferred/contingent consideration

Dividends paid (702 ) (655 )

Net cash provided by financing activities (163 ) 4,337

Investing cash flows:

Capital expenditures (278 ) (284 )

Net sales of long-term investments and other 98 55

Dispositions 93 225

Acquisitions (559 ) (5,500 )

Net cash used for investing activities (646 ) (5,504 )

Effect of exchange rate changes on cash and cash 43 23 equivalents

Increase in cash and cash equivalents 1,233 147

Cash and cash equivalents at beginning of period 1,155 1,066

Cash and cash equivalents at end of period $ 2,388 $ 1,213

Marsh & McLennan Companies, Inc. Reconciliation of Non-GAAP Measures - 2019 Revenue Including JLT Nine Months Ended September 30, 2019(Millions) (Unaudited)

On April 1, 2019, the Company completed its previously announced acquisition of Jardine Lloyd Thompson Group, plc. JLT's results of operations for the three and nine month periods ended September 30, 2020 are included in the Company's results of operations for 2020. The Company's prior period 2019 results of operations do not include JLT's results for the three months ended March 31, 2019. Prior to being acquired by the Company, JLT operated in three segments, Specialty, Reinsurance and Employee Benefits. As of April 1, 2019, the historical JLT businesses were combined into MMC operations as follows: JLT Specialty was included by geography within Marsh, JLT Reinsurance was included within Guy Carpenter and the majority of the JLT Employee Benefits business was included in Mercer Health and Wealth.

The JLT Transaction had a significant impact on the Company's results of operations in 2019. The Company believes that in addition to the change in reported GAAP revenue, a comparison of 2020 revenue to the combined 2019 revenue of MMC and JLT would provide investors useful information about the year-over-year results.

The table below sets forth revenue information as if the companies were combined on January 1, 2019. Consolidated revenue in 2019 for the nine months ended September 30, 2019 "MMC as previously reported" does not include JLT revenue for the period from January 1 to March 31, 2019. The "2019 Including JLT" revenue information set forth in the table below presents revenue information as if the companies were combined on January 1, 2019 and is not necessarily indicative of what the results would have been had we operated the business since January 1, 2019.

The MMC revenue amounts are as previously reported by the Company in its quarterly filings on Form 10-Q for the applicable periods. JLT 2019 revenue information is derived using the same policies and adjustments as the "JLT Supplemental Information - Revenue Analysis" furnished to the SEC on June 6, 2019 on Form 8-K, and includes the revenue from JLT's aerospace business.

Nine Months Ended September 30, 2019

MMC As Previously Reported

Risk & Insurance Services

Marsh $ 5,795

Guy Carpenter 1,328

Subtotal 7,123

Fiduciary Interest Income 80

Total Risk & Insurance Services 7,203

Consulting

Mercer 3,695

Oliver Wyman 1,563

Total Consulting 5,258

Corporate/Eliminations (73 )

Total Revenue $ 12,388



JLT 2019

Specialty (Marsh) $ 232

Reinsurance (Guy Carpenter) 118

Employee Benefits (Mercer) 74

Subtotal 424

Fiduciary Interest Income 5

Total Revenue $ 429



2019 Including JLT

Marsh $ 6,027

Guy Carpenter 1,446

Subtotal 7,473

Fiduciary Interest Income 85

Total Risk & Insurance Services 7,558

Consulting

Mercer 3,769

Oliver Wyman 1,563

Total Consulting 5,332

Corporate/Eliminations (73 )

Total Revenue Including JLT $ 12,817

View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005591/en/

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

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