Business Wire | Jul 30, 2020 07:01AM EDT

Marsh & McLennan Companies Reports Second Quarter 2020 Results

Jul. 30, 2020

NEW YORK--(BUSINESS WIRE)--Jul. 30, 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 second quarter ended June 30, 2020.

Dan Glaser, President and CEO, said: "In the midst of the pandemic, we delivered another strong quarter reflecting outstanding execution and the resilience of our business. In the second quarter, despite a modest decline in underlying revenue due to the global impact of COVID-19, we generated 10% adjusted operating income growth and 12% growth in adjusted EPS. For the first six months of 2020, we achieved 2% underlying revenue growth and 10% adjusted EPS growth.

"I am humbled by our colleagues' exceptional support of our clients and one another during these tumultuous times."

Consolidated Results

Consolidated revenue in the second quarter of 2020 was $4.2 billion, a decrease of 4%, or a 2% decline on an underlying basis compared with the second quarter of 2019. In the second quarter, the Company recognized a $36 million reduction to previously recorded revenue, the vast majority in Marsh, to reflect the estimated impact of the economic crisis on exposure units. This reduction is included in underlying revenue growth and adjusted earnings for the second quarter.

Operating income was $885 million, an increase of 30% from the prior year. Adjusted operating income, which excludes noteworthy items as presented in the attached supplemental schedules, rose 10% to $984 million. Net income attributable to the Company was $572 million, or $1.12 per diluted share, compared with $0.65 in the second quarter of 2019. Adjusted earnings per share rose 12% to $1.32 per diluted share compared with $1.18 for the prior year period.

For the six months ended June 30, 2020, consolidated revenue was $8.8 billion, an increase of 5%, or 2% on an underlying basis compared to the prior period a year ago. Operating income was $2.0 billion, an increase of 21% from the prior year period. Adjusted operating income rose 13% to $2.2 billion. Net income attributable to the Company was $1.3 billion. Fully diluted earnings per share was $2.60 compared with $2.05 in the first six months of 2019. Adjusted earnings per share increased 10% to $2.96 compared with $2.70 for the comparable period in 2019.

Risk & Insurance Services

Risk & Insurance Services revenue was $2.6 billion in the second quarter of 2020, an increase of 1%, or 2% on an underlying basis. Operating income rose 34% to $696 million, and adjusted operating income was $762 million, an increase of 19% from the prior year period. For the six months ended June 30, 2020, revenue was $5.5 billion, an increase of 10%, or 4% on an underlying basis. Operating income rose 24% to $1.6 billion, and adjusted operating income was $1.7 billion, an increase of 20% from the prior year period.

Marsh's revenue in the second quarter was $2.2 billion, an increase of 1% on an underlying basis. In US/Canada, underlying revenue rose 3%. In International, underlying revenue was flat compared to the prior year period, reflecting 4% underlying revenue growth in Asia Pacific, 4% growth in Latin America, and a decline of 3% in EMEA. For the six months ended June 30, 2020, Marsh's underlying revenue growth was 3% compared to the prior period a year ago.

Guy Carpenter's revenue in the second quarter was $433 million, an increase of 9% on an underlying basis. For the six months ended June 30, 2020, Guy Carpenter's underlying revenue growth was 8%.

Consulting

Consulting revenue in the second quarter was $1.6 billion, a decrease of 10%, or a decline of 6% on an underlying basis compared to the same period a year ago. Operating income decreased 8% to $255 million, and adjusted operating income decreased 13% to $265 million. For the first six months of 2020, revenue was $3.4 billion, a decrease of 3%, or a decline of 1% on an underlying basis. Operating income of $537 million decreased 4% and adjusted operating income decreased 7% to $554 million.

Mercer's revenue was $1.1 billion in the second quarter, a decrease of 3% on an underlying basis. Health, with revenue of $432 million, was up 1% on an underlying basis. Wealth revenue of $561 million declined 2% on an underlying basis, and Career revenue of $156 million decreased 16% on an underlying basis. For the six months ended June 30, 2020, Mercer's revenue was $2.4 billion, an increase of 1% on an underlying basis compared to the same period a year ago.

Oliver Wyman's revenue was $467 million in the second quarter, a decrease of 13% on an underlying basis. For the first six months ended June 30, 2020, Oliver Wyman's revenue was $978 million, a decline of 7% on an underlying basis.

Other Items

In May 2020, the Company issued $750 million of 10-year senior unsecured notes. The Company used the net proceeds to reduce outstanding short term borrowings.

In July, the Board of Directors increased the quarterly dividend to $0.465 per share, effective with the third quarter dividend payable on August 14, 2020.

Conference Call

A conference call to discuss second 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 1693114. 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 the coronavirus global pandemic 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; * 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, particularly given the increased risk of phishing and other cybersecurity attacks or unauthorized dissemination of information caused by remote work arrangements, including those in the existing JLT information systems; * the impact of investigations, reviews, or other activity by regulatory or law enforcement authorities; * the financial and operational impact of complying with laws and regulations where we operate and the risks of noncompliance with such laws, 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; * 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, including certain provisions of the U.S. Tax Cuts and Jobs Act, 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 Six Months Ended June 30, June 30,

2020 2019 2020 2019

Revenue $ 4,189 $ 4,349 $ 8,840 $ 8,420

Expense:

Compensation and Benefits 2,429 2,537 4,984 4,819

Other Operating Expenses 875 1,132 1,901 1,983

Operating Expenses 3,304 3,669 6,885 6,802

Operating Income 885 680 1,955 1,618

Other Net Benefit Credits 63 70 127 134

Interest Income 2 2 4 30

Interest Expense (132 ) (141 ) (259 ) (261 )

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

Investment (Loss) Income (31 ) 8 (33 ) 13

Acquisition Related Derivative - (37 ) - (8 )Contracts

Income Before Income Taxes 787 550 1,794 1,494

Income Tax Expense 207 206 447 423

Net Income Before 580 344 1,347 1,071 Non-Controlling Interests

Less: Net Income Attributable 8 12 21 23 to Non-Controlling Interests

Net Income Attributable to the $ 572 $ 332 $ 1,326 $ 1,048 Company

Net Income Per Share Attributable to the Company:

- Basic $ 1.13 $ 0.66 $ 2.62 $ 2.07

- Diluted $ 1.12 $ 0.65 $ 2.60 $ 2.05

Average Number of Shares Outstanding

- Basic 506 507 505 506

- Diluted 511 512 510 511

Shares Outstanding at June 30 506 507 506 507

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 AnalysisThree Months Ended June 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/ June 30, Change Currency Dispositions/ Underlying GAAP Impact Other Impact Revenue 2020 2019 Revenue

Risk andInsurance Services

Marsh $ 2,161 $ 2,156 - (2 )% 1 % 1 %

Guy 433 392 10 % - 2 % 9 %Carpenter

Subtotal 2,594 2,548 2 % (2 )% 1 % 2 %

FiduciaryInterest 9 26 Income

Total Riskand 2,603 2,574 1 % (2 )% 1 % 2 %InsuranceServices

Consulting

Mercer 1,149 1,260 (9 )% (2 )% (3 )% (3 )%

Oliver Wyman 467 540 (14 )% (1 )% - (13 )%Group

Total 1,616 1,800 (10 )% (2 )% (2 )% (6 )%Consulting

Corporate/ (30 ) (25 ) Eliminations

Total $ 4,189 $ 4,349 (4 )% (2 )% - (2 )%Revenue



Revenue Details

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

Components of Revenue Change*

Three Months Ended Acquisitions June 30, % / Change Currency Dispositions Underlying GAAP Impact / Revenue 2020 2019 Revenue Other Impact

Marsh:

EMEA $ 597 $ 652 (9 )% (3 )% (3 )% (3 )%

Asia Pacific 298 291 2 % (2 )% 1 % 4 %

Latin America 99 116 (14 )% (14 )% (5 )% 4 %

Total 994 1,059 (6 )% (4 )% (2 )% - International

U.S./Canada 1,167 1,097 6 % - 4 % 3 %

Total Marsh $ 2,161 $ 2,156 - (2 )% 1 % 1 %

Mercer:

Wealth 561 613 (8 )% (3 )% (3 )% (2 )%

Health 432 458 (5 )% (2 )% (5 )% 1 %

Career 156 189 (18 )% (2 )% (1 )% (16 )%

Total Mercer $ 1,149 $ 1,260 (9 )% (2 )% (3 )% (3 )%

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

Marsh & McLennan Companies, Inc.Supplemental Information - Revenue AnalysisSix Months Ended June 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 six months ended June 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*

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

Risk andInsurance Services

Marsh $ 4,222 $ 3,893 8 % $ 4,125 2 % (2 )% 1 % 3 %

Guy 1,260 1,055 19 % 1,172 7 % - - 8 %Carpenter

Subtotal 5,482 4,948 11 % 5,297 3 % (1 )% 1 % 4 %

Fiduciary Interest 32 49 54 Income

Total Riskand 5,514 4,997 10 % 5,351 3 % (1 )% 1 % 4 %InsuranceServices

Consulting

Mercer 2,400 2,415 (1 )% 2,489 (4 )% (2 )% (3 )% 1 %

Oliver Wyman 978 1,058 (8 )% 1,058 (8 )% (1 )% - (7 )%

Total 3,378 3,473 (3 )% 3,547 (5 )% (2 )% (2 )% (1 )%Consulting

Corporate/ (52 ) (50 ) (50 ) Eliminations

Total $ 8,840 $ 8,420 5 % $ 8,848 - (2 )% - 2 %Revenue



Revenue Details

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

Components of Revenue Change Including JLT*

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

Marsh:

EMEA $ 1,351 $ 1,285 5 % $ 1,392 (3 )% (2 )% (1 )% 1 %

Asia Pacific 536 456 17 % 523 3 % (2 )% - 5 %

Latin America 190 194 (2 )% 217 (12 )% (12 )% (4 )% 3 %

Total 2,077 1,935 7 % 2,132 (3 )% (3 )% (1 )% 2 %International

U.S./Canada 2,145 1,958 10 % 1,993 8 % - 4 % 4 %

Total Marsh $ 4,222 $ 3,893 8 % $ 4,125 2 % (2 )% 1 % 3 %

Mercer:

Wealth 1,153 1,156 - 1,211 (5 )% (2 )% (3 )% -

Health 918 900 2 % 919 - (1 )% (3 )% 5 %

Career 329 359 (8 )% 359 (9 )% (2 )% - (7 )%

Total Mercer $ 2,400 $ 2,415 (1 )% $ 2,489 (4 )% (2 )% (3 )% 1 %



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



Marsh & McLennan Companies, Inc.Reconciliation of Non-GAAP Measures - Actual as ReportedThree Months Ended June 30(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 "GAAP" or "reported" results). The Company also refers to and presents below certain additional non-GAAP financial measures, within the meaning of Regulation G under the Securities Exchange Act of 1934. These measures are: adjusted operating income (loss), adjusted operating margin, adjusted income, net of tax and adjusted earnings per share (EPS). The Company has 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 purposes 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 our 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 or (loss). The following tables identify these noteworthy items and reconcile adjusted operating income (loss) to GAAP operating income or loss, on a consolidated and segment basis, for the three and six months ended June 30, 2020 and 2019. The following tables also present adjusted operating margin. In 2019, the Company changed its methodology for calculating adjusted operating margin due to the significant amount of identified intangible asset amortization related to the JLT Transaction, on April 1, 2019. For the three and six months ended June 30, 2020 and 2019, adjusted operating margin is calculated by dividing the sum of adjusted operating income plus identified intangible asset amortization by consolidated or segment adjusted revenue.

Risk & Corporate/ Insurance Consulting Eliminations Total Services

Three Months Ended June 30, 2020

Operating income (loss) $ 696 $ 255 $ (66 ) $ 885

Operating margin 26.7 % 15.8 % N/A 21.1 %

Add (Deduct) impact of Noteworthy Items:

Restructuring, excluding JLT - 2 9 11 (a)

Changes in contingent 4 1 2 7 consideration (b)

JLT integration and 39 7 11 57 restructuring costs (c)

JLT acquisition-related costs 12 - 1 13 (d)

Disposal of businesses (e) 6 - - 6

Other 5 - - 5

Operating income adjustments 66 10 23 99

Adjusted operating income $ 762 $ 265 $ (43 ) $ 984 (loss)

Total identified intangible $ 75 $ 13 $ - $ 88 amortization expense

Adjusted operating margin 32.1 % 17.3 % N/A 25.5 %



As Reported Results

Three Months Ended June 30, 2019

Operating income (loss), as $ 517 $ 278 $ (115 ) $ 680 reported

Operating margin 20.1 % 15.5 % N/A 15.6 %

Add (Deduct) impact of Noteworthy Items:

Restructuring, excluding JLT 1 22 3 26 (a)

Changes in contingent 9 - - 9 consideration (b)

JLT integration and 56 5 18 79 restructuring costs (c)

JLT acquisition-related costs 60 - 41 101 (d)

Other (2 ) - 1 (1 )

Operating income adjustments 124 27 63 214

Adjusted operating income $ 641 $ 305 $ (52 ) $ 894 (loss)

Total identified intangible $ 80 $ 20 $ - $ 100 amortization expense

Adjusted operating margin 27.8 % 18.0 % N/A 22.8 %



(a) Corporate charges in 2020 reflect consulting costs related to therestructure of the Global HR function and adjustments to restructuringliabilities for future rent under non-cancellable leases. Consulting in 2019reflects severance related to the Mercer restructuring program.

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

(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 advisor fees, stamp duty taxesand legal fees related to the closing of the JLT Transaction. 2019 alsoincludes 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 operatingincome.

(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.

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

The information presented below represents the actual as reported data for the six months ended June 30, 2020 and 2019. Results for the six months ended June 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

Six Months Ended June 30, 2020

Operating income (loss) $ 1,550 $ 537 $ (132 ) $ 1,955

Operating margin 28.1 % 15.9 % N/A 22.1 %

Add (Deduct) impact of Noteworthy Items:

Restructuring, excluding JLT 2 6 12 20 (a)

Changes in contingent 7 (3 ) 2 6 consideration (b)

JLT integration and 100 17 20 137 restructuring costs (c)

JLT acquisition-related costs 24 1 1 26 (d)

Disposal of businesses (e) 6 (4 ) - 2

Other 5 - - 5

Operating income adjustments 144 17 35 196

Adjusted operating income $ 1,694 $ 554 $ (97 ) $ 2,151 (loss)

Total identified intangible $ 147 $ 27 $ - $ 174 amortization expense

Adjusted operating margin 33.4 % 17.2 % N/A 26.3 %



As Reported Results

Six Months Ended June 30, 2019

Operating income (loss), as $ 1,250 $ 557 $ (189 ) $ 1,618 reported

Operating margin 25.0 % 16.1 % N/A 19.2 %

Add (Deduct) impact of Noteworthy Items:

Restructuring, excluding JLT 6 33 5 44 (a)

Changes in contingent 19 1 - 20 consideration (b)

JLT integration and 76 5 34 115 restructuring costs (c)

JLT acquisition-related costs 65 - 47 112 (d)

Other - - 1 1

Operating income adjustments 166 39 87 292

Adjusted operating income $ 1,416 $ 596 $ (102 ) $ 1,910 (loss)

Total identified intangible $ 121 $ 30 $ - $ 151 amortization expense

Adjusted operating margin 30.6 % 18.0 % N/A 24.4 %



(a) Corporate charges in 2020 reflect consulting costs related to therestructure of the Global HR function and adjustments to restructuringliabilities for future rent under non-cancellable leases. Risk & InsuranceServices reflects severance and related charges from non-JLT merger integrationcosts. Consulting reflects severance related to the Mercer restructuringprogram.

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

(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 advisor fees, stamp duty taxesand legal fees related to the closing of the JLT Transaction. 2019 alsoincludes 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 operatingincome.

(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.

Marsh & McLennan Companies, Inc.Reconciliation of Non-GAAP MeasuresThree and Six Months Ended June 30,(Millions) (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 set forth in the preceding tables and investments gains or losses related to the impact of mark-to-market adjustments on certain equity securities. Adjustments also include JLT acquisition related items, including change in fair value of derivative contracts, financing costs and interest income on funds held in escrow. Adjusted EPS is calculated by dividing the Company's adjusted income, net of tax, by MMC's 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 six months ended June 30, 2020 and 2019. The information presented below represents the actual as reported results for the three and six month periods ended June 30, 2020 and 2019. Results for the six months ended June 30, 2019 do not include JLT's results of operations for the period January 1, 2019 through March 31, 2019.

Three Months Ended Three Months Ended June 30, 2020 June 30, 2019

Amount Adjusted Amount Adjusted EPS EPS

Net incomebeforenon-controlling $ 580 $ 344 interests, asreported

Less:Non-controlling 8 12 interest, netof tax

Subtotal $ 572 $ 1.12 $ 332 $ 0.65

Operatingincome $ 99 $ 214 adjustments

Investments 25 (2 ) adjustment (a)

Change in fairvalue ofacquisition - 37 relatedderivativecontracts (b)

Financing costs - (1 ) (c)

Earlyextinguishment - 32 of debt

Impact ofincome taxes on (21 ) (10 ) above items

103 0.20 270 0.53

Adjustedincome, net of $ 675 $ 1.32 $ 602 $ 1.18 tax



Six Months Ended Six Months Ended June 30, 2020 June 30, 2019

Amount Adjusted Amount Adjusted EPS EPS

Net incomebeforenon-controlling $ 1,347 $ 1,071 interests, asreported

Less:Non-controlling 21 23 interest, netof tax

Subtotal $ 1,326 $ 2.60 $ 1,048 $ 2.05

Operatingincome $ 196 $ 292 adjustments

Investments 26 (6 ) adjustment (a)

Change in fairvalue ofacquisition - 8 relatedderivativecontracts (b)

Financing costs - 53 (c)

Interest onfunds held in - (25 ) escrow (d)

Earlyextinguishment - 32 of debt

Impact ofincome taxes on (38 ) (22 ) above items

184 0.36 332 0.65

Adjustedincome, net of $ 1,510 $ 2.96 $ 1,380 $ 2.70 tax



(a) The Company recorded mark-to-market losses of $2 million and gains of $2million for the three month periods ended June 30, 2020 and June 30, 2019,respectively, and losses of $3 million and gains of $6 million for the sixmonth periods ended June 30, 2020 and June 30, 2019, respectively, which areincluded in investment (loss) income in the consolidated 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 $23 million in the second quarter of2020 primarily related to the recognition of accumulated foreign currencylosses previously recorded as part of equity.

(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 Six Months Ended June 30,(Millions) (Unaudited)

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

Consolidated

Compensation and Benefits $ 2,429 $ 2,537 $ 4,984 $ 4,819

Other Operating Expenses 875 1,132 1,901 1,983

Total Expenses $ 3,304 $ 3,669 $ 6,885 $ 6,802



Depreciation and amortization $ 91 $ 86 $ 188 $ 160 expense

Identified intangible amortization 88 100 174 151 expense

Total $ 179 $ 186 $ 362 $ 311



Stock option expense $ 5 $ 4 $ 21 $ 19



Risk and Insurance Services

Compensation and Benefits $ 1,382 $ 1,418 $ 2,834 $ 2,639

Other Operating Expenses 525 639 1,130 1,108

Total Expenses $ 1,907 $ 2,057 $ 3,964 $ 3,747



Depreciation and amortization $ 45 $ 39 $ 97 $ 71 expense

Identified intangible amortization 75 80 147 121 expense

Total $ 120 $ 119 $ 244 $ 192



Consulting

Compensation and Benefits $ 940 $ 1,009 $ 1,931 $ 1,965

Other Operating Expenses 421 513 910 951

Total Expenses $ 1,361 $ 1,522 $ 2,841 $ 2,916



Depreciation and amortization $ 29 $ 27 $ 57 $ 51 expense

Identified intangible amortization 13 20 27 30 expense

Total $ 42 $ 47 $ 84 $ 81



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 June 30, 31, 2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 1,711 $ 1,155

Net receivables 5,647 5,236

Other current assets 739 677

Total current assets 8,097 7,068



Goodwill and intangible assets 17,558 17,445

Fixed assets, net 866 858

Pension related assets 1,672 1,632

Right of use assets 1,882 1,921

Deferred tax assets 618 676

Other assets 1,476 1,757

TOTAL ASSETS $ 32,169 $ 31,357



LIABILITIES AND EQUITY

Current liabilities:

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

Accounts payable and accrued liabilities 2,668 2,746

Accrued compensation and employee benefits 1,345 2,197

Current lease liabilities 332 342

Accrued income taxes 367 179

Total current liabilities 5,928 6,679



Fiduciary liabilities 7,441 7,344

Less - cash and investments held in a fiduciary (7,441 ) (7,344 )capacity

- -

Long-term debt 11,985 10,741

Pension, post-retirement and post-employment 2,197 2,336 benefits

Long-term lease liabilities 1,902 1,926

Liabilities for errors and omissions 350 335

Other liabilities 1,415 1,397



Total equity 8,392 7,943

TOTAL LIABILITIES AND EQUITY $ 32,169 $ 31,357



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

Six Months Ended June 30,

2020 2019

Operating cash flows:

Net income before non-controlling interests $ 1,347 $ 1,071

Adjustments to reconcile net income to cash provided by operations:

Depreciation and Amortization 362 310

Non cash lease expense 165 151

Charge for early extinguishment of debt - 32

Share-based compensation expense 147 117

Change in fair value of acquisition-related derivative 15 89 contracts and other



Changes in Assets and Liabilities:

Accrued compensation and employee benefits (848 ) (670 )

Net receivables (389 ) (437 )

Other changes to assets and liabilities 114 34

Contributions to pension & other benefit plans in excess (165 ) (172 )of current year expense/credit

Operating lease liabilities (164 ) (155 )

Effect of exchange rate changes (6 ) (129 )

Net cash provided by operations 578 241

Financing cash flows:

Purchase of treasury shares - (100 )

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

Net increase in commercial paper - 549

Proceeds from issuance of debt 737 6,459

Repayments of debt (507 ) (457 )

Payments for early extinguishment of debt - (585 )

Acquisition-related derivative payments - (337 )

Net issuance of common stock from treasury shares (49 ) 21

Net distributions of non-controlling interests and (94 ) (104 )deferred/contingent consideration

Dividends paid (466 ) (422 )

Net cash provided by financing activities 621 5,324

Investing cash flows:

Capital expenditures (200 ) (161 )

Net sales of long-term investments and other 105 66

Dispositions 93 165

Acquisitions (562 ) (5,500 )

Net cash used for investing activities (564 ) (5,430 )

Effect of exchange rate changes on cash and cash (79 ) 93 equivalents

Increase in cash and cash equivalents 556 228

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

Cash and cash equivalents at end of period $ 1,711 $ 1,294



Marsh & McLennan Companies, Inc.Reconciliation of Non-GAAP Measures - 2019 Revenue Including JLTSix Months Ended June 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 six month periods ended June 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 six months ended June 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.

Six Months Ended June 30, 2019

MMC As Previously Reported

Risk & Insurance Services

Marsh $ 3,893

Guy Carpenter 1,055

Subtotal 4,948

Fiduciary Interest Income 49

Total Risk & Insurance Services 4,997

Consulting

Mercer 2,415

Oliver Wyman 1,058

Total Consulting 3,473

Corporate/Eliminations (50 )

Total Revenue $ 8,420



JLT 2019

Specialty (Marsh) $ 232

Reinsurance (Guy Carpenter) 117

Employee Benefits (Mercer) 74

Subtotal 423

Fiduciary Interest Income 5

Total Revenue $ 428



2019 Including JLT

Marsh $ 4,125

Guy Carpenter 1,172

Subtotal 5,297

Fiduciary Interest Income 54

Total Risk & Insurance Services 5,351

Consulting

Mercer 2,489

Oliver Wyman 1,058

Total Consulting 3,547

Corporate/Eliminations (50 )

Total Revenue Including JLT $ 8,848

View source version on businesswire.com: https://www.businesswire.com/news/home/20200730005457/en/

CONTACT: Media: Erick R. Gustafson Marsh & McLennan Companies +1 202 263 7788 mailto:erick.gustafson@mmc.com Investors: Sarah DeWitt Marsh & McLennan Companies +1 212 345 6750 mailto:sarah.dewitt@mmc.com