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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________ 
FORM 10-Q
_____________________________________________ 
(Mark One)
☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2021
OR
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to
____________________________________________ 
Marsh & McLennan Companies, Inc.
MMC-20210930_G1.JPG
1166 Avenue of the Americas
New York, New York 10036
(212) 345-5000
_____________________________________________ 
Commission file number 1-5998
State of Incorporation: Delaware
I.R.S. Employer Identification No. 36-2668272
_____________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of exchange on which registered
Common Stock, par value $1.00 per share MMC New York Stock Exchange
Chicago Stock Exchange
London Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒ Accelerated Filer ☐
Non-Accelerated Filer
☐(Do not check if a smaller reporting company)
 Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐   No  ý
As of October 15, 2021, there were outstanding 504,895,367 shares of common stock, par value $1.00 per share, of the registrant.


INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would."
Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Factors that could materially affect our future results include, among other things:
•the increasing prevalence of ransomware, supply chain and other forms of cyber attacks, and their potential to disrupt our operations and result in the disclosure of confidential client or company information;
•the impact from lawsuits or investigations arising from errors and omissions, breaches of fiduciary duty or other claims against us in our capacity as a broker or investment advisor;
•increased regulatory activity and scrutiny by regulatory or law enforcement authorities;
•the financial and operational impact of complying with laws and regulations where we operate and the risks of noncompliance with such laws by us or third-party providers, including anti-corruption laws such as the U.S. Foreign Corrupt Practices Act, U.K. Anti-Bribery Act and cybersecurity and data privacy regulations such as the E.U.’s General Data Protection Regulation;
•the impact of COVID-19, including emerging vaccine mandates, on our business operations, results of operations, cash flows and financial position;
•our ability to compete effectively and adapt to changes in the competitive environment, including to respond to technological change, disintermediation, digital disruption and other types of innovation;
•our ability to manage risks associated with our investment management and related services business, particularly in the context of uncertain equity markets, including our ability to execute timely trades in light of increased trading volume and to manage potential conflicts of interest;
•our ability to attract and retain industry leading talent;
•the impact of changes in tax laws, guidance and interpretations, or disagreements with tax authorities; and
•the regulatory, contractual and reputational risks that arise based on insurance placement activities and insurer revenue streams.
The factors identified above are not exhaustive. Marsh & McLennan Companies, Inc. and its subsidiaries (the "Company" or "Marsh McLennan") 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 this Quarterly Report on Form 10-Q and our most recently filed Annual Report on Form 10-K.
2

TABLE OF CONTENTS
 
4
ITEM 1.
4
4
5
6
8
9
ITEM 2.
OF OPERATIONS
ITEM 3.
ITEM 4.
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.

3

PART I.    FINANCIAL INFORMATION
Item 1.Financial Statements.
MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions, except per share data) 2021 2020 2021 2020
Revenue $ 4,583  $ 3,968  $ 14,683  $ 12,808 
Expense:
Compensation and benefits 2,853  2,495  8,520  7,479 
Other operating expenses 990  933  2,837  2,834 
Operating expenses 3,843  3,428  11,357  10,313 
Operating income 740  540  3,326  2,495 
Other net benefit credits 69  60  211  187 
Interest income 1  1  2  5 
Interest expense (107) (128) (335) (387)
Investment income (loss) 13  (14) 43  (47)
Income before income taxes 716  459  3,247  2,253 
Income tax expense 174  139  880  586 
Net income before non-controlling interests 542  320  2,367  1,667 
Less: Net income attributable to non-controlling interests 5  4  27  25 
Net income attributable to the Company $ 537  $ 316  $ 2,340  $ 1,642 
Net income per share attributable to the Company:
Basic $ 1.06  $ 0.62  $ 4.61  $ 3.25 
Diluted $ 1.05  $ 0.62  $ 4.56  $ 3.21 
Average number of shares outstanding:
Basic 506  507  508  506 
Diluted 513  512  513  511 
Shares outstanding at September 30, 505  507  505  507 
The accompanying notes are an integral part of these unaudited consolidated statements.
4

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions)
 2021 2020 2021 2020
Net income before non-controlling interests $ 542  $ 320  $ 2,367  $ 1,667 
Other comprehensive (loss) income, before tax:
Foreign currency translation (loss) gain adjustments (346) 500  (413) (200)
Gain (loss) related to pension/post-retirement plans 204  (73) 234  136 
Other comprehensive (loss) income, before tax (142) 427  (179) (64)
Income tax expense (benefit) on other comprehensive income 50  (7) 56  29 
Other comprehensive (loss) income, net of tax (192) 434  (235) (93)
Comprehensive income 350  754  2,132  1,574 
Less: comprehensive income attributable to non-controlling interest 5  4  27  25 
Comprehensive income attributable to the Company $ 345  $ 750  $ 2,105  $ 1,549 
The accompanying notes are an integral part of these unaudited consolidated statements.
5

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data) (Unaudited)
September 30,
2021		 December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents $ 1,398  $ 2,089 
Receivables
Commissions and fees 5,190  4,679 
Advanced premiums and claims 120  112 
Other 475  677 
5,785  5,468 
Less-allowance for credit losses (161) (142)
Net receivables 5,624  5,326 
Other current assets 855  740 
Total current assets 7,877  8,155 
Goodwill 15,648  15,517 
Other intangible assets 2,587  2,699 
Fixed assets (net of accumulated depreciation and amortization of $2,327 at September 30, 2021 and $2,159 at December 31, 2020)
 824  856 
Pension related assets 1,935  1,768 
Right of use assets 1,899  1,894 
Deferred tax assets 692  702 
Other assets 1,520  1,458 
  $ 32,982  $ 33,049 
 The accompanying notes are an integral part of these unaudited consolidated statements.
6

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(In millions, except share data) (Unaudited)
September 30,
2021		 December 31,
2020
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 516  $ 517 
Accounts payable and accrued liabilities 2,833  3,050 
Accrued compensation and employee benefits 2,365  2,400 
Current lease liabilities 339  342 
Accrued income taxes 333  247 
Dividends payable 273  — 
Total current liabilities 6,659  6,556 
Fiduciary liabilities 10,408  8,585 
Less – cash and investments held in a fiduciary capacity (10,408) (8,585)
—  — 
Long-term debt 10,228  10,796 
Pension, post-retirement and post-employment benefits 2,387  2,662 
Long-term lease liabilities 1,900  1,924 
Liabilities for errors and omissions 356  366 
Other liabilities 1,564  1,485 
Commitments and contingencies —  — 
Equity:
Preferred stock, $1 par value, authorized 6,000,000 shares, none issued
 —  — 
Common stock, $1 par value, authorized 1,600,000,000 shares, issued 560,641,640 shares at September 30, 2021 and December 31, 2020
 561  561 
Additional paid-in capital 1,034  943 
Retained earnings 17,589  16,272 
Accumulated other comprehensive loss (5,345) (5,110)
Non-controlling interests 154  156 
13,993  12,822 
Less – treasury shares, at cost, 55,175,963 shares at September 30, 2021
and 52,914,550 shares at December 31, 2020
 (4,105) (3,562)
Total equity 9,888  9,260 
  $ 32,982  $ 33,049 
The accompanying notes are an integral part of these unaudited consolidated statements.
7

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES                        
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30,
(In millions)
 2021 2020
Operating cash flows:
Net income before non-controlling interests $ 2,367  $ 1,667 
Adjustments to reconcile net income used for operations:
Depreciation and amortization of fixed assets and capitalized software 291  282 
Amortization of intangible assets 278  265 
Non cash lease expense 241  241 
Adjustments and payments related to contingent consideration assets and liabilities (16) (14)
Provision for deferred income taxes 7  6 
Net (gain) loss on investments (43) 47 
Net (gain) loss on disposition of assets (37) 9 
Share-based compensation expense 263  219 
Changes in assets and liabilities:
Net receivables (336) 77 
Other current assets (114) (14)
Other assets (115) 69 
Accounts payable and accrued liabilities (66) (144)
Accrued compensation and employee benefits (53) (431)
Accrued income taxes 92  150 
Contributions to pension and other benefit plans in excess of current year credit (282) (240)
Other liabilities (96) 74 
Operating lease liabilities (262) (254)
Effect of exchange rate changes (45) (10)
Net cash provided by operations 2,074  1,999 
Financing cash flows:
Purchase of treasury shares (734) — 
Borrowings from term-loan and credit facilities —  1,000 
Proceeds from issuance of debt —  737 
Repayments of debt (512) (1,011)
Purchase of non-controlling interests —  (3)
Shares withheld for taxes on vested units – treasury shares (99) (131)
Issuance of common stock from treasury shares 115  98 
Payments of deferred and contingent consideration for acquisitions (110) (125)
Receipts of contingent consideration for dispositions 71  — 
Distributions of non-controlling interests (27) (26)
Dividends paid (750) (702)
Net cash used for financing activities (2,046) (163)
Investing cash flows:
Capital expenditures (268) (278)
Net sale of long term investments 2  102 
Dispositions 84  93 
Acquisitions (401) (559)
Other, net (6) (4)
Net cash used for investing activities (589) (646)
Effect of exchange rate changes on cash and cash equivalents (130) 43 
(Decrease) increase in cash and cash equivalents (691) 1,233 
Cash and cash equivalents at beginning of period 2,089  1,155 
Cash and cash equivalents at end of period $ 1,398  $ 2,388 
The accompanying notes are an integral part of these unaudited consolidated statements.
8

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions, except per share data)
 2021 2020 2021 2020
COMMON STOCK
Balance, beginning and end of period $ 561  $ 561  $ 561  $ 561 
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of period $ 945  $ 814  $ 943  $ 862 
Change in accrued stock compensation costs 89  69  41  6 
Issuance of shares under stock compensation plans and employee stock purchase plans —  (1) 50  15 
Other —  —  —  (1)
Balance, end of period $ 1,034  $ 882  $ 1,034  $ 882 
RETAINED EARNINGS
Balance, beginning of period $ 17,597  $ 16,060  $ 16,272  $ 15,199 
Net income attributable to the Company 537  316  2,340  1,642 
Dividend equivalents declared (2) (3) (8) (9)
Dividends declared (543) (471) (1,015) (930)
Balance, end of period $ 17,589  $ 15,902  $ 17,589  $ 15,902 
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME
Balance, beginning of period $ (5,153) $ (5,582) $ (5,110) $ (5,055)
Other comprehensive (loss) income, net of tax (192) 434  (235) (93)
Balance, end of period $ (5,345) $ (5,148) $ (5,345) $ (5,148)
TREASURY SHARES
Balance, beginning of period $ (3,842) $ (3,627) $ (3,562) $ (3,774)
Issuance of shares under stock compensation plans and employee stock purchase plans 37  21  191  168 
Purchase of treasury shares (300) —  (734) — 
Balance, end of period $ (4,105) $ (3,606) $ (4,105) $ (3,606)
NON-CONTROLLING INTERESTS
Balance, beginning of period $ 156  $ 166  $ 156  $ 150 
Net income attributable to non-controlling interests 5  4  27  25 
Net non-controlling interests disposed —  —  —  (1)
Distributions and other changes (7) (9) (29) (13)
Balance, end of period $ 154  $ 161  $ 154  $ 161 
TOTAL EQUITY $ 9,888  $ 8,752  $ 9,888  $ 8,752 
Dividends declared per share $ 1.07  $ 0.93  $ 2.00  $ 1.84 
The accompanying notes are an integral part of these unaudited consolidated statements.
9

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.     Nature of Operations
Marsh & McLennan Companies, Inc. (the "Company" or "Marsh McLennan"), a global professional services firm, is organized based on the different services that it offers. Under this structure, the Company’s two business segments are Risk and Insurance Services and Consulting.
The Risk and Insurance Services segment ("RIS") provides risk management solutions, services, advice and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Company conducts business in this segment through Marsh and Guy Carpenter. 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.
The Company conducts business in its Consulting segment through Mercer and Oliver Wyman Group. Mercer provides consulting expertise, advice, services and solutions in the areas of health, wealth and career consulting services and products. Oliver Wyman Group provides specialized management and economic and brand consulting services.
Business Update Related To COVID-19
The World Health Organization declared COVID-19 a pandemic in March 2020. The pandemic has impacted businesses globally including virtually every geography in which the Company operates. Governments continue to ease restrictions or fully reopen their economies, as the various vaccines are effective in mitigating the effects of the virus. Our businesses have been resilient throughout the pandemic and demand for our advice and services remains strong as the global economic conditions improve.
Although the vast majority of colleagues continue to work in a remote environment, the Company has provided guidelines on a gradual and phased return to the office depending on the level of virus containment and local health and safety regulations in each geography. The safety and well-being of our colleagues is paramount and the Company expects to continue to service clients effectively in the current remote environment and as colleagues gradually return to the office.
The Company had strong revenue growth through the first nine months of 2021 and benefited from the continued recovery of the global economy. However, uncertainty remains in the economic outlook and the ultimate extent of COVID-19 impact to the Company will depend on future developments that it is unable to predict, including new "waves" of infection from emerging variants of the virus, potential renewed restrictions and mandates by various governments or agencies, and the distribution and uptake of vaccines.
2.     Principles of Consolidation and Other Matters
The Company prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. For interim filings, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The Company believes that the information and disclosures presented are adequate to make such information and disclosures not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K").
The financial information contained herein reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s consolidated financial statements as of and for the nine months ended September 30, 2021 and 2020.




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Estimates: The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The estimates are based on historical experience and on various other assumptions that the Company believes are reasonable. Such matters include:
•the allowance for current expected credit losses on receivables
•estimates of revenue
•impairment assessments and charges
•recoverability of long-lived assets
•liabilities for errors and omissions
•deferred tax assets, uncertain tax positions and income tax expense
•share-based and incentive compensation expense
•useful lives assigned to long-lived assets, and depreciation and amortization
•fair value estimates of contingent consideration receivable or payable related to acquisitions or dispositions
The Company believes these estimates are reasonable based on information currently available at the time they are made. The Company also considered any COVID-19 potential impacts to its customer base in various industries and geographies. Insurance exposures subject to variable factors are subject to mid-term and end of term adjustments, as well as policy audits, which may reduce premiums and corresponding commissions. Estimates were updated based on internal and industry specific economic data. The ultimate extent to which COVID-19 will directly or indirectly impact the Company’s businesses, results of operations and financial condition will depend on numerous evolving factors and future developments that it is not able to predict. Actual results may differ from these estimates.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of certificates of deposit and time deposits, with original maturities of three months or less, and money market funds. The estimated fair value of the Company's cash and cash equivalents approximates their carrying value. The Company is required to maintain operating funds primarily related to regulatory requirements outside of the United States or as collateral under captive insurance arrangements. At September 30, 2021, the Company maintained $306 million compared to $270 million at December 31, 2020 related to these regulatory requirements.
Allowance for Credit Losses on Accounts Receivable
The Company’s policy for providing an allowance for credit losses on its accounts receivable is based on a combination of factors, including historical write-offs, aging of balances, and other qualitative and quantitative analyses. The charge related to expected credit losses was immaterial to the consolidated statement of income for the three and nine months ended September 30, 2021 and 2020.
Investments
The caption "Investment income (loss)" in the consolidated statements of income comprises realized and unrealized gains and losses from investments recognized in earnings. It includes, when applicable, other than temporary declines in the value of securities, mark-to-market increases or decreases in equity investments with readily determinable fair values and equity method gains or losses on the Company's investments in private equity funds.
The Company holds investments in certain private equity funds that are accounted for in accordance with the equity method of accounting using a consistently applied three-month lag period adjusted for any known significant changes from the lag period to the reporting date of the Company. The underlying private equity funds follow investment company accounting, where investments within the fund are carried at fair value. Investment gains or losses for the Company's proportionate share of the change in fair value of the funds are recorded in earnings. Investments accounted for using the equity method of accounting are included in "other assets" in the consolidated balance sheets.
The Company recorded net investment income of $13 million and $43 million for the three and nine months ended September 30, 2021 compared to net investment losses of $14 million and $47 million for the same periods last
11

year. The income in 2021 is primarily driven by gains in the Company's private equity investments compared to losses for the same periods in prior year. The net investment loss reported in the third quarter of 2020 is primarily
due to the mark-to-market change related to the Company's investment in Alexander Forbes ("AF"). The net
investment loss for the nine months ended September 30, 2020 also includes a loss of $23 million from the sale of
shares of AF during the second quarter of 2020, as well as losses related to its private equity fund investments.
Income Taxes
The Company's effective tax rate in the third quarter of 2021 was 24.2% compared with 30.3% in the third quarter of 2020. The effective tax rates for the nine months ended September 30, 2021 and 2020 were 27.1% and 26.0%, respectively.
The rate in the third quarter of 2021 reflects tax benefits from planning implemented in the period that postponed the utilization of current-year losses in the U.K. to a future year when the tax rate will be 25%, additional tax benefits related to share-based compensation offset by changes to uncertain tax positions, deferred tax and other tax adjustments. The rate in the nine months ended September 30, 2021 reflects the charge recorded in the second quarter of approximately $100 million to re-measure the Company’s U.K. deferred tax assets and liabilities upon the enactment of legislation on June 10, 2021, commonly referred to as the "Finance Act 2021". The legislation increased the U.K. corporate income tax rate from 19% to 25% effective April 1, 2023. This is the most significant discrete item in the year-to-date period, increasing the Company’s effective tax rate by 3.1% for the nine months ended September 30, 2021.
The rate in the third quarter and nine months ended September 30, 2020 reflects costs of re-measuring the Company’s U.K. deferred tax assets and liabilities upon the enactment of legislation that cancelled a scheduled 2% reduction in the U.K. corporate income tax rate, partially offset by tax benefits for the implementation of a new international funding structure to facilitate global staffing and contracting.
The tax rates in both periods reflect the impact of discrete tax items such as excess tax benefits related to share-based compensation, enacted tax legislation, changes in uncertain tax positions, deferred tax adjustments and nontaxable adjustments to contingent acquisition consideration.
The Company's tax rate reflects its income, statutory tax rates, and tax planning in the various jurisdictions in which it operates. Significant judgment is required in determining the annual effective tax rate and in evaluating uncertain tax positions.
Losses in one jurisdiction, generally, cannot offset earnings in another, and within certain jurisdictions profits and losses may not offset between entities. Consequently, losses in certain jurisdictions may require valuation allowances affecting the effective tax rate, depending on estimates of the realizability of associated deferred tax assets. The tax rate is also sensitive to changes in unrecognized tax benefits, including the impact of settled tax audits and expired statutes of limitation.
Changes in tax laws or tax rulings may have a significant impact on our effective tax rate. The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in tax returns. The Company's gross unrecognized tax benefits was $101 million at September 30, 2021 and $98 million at December 31, 2020. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and approximately $33 million within the next twelve months due to settlements of audits and expirations of statutes of limitation.
Integration and Restructuring Charges
Severance and related costs are recognized based on amounts due under established severance plans or estimates of one-time benefits that will be provided. Typically, severance benefits are recognized when the impacted colleagues are notified of their expected termination and such termination is expected to occur within the legally required notification period. These costs are included in compensation and benefits in the consolidated statements of income.
Costs for real estate consolidation are recognized based on the type of cost, and the expected future use of the facility. For locations where the Company does not expect to sub-lease the property, the amortization of any right-of-use asset is accelerated from the decision date to the cease use date. For locations where the Company expects to sub-lease the properties subsequent to its vacating the property, the right-of-use asset is reviewed for potential impairment at the earlier of the cease use date or the date a sub-lease is signed. To determine the amount of impairment, the fair value of the right-of-use asset is determined based on the present value of the estimated net cash flows related to the property. Contractual costs outside of the right-of-use asset are recognized based on the net present value of expected future cash outflows for which the Company will not receive any benefit. Such
12

amounts are based on estimates of future sub-lease income to be received and future contractual costs to be incurred. These costs are included in other operating expenses in the consolidated statements of income.
Other costs related to integration and restructuring, such as moving, legal or consulting costs are recognized as incurred. These costs are included in other operating expenses in the consolidated statements of income.
3.     Revenue
The core principle of the revenue recognition guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The entity applies the following steps to achieve that principle: identify the contract(s) with the customer, identify the performance obligations in the contract(s), determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. A performance obligation is satisfied either at a “point in time” or “over time” depending on the nature of the product or service provided, and the specific terms of the contract with customers.
The Company's revenue recognition guidance is provided in more detail in Note 2 of the consolidated financial statements and the notes included in Form 10-K for the year ended December 31, 2020.
The following schedule disaggregates components of the Company's revenue:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions) 2021 2020 2021 2020
Marsh:
EMEA $ 600  $ 536  $ 2,233  $ 1,887 
Asia Pacific 281  254  902  790 
Latin America 105  93  298  283 
Total International 986  883  3,433  2,960 
U.S./Canada 1,366  1,126  3,894  3,271 
Total Marsh 2,352  2,009  7,327  6,231 
Guy Carpenter 314  274  1,697  1,534 
 Subtotal 2,666  2,283  9,024  7,765 
Fiduciary interest income 4  8  12  40 
Total Risk and Insurance Services $ 2,670  $ 2,291  $ 9,036  $ 7,805 
Mercer:
Wealth $ 613  $ 566  $ 1,861  $ 1,719 
Health 449  430  1,398  1,348 
Career 253  220  618  549 
Total Mercer 1,315  1,216  3,877  3,616 
Oliver Wyman Group 610  480  1,813  1,458 
Total Consulting $ 1,925  $ 1,696  $ 5,690  $ 5,074 
The Company recognizes commission revenue from arrangements for a significant portion of its brokerage arrangements at a point in time on the effective date of the underlying policy. Commission revenue is estimated using historical information about the risks to be covered over the policy period, some of which are dependent on variable factors such as number of employees covered, covered payroll, airline passenger miles flown, shipped tonnage of marine cargo and others.
The following schedule provides contract assets and contract liabilities information from contracts with customers:
(In millions) September 30, 2021 December 31, 2020
Contract assets $ 307  $ 236 
Contract liabilities $ 738  $ 676 
The Company records accounts receivable when the right to consideration is unconditional, subject only to the passage of time. Contract assets primarily relate to quota share reinsurance brokerage and contingent insurer
13

revenue. The Company does not have the right to bill and collect revenue for quota share brokerage until the underlying policies written by the ceding insurer attach to the treaty. Contract assets are included in other current assets in the Company's consolidated balance sheets. Contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities are included in current liabilities in the Company's consolidated balance sheets. Revenue recognized in the first nine months of 2021 and 2020 that was included in the contract liability balance at the beginning of each of those years was $511 million and $420 million, respectively.
The amount of revenue recognized in the first nine months of 2021 and 2020 from performance obligations satisfied in previous periods, mainly due to variable consideration from contracts with insurers, quota share business and consulting contracts previously considered constrained was $68 million and $84 million, respectively.
The Company applies the practical expedient and does not disclose the value of unsatisfied performance obligations for (1) contracts with original contract terms of one year or less and (2) contracts where the Company has the right to invoice for services performed. The revenue expected to be recognized in future periods during the non-cancellable term of existing contracts greater than one year that is related to performance obligations that are unsatisfied or partially satisfied at the end of the reporting period is approximately $54 million for Marsh, $204 million for Mercer and $4 million for Oliver Wyman Group. The Company expects revenue in 2022, 2023, 2024, 2025 and 2026 and beyond of $143 million, $66 million, $31 million, $14 million and $8 million, respectively, related to these performance obligations.
4.     Fiduciary Assets and Liabilities
In its capacity as an insurance broker or agent, the Company collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. The Company also collects claims or refunds from underwriters on behalf of insureds. Un-remitted insurance premiums and claims proceeds are held by the Company in a fiduciary capacity. Risk and Insurance Services revenue includes interest on fiduciary funds ("fiduciary interest income") of $4 million and $12 million for the three and nine month periods ended September 30, 2021, respectively, and $8 million and $40 million for the three and nine month periods ended September 30, 2020, respectively. The decrease in 2021 compared to 2020 reflects the impact of lower interest rates partially offset by a higher level of average invested funds. Since fiduciary assets are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities.
Net uncollected premiums and claims and the related payables amounted to $12.7 billion at September 30, 2021 and $11.2 billion at December 31, 2020. The Company is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Accordingly, net uncollected premiums and claims and the related payables are not assets and liabilities of the Company and are not included in the accompanying consolidated balance sheets.
In certain instances, the Company advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. These advances are made from corporate funds and are reflected in the accompanying consolidated balance sheets as receivables.
5.    Per Share Data
Basic net income per share attributable to the Company is calculated by dividing the after-tax income attributable to the Company by the weighted average number of outstanding shares of the Company’s common stock.
Diluted net income per share attributable to the Company is calculated by dividing the after-tax income attributable to the Company by the weighted average number of outstanding shares of the Company’s common stock, which have been adjusted for the dilutive effect of potentially issuable common shares.
Basic and Diluted EPS Calculation Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions, except per share data) 2021 2020 2021 2020
Net income before non-controlling interests $ 542  $ 320  $ 2,367  $ 1,667 
Less: Net income attributable to non-controlling interests 5  4  27  25 
Net income attributable to the Company $ 537  $ 316  $ 2,340  $ 1,642 
Basic weighted average common shares outstanding 506  507  508  506 
Dilutive effect of potentially issuable common shares 7  5  5  5 
Diluted weighted average common shares outstanding 513  512  513  511 
Average stock price used to calculate common stock equivalents $ 151.22  $ 114.64  $ 133.41  $ 107.64 
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6.    Supplemental Disclosures to the Consolidated Statements of Cash Flows
The following schedule provides additional information concerning acquisitions, interest and income taxes paid for the nine month periods ended September 30, 2021 and 2020.
(In millions) 2021 2020
Assets acquired, excluding cash $ 601  $ 795 
Liabilities assumed (59) (73)
Contingent/deferred purchase consideration (141) (163)
Net cash outflow for current year acquisitions $ 401  $ 559 
(In millions) 2021 2020
Interest paid $ 407  $ 437 
Income taxes paid, net of refunds $ 686  $ 414 
The classification of contingent consideration in the statement of cash flows is dependent upon whether the payment was part of the initial liability established on the acquisition date (financing) or an adjustment to the acquisition date liability (operating).
The following amounts are included in the consolidated statements of cash flows as a financing activity. The Company paid deferred and contingent consideration of $110 million for the nine months ended September 30, 2021. This consisted of deferred purchase consideration related to prior years' acquisitions of $84 million and contingent purchase consideration of $26 million. Cash flows from financing activities also reflect the receipt of contingent consideration of $71 million related to prior year dispositions. For the nine months ended September 30, 2020, the Company paid deferred and contingent consideration of $125 million, consisting of deferred purchase consideration related to prior years' acquisitions of $60 million and contingent consideration of $65 million.
The following amounts are included in the operating section of the consolidated statements of cash flows. For the nine months ended September 30, 2021, the Company recorded an expense for adjustments to contingent consideration liabilities of $35 million and made contingent consideration payments of $46 million. In addition, the Company recorded income of $24 million, primarily related to the settlement of contingent consideration receivables and received cash of $19 million related to prior year dispositions. For the nine months ended September 30, 2020, the Company recorded an expense for adjustments to contingent consideration liabilities of $22 million and made contingent consideration payments of $36 million.
The Company had non-cash issuances of common stock under its share-based payment plan of $225 million and $217 million for the nine months ended September 30, 2021 and 2020, respectively. The Company recorded stock-based compensation expense for equity awards related to restricted stock units, performance stock units and stock options of $263 million and $219 million for the nine months ended September 30, 2021 and 2020, respectively.
7.    Other Comprehensive Income (Loss)
The changes, net of tax, in the balances of each component of Accumulated Other Comprehensive Income ("AOCI") for the three and nine months ended September 30, 2021 and 2020, including amounts reclassified out of AOCI, are as follows:
(In millions)
Pension/Post-Retirement Plans Gains (Losses)
Foreign Currency Translation Gains (Losses)
Total Gains (Losses)
Balance as of July 1, 2021 $ (4,102) $ (1,051) $ (5,153)
Other comprehensive income (loss) before reclassifications 115  (346) (231)
Amounts reclassified from accumulated other comprehensive income
 39  —  39 
Net current period other comprehensive income (loss) 154  (346) (192)
Balance as of September 30, 2021 $ (3,948) $ (1,397) $ (5,345)
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(In millions)
Pension/Post-Retirement Plans Gains (Losses)
Foreign Currency Translation Gains (Losses)
Total Gains (Losses)
Balance as of July 1, 2020 $ (3,346) $ (2,236) $ (5,582)
Other comprehensive (loss) income before reclassifications (94) 497  403 
Amounts reclassified from accumulated other comprehensive income
 31  —  31 
Net current period other comprehensive (loss) income (63) 497  434 
Balance as of September 30, 2020 $ (3,409) $ (1,739) $ (5,148)

(In millions)
Pension/Post-Retirement Plans Gains (Losses)
Foreign Currency Translation Gains (Losses)
Total Gains (Losses)
Balance as of December 31, 2020 $ (4,126) $ (984) $ (5,110)
Other comprehensive income (loss) before reclassifications 63  (413) (350)
Amounts reclassified from accumulated other comprehensive income
 115  —  115 
Net current period other comprehensive income (loss) 178  (413) (235)
Balance as of September 30, 2021 $ (3,948) $ (1,397) $ (5,345)

(In millions)
Pension/Post-Retirement Plans Gains (Losses)
Foreign Currency Translation Gains (Losses)
Total Gains (Losses)
Balance as of December 31, 2019 $ (3,512) $ (1,543) $ (5,055)
Other comprehensive income (loss) before reclassifications
 12  (196) (184)
Amounts reclassified from accumulated other comprehensive income
 91  —  91 
Net current period other comprehensive income (loss) 103  (196) (93)
Balance as of September 30, 2020 $ (3,409) $ (1,739) $ (5,148)
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The components of other comprehensive income (loss) for the three and nine month periods ended September 30, 2021 and 2020 are as follows:
Three Months Ended September 30, 2021 2020
(In millions) Pre-Tax Tax (Credit) Net of Tax Pre-Tax Tax (Credit) Net of Tax
Foreign currency translation adjustments $ (346) $ —  $ (346) $ 500  $ 3  $ 497 
Pension/post-retirement plans:
Amortization of gains included in net periodic pension cost:
Net actuarial losses (a) 52  13  39  40  9  31 
Subtotal 52  13  39  40  9  31 
Foreign currency translation adjustments 88  21  67  (113) (19) (94)
Effect of remeasurement 64  16  48  —  —  — 
Pension/post-retirement plans gains (losses) 204  50  154  (73) (10) (63)
Other comprehensive (loss) income $ (142) $ 50  $ (192) $ 427  $ (7) $ 434 
(a) Components of net periodic pension cost are included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.
Nine Months Ended September 30, 2021 2020
(In millions) Pre-Tax Tax (Credit) Net of Tax Pre-Tax Tax (Credit) Net of Tax
Foreign currency translation adjustments $ (413) $ —  $ (413) $ (200) $ (4) $ (196)
Pension/post-retirement plans:
Amortization of (gains) losses included in net periodic pension cost:
Prior service credits (a) (1) —  (1) (1) —  (1)
Net actuarial losses (a) 156  40  116  120  28  92 
Subtotal 155  40  115  119  28  91 
Foreign currency translation adjustments 7  1  6  17  5  12 
Other adjustments (7) (2) (5) —  —  — 
Effect of remeasurement 77  17  60  —  —  — 
Effect of settlement 2  —  2  —  —  — 
Pension/post-retirement plans gains 234  56  178  136  33  103 
Other comprehensive (loss) income $ (179) $ 56  $ (235) $ (64) $ 29  $ (93)
(a) Components of net periodic pension cost are included in other net benefit credits in the consolidated statements of income. Income tax expense on net actuarial losses are included in income tax expense.
8.     Acquisitions and Dispositions
The Company’s acquisitions have been accounted for as business combinations. Net assets and results of operations are included in the Company’s consolidated financial statements commencing at the respective purchase closing dates. In connection with acquisitions, the Company records the estimated values of the net tangible assets and the identifiable intangible assets purchased, which typically consist of customer relationships, developed technology, trademarks and non-compete agreements. The valuation of purchased intangible assets involves significant estimates and assumptions. The Company estimates the fair value of purchased intangible assets, primarily using the income approach, by determining the present value of future cash flows over the remaining economic life of the respective assets. The significant estimates and assumptions used in this approach include the determination of the discount rate, economic life, future revenue growth rates, expected account attrition rates and earnings margins. Refinement and completion of final valuation of net assets acquired could affect the carrying value of tangible assets, goodwill and identifiable intangible assets.
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The Risk and Insurance Services segment completed three acquisitions during the first nine months ended September 30, 2021:
•April – Marsh McLennan Agency ("MMA") acquired PayneWest Insurance, Inc., a Montana-based full-service broker providing business insurance, surety, employee benefits and personal insurance services to companies and individuals, and The Pryor Group, LLC, a Texas-based full-service broker providing business insurance with a specialty in quick service restaurants and the personal lines of franchise owners.
•September – MMA acquired Vaaler Insurance, Inc., a North Dakota-based insurance broker providing business insurance, employee health and benefits, and personal lines solutions, with specialized expertise in the construction, education, and healthcare industries.
Total purchase consideration for acquisitions made during the nine months ended September 30, 2021 was $546 million, which consisted of cash paid of $405 million and deferred purchase consideration and estimated contingent consideration of $141 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. The Company also paid $84 million of deferred purchase consideration and $72 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment until purchase accounting is finalized.
The following table presents the preliminary allocation of purchase consideration to the assets acquired and liabilities assumed during 2021 based on the estimated fair values for the acquisitions as of their respective acquisition dates:
Acquisitions through September 30, 2021
(In millions)
Cash $ 405 
Estimated fair value of deferred/contingent consideration 141 
Total consideration $ 546 
Allocation of purchase price:
Cash and cash equivalents $ 4 
Accounts receivable, net 32 
Fixed assets, net 5 
Other intangible assets 190 
Goodwill 374 
Total assets acquired 605 
Current liabilities 27 
Other liabilities 32 
Total liabilities assumed 59 
Net assets acquired $ 546 
The purchase price allocation for assets acquired and liabilities assumed is based on estimates that are preliminary in nature and subject to adjustments, which could be material. Any necessary adjustments must be finalized during the measurement period, which for a particular asset, liability, or non-controlling interest ends once the acquirer determines that either (1) the necessary information has been obtained or (2) the information is not available. However, the measurement period for all items is limited to one year from the acquisition date.
The estimation of fair value requires numerous judgments, assumptions and estimates about future events and uncertainties, which could materially impact these values, and the related amortization, where applicable, in the Company’s results of operations.
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The following chart provides information about intangible assets acquired during 2021:
Intangible assets through September 30, 2021
(In millions)
 Amount Weighted Average Amortization Period
Client relationships $ 176  13.7 years
Other 14  3.8 years
$ 190 
The consolidated statements of income include the results of operations of acquired companies since their respective acquisition dates. The consolidated statements of income for the three and nine month periods ended September 30, 2021 include revenue of approximately $38 million and $73 million and operating income of $3 million and $4 million for acquisitions made in 2021. The consolidated statements of income for the three and nine month periods ended September 30, 2020 included approximately $52 million and $115 million of revenue, respectively, and operating loss of $8 million and operating income of $3 million, respectively, related to acquisitions made in 2020.
Dispositions
During the first nine months of 2021, the Company sold certain businesses, primarily in the U.S. and the U.K., for cash proceeds of approximately $84 million and recognized a net gain of approximately $50 million, primarily related to the commercial networks business in the U.K. that provided broking and back-office solutions for small independent brokers.
Prior-Year Acquisitions
The Risk and Insurance Services segment completed seven acquisitions during 2020:
•January – MMA acquired Momentous Insurance Brokerage Inc., a California-based full-service risk management and employee benefits firm specializing in high net worth private client services and insurance solutions for the entertainment industry, and Ironwood Insurance Services, LLC, an Atlanta-based broker that provides commercial property/casualty insurance, employee benefits, and private client solutions to mid-size businesses and individuals across the U.S.
•April – MMA acquired Assurance Holdings, Inc., an Illinois-based full service brokerage providing business insurance, employee benefits, private client insurance, and retirement services to businesses and individuals across the U.S.
•June – MMA acquired Nico Insurance Services, Inc., a California-based agency providing employee benefits solutions to groups and individuals.
•December – MMA acquired Heritage Insurance Services, Inc., a Kentucky-based full service broker that provides commercial property and casualty and personal lines primarily in the trucking and transportation industry, Inspro Insurance, Inc., a Nebraska-based full service broker that provides commercial property and casualty insurance, personal lines and employee benefits services, and Compass Financial Partners, LLC, a North Carolina-based retirement consulting and investment advisory firm.
Total purchase consideration for acquisitions made during the nine months ended September 30, 2020 was approximately $742 million, which consisted of cash paid of $579 million and deferred purchase and estimated contingent consideration of $163 million. Contingent consideration arrangements are based primarily on earnings before interest, tax, depreciation and amortization ("EBITDA") or revenue targets over a period of two to four years. For the first nine months of 2020, the Company also paid $60 million of deferred purchase consideration and $101 million of contingent consideration related to acquisitions made in prior years. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized.
Prior year dispositions
In the first nine months of 2020, the Company sold certain businesses primarily in the U.S., U.K. and Canada for cash proceeds of approximately $93 million.
Pro-Forma Information
The following unaudited pro-forma financial data gives effect to the acquisitions made by the Company during 2021 and 2020. In accordance with accounting guidance related to pro-forma disclosures, the information presented for acquisitions made in 2021 is as if they occurred on January 1, 2020 and reflects acquisitions made in 2020 as if they occurred on January 1, 2019. The unaudited pro-forma information adjusts for the effects of amortization of
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acquired intangibles. The unaudited pro-forma financial data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if such acquisitions had occurred on the dates indicated, nor is it necessarily indicative of future consolidated results.
Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions, except per share data) 2021 2020 2021 2020
Revenue $ 4,587  $ 4,019  $ 14,730  $ 12,955 
Net income attributable to the Company $ 538  $ 322  $ 2,345  $ 1,655 
Basic net income per share attributable to the Company $ 1.06  $ 0.63  $ 4.62  $ 3.27 
Diluted net income per share attributable to the Company $ 1.05  $ 0.63  $ 4.57  $ 3.24 
9.    Goodwill and Other Intangibles
The Company is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs the annual impairment assessment for each of its reporting units during the third quarter of each year. In accordance with applicable accounting guidance, a company can assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, the Company may elect to proceed directly to the quantitative goodwill impairment test. In 2021, the Company elected to perform a qualitative impairment assessment. As part of its assessment, the Company considered numerous factors, including:
•that the fair value of each reporting unit exceeds its carrying value by a substantial margin based on its most recent quantitative assessment in 2019;
•whether significant acquisitions or dispositions occurred which might alter the fair value of its reporting units;
•macroeconomic conditions and their potential impact on reporting unit fair values;
•actual performance compared with budget and prior projections used in its estimation of reporting unit fair values;
•industry and market conditions; and
•the year-over-year change in the Company’s share price.
The Company completed its qualitative assessment in the third quarter of 2021 and concluded that goodwill was not impaired.
Other intangible assets that are not deemed to have an indefinite life are amortized over their estimated lives and assessed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. Based on its assessment, the Company concluded that other intangible assets were not impaired. The Company does not have any indefinite lived intangible assets.
Changes in the carrying amount of goodwill are as follows:
September 30,
(In millions) 2021 2020
Balance as of January 1,
 $ 15,517  $ 14,671 
Goodwill acquired 374  462 
Other adjustments(a)
 (243) (99)
Balance at September 30, $ 15,648  $ 15,034 
(a) Primarily reflects the impact of foreign exchange.
The goodwill arising from the acquisitions in 2021 and 2020 consist largely of the synergies and economies of scale
expected from combining the operations of the Company and the acquired entities and the trained and assembled
workforce acquired.
The goodwill acquired in 2021 and 2020 included approximately $374 million and $462 million, respectively, of which approximately $25 million and $140 million is deductible for tax purposes, and is primarily related to the Risk and Insurance Services segment.
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Goodwill allocable to the Company’s reportable segments at September 30, 2021 is as follows: Risk and Insurance Services, $11.8 billion and Consulting, $3.8 billion.
The gross cost and accumulated amortization of identified intangible assets at September 30, 2021 and December 31, 2020 are as follows:
September 30, 2021 December 31, 2020
(In millions) Gross
Cost		 Accumulated
Amortization		 Net
Carrying
Amount		 Gross
Cost		 Accumulated
Amortization		 Net
Carrying
Amount
Client relationships $ 3,827  $ 1,331  $ 2,496  $ 3,713  $ 1,170  $ 2,543 
Other (a)
 367  276  91  386  230  156 
 Amortized intangibles $ 4,194  $ 1,607  $ 2,587  $ 4,099  $ 1,400  $ 2,699 
(a) Primarily non-compete agreements, trade names and developed technology.
Aggregate amortization expense for the nine months ended September 30, 2021 and 2020 was $278 million and $265 million, respectively. The estimated future aggregate amortization expense is as follows:
For the Years Ending December 31,
(In millions)
 Estimated Expense
2021 (excludes amortization through September 30, 2021) $ 88 
2022 329 
2023 302 
2024 281 
2025 241 
Subsequent years 1,346 
 Total future amortization $ 2,587 
10.     Fair Value Measurements
Fair Value Hierarchy
The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by the FASB. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, for disclosure purposes, is determined based on the lowest level input that is significant to the fair value measurement. Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on the inputs in the valuation techniques as follows:
Level 1.Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market (examples include active exchange-traded equity securities and exchange-traded money market mutual funds).
Assets and liabilities measured using Level 1 inputs include exchange-traded equity securities, exchange-traded mutual funds and money market funds.
Level 2.Assets and liabilities whose values are based on the following:
a)Quoted prices for similar assets or liabilities in active markets;
b)Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
c)Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and
d)Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full asset or liability (for example, certain mortgage loans).
Assets and liabilities using Level 2 inputs are related to an equity security.
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Level 3.Assets and liabilities whose values are based on prices, or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.
Assets and liabilities measured using Level 3 inputs relate to assets and liabilities for contingent purchase consideration.
Valuation Techniques
Equity Securities, Money Market Mutual Funds and Mutual Funds – Level 1
Investments for which market quotations are readily available are valued at the sale price on their principal exchange or, for certain markets, official closing bid price. Money market mutual funds are valued using a valuation technique that results in price per share at $1.00.
Contingent Purchase Consideration Assets and Liabilities – Level 3
Purchase consideration for some acquisitions and dispositions made by the Company include contingent consideration arrangements. Contingent consideration arrangements are based primarily on EBITDA or revenue targets over a period of two to four years. The fair value of the contingent purchase consideration asset and liability is estimated as the present value of future cash flows to be paid, based on projections of revenue and earnings and related targets of the acquired and disposed entities.
The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020:
Identical Assets
(Level 1)		 Observable Inputs
(Level 2)		 Unobservable
Inputs
(Level 3)		 Total
(In millions) 09/30/21 12/31/20 09/30/21 12/31/20 09/30/21 12/31/20 09/30/21 12/31/20
Assets:
Financial instruments owned:
Exchange traded equity securities(a)
 $ 60  $ 59  $ —  $ —  $ —  $ —  $ 60  $ 59 
Mutual funds(a)
 193  186  —  —  —  —  193  186 
Money market funds(b)
 106  587  —  —  —  —  106  587 
Other equity investment(a)
 —  —  8  8  —  —  8  8 
Contingent purchase consideration assets(c)
 —  —  —  —  5  68  5  68 
Total assets measured at fair value $ 359  $ 832  $ 8  $ 8  $ 5  $ 68  $ 372  $ 908 
Fiduciary Assets:
U.S. treasury bills $ 75  $ 150  $ —  $ —  $ —  $ —  $ 75  $ 150 
Money market funds 244  173  —  —  —  —  244  173 
Total fiduciary assets measured
at fair value		 $ 319  $ 323  $ —  $ —  $ —  $ —  $ 319  $ 323 
Liabilities:
Contingent purchase
consideration liability(d)
 $ —  $ —  $ —  $ —  $ 303  $ 243  $ 303  $ 243 
Total liabilities measured at fair value $ —  $ —  $ —  $ —  $ 303  $ 243  $ 303  $ 243 
(a) Included in other assets in the consolidated balance sheets.
(b) Included in cash and cash equivalents in the consolidated balance sheets.
(c) Included in other receivables in the consolidated balance sheets.
(d) Included in accounts payable and accrued liabilities and other liabilities in the consolidated balance sheets.
The Level 3 assets in the chart reflect contingent purchase consideration from the sale of businesses. The change in the contingent purchase consideration assets from December 31, 2020 is driven primarily by cash receipts of approximately $90 million. This decrease was partially offset by the impact of accretion and adjustments to the fair value of the contingent purchase consideration assets.
During the nine months ended September 30, 2021, there were no assets or liabilities that were transferred between levels.
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The following table sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities for the three and nine month periods ended September 30, 2021 and 2020:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions) 2021 2020 2021 2020
Balance at beginning of period $ 340  $ 233  $ 243  $ 225 
Net additions 1  —  99  96 
Payments (54) (23) (72) (101)
Revaluation impact 18  18  35  8 
Other (a)
 (2) 2  (2) 2 
Balance at September 30, $ 303  $ 230  $ 303  $ 230 
(a) Primarily reflects the impact of foreign exchange.
Long-Term Investments
The Company holds investments in public and private companies as well as certain private equity investments that are accounted for using the equity method of accounting. The carrying value of these investments was $328 million and $280 million at September 30, 2021 and December 31, 2020, respectively.
Investments in Public and Private Companies
The Company has investments in private insurance and consulting companies with a carrying value of $178 million and $169 million at September 30, 2021 and December 31, 2020, respectively. These investments are accounted for using the equity method of accounting, the results of which are included in revenue in the consolidated statements of income and the carrying value of which is included in other assets in the consolidated balance sheets. The Company records its share of income or loss on its equity method investments, some of which are on a one quarter lag basis.
Private Equity Investments
The Company's investments in private equity funds were $150 million and $111 million at September 30, 2021 and December 31, 2020, respectively. The carrying values of these private equity investments approximate fair value. The underlying private equity funds follow investment company accounting, where investments within the fund are carried at fair value. The Company records in earnings its proportionate share of the change in fair value of the funds on the investment income (loss) line in the consolidated statements of income. These investments are included in other assets in the consolidated balance sheets. The Company recorded net investment gains of $13 million and $40 million for the three and nine month periods ended September 30, 2021, respectively, and gain of $2 million and loss of $6 million from these investments for the same periods in 2020.
Other Investments
At September 30, 2021 and December 31, 2020, the Company held certain equity investments with readily determinable market values of $74 million and $72 million, respectively, including an investment in the common stock of Alexander Forbes ("AF") of $55 million at September 30, 2021 and $54 million at December 31, 2020. The Company also held investments without readily determinable market values of $33 million at both September 30, 2021 and December 31, 2020.
The Company sold 242 million shares of the common stock of AF during 2020. The investment in AF, which was accounted for using the equity method of accounting prior to the sale of these shares, is accounted for at fair value, with investment gains and losses recorded as investment income (loss) in the consolidated statement of income.
11.    Derivatives
Net Investment Hedge
The Company has investments in various subsidiaries with Euro functional currencies. As a result, the Company is exposed to the risk of fluctuations between the Euro and U.S. dollar exchange rates. The Company designated its €1.1 billion senior note debt instruments ("euro notes") as a net investment hedge (the "hedge") of its Euro denominated subsidiaries. The hedge effectiveness is re-assessed each quarter to confirm that the designated equity balance at the beginning of each period continues to equal or exceed 80% of the outstanding balance of the Euro debt instrument and that all the critical terms of the hedging instrument and the hedged net investment continue to match. The Company concluded that the hedge continues to be highly effective as of September 30,
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2021, and the change in the debt balance related to foreign exchange fluctuations was recorded in foreign currency translation gains (losses) in the consolidated balance sheet. The U.S. dollar value of the euro notes decreased $63 million through September 30, 2021 due to the impact of foreign exchange rates, with a corresponding decrease to accumulated other comprehensive loss.
12.    Leases
A lease is defined as a party obtaining the right to use an asset legally owned by another party. The Company determines if an arrangement is a lease at inception. Operating leases are recognized on the balance sheet as Right-of-Use ("ROU") assets and operating lease liabilities based on the present value of the remaining future minimum payments over the lease term at commencement date of the lease.
The Company uses discount rates to determine the present value of future lease payments. The Company primarily uses its incremental borrowing rate adjusted to reflect a secured rate, based on the information available for leases, including the lease term and interest rate environment in the country in which the lease exists. The lease terms used to calculate the ROU asset and lease liability may include options to extend or terminate when it is reasonably certain that the Company will exercise that option.
The Company leases office facilities under non-cancelable operating leases with terms generally ranging between 10 and 25 years. The Company utilizes these leased office facilities for use by its employees in countries in which the Company conducts its business. Leases are negotiated with third-parties and, in some instances contain renewal, expansion and termination options. The Company also subleases certain office facilities to third-parties when the Company no longer utilizes the space. None of the Company’s leases restrict the payment of dividends or the incurrence of debt or additional lease obligations, or contain significant purchase options. In addition to the base rental costs, our lease agreements generally provide for rent escalations resulting from increased assessments for real estate taxes and other charges. A portion of our real estate lease portfolio contains base rents subject to annual changes in the Consumer Price Index ("CPI") as well as charges for operating expenses which are reimbursable to the landlord based on actual usage. Changes to the CPI and payments for such reimbursable operating expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments is incurred. Approximately 99% of the Company’s lease obligations are for the use of office space. All of the Company’s material leases are operating leases.
As a practical expedient, the Company elected an accounting policy not to separate non-lease components from lease components and instead account as a single lease component. The Company also elected not to recognize ROU assets and lease liabilities for leases that, at the commencement date, are for 12 months or less.
The following chart provides additional information about the Company’s property leases:
 
 Three Months Ended
September 30,		 Nine Months Ended
September 30,
(In millions) 2021 2020 2021 2020
Lease Cost:
Operating lease cost $ 93  $ 99  $ 282 $ 288 
Short-term lease cost 1  1  4 3 
Variable lease cost 38  28  101 92 
Sublease income (3) (5) (16) (15)
Net lease cost $ 129  $ 123  $ 371 $ 368 
Other information:
Operating cash outflows from operating leases $ 310 $ 306 
Right of use assets obtained in exchange for new operating lease liabilities $ 282 $ 162 
Weighted-average remaining lease term – real estate 9.0 years 8.4 years
Weighted-average discount rate – real estate leases 2.75% 3.02%
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Future minimum lease payments for the Company’s operating leases as of September 30, 2021 are as follows:
Payment Dates (In millions)
 Real Estate Leases
Remainder of 2021 $ 102 
2022 387 
2023 340 
2024 298 
2025 266 
2026 243 
Subsequent years 897 
Total future lease payments 2,533 
Less: Imputed interest (294)
Total $ 2,239 
Current lease liabilities $ 339 
Long-term lease liabilities 1,900 
Total lease liabilities $ 2,239 
Note: Table excludes obligations for leases with original terms of 12 months or less which have not been recognized as a right of use asset or liability in the consolidated balance sheets.

As of September 30, 2021, the Company had additional operating real estate leases that had not yet commenced of $13 million. These operating leases will commence over the next 12 months.
13.    Retirement Benefits
The Company maintains qualified and non-qualified defined benefit pension plans for some of its U.S. and non-U.S. eligible employees. The Company’s policy for funding its tax-qualified defined benefit pension plans is to contribute amounts at least sufficient to meet the funding requirements set forth in accordance with applicable law.
The target asset allocation for the Company's U.S. plans is 64% equities and equity alternatives and 36% fixed income. At September 30, 2021 the actual allocation for the Company's U.S. Plan was 65% equities and equity alternatives and 35% fixed income. The target allocation for the U.K. Plans at September 30, 2021 is 27% equities and equity alternatives and 73% fixed income. At September 30, 2021, the actual allocation for the U.K. Plans was 28% equities and equity alternatives and 72% fixed income. The Company's U.K. Plans comprised approximately 81% of non-U.S. plan assets at December 31, 2020. The assets of the Company's defined benefit plans are diversified and are managed in accordance with applicable laws and with the goal of maximizing the plans' real return within acceptable risk parameters. The Company generally uses threshold-based portfolio re-balancing to ensure the actual portfolio remains consistent with target asset allocation ranges.
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The components of the net periodic benefit cost for defined benefit plans are as follows:
Combined U.S. and significant non-U.S. Plans Pension
Benefits
For the Three Months Ended September 30,
(In millions) 2021 2020
Service cost $ 9  $ 10 
Interest cost 87  112 
Expected return on plan assets (208) (212)
Recognized actuarial loss 52  40 
Total credit $ (60) $ (50)
Combined U.S. and significant non-U.S. Plans Pension
Benefits
For the Nine Months Ended September 30,
(In millions) 2021 2020
Service cost $ 29  $ 27 
Interest cost 258  322 
Expected return on plan assets (627) (629)
Recognized actuarial loss 155  120 
Net periodic benefit credit $ (185) $ (160)
Settlement loss 2  — 
Total credit $ (183) $ (160)
Amounts Recorded in the Consolidated Statement of Income
Combined U.S. and significant non-U.S. Plans Pension
Benefits
For the Three Months Ended September 30,
(In millions) 2021 2020
Compensation and benefits expense $ 9  $ 10 
Other net benefit credit (69) (60)
Total credit $ (60) $ (50)
Amounts Recorded in the Consolidated Statement of Income
Combined U.S. and significant non-U.S. Plans Pension
Benefits
For the Nine Months Ended September 30,
(In millions) 2021 2020
Compensation and benefits expense $ 29  $ 27 
Other net benefit credit (212) (187)
Total credit $ (183) $ (160)
U.S. Plans only Pension
Benefits
For the Three Months Ended September 30,
(In millions) 2021 2020
Interest cost $ 47  $ 53 
Expected return on plan assets (82) (86)
Recognized actuarial loss 22  18 
Net periodic benefit credit $ (13) $ (15)
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U.S. Plans only Pension
Benefits
For the Nine Months Ended September 30,
(In millions) 2021 2020
Interest cost $ 139  $ 160 
Expected return on plan assets (245) (259)
Recognized actuarial loss 67  54 
Net periodic benefit credit $ (39) $ (45)

Significant non-U.S. Plans only Pension
Benefits
For the Three Months Ended September 30,
(In millions) 2021 2020
Service cost $ 9  $ 10 
Interest cost 40  59 
Expected return on plan assets (126) (126)
Recognized actuarial loss 30  22 
Total credit $ (47) $ (35)
Significant non-U.S. Plans only Pension
Benefits
For the Nine Months Ended September 30,
(In millions) 2021 2020
Service cost $ 29  $ 27 
Interest cost 119  162 
Expected return on plan assets (382) (370)
Recognized actuarial loss 88  66 
Net periodic benefit credit $ (146) $ (115)
Settlement loss 2  — 
Total credit $ (144) $ (115)
The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:
Combined U.S. and significant non-U.S. Plans Pension
Benefits
September 30, 2021 2020
Weighted average assumptions:
Expected return on plan assets 4.72  % 5.31  %
Discount rate 1.92  % 2.57  %
Rate of compensation increase 1.85  % 1.76  %
The Company made approximately $90 million of contributions to its U.S. and non-U.S. defined benefit pension plans for the nine months ended September 30, 2021. The Company expects to contribute approximately $39 million to its U.S. and non-U.S. defined benefit pension plans during the remainder of 2021.
Defined Contribution Plans
The Company maintains certain defined contribution plans ("DC Plans") for its employees, the most significant being in the U.S. and the U.K. The cost of the U.S. DC Plans was $115 million and $110 million for the nine months ended September 30, 2021 and 2020, respectively. The cost of the U.K. DC Plans was $106 million and $94 million for the nine months ended September 30, 2021 and 2020, respectively.
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14.    Debt
The Company’s outstanding debt is as follows:
(In millions) September 30,
2021		 December 31,
2020
Short-term:
Current portion of long-term debt $ 516  $ 517 
516  517 
Long-term:
Senior notes – 4.80% due 2021
 —  500 
Senior notes – 2.75% due 2022
 500  499 
Senior notes – 3.30% due 2023
 349  349 
Senior notes – 4.05% due 2023
 249  249 
Senior notes – 3.50% due 2024
 598  598 
Senior notes – 3.875% due 2024
 996  995 
Senior notes – 3.50% due 2025
 498  498 
Senior notes – 1.349% due 2026
 647  677 
Senior notes – 3.75% due 2026
 598  597 
Senior notes – 4.375% due 2029
 1,499  1,499 
Senior notes – 1.979% due 2030
 632  664 
Senior notes – 2.250% due 2030
 738  737 
Senior notes – 5.875% due 2033
 298  298 
Senior notes – 4.75% due 2039
 495  495 
Senior notes – 4.35% due 2047
 493  493 
Senior notes – 4.20% due 2048
 592  592 
Senior notes – 4.90% due 2049
 1,238  1,237 
Mortgage – 5.70% due 2035
 320  331 
Other 4  5 
10,744  11,313 
Less current portion 516  517 
  $ 10,228  $ 10,796 
The senior notes in the table are registered by the Company with the Securities and Exchange Commission and are not guaranteed.
On April 9, 2021, the Company increased its short-term commercial paper financing program to $2.0 billion from $1.5 billion. The Company had no commercial paper outstanding at September 30, 2021.
Credit Facilities
On April 2, 2021, the Company entered into an amended and restated multi-currency unsecured $2.8 billion five-year revolving credit facility ("New Facility"). The interest rate on the New Facility is based on LIBOR plus a fixed margin which varies with the Company’s credit ratings. The New Facility expires in April 2026 and requires the Company to maintain certain coverage and leverage ratios which are tested quarterly. The New Facility includes provisions for determining a LIBOR successor rate in the event LIBOR reference rates are no longer available or in certain other circumstances which are determined to make using an alternative rate desirable. As of September 30, 2021, the Company had no borrowings under this facility.
In connection with the New Facility, the Company terminated its previous multi-currency unsecured $1.8 billion five-year revolving credit facility and its unsecured $1 billion 364-day unsecured revolving credit facility ("364-day Facility").
In January 2020, the Company closed on a $500 million one-year and $500 million two-year term loan facilities. In the first quarter of 2020 the Company borrowed $1 billion against these facilities, which were subsequently repaid during the third and fourth quarters of 2020. These two facilities were terminated as of December 31, 2020 after repayment of the initial draw down.
28

Additional credit facilities, guarantees and letters of credit are maintained with various banks, primarily related to operations located outside the United States, aggregating $512 million at September 30, 2021 and $573 million at December 31, 2020. There were no outstanding borrowings under these facilities at September 30, 2021 and December 31, 2020.
Senior Notes
On April 15, 2021, the Company repaid $500 million of senior notes maturing in July 2021.
In May 2020, the Company issued $750 million of senior notes due 2030.
In March 2020, the Company repaid $500 million of maturing senior notes.
Fair Value of Short-term and Long-term Debt
The following table reflects the carrying values and estimated fair value of the Company’s short-term and long-term debt. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or need to dispose of the financial instrument.
September 30, 2021 December 31, 2020
(In millions) Carrying
Amount		 Fair
Value		 Carrying
Amount		 Fair
Value
Short-term debt $ 516  $ 519  $ 517  $ 523 
Long-term debt $ 10,228  $ 11,878  $ 10,796  $ 12,858 
The fair value of the Company's short-term debt consists primarily of term debt maturing within the next year and its fair value approximates its carrying value. The estimated fair value of the Company's long-term debt is based on discounted future cash flows using current interest rates available for debt with similar terms and remaining maturities. Shor