Marsh & Mclennan Companies, Inc 10-Q for FY2022 Q1

Marsh & Mclennan Companies, Inc. (MRSH)

10-Q 2022-04-21 For: 2022-03-31

Added on April 08, 2026

About this 10-Q

Marsh & Mclennan Companies, Inc filed this 10-Q on April 21, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $5.55B; up 9.2% from $5.08B a year earlier
Net income: $1.07B; up 9.0% from net income of $983M a year earlier
Diluted EPS: $2.10; up 9.9% from $1.91 a year earlier

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PART I. FINANCIAL INFORMATION		4

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	4

	CONSOLIDATED STATEMENTS OF INCOME	4

	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5

	CONSOLIDATED BALANCE SHEETS	6

	CONSOLIDATED STATEMENTS OF CASH FLOWS	8

	CONSOLIDATED STATEMENTS OF EQUITY	9

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	10

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS	32
	OF OPERATIONS
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44

ITEM 4.	CONTROLS & PROCEDURES	45

PART II. OTHER INFORMATION		46

ITEM 1.	LEGAL PROCEEDINGS	46

ITEM 1A.	RISK FACTORS	46

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	46

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	46

ITEM 4.	MINE SAFETY DISCLOSURE	46

ITEM 5.	OTHER INFORMATION	46

ITEM 6.	EXHIBITS	46


	Three Months Ended March 31,
(In millions, except per share data)	2022		2021
Revenue	$	5,549	$	5,083
Expense:
Compensation and benefits	3,100		2,807
Other operating expenses	1,004		918
Operating expenses	4,104		3,725
Operating income	1,445		1,358
Other net benefit credits	62		71
Interest income	1		—
Interest expense	(110)		(118)

Investment income	26		11

Income before income taxes	1,424		1,322
Income tax expense	338		324


Net income before non-controlling interests	1,086		998
Less: Net income attributable to non-controlling interests	15		15
Net income attributable to the Company	$	1,071	$	983
Net income per share attributable to the Company:
- Basic	$	2.13	$	1.93

- Diluted	$	2.10	$	1.91

Average number of shares outstanding:
- Basic	503		509
- Diluted	509		514
Shares outstanding at March 31,	502		509


	Three Months Ended March 31,
(In millions)	2022		2021
Net income before non-controlling interests	$	1,086	$	998
Other comprehensive (loss) income, before tax:
Foreign currency translation adjustments	(169)		(91)

Gain related to pension/post-retirement plans	86		6
Other comprehensive loss, before tax	(83)		(85)
Income tax expense on other comprehensive income	21		2
Other comprehensive loss, net of tax	(104)		(87)
Comprehensive income	982		911
Less: comprehensive income attributable to non-controlling interest	15		15
Comprehensive income attributable to the Company	$	967	$	896


(In millions, except share data)	(Unaudited) March 31, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	772	$	1,752
Receivables
Commissions and fees	5,503		5,093
Advanced premiums and claims	139		136

Other	494		523
	6,136		5,752
Less-allowance for credit losses	(173)		(166)
Net receivables	5,963		5,586


Other current assets	1,053		926
Total current assets	7,788		8,264
Goodwill	16,254		16,317
Other intangible assets	2,720		2,810
Fixed assets (net of accumulated depreciation and amortization of $1,679 at March 31, 2022 and $1,589 at December 31, 2021)	865		847
Pension related assets	2,246		2,270
Right of use assets	1,825		1,868
Deferred tax assets	530		551
Other assets	1,460		1,461
	$	33,688	$	34,388


(In millions, except share data)	(Unaudited) March 31, 2022		December 31, 2021
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	1,191	$	17
Accounts payable and accrued liabilities	3,084		3,165
Accrued compensation and employee benefits	1,400		2,942

Current lease liabilities	331		332
Accrued income taxes	308		198
Dividends payable	273		—
Total current liabilities	6,587		6,654
Fiduciary liabilities	10,461		9,622
Less – cash and cash equivalents held in a fiduciary capacity	(10,461)		(9,622)
	—		—
Long-term debt	10,552		10,933
Pension, post-retirement and post-employment benefits	1,515		1,632
Long-term lease liabilities	1,831		1,880
Liabilities for errors and omissions	352		355
Other liabilities	1,695		1,712
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 March 31, 2022 and December 31, 2021	561		561
Additional paid-in capital	1,026		1,112
Retained earnings	18,916		18,389
Accumulated other comprehensive loss	(4,679)		(4,575)
Non-controlling interests	219		213
	16,043		15,700
Less – treasury shares, at cost, 58,524,983 shares at March 31, 2022 and 57,105,619 shares at December 31, 2021	(4,887)		(4,478)
Total equity	11,156		11,222
	$	33,688	$	34,388


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


For the Three Months Ended March 31,
(In millions)	2022		2021
Operating cash flows:
Net income before non-controlling interests	$	1,086	$	998
Adjustments to reconcile net income used for operations:
Depreciation and amortization of fixed assets and capitalized software	89		97
Amortization of intangible assets	91		100

Non cash lease expense	77		79
Adjustments and payments related to contingent consideration assets and liabilities	10		(1)
Deconsolidation of Russian businesses	39		—


Net gain on investments	(26)		(11)
Net (gain) loss on disposition of assets	(1)		3
Share-based compensation expense	105		78

Changes in assets and liabilities:
Net receivables	(429)		(404)

Other assets	(117)		(116)

Accrued compensation and employee benefits	(1,528)		(1,167)
Provision for taxes, net of payments and refunds	144		198
Contributions to pension and other benefit plans in excess of current year credit	(125)		(102)
Other liabilities	(33)		(78)
Operating lease liabilities	(84)		(82)

Net cash used for operations	(702)		(408)
Financing cash flows:
Purchase of treasury shares	(500)		(112)
Net proceeds from issuance of commercial paper	825		—


Repayments of debt	(4)		(4)




Shares withheld for taxes on vested units – treasury shares	(134)		(93)
Issuance of common stock from treasury shares	34		35
Payments of deferred and contingent consideration for acquisitions	(16)		(32)
Receipts of contingent consideration for dispositions	3		—
Distributions of non-controlling interests	(7)		(8)
Dividends paid	(272)		(237)
Change in fiduciary liabilities	926		190
Net cash provided by (used for) financing activities	855		(261)
Investing cash flows:
Capital expenditures	(122)		(69)
Net (purchases) sale of long term investments	(8)		4



Dispositions	(4)		—
Acquisitions	(24)		—

Other, net	(1)		(2)
Net cash used for investing activities	(159)		(67)
Effect of exchange rate changes on cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	(136)		(36)
Decrease in cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	(142)		(772)
Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at beginning of period	11,375		10,674



Cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity at end of period	$	11,233	$	9,902


Reconciliation of cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity to the Consolidated Balance Sheets
Three Months Ended March 31,	2022		2021
(In millions)
Cash and cash equivalents	$	772	$	1,120
Cash and cash equivalents held in a fiduciary capacity	10,461		8,782
Total cash, cash equivalents, and cash and cash equivalents held in a fiduciary capacity	$	11,233	$	9,902


(In millions)	March 31, 2022		December 31, 2021
Contract assets	$	357	$	290
Contract liabilities	$	824	$	776


Basic and Diluted EPS Calculation	Three Months Ended March 31,
(In millions, except per share data)	2022		2021
Net income before non-controlling interests	$	1,086	$	998
Less: Net income attributable to non-controlling interests	15		15
Net income attributable to the Company	$	1,071	$	983
Basic weighted average common shares outstanding	503		509
Dilutive effect of potentially issuable common shares	6		5
Diluted weighted average common shares outstanding	509		514
Average stock price used to calculate common stock equivalents	$	157.49	$	114.96



(In millions)	Pension/Post-Retirement Plans Gains (Losses)		Foreign Currency Translation Gains (Losses)		Total Gains (Losses)
Balance as of December 31, 2021	$	(3,202)	$	(1,373)	$	(4,575)

Other comprehensive income (loss) before reclassifications	35		(169)		(134)
Amounts reclassified from accumulated other comprehensive income	30		—		30
Net current period other comprehensive income (loss)	65		(169)		(104)
Balance as of March 31, 2022	$	(3,137)	$	(1,542)	$	(4,679)


Acquisitions through March 31, 2022
(In millions)
Cash	$	24
Estimated fair value of deferred/contingent consideration	4

Total consideration	$	28
Allocation of purchase price:


Net receivables	1
Other current assets	2
Goodwill	17
Other intangible assets	10





Total assets acquired	30
Current liabilities	1






Other liabilities	1
Total liabilities assumed	2

Net assets acquired	$	28


March 31,
(In millions)	2022		2021
Balance as of January 1,	$	16,317	$	15,517
Goodwill acquired	17		—
Other adjustments(a)	(80)		(59)
Balance at March 31,	$	16,254	$	15,458


For the Years Ending December 31,
(In millions)	Estimated Expense
2022 (excludes amortization through March 31, 2022)	$	261
2023	328
2024	308
2025	269
2026	248
Subsequent years	1,306
Total future amortization	$	2,720


	Three Months Ended March 31,
(In millions)		2022		2021
Marsh:
EMEA		$	842	$	837
Asia Pacific		321		274
Latin America		104		90
Total International		1,267		1,201
U.S./Canada		1,279		1,124
Total Marsh		2,546		2,325
Guy Carpenter		999		895
Subtotal		3,545		3,220
Fiduciary interest income		4		5
Total Risk and Insurance Services		$	3,549	$	3,225
Mercer:


Wealth		$	617	$	623
Health		524		487
Career		202		178
Total Mercer		1,343		1,288
Oliver Wyman Group		667		585
Total Consulting		$	2,010	$	1,873


	March 31, 2022						December 31, 2021
(In millions)	Gross Cost		Accumulated Amortization		Net Carrying Amount		Gross Cost		Accumulated Amortization		Net Carrying Amount
Client relationships	$	4,041	$	1,389	$	2,652	$	4,066	$	1,334	$	2,732
Other (a)	362		294		68		365		287		78
Amortized intangibles	$	4,403	$	1,683	$	2,720	$	4,431	$	1,621	$	2,810


Combined U.S. and significant non-U.S. Plans	Pension Benefits

For the Three Months Ended March 31,	2022		2021
Weighted average assumptions:
Expected return on plan assets	4.56	%	4.72	%
Discount rate	2.28	%	1.92	%
Rate of compensation increase	2.16	%	1.85	%


(In millions)	March 31, 2022		December 31, 2021
Short-term:
Commercial paper	$	825	$	—


Current portion of long-term debt	366		17
	1,191		17
Long-term:








Senior notes – 3.30% due 2023	350		349
Senior notes – 4.05% due 2023	250		249
Senior notes – 3.50% due 2024	599		599
Senior notes – 3.875% due 2024	997		997
Senior notes – 3.50% due 2025	498		498
Senior notes – 1.349% due 2026	615		629
Senior notes – 3.75% due 2026	598		598
Senior notes – 4.375% due 2029	1,499		1,499
Senior notes – 1.979% due 2030	600		614
Senior notes – 2.250% due 2030	739		739
Senior notes – 2.375% due 2031	396		397
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	593		593
Senior notes – 4.90% due 2049	1,238		1,238
Senior notes – 2.90% due 2051	346		346
Mortgage – 5.70% due 2035	312		316

Other	2		3
	10,918		10,950
Less current portion	366		17
	$	10,552	$	10,933


	Identical Assets (Level 1)				Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Total
(In millions)	03/31/22		12/31/21		03/31/22		12/31/21		03/31/22		12/31/21		03/31/22		12/31/21
Assets:
Financial instruments owned:
Exchange traded equity securities(a)	$	69	$	61	$	—	$	—	$	—	$	—	$	69	$	61
Mutual funds(a)	179		192		—		—		—		—		179		192
Money market funds(b)	82		425		—		—		—		—		82		425
Other equity investment(a)	—		—		8		8		—		—		8		8
Contingent purchase consideration assets(c)	—		—		—		—		2		5		2		5
Total assets measured at fair value	$	330	$	678	$	8	$	8	$	2	$	5	$	340	$	691
Fiduciary Assets:


U.S. treasury bills(e)	$	30	$	55	$	—	$	—	$	—	$	—	$	30	$	55
Money market funds	205		527		—		—		—		—		205		527
Total fiduciary assets measured at fair value	$	235	$	582	$	—	$	—	$	—	$	—	$	235	$	582
Liabilities:
Contingent purchase consideration liability(d)	$	—	$	—	$	—	$	—	$	358	$	352	$	358	$	352

Total liabilities measured at fair value	$	—	$	—	$	—	$	—	$	358	$	352	$	358	$	352


Payment Dates (In millions)	Real Estate Leases
Remainder of 2022	$	290
2023	356
2024	314
2025	282
2026	258
2027	223
Subsequent years	710
Total future lease payments	2,433
Less: Imputed interest	(271)
Total	$	2,162
Current lease liabilities	$	331
Long-term lease liabilities	1,831
Total lease liabilities	$	2,162



Amounts Recorded in the Consolidated Statement of Income
Combined U.S. and significant non-U.S. Plans	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2022		2021
Compensation and benefits expense	$	8	$	10
Other net benefit credit	(63)		(71)
Total credit	$	(55)	$	(61)



U.S. Plans only	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2022		2021

Interest cost	$	48	$	46
Expected return on plan assets	(84)		(82)

Recognized actuarial loss	19		23
Net periodic credit	$	(17)	$	(13)


Significant non-U.S. Plans only	Pension Benefits
For the Three Months Ended March 31,
(In millions)	2022		2021
Service cost	$	8	$	10
Interest cost	52		39
Expected return on plan assets	(118)		(126)

Recognized actuarial loss	20		29
Net periodic credit	$	(38)	$	(48)


(In millions)	Severance		Real Estate Related Costs (a)		Information Technology		Consulting and Other Outside Services		Total
Liability at 1/1/21	$	52	$	51	$	2	$	1	$	106
2021 charges	38		31		23		71		163
Cash payments	(55)		(26)		(25)		(72)		(178)
Non-cash charges	—		(22)		—		—		(22)

Liability at 12/31/21	$	35	$	34	$	—	$	—	$	69
2022 charges	3		6		5		16		30
Cash payments	(16)		(4)		(3)		(16)		(39)
Non-cash charges	—		(4)		(2)		—		(6)
Liability at 3/31/22	$	22	$	32	$	—	$	—	$	54


	Three Months Ended March 31,				% Change GAAP Revenue				Components of Revenue Change*
							Currency Impact	Acquisitions/ Dispositions/ Other Impact	Underlying Revenue
(In millions, except percentages)	2022		2021
Risk and Insurance Services
Marsh	$	2,546	$	2,325	10	%			(2)	%	1	%	11	%
Guy Carpenter	999		895		12	%			(1)	%	2	%	11	%
Subtotal	3,545		3,220		10	%			(2)	%	1	%	11	%
Fiduciary interest income	4		5
Total Risk and Insurance Services	3,549		3,225		10	%			(2)	%	1	%	11	%
Consulting
Mercer	1,343		1,288		4	%			(2)	%	—		6	%
Oliver Wyman Group	667		585		14	%			(2)	%	(1)	%	17	%
Total Consulting	2,010		1,873		7	%			(2)	%	—		10	%
Corporate Eliminations	(10)		(15)
Total Revenue	$	5,549	$	5,083	9	%			(2)	%	1	%	10	%


For the Three Months Ended March 31,	Three Months
(In millions, except percentages)		2022		2021
Revenue		$	3,549	$	3,225
Compensation and benefits		1,801		1,610
Other operating expenses		627		555
Operating expenses		2,428		2,165
Operating income		$	1,121	$	1,060
Operating income margin		31.6%		32.9%


(In millions)	Payment due by Period
Contractual Obligations	Total		Within 1 Year		1-3 Years		4-5 Years		After 5 Years
Commercial paper	$	825	$	825	$	—	$	—	$	—


Current portion of long-term debt	366		366		—		—		—
Long-term debt	10,618		—		2,386		1,248		6,984
Interest on long-term debt	5,049		411		736		594		3,308
Net operating leases	2,433		384		650		526		873
Service agreements	274		169		77		23		5
Other long-term obligations	613		202		393		16		2


Total	$	20,178	$	2,357	$	4,242	$	2,407	$	11,172


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1-31, 2022	640,408	$	162.3958	640,408	$	1,159,976,641
February 1-28, 2022	1,411,026	$	152.8169	1,411,026	$	944,348,006
March 1-31, 2022	1,166,128	$	154.6613	1,166,128	$	5,763,993,137
Total	3,217,562	$	155.3919	3,217,562	$	5,763,993,137


Date:	April 21, 2022	/s/ Mark C. McGivney
		Mark C. McGivney
		Chief Financial Officer

Date:	April 21, 2022	/s/ Stacy M. Mills
		Stacy M. Mills
		Vice President & Controller
		(Chief Accounting Officer)


Exhibit No.						Exhibit Name

10.1						Letter Agreement, effective as of January 1, 2022, between Marsh & McLennan Companies, Inc. and Peter C. Hearn

10.2						Letter Agreement, effective as of April 1, 2022, between Marsh & McLennan Companies, Inc. and Martine Ferland

10.3						Form of Deferred Stock Unit Award, with grant dates from March 1, 2022 through February 1, 2023, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan – Cliff Vesting

10.4						Form of Deferred Stock Unit Award, with grant dates from March 1, 2022 through February 1, 2023, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan – Ratable Vesting

10.5						Form of Restricted Stock Unit Award, dated as of February 23, 2022, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan

10.6						Form of Performance Stock Unit Award, dated as of February 23, 2022, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan

10.7						Form of Stock Option Award, dated as of February 23, 2022, under the Marsh & McLennan Companies, Inc. 2020 Incentive and Stock Award Plan

31.1						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1						Section 1350 Certifications

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Board or Committee Memberships			St. Mark’s School
Annual Base Salary			$800,000, effective January 1, 2022.
Annual Target Bonus Opportunity			Bonus awards are discretionary. Target bonus of $1,500,000 for the 2022 performance year (awarded in 2023). Actual bonus awards will be based on performance over the applicable fiscal year.
Key Responsibilities			•Expected to work full-time, focusing on three areas: ◦Clients & Sales •Advise Senior Relationship Officers on client account management and sales •Provide guidance on RFPs to client teams •Act as coach on sales, including leadership on sales training ◦Recruiting •Assist with strategic hiring ◦CEO Transition •Be available to advise the new Guy Carpenter CEO as requested •Other duties as requested by the Marsh McLennan Chief Executive Officer
Other Benefits			•The Company will pay for travel and expenses in accordance with its travel and expense policies in effect from time to time.


Board or Committee Memberships			Board of Trustees for the New York Academy of Medicine
Annual Base Salary			$1,000,000 effective as of April 1, 2022
Annual Target Bonus Opportunity			Bonus awards are discretionary. Target bonus of $1,900,000 commencing with the 2021 performance year (awarded in February 2022). Actual bonus may range from 0% - 200% of target, based on achievement of individual performance objectives, Mercer’s performance and/or Marsh McLennan’s performance as Marsh McLennan may establish from time to time.
Annual Target Long-Term Incentive Opportunity			Long-term incentive awards are discretionary. Target award value of $2,300,000, commencing with the award made in 2021.


Date:	April 21, 2022	/s/ Daniel S. Glaser
		Daniel S. Glaser
		President and Chief Executive Officer