MARSH & MCLENNAN COMPANIES, INC. – 10-K – Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

Marsh & McLennan Companies, Inc. and its consolidated subsidiaries (the
"Company") is a global professional services firm offering clients advice in the
areas of risk, strategy and people. The Company's 83,000 colleagues advise
clients in over 130 countries. With annual revenue of nearly $20 billion, the
Company helps clients navigate an increasingly dynamic and complex environment
through four market-leading businesses. Marsh provides data-driven risk advisory
services and insurance solutions to commercial and consumer clients. Guy
Carpenter develops advanced risk, reinsurance and capital strategies that help
clients grow profitably and identify and capitalize on emerging opportunities.
Mercer delivers advice and solutions that help organizations create a dynamic
world of work, shape retirement and investment outcomes, and unlock health and
well being for a changing workforce. Oliver
Wyman Group serves as critical strategic, economic and brand advisor to private
sector and governmental clients.

The Company conducts business through two segments:

•Risk and Insurance Services includes risk management activities (risk advice,
risk transfer and risk control and mitigation solutions) as well as insurance
and reinsurance broking and services. The Company conducts business in this
segment through Marsh and Guy Carpenter.

•Consulting includes health, wealth and career consulting services and products,
and specialized management, economic and brand consulting services. The Company
conducts business in this segment through Mercer and Oliver Wyman Group.

The results of operations in the Management Discussion & Analysis ("MD&A")
includes an overview of the Company's consolidated 2021 results compared to the
2020 results, and should be read in conjunction with the consolidated financial
statements and notes. This section also includes a discussion of the key drivers
impacting the Company's financial results of operations both on a consolidated
basis and by reportable segments.

We describe the primary sources of revenue and categories of expense for each
segment in the discussion of segment financial results. A reconciliation of
segment operating income to total operating income is included in Note 17,
Segment Information, in the notes to the consolidated financial statements
included in Part II, Item 8 in this report.

For information and comparability of the Company's results of operations and
liquidity and capital resources for fiscal 2019, including the impact from the
acquisition of Jardine Lloyd Thompson Group plc ("JLT"), see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" of our Form 10-K for the fiscal year ended December 31, 2020.

This MD&A contains forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. See "Information Concerning
Forward-Looking Statements" at the outset of this report.


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Financial Highlights

•Consolidated revenue for the year 2021 was $19.8 billion, an increase of 15%
compared with 2020, or 10% on an underlying basis.

•Consolidated operating income increased $1.2 billion, or 41% to $4.3 billion in
2021 compared to $3.1 billion in 2020. Net income attributable to the Company
was $3.1 billion. Earnings per share increased 56% to $6.13.

•Risk and Insurance Services revenue for the year 2021 was $12.1 billion, an
increase of 17%, or 10% on an underlying basis. Operating income was $3.1
billion, compared to $2.3 billion in 2020.

•Consulting revenue for the year 2021 was $7.8 billion, an increase of 12%, or
10% on an underlying basis. Operating income was $1.5 billion, compared with
$1.0 billion in 2020.

•In 2021, Marsh McLennan Agency ("MMA") completed a number of transactions,
including the acquisition of PayneWest, one of the largest independent agencies
in the U.S.

•In December 2021, the Company increased its ownership in Marsh India Insurance
Brokers Pvt. Ltd.("Marsh India") from 49% to 92%.

•For the year ended December 31, 2021, the Company repurchased 7.9 million
shares for $1.2 billion.

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

For additional details, refer to the Consolidated Results of Operations and
Liquidity and Capital Resources sections in this MD&A.

Business Update Related To COVID-19

The World Health Organization declared COVID-19 a pandemic in March 2020. For
almost two years, the pandemic has impacted businesses globally including
virtually every geography in which the Company operates. Our businesses have
been resilient throughout the pandemic and demand for our advice and services
remains strong as the global economic conditions continue to improve.

Although the majority of our colleagues continue to work remotely, the Company
has provided guidelines on 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 both the remote and in-office
environments.

The Company had strong revenue growth in 2021 and benefited from the continued
recovery of the global economy. However, uncertainty remains in the economic
outlook and the ultimate extent of the impact of COVID-19 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 and vaccine boosters.

Acquisition of JLT

On April 1, 2019, the Company completed the acquisition (the "Transaction") of
all of the outstanding shares of JLT, a public company organized under the laws
of England and Wales. As of December 31, 2021, the Company has substantially
integrated JLT into all of its business operations.

After the acquisition of JLT, the Company assumed the legal liabilities of JLT's
litigation and regulatory exposures as of April 1, 2019. Please see Note 16,
Claims, Lawsuits and Other Contingencies, in the notes to the consolidated
financial statements, which discusses certain errors and omission matters
related to the acquisition.

JLT's results of operations for the period April 1, 2019 through December 31,
2019 are included in the Company's results of operations for 2019. JLT's results
of operations for the period January 1 through March 31, 2019 are not included
in the Company's results of operations and therefore, affect comparability. The
Company's results for the years ended December 31, 2021, 2020 and 2019 were
impacted by JLT related acquisition restructuring and integration costs as
discussed in Note 14, Integration and Restructuring Costs, in the notes to the
consolidated financial statements.
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Consolidated Results of Operations

For the Years Ended December 31,
(In millions, except per share data)                  2021          2020          2019
Revenue                                            $ 19,820      $ 17,224      $ 16,652
Expense
Compensation and benefits                            11,425        10,129         9,734
Other operating expenses                              4,083         4,029         4,241
Operating expenses                                   15,508        14,158        13,975
Operating income                                   $  4,312      $  3,066      $  2,677
Income before income taxes                         $  4,208      $  2,793      $  2,439

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

    $  1,773
Net income attributable to the Company             $  3,143      $  2,016      $  1,742
Net income per share attributable to the Company

- Basic                                            $   6.20      $   3.98      $   3.44

- Diluted                                          $   6.13      $   3.94      $   3.41

Average number of shares outstanding
- Basic                                                 507           506   

506

- Diluted                                               513           512   

511

Shares outstanding at December 31,                      504           508   

504

Consolidated operating income increased $1.2 billion, or 41% to $4.3 billion in
2021 compared to $3.1 billion in 2020, reflecting a 15% increase in revenue and
a 10% increase in expenses. Revenue growth was driven by increases in the Risk
and Insurance Services and Consulting segments of 17% and 12%, respectively,
reflecting the strong demand for our advice and services and the improvement in
global economic conditions. The increase in expense is primarily due to
increased headcount and higher incentive compensation. These increases were
partially offset by a reduction in JLT integration costs and the JLT legacy E&O
provision recorded in 2020.

Diluted earnings per share increased 56% to $6.13 in 2021 compared with $3.94 in
2020. The increase is a result of higher operating income, lower interest
expense and higher investment gains in 2021 compared to 2020. Results in 2021
also include a net charge of approximately $110 million related to the
re-measurement of deferred tax assets and liabilities due to the enactment of a
tax rate increase from 19% to 25% in the U.K. in the second quarter of 2021,
offset by no tax impact on the gain from the re-measurement to fair value upon
consolidation of the Company's previously held equity method investment in
India, tax benefits from share-based compensation and planning that included the
utilization of foreign tax credits and postponing the utilization of the losses
in the U.K. to a future year when the tax rate will be 25%.
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The following table summarizes restructuring and other items discussed in more
detail below:

                                                       For the Years Ended December 31,
(In millions)                                                                  2021       2020       2019
Restructuring costs, excluding JLT                                          $  70      $  89      $ 112
Changes in contingent consideration                                            57         26         68
JLT integration and restructuring costs                                        93        251        335
JLT acquisition-related costs and other                                        81         54        150
JLT legacy E&O provision                                                      (69)       161          -
Legal claims                                                                   62          -          -
Gain on consolidation of business                                            (267)         -          -
Disposal of businesses                                                        (49)        (8)         1
Other                                                                           -          5          8
Impact on operating income                                                  $ (22)     $ 578      $ 674

In 2021 and 2020, the Company's results of operations and earnings per share
were impacted by the following items:

•Restructuring costs, excluding JLT: Includes severance, adjustments to
restructuring liabilities for future rent under non-cancellable leases and other
real estate exit costs, and restructuring costs related to the integration of
recent acquisitions. These costs are discussed in more detail in Note 14,
Integration and Restructuring, in the notes to the consolidated financial
statements.

•Changes in contingent consideration: Primarily includes the change in fair
value of contingent consideration related to acquisitions and dispositions as
measured each quarter.

•JLT integration and restructuring costs: Includes severance, real estate and
technology rationalization, process management consulting fees, and legal fees
for the rationalization of legal entity structures. The Company has incurred JLT
integration and restructuring costs of $679 million through 2021 and expects to
incur the remaining $46 million in 2022, primarily related to real estate and
technology, of which approximately $42 million will be cash expenditures. The
Company has realized at least $425 million of annualized savings. These costs
are discussed in more detail in Note 14, Integration and Restructuring, in the
notes to the consolidated financial statements. The Company expects to complete
the integration of JLT during 2022.

•JLT acquisition-related costs and other: Includes retention and legal charges
related to the acquisition of JLT.

•JLT legacy E&O provision: In 2021, the Company recorded a $36 million reduction
in the liability as well as $33 million of recoveries under indemnities for a
legacy JLT Errors and Omissions ("E&O") provision relating to suitability of
financial advice provided to individuals for defined benefit pension transfers.
The reduction in liability primarily reflects lower redress payments than
previously estimated, partly offset by higher costs to review and calculate
redress. In 2020, the Company recorded an increase in the liability of $161
million related to this matter. See Note 16, Claims, Lawsuits and Other
Contingencies, in the notes to the consolidated financial statements.

•Legal claims: The Company recorded settlement charges and legal costs related
to strategic recruiting.

•Gain on consolidation of business: In December 2021, the Company increased its
ownership in Marsh India from 49% to 92%. Prior to the increase in ownership,
the Company accounted for the investment under the equity method of accounting.
In connection with the increased investment in Marsh India, the Company recorded
a gain of $267 million, related to the re-measurement of its previously held
investment to fair value.



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•Disposal of businesses: During 2021, the Company disposed of certain businesses
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. Results in 2020 include a contingent
gain adjustment from the U.S. large market health and defined benefit
administration business disposed in 2019.

Consolidated Revenue and Expense

Revenue - Components of Change

The Company conducts business in 130 countries. As a result, foreign exchange
rate movements may impact period-to-period comparisons of revenue. Similarly,
certain other items such as the revenue impact of acquisitions and dispositions,
including transfers among businesses, may impact period-to-period comparisons of
revenue. Underlying revenue measures the change in revenue from one period to
another by isolating these impacts.

The impact of foreign currency exchange fluctuations, acquisitions and
dispositions, including transfers among businesses, on the Company's operating
revenues by segment are as follows:

                                      Year Ended
                                     December 31,                                                                                    Components of Revenue Change*
                                                                    %  Change                                         Acquisitions/
(In millions, except                                                   GAAP                                        Dispositions/ Other
percentages)                        2021              2020           Revenue                   Currency Impact            Impact               Underlying Revenue
Risk and Insurance Services
Marsh                        $ 10,203          $  8,595                     19  %                                                  2  %                       6  %             11  %
Guy Carpenter                   1,867             1,696                     10  %                                                  1  %                       -                 9  %
Subtotal                       12,070            10,291                     17  %                                                  2  %                       5  %             11  %
Fiduciary Interest Income          15                46
Total Risk and Insurance
Services                       12,085            10,337                     17  %                                                  2  %                       5  %             10  %
Consulting
Mercer                          5,254             4,928                      7  %                                                  3  %                      (1) %              5  %
Oliver Wyman Group              2,535             2,048                     24  %                                                  2  %                       -                21  %
Total Consulting                7,789             6,976                     12  %                                                  3  %                       -                10  %
Corporate Eliminations            (54)              (89)
Total Revenue                $ 19,820          $ 17,224                     15  %                                                  2  %                       3  %             10  %

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

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

                                         Year Ended
                                        December 31,                                                                                   Components of Revenue Change*
                                                                      %  Change                                         Acquisitions/
(In millions, except                                                     GAAP                                        Dispositions/ Other
percentages)                           2021             2020           Revenue                   Currency Impact            Impact               Underlying Revenue
Marsh:
EMEA                            $  2,946          $ 2,575                     14  %                                                  4  %                       1  %              9  %
Asia Pacific                       1,462            1,059                     38  %                                                  4  %                      25  %              9  %
Latin America                        453              424                      7  %                                                 (2) %                       -                 9  %
Total International                4,861            4,058                     20  %                                                  4  %                       7  %              9  %
U.S./Canada                        5,342            4,537                     18  %                                                  1  %                       4  %             13  %
Total Marsh                     $ 10,203          $ 8,595                     19  %                                                  2  %                       6  %             11  %
Mercer:

Wealth                             2,509            2,348                      7  %                                                  4  %                      (1) %              4  %
Health                             1,855            1,793                      3  %                                                  1  %                      (1) %              3  %
Career                               890              787                     13  %                                                  2  %                       -                12  %
Total Mercer                    $  5,254          $ 4,928                      7  %                                                  3  %                      (1) %              5  %

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

Consolidated Revenue

Consolidated revenue increased $2.6 billion, or 15%, to $19.8 billion in 2021,
compared to $17.2 billion in 2020. Consolidated revenue increased 10% on an
underlying basis, 2% from the impact of foreign currency translation and 3% from
acquisitions. On an underlying basis, revenue increased 10% for the year ended
December 31, 2021 in both the Risk and Insurance Services and Consulting
segments.

Underlying growth in the Risk and Insurance Services and Consulting segments was
driven by the strong demand for our advice and services and the improvement in
global economic conditions.

Consolidated Operating Expense

Consolidated operating expenses increased $1.3 billion, or 10%, to $15.5 billion
in 2021 compared to $14.2 billion in 2020, reflecting increases of 6% on an
underlying basis, 2% from the impact of foreign currency translation and 1% from
acquisitions. On an underlying basis, expenses increased 8% and 3% in 2021 in
the Risk and Insurance Services and Consulting segments, respectively.
Underlying expenses in 2021 is primarily due to increased headcount and higher
incentive compensation.

Risk and Insurance Services

In the Risk and Insurance Services segment, the Company's subsidiaries and other
affiliated entities act as brokers, agents or consultants for insureds,
insurance underwriters and other brokers in the areas of risk management,
insurance broking and insurance program management services, primarily under the
name of Marsh, and engage in reinsurance broking, catastrophe and financial
modeling services and related advisory functions, primarily under the name of
Guy Carpenter.

Marsh and Guy Carpenter are compensated for brokerage and consulting services
through commissions and fees. Commission rates and fees vary in amount and can
depend on a number of factors, including the type of insurance or reinsurance
coverage provided, the particular insurer or reinsurer selected, and the
capacity in which the broker acts and negotiates with clients. Revenues can be
affected by premium rate levels in the insurance/reinsurance markets, the amount
of risk retained by insurance and reinsurance clients and by the value of the
risks that have been insured since commission-based compensation is frequently
related to the premiums paid by insureds and reinsureds. In many cases, fee
compensation may be negotiated in advance, based on the type of risk, coverage
required and service provided by the Company and ultimately, the extent of the
risk placed into the insurance market or retained by the client. The trends and
comparisons of revenue from one period to the next can be affected by changes in
premium rate levels, fluctuations in client risk retention and increases or
decreases in the
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value of risks that have been insured, as well as new and lost business, and the
volume of business from new and existing clients.

In addition to compensation from its clients, Marsh also receives other
compensation, separate from retail fees and commissions, from insurance
companies. This other compensation includes, among other things, payment for
consulting and analytics services provided to insurers; compensation for
administrative and other services (including fees for underwriting services and
services provided to or on behalf of insurers relating to the administration and
management of quota shares, panels and other facilities in which insurers
participate); and contingent commissions, which are paid by insurers based on
factors such as volume or profitability of Marsh's placements, primarily driven
by MMA and parts of Marsh's international operations. Marsh and Guy Carpenter
receive interest income on certain funds (such as premiums and claims proceeds)
held in a fiduciary capacity for others. The investment of fiduciary funds is
regulated by state and other insurance authorities. These regulations typically
require segregation of fiduciary funds and limit the types of investments that
may be made with them. Interest income from these investments varies depending
on the amount of funds invested and applicable interest rates, both of which
vary from time to time. For presentation purposes, fiduciary interest is
segregated from the other revenues of Marsh and Guy Carpenter and separately
presented within the segment, as shown in the previous revenue by segments
tables.

The results of operations for the Risk and Insurance Services segment are
presented below:

(In millions, except percentages)          2021    2020           2019
Revenue                             $ 12,085       $ 10,337       $ 9,599
Compensation and benefits              6,506          5,690         5,370
Other operating expenses               2,499          2,301         2,396
Operating expenses                     9,005          7,991         7,766
Operating income                    $  3,080       $  2,346       $ 1,833
Operating income margin                 25.5  %        22.7  %       19.1  %


Revenue

Revenue in the Risk and Insurance Services segment increased $1.7 billion, or
17%, to $12.1 billion in 2021 compared with $10.3 billion in 2020. Revenue grew
10% on an underlying basis, 5% from the impact of acquisitions, and 2% related
to the impact of foreign currency translation. The increase in underlying
revenue was primarily due to strong growth in new business, solid retention, and
benefits from pricing in the marketplace.

In Marsh, revenue increased $1.6 billion, or 19%, to $10.2 billion in 2021
compared to $8.6 billion in 2020. This reflects increases of 11% on an
underlying basis, 6% from the impact of acquisitions, and 2% from the impact of
foreign currency translation. In 2021, the increase in revenue from acquisitions
reflects the gain of $267 million related to the re-measurement of the
previously held equity method investment in Marsh India. On an underlying basis,
U.S./Canada rose 13%. Total International operations, which includes Asia
Pacific, Latin America and EMEA each produced underlying revenue growth of 9%
compared to prior year.

At Guy Carpenter, revenue increased $171 million, or 10%, to $1.9 billion in
2021 compared with $1.7 billion in 2020. On an underlying basis, revenue
increased 9%.

The Risk and Insurance Services segment completed eight acquisitions during
2021. Information regarding those acquisitions is included in Note 5,
Acquisitions and Dispositions, in the notes to the consolidated financial
statements.

Operating Expense

Expense in the Risk and Insurance Services segment increased $1.0 billion, or
13%, to $9.0 billion in 2021 compared with $8.0 billion in 2020. This reflects
increases of 8% on an underlying basis, 2% from the impact of foreign currency,
and 2% from acquisitions. The increase in underlying expense reflects increased
headcount and higher incentive compensation, partly offset by lower JLT
integration and restructuring costs.
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Consulting

The Company conducts business in its Consulting segment through Mercer and
Oliver Wyman Group. Mercer delivers advice and solutions that help organizations
create a dynamic world of work, shape
retirement and investment outcomes, and unlock health and well being for a
changing workforce. Oliver
Wyman serves as critical strategic, economic and brand advisor to private sector
and governmental
clients.

The major component of revenue in the Consulting business is fees paid by
clients for advice and services. Mercer, principally through its health line of
business, also earns revenue in the form of commissions received from insurance
companies for the placement of group (and occasionally individual) insurance
contracts, primarily life, health and accident coverages. Revenue for Mercer's
investment management business and certain of Mercer's defined contribution
administration services consists principally of fees based on assets under
management or administration. For a majority of the Mercer managed investment
funds, revenue is recorded on a gross basis with sub-advisor fees included in
other operating expenses.

Revenue in the Consulting segment is affected by, among other things, global
economic conditions, including changes in clients' particular industries and
markets. Revenue is also affected by competition due to the introduction of new
products and services, broad trends in employee demographics, including levels
of employment, the effect of government policies and regulations, and
fluctuations in interest and foreign exchange rates. Revenues from investment
management services and retirement trust and administrative services are
significantly affected by the level of assets under management or
administration, which is impacted by securities market performance.

The results of operations for the Consulting segment are presented below:

(In millions, except percentages)   2021          2020          2019
Revenue                             $ 7,789       $ 6,976       $ 7,143
Compensation and benefits             4,435         3,995         3,934
Other operating expenses              1,850         1,987         1,999
Operating expenses                    6,285         5,982         5,933
Operating income                    $ 1,504       $   994       $ 1,210
Operating income margin                19.3  %       14.3  %       16.9  %


Revenue

Consulting revenue increased $813 million, or 12%, to $7.8 billion in 2021
compared with $7.0 billion in 2020. This reflects increases of 10% on an
underlying basis and 3% from the impact of foreign currency translation.

Mercer's revenue increased $326 million, or 7%, to $5.3 billion in 2021 compared
to $4.9 billion in 2020, or 5% on an underlying basis. Revenue also reflects an
increase of 3% from the impact of foreign currency translation offset by a
decrease of 1% from disposition of businesses. On an underlying basis, revenue
for Career, Wealth and Health increased 12%, 4% and 3%, respectively. The
increase in underlying revenue at Mercer for the year ended December 31, 2021
was due to higher investment management fees from growth in assets under
management and increased demand and retention for Health and Career products and
services.

Oliver Wyman Group's revenue increased $487 million, or 24%, to $2.5 billion in
2021 compared with $2.0 billion in 2020, reflecting an increase of 21% on an
underlying basis and 2% from the impact of foreign currency translation. The
increase in underlying revenue at Oliver Wyman for the year ended December 31,
2021 primarily reflects the impact of increased demand for project-based
services across all industries.

The Consulting segment completed one acquisition during 2021. Information
regarding the acquisition is included in Note 5, Acquisitions and Dispositions,
in the notes to the consolidated financial statements.

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Operating Expense

Consulting expenses increased $303 million, or 5%, to $6.3 billion in 2021
compared to $6.0 billion in 2020. This reflects an increase of 3% on an
underlying basis and 2% from the impact of foreign currency translation. The
increase in underlying expense in the Consulting segment in 2021 is primarily
due to increased headcount and higher incentive compensation. This is partially
offset by a $69 million reduction in the legacy JLT E&O provision including
recoveries under indemnities. In 2020, the Company recorded an increase in the
liability of $161 million for the same matter.

Corporate and Other

Corporate expense in 2021 was $272 million compared with $274 million in 2020.
Expenses decreased 1% on an underlying basis due to lower integration and
restructuring costs primarily related to the JLT Transaction and savings
realized from the completion of integration efforts to date, partly offset by
higher headcount and incentive compensation.

Other Corporate Items

Interest

Interest expense decreased $71 million to $444 million in 2021 compared to $515
million in 2020 due to lower average debt levels in 2021 compared to the prior
year.

Investment Income (Loss)

The caption "Investment income (loss)" in the consolidated statements of income
comprises realized and unrealized gains and losses from investments. 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 its
investments in private equity funds. The Company's investments may include
direct investments in insurance, consulting or other strategically linked
companies, and private equity funds.

The Company recorded net investment income of $61 million in 2021 compared to a
net investment loss of $22 million in 2020. The income in 2021 is primarily
driven by gains in the Company's private equity investments. The loss in 2020
was primarily due to a loss from the sale of shares of Alexander Forbes ("AF").

Income Taxes

The Company's consolidated effective tax rate was 24.6% and 26.7% in 2021 and
2020, respectively. The rates in all periods reflect the effects of tax planning
and the impact of regulatory and other guidance as it became available.

The rate for the year ended December 31, 2021 reflects:

•The charge for re-measuring 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 2.6% for the year ended December 31, 2021.

•The tax effect of the gain from the fair value re-measurement of the Company's
previously held equity method investment in Marsh India upon the Company
increasing its ownership interest from 49% to 92%. The Company has indefinitely
reinvested this gain, as it has no intent to dispose of the business, and did
not record tax on the gain. This decreased the Company's effective tax rate by
1.5% for the year ended December 31, 2021.

•Tax benefits from planning implemented in the period that postponed the
utilization of losses in the U.K. to a future year when the tax rate will be
25%.

The tax rate in 2020 includes a valuation allowance for certain tax credits, the
impact of uncertain tax positions, and certain tax planning benefits. The rate
in 2020 also reflects costs of re-measuring the Company's U.K. deferred tax
assets and liabilities upon the enactment of legislation that cancelled a 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.
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The tax rates in all periods reflect the impact of discrete tax matters such as
excess tax benefits related to share-based compensation, enacted tax
legislation, changes in uncertain tax positions, deferred tax adjustments and
non-taxable adjustments to contingent acquisition consideration.

The effective tax rate may vary significantly from period to period for the
foreseeable future. The effective tax rate is sensitive to the geographic mix of
earnings and repatriation of the Company's earnings, which may result in higher
or lower tax rates. In 2021, pre-tax income in the U.K., Barbados, Canada,
Ireland, Bermuda, and Australia accounted for approximately 60% of the Company's
total non-U.S. pre-tax income, with effective rates in those countries of 21%
(excluding the non-cash deferred tax impact of U.K. tax legislation enacted in
2021), 1%, 27%, 17%, 0.3% and 16%, respectively.

In addition, losses in certain jurisdictions cannot be offset by earnings from
other operations, and may require valuation allowances that affect the rate,
depending on estimates of the value of associated deferred tax assets which can
be realized. A valuation allowance was recorded to reduce deferred tax assets to
the amount that the Company believes is more likely than not to be realized.
Details are provided in Note 7, Income Taxes, in the notes to the consolidated
financial statements. The effective 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, rulings, policies or related legal and regulatory
interpretations occur frequently and may also have significant favorable or
adverse impacts on our effective tax rate.

As a U.S. domiciled parent holding company, the Company is the issuer of
essentially all of the Company's external indebtedness, and incurs the related
interest expense in the U.S. The Company's interest expense deductions are not
currently limited. Further, most senior executive and oversight functions are
conducted in the U.S. and the associated costs are incurred primarily in the
U.S. Some of these expenses may not be deductible in the U.S., which may impact
the effective tax rate.

The quasi-territorial tax regime provides an opportunity for the Company to
repatriate foreign earnings more tax efficiently and there is less incentive for
permanent reinvestment of these earnings. However, permanent reinvestment
continues to be a component of the Company's global capital strategy. The
Company continues to evaluate its global investment and repatriation strategy in
light of our capital requirements and potential costs of repatriation.

The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was
signed into law on March 27, 2020. The CARES Act provided over $2 trillion in
economic relief to individuals, governmental agencies and companies, to deal
with the public health and economic impacts of COVID-19. Pursuant to the CARES
Act, the Company deferred payroll taxes due from March 27, 2020 through December
31, 2020 and paid 50% in 2021 and will pay the remaining 50% in 2022.

Liquidity and Capital Resources

The Company is organized as a legal entity separate and distinct from its
operating subsidiaries. As the Company does not have significant operations of
its own, the Company is dependent upon dividends and other payments from its
operating subsidiaries to pay principal and interest on its outstanding debt
obligations, pay dividends to stockholders, repurchase its shares and pay
corporate expenses. The Company can also provide financial support to its
operating subsidiaries for acquisitions, investments and certain parts of their
business that require liquidity, such as the capital markets business of Guy
Carpenter. Other sources of liquidity include borrowing facilities in financing
cash flows.

The Company derives a significant portion of its revenue and operating profit
from operating subsidiaries located outside of the U.S. Funds from those
operating subsidiaries are regularly repatriated to the U.S. out of annual
earnings. At December 31, 2021, the Company had approximately $737 million of
cash and cash equivalents in its foreign operations, which includes $280 million
of operating funds required to be maintained for regulatory requirements or as
collateral under certain captive insurance arrangements. The Company expects to
continue its practice of repatriating available funds from its non-U.S.
operating subsidiaries out of current annual earnings. Where appropriate, a
portion of the current year earnings will continue to be permanently reinvested.

During 2021, the Company recorded foreign currency translation adjustments which
decreased net equity by $389 million. Continued weakening of the U.S. dollar
against foreign currencies would further increase the translated U.S. dollar
value of the Company's net investments in its non-U.S. subsidiaries, as well as
                                       46
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the translated U.S. dollar value of cash repatriations from those subsidiaries.
Conversely, strengthening of the U.S. dollar against foreign currencies would
decrease the translated U.S. dollar value of the Company's net investments in
its non-U.S. subsidiaries, as well as the translated U.S. dollar value of cash
repatriations from those subsidiaries.

Cash and cash equivalents on our consolidated balance sheets includes funds
available for general corporate purposes. Funds held on behalf of clients in a
fiduciary capacity are segregated and shown separately in the consolidated
balance sheets as an offset to fiduciary liabilities. Fiduciary funds cannot be
used for general corporate purposes, and should not be considered as a source of
liquidity for the Company.

Operating Cash Flows

The Company generated $3.5 billion of cash from operations in 2021 and $3.4
billion in 2020. These amounts reflect the net income of the Company during
those periods, excluding gains or losses from investments, adjusted for non-cash
charges and changes in working capital which relate primarily to the timing of
payments of accrued liabilities or receipts of assets and pension contributions.

Pension-Related Items

Contributions

During 2021, the Company contributed $35 million to its U.S. pension plans and
$95 million to non-U.S. pension plans compared to contributions of $65 million
to U.S. plans and $78 million to non-U.S. plans in 2020.

In the U.S., contributions to the tax-qualified defined benefit plans are based
on ERISA guidelines and the Company generally expects to maintain a funded
status of 80% or more of the liability determined in accordance with the ERISA
guidelines. In 2021, the Company made $30 million of contributions to
non-qualified plans and $5 million to its qualified plans. The Company expects
to contribute approximately $31 million to its non-qualified U.S. pension plans
in 2022. The Company is not required to make any contributions to its U.S.
qualified plan in 2022.

Outside the U.S., the Company has a large number of non-U.S. defined benefit
pension plans, the largest of which are in the U.K., which comprise
approximately 81% of non-U.S. plan assets at December 31, 2021. Contribution
rates for non-U.S. plans are generally based on local funding practices and
statutory requirements, which may differ significantly from measurements under
U.S. GAAP.

The Company contributed $55 million to its U.K. plans in 2021. The Company's
contributions to its U.K. plans in 2022 are expected to be approximately
$124 million.

In the U.K., the assumptions used to determine pension contributions are the
result of legally-prescribed negotiations between the Company and the plans'
trustee that typically occur every three years in conjunction with the actuarial
valuation of the plans. Currently, this results in a lower funded status
compared to U.S. GAAP and may result in contributions irrespective of the U.S.
GAAP funded status.

During 2021, the JLT Pension Scheme was merged into the MMC U.K. Pension Fund
with a new segregated JLT section created. The Company made deficit
contributions of $38 million to the JLT section in 2021 and is expected to make
contributions totaling approximately $112 million in 2022. The funding level of
the JLT section will be reassessed during 2022 to determine contributions in
2023 and onwards.

For the MMC U.K. Pension Fund, excluding the JLT section, an agreement was
reached with the trustee in fourth quarter of 2019 based on the surplus funding
position at December 31, 2018. In accordance with the agreement, no deficit
funding is required until 2023. The funding level will be re-assessed during
2022 as part of the December 31, 2021 actuarial valuation to determine if
contributions are required in 2023. As part of a long-term strategy which
depends on having greater influence over asset allocation and overall investment
decisions, in November 2019, the Company renewed its agreement to support annual
deficit contributions by the U.K. operating companies under certain
circumstances, up to £450 million over a seven-year period.

In the aggregate, the Company expects to contribute approximately $147 million
to its non-U.S. defined benefit plans in 2022, comprising approximately
$124 million to the U.K. plans and $23 million to plans outside of the U.K.

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Changes in Funded Status and Expense

The year-over-year change in the funded status of the Company's pension plans is
impacted by the difference between actual and assumed results, particularly with
regard to return on assets, and changes in the discount rate, as well as the
amount of Company contributions, if any. Unrecognized actuarial losses were
approximately $1.8 billion and $2.9 billion at December 31, 2021 for the U.S.
plans and non-U.S. plans, respectively, compared with losses of $2.4 billion and
$3.5 billion at December 31, 2020. The decreases in both the U.S. and non-U.S.
plans were primarily due to an increase in the discount rate used to measure
plan liabilities and an increase in asset values. In the past several years, the
amount of unamortized losses has been significantly impacted, both positively
and negatively, by actual asset performance and changes in discount rates. The
discount rate used to measure plan liabilities in 2021 increased in the U.S. and
U.K., the Company's largest plans, following decreases in 2020 and 2019. An
increase in the discount rate decreases the measured plan benefit obligation,
resulting in actuarial gains, while a decrease in the discount rate increases
the measured plan obligation, resulting in actuarial losses. During 2021, the
Company's defined benefit pension plan assets had gains of 13.2% and 1.9% in the
U.S. and U.K., respectively, as compared to gains of 13.1% and 12.0% in the U.S.
and U.K., respectively, in 2020.

Overall, based on the measurement at December 31, 2021, net benefit credits
related to the Company's defined benefit plans are expected to decrease in 2022
by approximately $23 million compared to 2021, reflecting a decrease in non-U.S.
plans of approximately $40 million, offset by an increase in U.S. plans of $17
million.

The Company's accounting policies for its defined benefit pension plans,
including the selection of and sensitivity to assumptions, are discussed in
Management's Discussion of Critical Accounting Policies. For additional
information regarding the Company's retirement plans, see Note 1, Summary of
Significant Accounting Policies, and Note 8, Retirement Benefits, in the notes
to the consolidated financial statements.

Financing Cash Flows

Net cash used for financing activities was $1.3 billion in 2021 compared with
$925 million used by financing activities in 2020.

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 December 31, 2021, the Company had no
borrowings under this facility. In connection with the New Facility, the Company
terminated its previous multicurrency unsecured $1.8 billion five-year revolving
credit facility and its unsecured $1.0 billion 364-day unsecured revolving
credit facility.

In January 2020, the Company entered into two new term loan facilities: a $500
million one-year facility and a $500 million two-year facility. During 2020, the
Company borrowed and repaid $1.0 billion against these facilities. These two
facilities were terminated as of December 31, 2020 after repayment of the
initial draw down.

The Company also maintains other credit facilities, guarantees and letters of
credit with various banks, aggregating $508 million at December 31, 2021 and
$573 million at December 31, 2020. There were no outstanding borrowings under
these facilities as of December 31, 2021 or as of December 31, 2020.

Debt

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 December 31, 2021.

In December 2021, the Company issued $400 million of 2.375% senior notes due
2031 and $350 million of 2.90% senior notes due 2051. The Company used the net
proceeds from these issuances for general
                                       48
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corporate purposes and repaid $500 million of 2.75% senior notes with an
original maturity date of January 2022 in December 2021.

On April 15, 2021, the Company repaid $500 million of senior notes maturing in
July 2021.

In December 2020, the Company repaid $700 million of maturing senior notes and
$300 million of floating rate notes with an original maturity of December 2021.

In May 2020, the Company issued $750 million of 2.250% senior notes due 2030.
The Company used the net proceeds from this offering to pay outstanding
borrowings under the revolving credit facility.

In March 2020, the Company repaid $500 million of maturing senior notes.

The Company's senior debt is currently rated A- by Standard & Poor's and Baa1 by
Moody's. The Company's short-term debt is currently rated A-2 by Standard &
Poor's and P-2 by Moody's. The Company carries a Stable outlook with both
Standard & Poor's and Moody's.

Share Repurchases

In November 2019, the Board of Directors authorized an increase in the Company's
share repurchase program, which supersedes any prior authorization, allowing
management to buy back up to $2.5 billion of the Company's common stock. During
2021, the Company repurchased 7.9 million shares of its common stock for total
consideration of approximately $1.2 billion. As of December 31, 2021, the
Company remained authorized to purchase shares of its common stock up to a value
of approximately $1.3 billion. There is no time limit on this authorization.

The Company did not repurchase any of its common stock during 2020.

Dividends

The Company paid total dividends of $1.0 billion in 2021 ($2.00 per share) and
$943 million in 2020 ($1.84 per share).

Contingent Payments Related To Acquisitions

The classification of contingent consideration payments in the consolidated
statement of cash flows is dependent upon whether the receipt, payment, or
adjustment 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 operating and financing activities:

For the Years Ended December 31,
(In millions)                                                       2021             2020             2019

Operating:

Contingent consideration payments                             $   (49)         $   (48)         $   (41)
Prior years' dispositions cash received                            19                -                -
Acquisition related net charge for adjustments                     57               26               68

Adjustments and payments related to contingent consideration $ 27

    $   (22)         $    27
Financing:
Contingent purchase consideration                             $   (28)      

$ (54) $ (22)
Deferred purchase consideration related to prior years'
acquisitions

                                                      (89)             (68)             (43)

Payments of deferred and contingent consideration for
acquisitions

                                                  $  (117)      

$ (122) $ (65)

 Receipt of contingent consideration related to prior years'
dispositions                                                  $    71          $     -          $     -





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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. As part of its risk management
program to fund the JLT acquisition, the Company issued €1.1 billion Senior
Notes, and designated the debt instruments as a net investment hedge of its Euro
denominated subsidiaries. The hedge 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. If the hedge is highly effective, the change in the debt
balance related to foreign exchange fluctuations will be recorded in foreign
currency translation gains (losses) in the consolidated balance sheet. The U.S.
dollar value of the Euro notes decreased by $100 million during 2021 related to
the change in foreign exchange rates. The Company concluded that the hedge was
highly effective and recorded a decrease to accumulated other comprehensive loss
for the year ended December 31, 2021.

Fiduciary Liabilities

Since cash and cash equivalents held in a fiduciary capacity are not available
for corporate use, they are shown in the consolidated balance sheet as an offset
to fiduciary liabilities. Financing cash flows reflect an increase of $1.2
billion and $955 million in 2021 and 2020, respectively, related to the increase
in fiduciary liabilities.

Investing Cash Flows

Net cash used for investing activities amounted to $1.2 billion in 2021 compared
with $793 million used for investing activities in 2020.

The Company paid $859 million and $647 million, net of cash, cash equivalents
and cash and cash equivalents held in a fiduciary capacity acquired, for
acquisitions it made during 2021 and 2020, respectively, including the Company's
increased ownership interest in Marsh India from 49% to 92% in December 2021.

During 2021 and 2020, the Company sold certain businesses, primarily in the U.S.
and U.K., for cash proceeds of approximately $84 million and $98 million,
respectively.

The Company sold 242 million shares of the common stock of AF during 2020.

The Company's additions to fixed assets and capitalized software, which amounted
to $406 million in 2021 and $348 million in 2020, primarily related to computer
equipment purchases, the refurbishing and modernizing of office facilities, and
software development costs.

The Company has commitments for potential future investments of approximately
$52 million in six private equity funds that invest primarily in financial
services companies.

Commitments and Obligations

The following sets forth the Company's future contractual obligations by the
types identified in the table below as of December 31, 2021:

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

Current portion of long-term debt   $     17      $    17      $     -      $     -      $      -

Long-term debt                        11,002            -        2,236        1,762         7,004
Interest on long-term debt             5,222          412          763          616         3,431
Net operating leases                   2,499          389          657          529           924
Service agreements                       325          209           84           26             6
Other long-term obligations              631          209          402           18             2

Total                               $ 19,696      $ 1,236      $ 4,142      $ 2,951      $ 11,367


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The above table does not include the liability for unrecognized tax benefits of
$94 million as the Company is unable to reasonably predict the timing of
settlement of these liabilities, other than approximately $34 million that may
become payable during 2022.

The above does not include the remaining transitional tax payments related to
the Tax Cuts and Jobs Act ("TCJA") of $62 million, which will be paid in
installments beginning in 2023 through 2026.

Management's Discussion of Critical Accounting Policies and Estimates

Management makes estimates and judgments that affect reported amounts of assets,
liabilities, revenue and expenses, and disclosure of contingent assets and
liabilities. Management considers the policies discussed below to be critical to
understanding the Company's financial statements because their application
places the most significant demands on management's judgment, and requires
management to make estimates about the effect of matters that are inherently
uncertain. Actual results may differ from those estimates.

Revenue Recognition

In the Risk and Insurance Services segment, judgments related to the amount of
variable revenue consideration to ultimately be received on placement of quota
share reinsurance treaties and contingent commission from insurers, which was
previously recognized when the contingency was resolved, now requires
significant judgments and estimates.

Management also makes significant judgments and estimates to measure the
progress toward completing performance obligations and realization rates for
consideration related to contracts as well as potential performance-based fees
in the Consulting segment.

The Company capitalizes the incremental costs to obtain contracts primarily
related to commissions or sales bonus payments. These deferred costs are
amortized over the expected life of the underlying customer relationships. The
Company also capitalizes certain pre-placement costs that are considered
fulfillment costs that are amortized at a point in time when the associated
revenue is recognized.

See Note 2, Revenue, in the notes to the consolidated financial statements for
additional information.

Legal and Other Loss Contingencies

The Company and its subsidiaries are subject to numerous claims, lawsuits and
proceedings including claims for errors and omissions ("E&O"). The Company
records a liability when a loss is both probable and reasonably estimable which
requires significant management judgment. The Company utilizes case level
reviews by inside and outside counsel, an internal actuarial analysis by Oliver
Wyman, a subsidiary of the Company, and other methods to estimate potential
losses. The liability is reviewed quarterly and adjusted as developments
warrant. In many cases, the Company has not recorded a liability, other than for
legal fees to defend the claim, because we are unable, at the present time, to
make a determination that a loss is both probable and reasonably estimable.
Given the unpredictability of E&O claims and of litigation that could arise from
such claims, it is possible that an adverse outcome in a particular matter could
have a material adverse effect on the Company's businesses, results of
operations, financial condition or cash flow in a given quarterly or annual
period.

In addition, to the extent that insurance coverage is available, significant
management judgment is required to determine the amount of recoveries that are
probable of collection under the Company's various insurance programs.

Retirement Benefits

The Company maintains qualified and non-qualified defined benefit pension and
defined contribution plans for its eligible U.S. employees and a variety of
defined benefit and defined contribution plans for its eligible non-U.S.
employees. The Company's policy for funding its tax-qualified defined benefit
retirement plans is to contribute amounts at least sufficient to meet the
funding requirements set forth in U.S. and applicable foreign laws.

The Company recognizes the funded status of its over-funded defined benefit
pension and retiree medical plans as a net benefit plan asset and its unfunded
and underfunded plans as a net benefit plan liability. The gains or losses and
prior service costs or credits that have not been recognized as components of
net periodic costs are recorded as a component of Accumulated Other
Comprehensive Income ("AOCI"),
                                       51
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net of tax, in the Company's consolidated balance sheets. The gains and losses
that exceed specified corridors, 10% of the greater of the projected benefit
obligation or the market-related value of plan assets, are amortized
prospectively out of AOCI over a period that approximates the remaining life
expectancy of participants in plans where substantially all participants are
inactive or the average remaining service period of active participants for
plans with active participants. The vast majority of unrecognized losses relate
to inactive plans and are amortized over the remaining life expectancy of the
participants.

The determination of net periodic pension cost is based on a number of
assumptions, including an expected long-term rate of return on plan assets, the
discount rate, mortality and assumed rate of salary increase. The assumptions
used in the calculation of net periodic pension costs and pension liabilities
are disclosed in Note 8, Retirement Benefits, in the notes to the consolidated
financial statements.

The long-term rate of return on plan assets assumption is determined for each
plan based on the facts and circumstances that exist as of the measurement date,
and the specific portfolio mix of each plan's assets. The Company utilizes a
model developed by Mercer, a subsidiary of the Company, to assist in the
determination of this assumption. The model takes into account several factors,
including: target portfolio allocation; investment, administrative and trading
expenses incurred directly by the plan trust; historical portfolio performance;
relevant forward-looking economic analysis; and expected returns, variances and
correlations for different asset classes. These measures are used to determine
probabilities using standard statistical techniques to calculate a range of
expected returns on the portfolio.

The target asset allocation for the U.S. plans is 60% equities and equity
alternatives and 40% fixed income. At the end of 2021, the actual allocation for
the U.S. plans was 65% equities and equity alternatives and 35% fixed income.
The target asset allocation for the U.K. plans, which comprise approximately 81%
of non-U.S. plan assets, is 26% equities and equity alternatives and 74% fixed
income. At the end of 2021, the actual allocation for the U.K. plans was 28%
equities and equity alternatives and 72% fixed income.

The discount rate selected for each U.S. plan is based on a model bond portfolio
with coupons and redemptions that closely match the expected liability cash
flows from the plan. Discount rates for non-U.S. plans are based on appropriate
bond indices adjusted for duration; in the U.K., the plan duration is reflected
using the Mercer yield curve.

The following table shows the weighted average assumed rate of return and the
discount rate at the December 31, 2021 measurement date used to measure pension
expense in 2022 for the total Company, the U.S. and the Rest of World ("ROW").

                                           Total Company     U.S.          

ROW

Assumed rate of return on plan assets             4.56  %     6.88  %     3.64  %
Discount rate                                     2.28  %     3.00  %     1.89  %


Holding all other assumptions constant, a half-percentage point change in the
rate of return on plan assets and discount rate assumptions would affect net
periodic pension cost for the U.S. and U.K. plans, which together comprise
approximately 86% of total pension plan liabilities, as follows:

                                               0.5 Percentage                0.5 Percentage
                                               Point Increase                Point Decrease
(In millions)                                       U.S.       U.K.                U.S.      U.K.
Assumed rate of return on plan assets     $    (24)         $ (54)     $     24            $ 54
Discount Rate                             $      3          $   3      $     (4)           $ (4)


The impact of discount rate changes relates to the increase or decrease in
actuarial gains or losses being amortized through net periodic pension cost, as
well as the increase or decrease in interest expense, with all other facts and
assumptions held constant. It does not contemplate nor include potential future
impacts a change in the interest rate environment and discount rates might
cause, such as the impact on the market value of the plans' assets. In addition,
the assumed return on plan assets would likely be impacted by changes in the
interest rate environment and other factors, including equity valuations, since
these factors reflect the starting point used in the Company's projection
models. For example, a reduction in interest rates may result in a reduction in
the assumed return on plan assets. Changing the discount rate
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and leaving the other assumptions constant also may not be representative of the
impact on expense, because the long-term rates of inflation and salary increases
are often correlated with the discount rate. Changes in these assumptions will
not necessarily have a linear impact on the net periodic pension cost.

The Company contributes to certain health care and life insurance benefits
provided to its retired employees. The cost of these post-retirement benefits
for employees in the U.S. is accrued during the period up to the date employees
are eligible to retire but is funded by the Company as incurred. The key
assumptions and sensitivity to changes in the assumed health care cost trend
rate are discussed in Note 8, Retirement Benefits, in the notes to the
consolidated financial statements.

Income Taxes

Significant judgment is required in determining the annual effective tax rate
and in evaluating uncertain tax positions. The Company reports a liability for
unrecognized tax benefits resulting from uncertain tax positions taken or
expected to be taken in a tax return. The evaluation of a tax position is a
two-step process:

•First, the Company determines whether it is more-likely-than-not a tax position
will be sustained upon tax examination, including resolution of any related
appeals or litigation, based on only the technical merits of the position. If a
tax position does not meet the more-likely-than-not recognition threshold, the
benefit of that position is not recognized in the financial statements.

•The second step is measurement. A tax position that meets the
more-likely-than-not recognition threshold is measured to determine the amount
of benefit to recognize in the financial statements. The tax position is
measured as the largest amount of benefit that is greater than 50-percent likely
of being realized upon ultimate resolution with a taxing authority. Uncertain
tax positions are evaluated based upon the facts and circumstances that exist at
each reporting period and involve significant management judgment. Subsequent
changes in judgment based upon new information may lead to changes in
recognition, de-recognition, and measurement. Adjustments may result, for
example, upon resolution of an issue with the taxing authorities, or expiration
of a statute of limitations barring an assessment for an issue.

The Company recognizes interest and penalties, if any, related to unrecognized
tax benefits in income tax expense. The Company's accounting policy follows the
portfolio approach that leaves stranded income tax effects in AOCI.

Certain items are included in the Company's tax returns at different times than
the items are reflected in the financial statements. As a result, the annual tax
expense reflected in the consolidated statements of income is different than
that reported in the tax returns. Some of these differences are permanent, such
as non-deductible expenses, and some differences are temporary and reverse over
time, such as depreciation expense. Temporary differences create deferred tax
assets and liabilities, which are measured at existing tax rates. Deferred tax
liabilities generally represent tax expense recognized in the financial
statements for which payment has been deferred, or expense for which a deduction
has been taken already in the tax return but the expense has not yet been
recognized in the financial statements. Deferred tax assets generally represent
items that can be used as a tax deduction or credit in tax returns in future
years for which a benefit has already been recorded in the financial statements.
The Company evaluates all significant available positive and negative evidence,
including the existence of losses in recent years and its forecast of future
taxable income by jurisdiction, in assessing the need for a valuation allowance.
The Company also considers tax planning strategies that would result in
realization of deferred tax assets, and the presence of taxable income in prior
period tax filings in jurisdictions that allow for the carry back of tax
attributes pursuant to the applicable tax law. The underlying assumptions the
Company uses in forecasting future taxable income require significant judgment
and take into account the Company's recent performance. The ultimate realization
of deferred tax assets is dependent on the generation of future taxable income
during the periods in which temporary differences or carry-forwards are
deductible or creditable. Valuation allowances are established for deferred tax
assets when it is estimated that it is more-likely-than-not that future taxable
income will be insufficient to fully use a deduction or credit in that
jurisdiction.
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Fair Value Determinations

Goodwill Impairment Testing - 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. 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 a quantitative goodwill impairment test was not required in
2021 and that goodwill was not impaired.

Purchase Price Allocation

Assets acquired and liabilities assumed, including contingent consideration, as
part of a business acquisition are generally recorded at their fair value at the
date of acquisition. The excess of purchase price over the fair value of assets
acquired and liabilities assumed is recorded as goodwill. Determining fair value
of identifiable assets, particularly intangibles, and liabilities acquired also
requires management to make estimates, which are based on all available
information and in some cases assumptions with respect to the timing and amount
of future revenues and expenses associated with an asset. These estimates
directly impact the amount of identified intangible assets recognized and the
related amortization expense in future periods.

New Accounting Pronouncements

Note 1, Summary of Significant Accounting Policies, in the notes to the
consolidated financial statements contains a summary of the Company's
significant accounting policies, including a discussion of recently issued
accounting pronouncements and their impact or potential future impact on the
Company's financial results, if determinable, under the sub-heading "New
Accounting Pronouncements."

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