MARSH & MCLENNAN COMPANIES, INC. (Form: 10-Q, Received: 11/04/2011 14:31:17)

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________________________________

FORM 10-Q Filing

_____________________________________________

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2011

_____________________________________________

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, New York 10036

(212) 345-5000

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Commission file number 1-5998

State of Incorporation: Delaware

I.R.S. Employer Identification No. 36-2668272

_____________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting Company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer x		Accelerated Filer ¨

Non-Accelerated Filer ¨ (Do not check if a smaller reporting company)		Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of October 31, 2011, there were outstanding 537,968,459 shares of common stock, par value $1.00 per share, of the registrant.

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INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “future,” “intend,” “plan,” “project” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” For example, we may use forward-looking statements when addressing topics such as: the outcome of contingencies; the expected impact of acquisitions and dispositions; pension obligations; market and industry conditions; changes in our business strategies and methods of generating revenue; the development and performance of our services and products; changes in the composition or level of our revenues; our cost structure and the outcome of cost-saving or restructuring initiatives; dividend policy; cash flow and liquidity; future actions by regulators; and the impact of changes in accounting rules.

Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include, among other things:


▪	our exposure to potential liabilities arising from errors and omissions claims against us, particularly in our Marsh and Mercer businesses;


▪	our ability to make strategic acquisitions and dispositions and to integrate, and realize expected synergies, savings or strategic benefits from the businesses we acquire;


▪	changes in the funded status of our global defined benefit pension plans and the impact of any increased pension funding resulting from those changes;


▪	the impact of any regional, national or global political, economic, regulatory or market conditions on our results of operations and financial condition;


▪	the impact on our net income caused by fluctuations in foreign currency exchange rates;


▪	the impact on our net income or cash flows and our effective tax rate in a particular period caused by settled tax audits and expired statutes of limitation;


▪	the extent to which we retain existing clients and attract new business, and our ability to incentivize and retain key employees;

▪

our exposure to potential criminal sanctions or civil remedies if we fail to comply with foreign and U.S. laws and regulations that are applicable to our international operations, including import and export requirements, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the UK Bribery Act 2010, local laws prohibiting corrupt payments to government officials, as well as various trade sanctions laws;


▪	the impact of competition, including with respect to pricing;


▪	the potential impact of rating agency actions on our cost of financing and ability to borrow, as well as on our operating costs and competitive position;


▪	our ability to successfully recover should we experience a disaster or other business continuity problem;


▪	changes in applicable tax or accounting requirements; and


▪	potential income statement effects from the application of FASB's ASC Topic No. 740 (“Income Taxes”) regarding accounting treatment of uncertain tax benefits and valuation allowances, including the effect of any subsequent adjustments to the estimates we use in applying this accounting standard.

The factors identified above are not exhaustive. Marsh & McLennan Companies and its subsidiaries operate in a dynamic business environment in which new risks may emerge frequently. Accordingly, we caution readers not to place undue reliance on the above forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made. Further information concerning Marsh & McLennan Companies and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in the Company's filings with the Securities and Exchange Commission, including the “Risk Factors” section of our most recently filed Annual Report on Form 10-K.

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PART I. FINANCIAL INFORMATION		4

ITEM 1.	FINANCIAL STATEMENTS	4

	CONSOLIDATED STATEMENTS OF INCOME	4

	CONSOLIDATED BALANCE SHEETS	5

	CONSOLIDATED BALANCE SHEETS (Continued)	6

	CONSOLIDATED STATEMENTS OF CASH FLOWS	7

	CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME	8

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	9

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	30

ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	41

ITEM 4.	CONTROLS & PROCEDURES	43

PART II. OTHER INFORMATION		44

ITEM 1.	LEGAL PROCEEDINGS	44

ITEM 1A.	RISK FACTORS	44

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	44

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	45

ITEM 4.	OTHER INFORMATION	45

ITEM 5.	EXHIBITS	45

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PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions, except per share figures)	2011			2010			2011			2010
Revenue	$	2,806		$	2,524		$	8,618		$	7,765
Expense:
Compensation and benefits	1,753			1,586			5,202			4,775
Other operating expenses	743			699			2,169			2,376
Operating expenses	2,496			2,285			7,371			7,151
Operating income	310			239			1,247			614
Interest income	9			6			21			13
Interest expense	(49		)	(60		)	(149		)	(180		)
Cost of extinguishment of debt	(72		)	—			(72		)	—
Investment income (loss)	—			(2		)	13			24
Income before income taxes	198			183			1,060			471
Income tax expense	65			55			322			98
Income from continuing operations	133			128			738			373
Discontinued operations, net of tax	2			43			17			292
Net income before non-controlling interests	135			171			755			665
Less: Net income attributable to non-controlling interests	5			3			18			13
Net income attributable to the Company	$	130		$	168		$	737		$	652
Basic net income per share – Continuing operations	$	0.24		$	0.23		$	1.32		$	0.66
– Net income attributable to the Company	$	0.24		$	0.30		$	1.35		$	1.19
Diluted net income per share – Continuing operations	$	0.23		$	0.22		$	1.30		$	0.65
–Net income attributable to the Company	$	0.24		$	0.30		$	1.33		$	1.18
Average number of shares outstanding – Basic	540			543			543			539
– Diluted	549			548			552			543
Shares outstanding at September 30,	538			543			538			543

The accompanying notes are an integral part of these consolidated statements.

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MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



(In millions of dollars)	September 30, 2011			December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	1,714		$	1,894
Receivables
Commissions and fees	2,682			2,544
Advanced premiums and claims	83			96
Income tax receivable	46			323
Other	226			186
	3,037			3,149
Less-allowance for doubtful accounts and cancellations	(112		)	(114		)
Net receivables	2,925			3,035
Other current assets	391			347
Total current assets	5,030			5,276
Goodwill and intangible assets	6,933			6,823
Fixed assets (net of accumulated depreciation and amortization of $1,483 at September 30, 2011 and $1,411 at December 31, 2010)	804			822
Pension related assets	477			265
Deferred tax assets	1,084			1,205
Other assets	793			919
	$	15,121		$	15,310

The accompanying notes are an integral part of these consolidated statements.

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MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(Unaudited)



(In millions of dollars)	September 30, 2011			December 31, 2010
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	260		$	8
Accounts payable and accrued liabilities	1,819			1,741
Accrued compensation and employee benefits	1,106			1,294
Accrued income taxes	80			62
Dividends payable	119			—
Total current liabilities	3,384			3,105
Fiduciary liabilities	4,118			3,824
Less – cash and investments held in a fiduciary capacity	(4,118		)	(3,824		)
	—			—
Long-term debt	2,670			3,026
Pension, postretirement and postemployment benefits	1,148			1,211
Liabilities for errors and omissions	446			430
Other liabilities	1,008			1,123
Commitments and contingencies
Equity:
Preferred stock, $1 par value, authorized 6,000,000 shares, none issued	—			—
Common stock, $1 par value, authorized
1,600,000,000 shares, issued 560,641,640 shares at September 30, 2011 and December 31, 2010	561			561
Additional paid-in capital	1,123			1,185
Retained earnings	7,696			7,436
Accumulated other comprehensive loss	(2,333		)	(2,300		)
Non-controlling interests	58			47
	7,105			6,929
Less – treasury shares, at cost, 23,079,851 shares at September 30, 2011 and 20,132,120 shares at December 31, 2010	(640		)	(514		)
Total equity	6,465			6,415
	$	15,121		$	15,310

The accompanying notes are an integral part of these consolidated statements.

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MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



For the Nine Months Ended September 30,
(In millions of dollars)	2011			2010
Operating cash flows:
Net income before non-controlling interests	$	755		$	665
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization of fixed assets and capitalized software	200			222
Amortization of intangible assets	50			52
Charge for early extinguishment of debt	72			—
Provision for deferred income taxes	91			(40		)
Gain on investments	(12		)	(21		)
Loss (gain) on disposition of assets	1			(23		)
Stock option expense	16			14
Changes in assets and liabilities:
Net receivables	122			(248		)
Other current assets	(83		)	(16		)
Other assets	(184		)	(167		)
Accounts payable and accrued liabilities	90			(33		)
Accrued compensation and employee benefits	(188		)	(269		)
Accrued income taxes	12			(23		)
Other liabilities	93			(117		)
Effect of exchange rate changes	(40		)	54
Net cash provided by operations	995			50
Financing cash flows:
Purchase of treasury shares	(361		)	—
Proceeds from issuance of debt	496			—
Repayments of debt	(8		)	(557		)
Payments for early extinguishment of debt	(672		)	—
Purchase of non-controlling interests	(21		)	(15		)
Shares withheld for taxes on vested units – treasury shares	(90		)	(54		)
Issuance of common stock	123			28
Dividends paid	(358		)	(333		)
Net cash used for financing activities	(891		)	(931		)
Investing cash flows:
Capital expenditures	(205		)	(193		)
Net sales of long-term investments	64			58
Proceeds from sales of fixed assets	4			3
Dispositions	1			1,194
Acquisitions	(134		)	(248		)
Other, net	(3		)	3
Net cash provided by (used for) investing activities	(273		)	817
Effect of exchange rate changes on cash and cash equivalents	(11		)	(18		)
Decrease in cash and cash equivalents	(180		)	(82		)
Cash and cash equivalents at beginning of period	1,894			1,777
Cash and cash equivalents at end of period	$	1,714		$	1,695

The accompanying notes are an integral part of these consolidated statements.

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MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME

(Unaudited)



For the Nine Months Ended September 30,
(In millions, except per share figures)	2011			2010
COMMON STOCK
Balance, beginning and end of year	$	561		$	561
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year	$	1,185		$	1,211
Change in accrued stock compensation costs	(50		)	(25		)
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax impact	(10		)	(12		)
Purchase of subsidiary shares from non-controlling interests	(2		)	—
Issuance of shares for acquisitions	—			(15		)
Balance, end of period	$	1,123		$	1,159
RETAINED EARNINGS
Balance, beginning of year	$	7,436		$	7,033
Net income attributable to the Company (a)	737			652
Dividend equivalents paid	(11		)	(12		)
Dividends declared – (per share amounts: $0.86 in 2011 and $0.81 in 2010)	(466		)	(437		)
Balance, end of period	$	7,696		$	7,236
ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS)
Balance, beginning of year	$	(2,300	)	$	(2,171	)
Foreign currency translation adjustments (b)	(113		)	(44		)
Unrealized investment holding losses, net of reclassification adjustments (c)	(5		)	(11		)
Net changes under benefit plans, net of tax (d)	85			88
Balance, end of period	$	(2,333	)	$	(2,138	)
TREASURY SHARES
Balance, beginning of year	$	(514	)	$	(806	)
Issuance of shares under stock compensation plans and employee stock purchase plans	235			160
Issuance of shares for acquisitions	—			198
Purchase of treasury shares	(361		)	—
Balance, end of period	$	(640	)	$	(448	)
NON-CONTROLLING INTERESTS
Balance, beginning of year	$	47		$	35
Net income attributable to non-controlling interests (e)	18			13
Other changes	(7		)	(3		)
Balance, end of period	$	58		$	45
TOTAL EQUITY	$	6,465		$	6,415
TOTAL COMPREHENSIVE INCOME (a+b+c+d+e)	$	722		$	698

The accompanying notes are an integral part of these consolidated statements.

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MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Operations

Marsh & McLennan Companies, Inc. (“the Company”), a global professional services firm, is organized based on the different services that it offers. Under this organizational structure, the Company’s two business segments are Risk and Insurance Services and Consulting.

The Risk and Insurance Services segment provides risk management and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. The Company conducts business in this segment through Marsh and Guy Carpenter.

In January 2011, Marsh acquired RJF Agencies, an independent insurance agency in the upper Midwest region of the U.S. In February 2011, Marsh acquired Hampton Roads Bonding, a surety bonding agency for commercial, road, utility, marit ime and government contractors in the state of Virginia, and the Boston office of Kinloch Consulting Group, Inc. In July 2011, Marsh acquired Prescott Pailet Benefits, an employee benefits broker in the state of Texas.

In the first quarter of 2010 , Marsh acquired Haake Companies, Inc., an insurance broking firm in the Midwest region and Thomas Rutherfoord, Inc., an insurance broking firm in the Southeast and mid-Atlantic regions of the U.S. In the second quarter of 2010 , Marsh acquired HSBC Insurance Brokers Ltd., an international provider of risk intermediary and risk advisory services and the Bostonian Group Insurance Agency, Inc. and Bostonian Solutions, Inc. (collectively the “Bostonian Group”), a regional insurance brokerage in New England. In the fourth quarter of 2010 Marsh acquired Trion, a U.S. private benefits specialist and SBS, a Georgia-based benefits brokerage and consulting firm.

The Consulting segment provides advice and services to the managements of organizations in the area of human resource consulting, comprising retirement and investments, health and benefits, outsourcing and talent; and strategy and risk management consulting, comprising management, economic and brand consulting. The Company conducts business in this segment through Mercer and Oliver Wyman Group. In the first quarter of 2011, Mercer acquired Hammond Associates, an investment consulting company for endowments and foundations in the U.S. In June 2011, Mercer acquired Evaluation Associates LLC, an investment consulting firm. In July 2011, Mercer acquired Mahoney Associates, a health and benefits advisory firm based in south Florida. In July 2010, Mercer acquired Innovative Process Administration (“IPA”), a provider of health and benefit recordkeeping and employee enrollment technology. In August 2010, Mercer acquired ORC Worldwide, a premier provider of HR knowledge, data and solutions for professionals in numerous industries.

On August 3, 2010, the Company completed the sale of Kroll, the Company’s former Risk Consulting & Technology segment, to Altegrity, Inc. (“Altegrity”) for cash consideration of $1.13 billion . In the first quarter of 2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”). The gain on the sale of Kroll and related tax benefits and the after-tax loss on the sale of KLS, along with Kroll’s, and KLS’s 2010 comparative results of operations are included in discontinued operations in 2010 .

With the sale of Kroll in August 2010, along with previous divestiture transactions between 2008 and 2010, the Company has divested its entire Risk Consulting & Technology segment. The run-off of the Company’s involvement in the Corporate Advisory and Restructuring business (“CARG”), previously part of Risk Consulting & Technology, in which the Company has “continuing involvement” as defined in SEC Staff Accounting Bulletin Topic 5e, is now managed by the Company’s corporate departments. Consequently, the financial results of the CARG businesses are included in “Corporate” for segment reporting purposes.

2. Principles of Consolidation and Other Matters

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to such rules and regulations for interim filings, although the Company believes that the information and disclosures presented are adequate to make such information and disclosure not misleading. These consolidated financial statements should be read in conjunction with the

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consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (the “2010 10-K”).

The financial information contained herein reflects all adjustments consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the Company’s results of operations for the three and nine -month periods ended September 30, 2011 and 2010 .

Investment Income (Loss)

The caption “investment income (loss)” in the consolidated statements of income comprises realized and unrealized gains and losses from investments recognized in current earnings. It includes, when applicable, other than temporary declines in the value of available for sale securities and the change in value of the Company’s holdings in certain private equity funds. The Company’s investments may include direct investments in insurance or consulting companies and investments in private equity funds. This line includes equity method gains/(losses) of $0 million and $(4) million for the three months ended September 30, 2011 and 2010 , respectively, and $14 million and $13 million for the nine months ended September 30, 2011 and 2010 , respectively.

The Company has an investment in Trident II limited partnership, a private equity investment fund. At September 30, 2011 , the Company’s investment in Trident II was approximately $84 million , reflected in other assets in the consolidated balance sheet. The Company’s maximum exposure to loss is equal to its investment plus any calls on its remaining capital commitment of $67 million . Since this fund is closed to new investments, none of the remaining capital commitment is expected to be called.

Income Taxes

The Company’s effective tax rate in the third quarter of 2011 was 32.8% . The rate reflects non-U.S. earnings subject to tax at rates below the U.S. statutory rate, partially offset by a deferred tax charge from re-measuring deferred tax assets for legislation that reduced tax rates in the U.K. The 30.4% effective tax rate for the first nine months of 2011 primarily reflects non-U.S. earnings subject to tax at rates below the U.S. statutory rate.

The Company reported an effective tax rate of 30.0% in the third quarter of 2010 . The 20.8% effective tax rate for the first nine months of 2010 primarily reflects the combination of the tax benefit related to the Alaska settlement, determined at U.S. tax rates, with other pretax income that is subject to lower average effective tax rates applicable worldwide. Excluding the impact of the Alaska settlement, the effective tax rate for the first nine months of 2010 was 29.6% .

The Company is routinely examined by tax authorities in the jurisdictions in which it has significant operations. The Company regularly considers the likelihood of assessments in each of the taxing jurisdictions resulting from examinations. When appropriate, the Company establishes liabilities for uncertain tax positions in relation to the potential assessments, including the possible assessment of penalties. When establishing this liability, the Company considers a number of relevant factors under penalty statutes, including appropriate disclosure of the tax return position, the existence of legal authority supporting the Company’s position, and reliance on the opinion of professional tax advisors.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in the tax return. The Company’s gross unrecognized tax benefits decreased from $199 million at December 31, 2010 to $154 million at September 30, 2011 , primarily reflecting the effective settlement of issues on audit. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and approximately $80 million within the next twelve months due to settlement of audits and expiration of statutes of limitation.

Other Matters Impacting Results in Prior Periods

In June 2010, the Company settled a lawsuit brought by the Alaska Retirement Management Board (“ARMB”) against Mercer. Under the terms of the settlement agreement, Mercer paid $500 million , of which $100 million was covered by insurance, and recognized a charge of $400 million in the second quarter of 2010.

3. Fiduciary Assets and Liabilities

In its capacity as an insurance broker or agent, the Company collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. The Company also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held

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by the Company in a fiduciary capacity. Risk and Insurance Services revenue includes interest on fiduciary funds of $36 million and $33 million for the nine -month periods ended September 30, 2011 and 2010 . The Consulting segment recorded fiduciary interest income of $3 million in each of the nine -month periods ended September 30, 2011 and 2010 . Since fiduciary assets are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities.

Fiduciary assets include approximately $102 million and $283 million of fixed income securities classified as available for sale at September 30, 2011 and December 31, 2010 , respectively. Unrealized gains or losses from available for sale securities are recorded in other comprehensive income until the securities are disposed of, mature or recognized as an other than temporary impairment. Unrealized gains, net of tax, were $1 million and $5 million at September 30, 2011 and December 31, 2010 , respectively.

Net uncollected premiums and claims and the related payables amounted to $9.1 billion at both September 30, 2011 and December 31, 2010 . The Company is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Net uncollected premiums and claims and the related payables are, therefore, not assets and liabilities of the Company and are not included in the accompanying consolidated balance sheets.

In certain instances, the Company advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. These advances are made from corporate funds and are reflected in the accompanying consolidated balance sheets as receivables.

4. Per Share Data

Under the accounting guidance which applies to the calculation of earnings per share (“EPS”) for share-based payment awards with rights to dividends or dividend equivalents, unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of basic and dilutive EPS using the two-class method.

Basic net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of the Company’s common stock.

Diluted net income per share attributable to the Company and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of the Company’s common stock, which have been adjusted for the dilutive effect of potentially issuable common shares (excluding those that are considered participating securities). The diluted earnings per share calculation reflects the more dilutive effect of either (a) the two-class method that assumes that the participating securities have not been exercised or (b) the treasury stock method. Reconciliation of the applicable income components used for diluted earnings per share and basic weighted average common shares outstanding to diluted weighted average common shares outstanding is presented below.



Basic EPS Calculation Continuing Operations	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share figures)	2011		2010		2011		2010
Net income from continuing operations	$	133	$	128	$	738	$	373
Less: Net income attributable to non-controlling interests	5		3		18		13
Net income from continuing operations attributable to the Company	128		125		720		360
Less: Portion attributable to participating securities	1		3		5		7
Net income attributable to common shares for basic earnings per share	$	127	$	122	$	715	$	353
Basic weighted average common shares outstanding	540		543		543		539

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Basic EPS Calculation Net Income	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share figures)	2011		2010		2011		2010
Net income attributable to the Company	$	130	$	168	$	737	$	652
Less: Portion attributable to participating securities	1		3		5		11
Net income attributable to common shares for basic earnings per share	$	129	$	165	$	732	$	641
Basic weighted average common shares outstanding	540		543		543		539



Diluted EPS Calculation Continuing Operations	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share figures)	2011		2010		2011		2010
Net income from continuing operations	$	133	$	128	$	738	$	373
Less: Net income attributable to non-controlling interests	5		3		18		13
Net income from continuing operations attributable to the Company	128		125		720		360
Less: Portion attributable to participating securities	1		3		5		7
Net income attributable to common shares for diluted earnings per share	$	127	$	122	$	715	$	353
Basic weighted average common shares outstanding	540		543		543		539
Dilutive effect of potentially issuable common shares	9		5		9		4
Diluted weighted average common shares outstanding	549		548		552		543
Average stock price used to calculate common stock equivalents	$	28.87	$	23.58	$	29.27	$	23.19



Diluted EPS Calculation Net Income	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share figures)	2011		2010		2011		2010
Net income attributable to the Company	$	130	$	168	$	737	$	652
Less: Portion attributable to participating securities	1		3		5		11
Net income attributable to common shares for diluted earnings per share	$	129	$	165	$	732	$	641
Basic weighted average common shares outstanding	540		543		543		539
Dilutive effect of potentially issuable common shares	9		5		9		4
Diluted weighted average common shares outstanding	549		548		552		543
Average stock price used to calculate common stock equivalents	$	28.87	$	23.58	$	29.27	$	23.19

There were 40.5 million and 44.1 million stock options outstanding as of September 30, 2011 and 2010 , respectively.

5. Supplemental Disclosures to the Consolidated Statements of Cash Flows

The following schedule provides additional information concerning acquisitions, interest and income taxes paid for the nine -month periods ended September 30, 2011 and 2010 .

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(In millions of dollars)	2011			2010
Assets acquired, excluding cash	$	148		$	633
Liabilities assumed	(19		)	(163		)
Shares issued (7.6 million shares in 2010)	—			(183		)
Contingent/deferred purchase consideration	(16		)	(65		)
Net cash outflow for current year acquisitions	113			222
Purchase of other intangibles	2			3
Contingent payments from prior years' acquisitions	3			2
Deferred purchase consideration from prior years' acquisitions	16			21
Net cash outflow for acquisitions	$	134		$	248



(In millions of dollars)	2011			2010
Interest paid	$	163		$	182
Income taxes (refunded)/paid	$	(37	)	$	82

The Company had non-cash issuances of common stock under its share-based payment plan of $191 million and $173 million for the nine months ended September 30, 2011 and 2010 , respectively. The Company recorded stock-based compensation expense related to equity awards of $124 million and $130 million for the nine month periods ended September 30, 2011 and 2010 , respectively.

The consolidated statement of cash flows for the period ended September 30, 2010 includes the cash flow impact of discontinued operations in each cash flow category. The cash flow impact of discontinued operations from the operating, financing and investing cash flow categories in 2010 is as follows:



For the Year Ended September 30,
(In millions of dollars)	2010
Net cash used for operations	$	(22	)
Net cash used for investing activities	$	(14	)
Effect of exchange rate changes on cash and cash equivalents	$	(2	)

The information above excludes the cash flow impacts of actual disposal transactions related to discontinued operations because the Company believes these transactions to be cash flows attributable to the parent company, arising from its decision to dispose of the discontinued operation. In the first nine months of 2010 , the Company’s cash flow reflects cash provided by investing activities of $1.13 billion from the disposal of Kroll and $110 million related to the disposition of KLS.

6. Comprehensive Income

The components of comprehensive income for the nine -month periods ended September 30, 2011 and 2010 are as follows:

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(In millions of dollars)	2011			2010
Foreign currency translation adjustments, net of income tax expense (credit) ($1 for 2011 and $(3) for 2010)	$	(113	)	$	(44	)
Unrealized investment holding losses, net of income tax credit ($1 for 2011 and $4 for 2010)	(5		)	(11		)
(Losses) gains related to pension/retiree plans, net of income tax expense ($39 for 2011 and $34 for 2010)	85			88
Other comprehensive (loss) income	(33		)	33
Net income before non-controlling interests	755			665
Comprehensive income before non-controlling interests	722			698
Less: Comprehensive income attributable to non-controlling interests	(18		)	(13		)
Comprehensive income attributable to the Company	$	704		$	685

7. Acquisitions

Du ring the first nine months of 2011 the Company made four acquisitions in its Risk and Insurance Services segment and three in its Consulting segment. In January 2011, Marsh acquired RJF Agencies, Inc., an independent insurance broking firm in the Midwest. In February 2011, Marsh acquired Hampton Roads Bonding, a surety bonding agency for commercial, road, utility, maritime and government contractors in the state of Virginia, and the Boston office of Kinloch Consulting Group, Inc. In July 2011, Marsh acquired Prescott Pailet Benefits, an employee benefits broker in the state of Texas. These acquisitions were made to expand Marsh’s share in the middle-market through Marsh & McLennan Agency.

In January 2011, Mercer acquired Hammond Associates, an investment consulting company for endowments and foundations in the U.S. In June 2011, Mercer acquired Evaluation Associates LLC, an investment consulting firm. In July 2011, Mercer acquired Mahoney Associates, a health and benefits advisory firm based in south Florida.

Total purchase consideration for the 2011 acquisitions was $132 million which consisted of cash paid of $116 million and estimated contingent consideration of $16 million . Contingent consideration arrangements are primarily based on EBITDA and revenue targets over two to four years . The fair value of the contingent consideration was based on projected revenue and earnings of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized. The Company also paid $19 million of deferred purchase and contingent consideration related to acquisitions made in prior years. In addition, the Company paid $2 million to purchase other intangible assets during the first nine months of 2011 .

In the second quarter of 2011 , Marsh acquired the remaining minority interest of a previously majority owned entity for total purchase consideration of $8 million and accounted for this acquisition under the accounting guidance for consolidations and non-controlling interests. This guidance requires that changes in a parent’s ownership interest while retaining financial controlling interest in a subsidiary be accounted for as an equity transaction. Stepping up the acquired assets to fair value or the recording of goodwill is not permitted. Therefore, the Company recorded a decrease to additional paid-in capital in 2011 of $2 million related to this transaction.

In the first quarter of 2011 , the Company paid deferred purchase consideration of $13 million related to the purchase in 2009 of the minority interest of a previously controlled entity.

The following table presents the preliminary allocation of the acquisition cost to the assets acquired and liabilities assumed, based on their fair values (amounts in millions):

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Cash	$	116
Contingent consideration	16
Total Consideration	$	132
Allocation of purchase price:
Cash and cash equivalents	$	3
Accounts receivable, net	6
Property, plant, and equipment	2
Intangible assets	54
Goodwill	86
Total assets acquired	151
Current liabilities	12
Other liabilities	7
Total liabilities assumed	19
Net assets acquired	$	132

Prior Year Acquisitions

During the first nine months of 2010 , the Company made four acquisitions in its Risk and Insurance Services segment and two acqu isitions in its Consulting s egment.

In July 2010, Mercer acquired IPA, a provider of health and benefit record-keeping and employee enrollment technology. In August 2010, Mercer acquired ORC Worldwide, a premier provider of HR knowledge, data and solutions for professionals in numerous industries.

During the first three quarters of 2010 , the Company made four acquisitions in its Risk and Insurance Services segment. In February 2010, Marsh acquired Haake Companies, Inc., an independent insurance broking firm in the Midwest. In March 2010, Marsh acquired Thomas Rutherfoord, Inc., an insurance broking firm in the Southeast and mid-Atlantic regions in the U.S. On April 30, 2010, Marsh acquired the Bostonian Group, one of the largest regional insurance borkerages in New England. These acquisitions were made to expand Marsh’s share in the middle-market through Marsh & McLennan Agency. On April 1, 2010, Marsh completed the acquisition of HSBC Insurance Brokers Ltd. This transaction deepens Marsh’s presence in the U.K., Hong Kong, Singapore, China and the Middle East. As part of the acquisition agreement, Marsh also entered into a strategic partnership with HSBC Bank that gives the Company preferred access to provide insurance broking and risk management services to HSBC and their corporate and private clients.

Total purchase co nsideration for the six acquisitions ma de during the first nine months of 2010 was $530 million which consisted of cash paid of $282 million , the issuance of 7.6 million shares with a fair value of $183 million , and estimated contingent consideration of $65 million . Contingent consideration arrangements are primarily based on EBITDA and revenue targets over two to four years. The fair value of the contingent consideration was based on earnings projections of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized.

In 2010 , the Company also paid $21 million of deferred purchase consideration and $2 million of contingent purchase consideration related to acquisitions made in prior years and $3 million to purchase other intangible assets.

In the first quarter of 2010 , the Company paid deferred purchase consideration of $15 million related to the purchase in 2009 of the minority interest of a previously controlled entity.

Pro-Forma Information

While the Company does not believe its acquisitions are material in the aggregate, the following unaudited pro-forma financial data gives effect to the acquisitions made by the Company during 2011 and 2010 . In accordance with accounting guidance related to pro-forma disclosures, the information presented for current year acquisitions is as if they occurred on January 1, 2010. The pro-forma information adjusts for the effects of amortization of acquired intangibles. The unaudited pro-forma financial data is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved if such acquisitions had occurred on the dates

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indicated, nor is it necessarily indicative of future consolidated results.



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2011		2010		2011		2010
Revenue	$	2,806	$	2,568	$	8,630	$	7,985
Income from continuing operations	$	133	$	131	$	741	$	383
Net income attributable to the Company	$	131	$	171	$	739	$	661
Basic net income per share:
– Continuing operations	$	0.24	$	0.23	$	1.32	$	0.67
– Net income attributable to the Company	$	0.24	$	0.31	$	1.35	$	1.20
Diluted net income per share:
– Continuing operations	$	0.23	$	0.23	$	1.30	$	0.67
– Net income attributable to the Company	$	0.24	$	0.31	$	1.33	$	1.19

The Consolidated Statements of Income for the three and nine months ended September 30, 2011 include approximately $21 million of revenue and $2 million of net operating income and approximately $55 million of revenue and $8 million of net operating income, respectively, related to acquisitions made during 2011 .

8. Dispositions

In the first quarter of 2010 , Kroll completed the sale of KLS and on August 3, 2010, the Company completed the sale of Kroll to Altegrity.

Kroll’s results of operations are reported as discontinued operations in the Company’s consolidated statements of income. The nine months ended September 30, 2010 also includes the gain on the sale of Kroll and related tax benefits and the loss on the sale of KLS, which includes the tax provision of $ 36 million on the sale. Discontinued operations for the nine months ended September 30, 2011 primarily relates to an insurance recovery for legal fees incurred at Putnam prior to its sale and a tax recovery under the indemnity related to the Putnam sale.

The Company’s tax basis in its investment in the stock of Kroll at the time of sale exceeded the recorded amount primarily as a result of prior impairments of goodwill recognized for financial reporting, but not tax. Prior to the second quarter of 2010 , a tax benefit was not recorded for this temporary difference because it was not apparent in the foreseeable future that it would reverse in a transaction that would result in a tax benefit. Since Kroll met the criteria for classification as a discontinued operation in the second quarter of 2010 , the Company determined that it had the ability to carry back the capital loss realized against prior realized capital gains. Therefore, a $265 million deferred tax benefit was recorded in discontinued operations in the second quarter of 2010 to establish a deferred tax asset.

Summarized Statements of Income data for discontinued operations is as follows:

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	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions of dollars except per share figures)	2011		2010			2011			2010
Kroll Operations
Revenue	$	—	$	56		$	—		$	381
Expense	—		52			—			345
Net operating income	—		4			—			36
Income tax	—		1			—			16
Income from Kroll operations, net of tax	—		3			—			20
Other discontinued operations, net of tax	—		(7		)	—			(7		)
Income (loss) from discontinued operations, net of tax	—		(4		)	—			13
Disposals of discontinued operations	3		35			11			42
Income tax (credit) expense	1		(12		)	(6		)	(237		)
Disposals of discontinued operations, net of tax	2		47			17			279
Discontinued operations, net of tax	$	2	$	43		$	17		$	292
Discontinued operations, net of tax per share
– Basic	$	—	$	0.07		$	0.03		$	0.53
– Diluted	$	0.01	$	0.08		$	0.03		$	0.53

9. Goodwill and Other Intangibles

The Company is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs the annual impairment test for each of its reporting units during the third quarter of each year. The Company adopted new accounting provisions in the third quarter of 2011. Under this guidance, a company may first assess qualitative factors to determine whether it is necessary to perform the two-step goodwill impairment test. The Company considered numerous issues, which included the excess of fair value over carrying value in its most recent estimate of reporting unit fair values, whether significant acquisitions or dispositions occurred which might alter the fair values 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.

Based on its qualitative evaluation, the Company concluded that a two-step goodwill impairment test was not required.

Other intangible assets that are not deemed to have an indefinite life are amortized over their estimated lives and reviewed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature.

Changes in the carrying amount of goodwill are as follows:



(In millions of dollars)	2011		2010
Balance as of January 1, as reported ^(a)	$	6,420	$	5,990
Goodwill acquired	88		349
Other adjustments ^(b)	31		(53		)
Balance at September 30,	$	6,539	$	6,286


^(a)	Amounts in 2010 exclude goodwill and accumulated impairment losses related to Kroll, which were reclassified to discontinued operations.


^(b)	Primarily foreign exchange.

Goodwill allocable to the Company’s reportable segments is as follows: Risk & Insurance Services, $4.4 billion and Consulting, $2.1 billion .

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Amortized intangible assets consist of the cost of client lists, client relationships and trade names acquired. The gross cost and accumulated amortization is as follows:



	September 30, 2011						December 31, 2010
(In millions of dollars)	Gross Cost		Accumulated Amortization		Net Carrying Amount		Gross Cost		Accumulated Amortization		Net Carrying Amount
Amortized intangibles	$	642	$	248	$	394	$	615	$	212	$	403

Aggregate amortization expense for the nine months ended September 30, 2011 and 2010 was $50 million and $36 million , respectively, and the estimated future aggregate amortization expense is as follows:



For the Years Ending December 31,
(In millions of dollars)	Estimated Expense
2011 (excludes amortization through Sept 30, 2011)	$	17
2012	63
2013	56
2014	51
2015	43
Subsequent years	164
	$	394

10. Fair Value Measurements

Fair Value Hierarchy

The Company has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by the FASB in ASC Topic No. 820 (“Fair Value Measurements and Disclosures”). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy, for disclosure purposes, is determined based on the lowest level input that is significant to the fair value measurement.

Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on the inputs in the valuation techniques as follows:


Level 1.	Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market (examples include active exchange-traded equity securities, most U.S. Government and agency securities, money market mutual funds and certain other sovereign government obligations).

Assets and liabilities utilizing Level 1 inputs include exchange traded equity securities and mutual funds.


Level 2.	Assets and liabilities whose values are based on the following:


a)	Quoted prices for similar assets or liabilities in active markets;


b)	Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);


c)	Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and


d)	Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full asset or liability (for

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example, certain mortgage loans).

Assets and liabilities utilizing Level 2 inputs include corporate and mutual funds and senior notes.

Level 3.

Assets and liabilities whose values are based on prices, or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability (examples include private equity investments, certain commercial mortgage whole loans, and long-dated or complex derivatives including certain foreign exchange options and long-dated options on gas and power).

Valuation Techniques

Equity Securities & Mutual Funds

Investments for which market quotations are readily available are valued at the sale price on their principal exchange, or official closing bid price for certain markets. If no sales are reported, the security is valued at its last reported bid price.

Other Sovereign Government Obligations, Municipal Bonds and Corporate Bonds

The investments listed in the caption above are valued on the basis of valuations furnished by an independent pricing service approved by the trustees or dealers. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities.

Interest Rate Swap Derivative

The fair value of interest rate swap derivatives is based on the present value of future cash flows at each valuation date resulting from utilization of the swaps, using a constant discount rate of 1.6% compared to discount rates based on projected future yield curves. (See Note 12)

Senior Notes due 2014

The fair value of the first $250 million of Senior Notes maturing in 2014 is estimated to be the carrying value of those notes adjusted by the fair value of the interest rate swap derivative, discussed above. In the first quarter of 2011 , the Company entered into two interest rate swaps to convert interest on a portion of its Senior Notes from a fixed rate to a floating rate. The swaps are designated as fair value hedging instruments. The change in the fair value of the swaps will be recorded on the balance sheet. The carrying value of the debt related to these swaps will be adjusted by an equal amount. (See Note 12)

Contingent Consideration Liability

Purchase consideration for some acquisitions made by the Company includes contingent consideration arrangements. Contingent consideration arrangements are primarily based on meeting EBITDA and revenue targets over two to four years. The fair value of contingent consideration is estimated as the present value of future cash flows that would result from the projected revenue and earnings of the acquired entities.

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2011 and December 31, 2010 .

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(In millions of dollars)	Identical Assets (Level 1)				Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Total
	09/30/11		12/31/10		09/30/11		12/31/10		09/30/11		12/31/10		09/30/11		12/31/10
Assets:
Financial instruments owned:
Exchange traded equity securities	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	1
Mutual funds ^(a)	127		137		—		—		—		—		127		137
Money market funds ^(b)	59		8		—		—		—		—		59		8
Interest rate swap derivatives ^(c)	—		—		7		—		—		—		7		—
Total assets measured at fair value	$	186	$	146	$	7	$	—	$	—	$	—	$	193	$	146
Fiduciary Assets:
State and local obligations (including non-U.S. locales)	$	—	$	—	$	19	$	68	$	—	$	—	$	19	$	68
Other sovereign government obligations and supranational agencies	—		—		80		185		—		—		80		185
Corporate and other debt	—		—		3		30		—		—		3		30
Money market funds	119		152		—		—		—		—		119		152
Total fiduciary assets measured at fair value	$	119	$	152	$	102	$	283	$	—	$	—	$	221	$	435
Liabilities:
Contingent consideration liability ^(d)	$	—	$	—	$	—	$	—	$	119	$	106	$	119	$	106
Senior Notes due 2014 ^(e)	$	—	$	—	$	257	$	—	$	—	$	—	$	257	$	—
Total liabilities measured at fair value	$	—	$	—	$	257	$	—	$	119	$	106	$	376	$	106


^(a)	Included in other assets in the consolidated balance sheets.

^(b) Included in cash and cash equivalents in the consolidated balance sheets.

^(c) Included in other receivables in the consolidated balance sheets.

^(d) Included in accounts payable and accrued liabilities and other liabilities in the consolidated balance sheets.

^(e) Included in long term debt in the consolidated balance sheets.

During the nine month period ended September 30, 2011 , there were no assets that transferred between Level 1 and Level 2.

The table below sets forth a summary of the changes in fair value of the Company’s Level 3 liabilities for the quarter ended September 30, 2011 that represent contingent consideration related to acquisitions:



	Fair Value, Beginning of Period		Additions	Payments		Revaluation Impact	Fair Value, End of Period
Contingent consideration	$	106	16	(6	)	3	$	119

The fair value of the contingent liability is based on projections of revenue and earnings for the acquired entities that are reassessed on a quarterly basis.

11. Retirement Benefits

The Company maintains qualified and non-qualified defined benefit pension plans for its U.S. and non-U.S. eligible 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 by U.S. law and the laws of the non-U.S. jurisdictions in which the Company offers defined benefit plans.

The target asset allocation for the U.S. Plan is 58% equities and 42% fixed income. At the end of the third quarter of 2011 , the actual allocation for the U.S. Plan was 57% equities and 43% fixed income. The target asset allocation for

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the U.K. Plan, which comprises approximately 82% of non-U.S. Plan assets, is 58% equities and 42% fixed income. At the end of the third quarter of 2011 , the actual allocation for the U.K. Plan was 49% equities and 51% fixed income.

The components of the net periodic benefit cost for defined benefit and other post-retirement plans are as follows:



Combined U.S. and significant non-U.S. Plan	Pension						Postretirement
For the Three Months Ended September 30,	Benefits						Benefits
(In millions of dollars)	2011			2010			2011			2010
Service cost	$	55		$	49		$	1		$	—
Interest cost	153			145			2			4
Expected return on plan assets	(223		)	(204		)	—			—
Amortization of prior service credit	(5		)	(5		)	(3		)	(3		)
Recognized actuarial loss (credit)	54			36			(3		)	—
Net periodic benefit cost (credit)	$	34		$	21		$	(3	)	$	1

Combined U.S. and significant non-U.S. Plans	Pension						Postretirement
For the Nine Months Ended September 30,	Benefits						Benefits
(In millions of dollars)	2011			2010			2011			2010
Service cost	$	169		$	147		$	4		$	3
Interest cost	458			431			9			11
Expected return on plan assets	(668		)	(608		)	—			—
Amortization of prior service credit	(14		)	(15		)	(10		)	(10		)
Recognized actuarial loss (credit)	162			108			(3		)	—
Net periodic benefit cost	$	107		$	63		$	—		$	4

U.S. Plans only	Pension						Postretirement
For the Three Months Ended September 30,	Benefits						Benefits
(In millions of dollars)	2011			2010			2011			2010
Service cost	$	20		$	19		$	—		$	—
Interest cost	58			57			1			3
Expected return on plan assets	(79		)	(74		)	—			—
Amortization of prior service credit	(4		)	(4		)	(3		)	(3		)
Recognized actuarial loss (credit)	25			17			(3		)	—
Net periodic benefit cost (credit)	$	20		$	15		$	(5	)	$	—



U.S. Plans only	Pension						Postretirement
For the Nine Months Ended September 30,	Benefits						Benefits
(In millions of dollars)	2011			2010			2011			2010
Service cost	$	62		$	57		$	2		$	2
Interest cost	173			170			6			8
Expected return on plan assets	(236		)	(221		)	—			—
Amortization of prior service credit	(12		)	(13		)	(10		)	(10		)
Recognized actuarial loss (credit)	75			53			(3		)	—
Net periodic benefit cost (credit)	$	62		$	46		$	(5	)	$	—

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Significant non-U.S. Plans only	Pension						Postretirement
For the Three Months Ended September 30,	Benefits						Benefits
(In millions of dollars)	2011			2010			2011		2010
Service cost	$	35		$	30		$	1	$	—
Interest cost	95			88			1		1
Expected return on plan assets	(144		)	(130		)	—		—
Amortization of prior service cost	(1		)	(1		)	—		—
Recognized actuarial loss	29			19			—		—
Net periodic benefit cost	$	14		$	6		$	2	$	1



Significant non-U.S. Plans only	Pension						Postretirement
For the Nine Months Ended September 30,	Benefits						Benefits
(In millions of dollars)	2011			2010			2011		2010
Service cost	$	107		$	90		$	2	$	1
Interest cost	285			261			3		3
Expected return on plan assets	(432		)	(387		)	—		—
Amortization of prior service cost	(2		)	(2		)	—		—
Recognized actuarial loss	87			55			—		—
Net periodic benefit cost	$	45		$	17		$	5	$	4

The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:



Combined U.S. and significant non-U.S. Plans	Pension Benefits				Postretirement Benefits
	2011		2010		2011		2010
Weighted average assumptions:
Expected return on plan assets	8.2	%	8.1	%	—	%	—	%
Discount rate	5.6	%	6.0	%	5.8	%	6.3	%
Rate of compensation increase	4.1	%	4.2	%	—	%	—	%

The Company made $247 million of contributions to its U.S. non-qualified and non-U.S. pension plans in the first nine months of 2011 and expects to contribute approximately $70 million to these plans during the remainder of 2011 .

12. Debt

The Company’s outstanding debt is as follows:

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(In millions of dollars)	September 30, 2011		December 31, 2010
Short-term:
Current portion of long-term debt	$	260	$	8
Long-term:
Senior notes – 6.25% due 2012 (5.1% effective interest rate)	$	251	$	253
Senior notes – 4.850% due 2013	250		250
Senior notes – 5.875% due 2033	296		296
Senior notes – 5.375% due 2014	326		648
Senior notes – 5.75% due 2015	479		747
Senior notes – 9.25% due 2019	398		398
Senior notes – 4.80% due 2021	496		—
Mortgage – 5.70% due 2035	433		439
Other	1		3
	2,930		3,034
Less current portion	260		8
	$	2,670	$	3,026

The senior notes in the table above are publically registered by the Company with no guarantees attached.

On June 27, 2011, the Company commenced tender offers (the “tender offers”) to purchase for cash up to a total of $ 500 million aggregate principal amount of its outstanding 5.375% notes due 2014 (the “2014 Notes”) and 5.750% notes due 2015 (the “2015 Notes” and together with the 2014 Notes, the “Outstanding Notes”), of which $650 million and $750 million , respectively, were then outstanding.

The Company used proceeds from the issuance of 4.80% ten-year $500 million senior notes in the third quarter of 2011 and cash on hand to fund the amounts associated with the tendered bonds.

During the third quarter of 2010, the Company repaid its 5.15% fixed rate $550 million senior notes that matured.

On October 13, 2011, the Company and certain of its foreign subsidiaries entered into a new $ 1.0 billion multi-currenc y five -year unsec ured revolving credit facility, which replaced the $ 1.0 billion facility discussed below, which was in effect as of September 30, 2011 . The interest rate on this facility is based on LIBOR plus a fixed margin which varies with the Company's credit ratings. This facility requires the Company to maintain certain coverage and leverage ratios which are tested quarterly.

The Company and certain of its foreign subsidiaries previously maintained a $1.0 billion multi-currency three-year unsecured revolving credit facility. This facility was due to expire in October 2012. There were no borrowings outstanding under this facility at September 30, 2011 .

Derivative Financial Instruments

In February 2011, the Company entered into two $125 million 3.5 -year interest rate swaps to hedge changes in the fair value of the first $250 million of the outstanding 5.375% senior notes due in 2014.

Under the terms of the swaps, the counter-parties will pay the Company a fixed rate of 5.375% and the Company will pay interest at a floating rate of three-month LIBOR plus a fixed spread of 3.726% . The maturity date of the senior notes and the swaps match exactly. The floating rate resets quarterly, with every second reset occurring on the interest payment date of the senior notes. The swaps net settle every six months on the senior note coupon payment dates. The swaps are designated as fair value hedging instruments and are deemed to be perfectly effective in accordance with applicable accounting guidance. The fair value of the swaps at inception was zero and subsequent changes in the fair value of the interest rate swaps are reflected in the carrying value of the interest rate swaps and in the consolidated balance sheet. The carrying value of the debt on the balance sheet was adjusted by an equal amount. The gain or loss on the hedged item (fixed rate debt) and the offsetting gain or loss on the interest

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rate swaps as of September 30, 2011 are as follows:



Income statement classification (In millions of dollars)	Gain on Swaps		Loss on Notes			Net Income Effect
Other Operating Expenses	$	7	$	(7	)	$	—

The amounts earned and owed under the swap agreements are accrued each period and are reported in interest expense. There was no ineffectiveness recognized in the periods presented. The portion of the debt acquired under the tender offer discussed above was not part of the first $ 250 million outstanding and therefore, did not impact the hedged portion of this debt.

13. Restructuring Costs

The Company recorded total restructuring costs of $16 million in the first nine months of 2011 , majority of which related to severance.

Details of the activity from January 1, 2010 through September 30, 2011 regarding restructuring activities, which includes liabilities from actions prior to 2011 , are as follows:



(In millions of dollars)	Liability at 1/1/10		Amounts Accrued		Cash Paid			Liability at 12/31/10		Amounts Accrued		Cash Paid			Other ^(a)		Liability at 9/30/11
Severance	$	77	$	79	$	(116	)	$	40	$	9	$	(37	)	$	—	$	12
Future rent under non-cancelable leases and other costs	182		62		(73		)	171		7		(33		)	2		147
Total	$	259	$	141	$	(189	)	$	211	$	16	$	(70	)	$	2	$	159


^(a)	Primarily foreign exchange

The expenses associated with the above initiatives are included in compensation and benefits and other operating expenses in the consolidated statements of income. The liabilities associated with these initiatives are classified on the consolidated balance sheets as Accounts payable, Other liabilities, or Accrued compensation, depending on the nature of the items.

14. Financial Instruments

The estimated fair value of the Company’s significant financial instruments is provided below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or need to dispose of the financial instrument.



	September 30, 2011				December 31, 2010
(In millions of dollars)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	1,714	$	1,714	$	1,894	$	1,894
Long-term investments	$	56	$	56	$	68	$	64
Short-term debt	$	260	$	263	$	8	$	8
Long-term debt	$	2,670	$	2,914	$	3,026	$	3,234

Cash and Cash Equivalents : The estimated fair value of the Company’s cash and cash equivalents approximates their carrying value.

Long-term Investments : Long-term investments include available for sale securities recorded at quoted market

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prices, certain investments carried at cost and unrealized gains related to available for sale investments held in a fiduciary capacity as discussed below.

The Company has long-term investments of $34 million and $39 million at September 30, 2011 and December 31, 2010 , carried on the cost basis for which there are no readily available market prices. These investments are included in Other assets in the consolidated balance sheets. The Company monitors these investments for impairment and makes appropriate reductions in carrying values when necessary.

The Company had available for sale securities with an aggregate fair value of $20 million and $23 million at September 30, 2011 and December 31, 2010 , respectively, which are carried at market value under ASC Topic No. 320. The Company had gross unrealized gains (pre-tax) on these securities of $7 million and $8 million included in accumulated other comprehensive income at September 30, 2011 and December 31, 2010 , respectively. The Company recorded the following change in unrealized gains and losses for the three and nine-month periods ended September 30, 2011 and 2010 .



(In millions of dollars)	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011			2010
Unrealized gains (pre-tax)	$	—	$	—	$	—		$	1
Unrealized losses (pre-tax)	$	—	$	—	$	(1	)	$	—

A portion of the Company’s fiduciary funds described in Note 3 are invested in high quality debt securities and are classified as available for sale. Gross unrealized gains (pre-tax) on these securities that are included in other assets and accumulated other comprehensive income in the consolidated balance sheets were $1 million and $7 million at September 30, 2011 and December 31, 2010 , respectively. In the nine months ended September 30, 2011 and 2010 , the Company recorded gross unrealized losses (pre-tax) of $5 million and $8 million , respectively, related to these investments. These amounts have been excluded from earnings and reported, net of deferred income taxes, in accumulated other comprehensive income (loss), which is a component of equity.

Proceeds from the sale of available for sale investments were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions of dollars)	2011		2010		2011		2010
Proceeds from the sale of available for sale securities	$	—	$	1	$	3	$	15

The cost of equity securities sold is determined using the average cost method.

The Company also holds investments in certain private equity fund partnerships which are accounted for using the equity method and other investments that are held at cost. The Company recorded the following gains (losses) related to these investments:



	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions of dollars)	2011		2010			2011			2010
Equity method gains (losses)	$	—	$	(4	)	$	14		$	13
Gains (losses) on cost method investments	—		1			(2		)	2
Gains (losses) from equity and cost method investments	—		(3		)	12			15
Realized gains on available for sale securities	—		1			1			9
Investment income (loss)	$	—	$	(2	)	$	13		$	24

Short-term and Long-term Debt : The fair value of the Company’s short-term debt, which consists primarily of term debt maturing within the next year, approximates its carrying value. The estimated fair value of a primary portion of the Company’s long-term debt is based on discounted future cash flows using current interest rates available for debt with similar terms and remaining maturities. The fair value of the first $250 million of Senior Notes maturing in

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2014 is estimated to be the carrying value of those notes adjusted by the fair value of the interest rate swap derivative, discussed above.

15. Common Stock

During the third quarter of 2011 , the Company repurchased approximately 4.4 million shares of its common stock for total consideration of approximately $126 million , at an average price per share of $28.28 . For the nine months ending September 30, 2011, the Company has repurchased approximately 12.2 million shares for total consideration of $361 million at an average price per share of $29.44 . The repurchased shares were reflected as an increase in treasury shares (a decrease in shares outstanding). During the third quarter of 2011, the Company received authorization to increase the share repurchase program to $1 billion from $500 million . The Company remains authorized to repurchase additional shares of its common stock up to a value of $553 million . There is no time limit on this authorization.

16. Claims, Lawsuits and Other Contingencies

Errors and Omissions Claims

The Company and its subsidiaries, particularly Marsh and Mercer, are subject to a significant number of claims, lawsuits and proceedings in the ordinary course of business. Such claims and lawsuits consist principally of alleged errors and omissions in connection with the performance of professional services, including the placement of insurance and the provision of actuarial services for corporate and public clients. Certain of these claims seek damages, including punitive and treble damages, in amounts that could, if awarded, be significant. In establishing liabilities for errors and omissions claims in accordance with FASB ASC Subtopic No. 450-20 (Contingencies—Loss Contingencies), the Company utilizes case level reviews by inside and outside counsel and an internal actuarial analysis to estimate potential losses. A liability is established when a loss is both probable and reasonably estimable. 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.

To the extent that expected losses exceed our deductible in any policy year, the Company also records an asset for the amount that we expect to recover under any available third-party insurance programs. The Company has varying levels of third-party insurance coverage, with policy limits and coverage terms varying significantly by policy year.

Governmental Inquiries and Related Claims

In January 2005, the Company and its subsidiary Marsh Inc. entered into a settlement agreement with the New York State Attorney General (“NYAG”) and the New York State Insurance Department to settle a civil complaint and related citation regarding Marsh’s use of market service agreements with various insurance companies. The parties subsequently entered into an amended and restated settlement agreement in February 2010 that helps restore a level playing field for Marsh.

Numerous private party lawsuits based on similar allegations to those made in the NYAG complaint were commenced against the Company, one or more of its subsidiaries, and their current and former directors and officers. Most of these matters have been resolved. Eight actions instituted by individual policyholders against the Company, Marsh and certain Marsh subsidiaries remain pending in federal and state courts.

Our activities are regulated under the laws of the United States and its various states, the European Union and its member states, and the other jurisdictions in which we operate. In the ordinary course of business we are also subject to investigations, lawsuits and/or other regulatory actions undertaken by governmental authorities.

Other Contingencies—Guarantees

In connection with its acquisition of U.K.-based Sedgwick Group in 1998, the Company acquired several insurance underwriting businesses that were already in run-off, including River Thames Insurance Company Limited (“River Thames”), which we sold in 2001. Sedgwick guaranteed payment of claims on certain policies underwritten through the Institute of London Underwriters (the “ILU”) by River Thames. The policies covered by this guarantee are reinsured up to £40 million by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by segregated assets held in a trust. As of September 30, 2011 , the reinsurance coverage exceeded the best estimate of the projected liability of the policies covered by the guarantee. To the extent River Thames or the reinsurer is unable to meet its obligations under those policies, a claimant may seek to recover from

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us under the guarantee.

From 1980 to 1983, the Company owned indirectly the English & American Insurance Company (“E&A”), which was a member of the ILU. The ILU required the Company to guarantee a portion of E&A’s obligations. After E&A became insolvent in 1993, the ILU agreed to discharge the guarantee in exchange for the Company’s agreement to post an evergreen letter of credit that is available to pay claims by policyholders on certain E&A policies issued through the ILU and incepting between July 3, 1980 and October 6, 1983. Certain claims have been paid under the letter of credit and we anticipate that additional claimants may seek to recover against the letter of credit.

Putnam-related Matters

Under the terms of a stock purchase agreement with Great-West Lifeco Inc. (“GWL”) related to GWL’s purchase of Putnam Investments Trust from the Company in August 2007, a copy of which was included as an exhibit to the Company’s Form 8-K filed on February 1, 2007, we agreed to indemnify GWL with respect to certain Putnam-related litigation and regulatory matters. Most of these matters have been resolved.

One action by investors in certain Putnam mutual funds, which asserts derivative claims on behalf of the funds against Putnam regarding excessive short-term trading, remains pending in the District of Maryland, and may be subject to our indemnification obligations.

Kroll-related Matters

Under the terms of a stock purchase agreement with Altegrity, Inc. (“Altegrity”) related to Altegrity’s purchase of Kroll from the Company in August 2010, a copy of which is attached as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010, we agreed to provide a limited indemnity to Altegrity with respect to certain Kroll-related litigation and regulatory matters.

The pending proceedings and other matters described in this Note 16 on Claims, Lawsuits and Other Contingencies may expose the Company or its subsidiaries to liability for significant monetary damages and other forms of relief. Where a loss is both probable and reasonably estimable, we establish liabilities in accordance with FASB ASC Subtopic No. 450-20 (Contingencies—Loss Contingencies). Except as described above, we are not able at this time to provide a reasonable estimate of the range of possible loss attributable to these matters or the impact they may have on the Company’s consolidated results of operations, financial position or cash flows. This is primarily because these matters are still developing and involve complex issues subject to inherent uncertainty. Adverse determinations in one or more of these matters could have a material impact on the Company’s consolidated results of operations, financial condition or cash flows in a future period.

17. Segment Information

The Company is organized based on the types of services provided. Under this organizational structure, the Company’s business segments are:


▪	Risk and Insurance Services , comprising insurance services (Marsh) and reinsurance services (Guy Carpenter); and


▪	Consulting , comprising Mercer and Oliver Wyman Group

With the sale of Kroll in August 2010, along with previous divestiture transactions between 2008 and 2010, the Company has divested its entire Risk Consulting and Technology segment.

The accounting policies of the segments are the same as those used for the consolidated financial statements described in Note 1 to the Company’s 2010 10-K. Segment performance is evaluated based on segment operating income, which includes directly related expenses, and charges or credits related to integration and restructuring but not the Company’s corporate-level expenses. Revenues are attributed to geographic areas on the basis of where the services are performed.

Selected information about the Company’s operating segments for the three and nine -month periods ended September 30, 2011 and 2010 are as follows:

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	Three Months Ended September 30,							Nine Months Ended September 30,
(In millions of dollars)	Revenue				Operating Income (Loss)			Revenue				Operating Income (Loss)
2011 –
Risk and Insurance Services	$	1,475		^(a)	$	186		$	4,729		^(c)	$	925
Consulting	1,339			^(b)	161			3,919			^(d)	441
Total Operating Segments	2,814				347			8,648				1,366
Corporate / Eliminations	(8		)		(37		)	(30		)		(119		)
Total Consolidated	$	2,806			$	310		$	8,618			$	1,247
2010 –
Risk and Insurance Services	$	1,327		^(a)	$	142		$	4,278		^(c)	$	747
Consulting	1,203			^(b)	138			3,526			^(d)	(21		)
Total Operating Segments	2,530				280			7,804				726
Corporate / Eliminations	(6		)		(41		)	(39		)		(112		)
Total Consolidated	$	2,524			$	239		$	7,765			$	614


^(a)	Includes inter-segment revenue of $2 million and $4 million in 2011 and 2010 , respectively, interest income on fiduciary funds of $14 million and $11 million in 2011 and 2010 , respectively, and equity method income of $1 million in both 2011 and 2010 .


^(b)	Includes inter-segment revenue of $6 million and $2 million in 2011 and 2010 , respectively, and interest income on fiduciary funds of $ 1 million in both 2011 and 2010 .


^(c)	Includes inter-segment revenue of $4 million and $6 million in 2011 and 2010 , respectively, interest income on fiduciary funds of $36 million and $33 million in 2011 and 2010 , respectively, and equity method income of $10 million and $9 million in 2011 and 2010 , respectively.


^(d)	Includes inter-segment revenue of $ 26 million and $ 33 million in 2011 and 2010 , respectively, and interest income on fiduciary funds of $ 3 million in both 2011 and 2010 .

Details of operating segment revenue for the three and nine-month periods ended September 30, 2011 and 2010 are as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions of dollars)	2011			2010			2011			2010
Risk and Insurance Services
Marsh	$	1,221		$	1,092		$	3,875		$	3,481
Guy Carpenter	254			235			854			797
Total Risk and Insurance Services	1,475			1,327			4,729			4,278
Consulting
Mercer	975			881			2,842			2,568
Oliver Wyman Group	364			322			1,077			958
Total Consulting	1,339			1,203			3,919			3,526
Total Operating Segments	2,814			2,530			8,648			7,804
Corporate / Eliminations	(8		)	(6		)	(30		)	(39		)
Total	$	2,806		$	2,524		$	8,618		$	7,765

18. New Accounting Pronouncements

In June 2011, the FASB issued guidance related to the presentation of Comprehensive Income. The new guidance gives an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net

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income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The guidance does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.

On October 21, the effective date for implementation of this guidance was deferred indefinitely by the FASB. Other than enhanced disclosure, adoption of this guidance will not have a material affect on the Company’s financial statements.

In December 2009, the FASB issued new guidance related to the Consolidation of Variable Interest Entities (“VIE”). The new guidance focuses on “controlling financial interests” and requires companies to perform qualitative analysis to determine whether they must consolidate a VIE by assessing whether the variable interests give them controlling financial interests in the VIE. This guidance is effective for transfers occurring on or after November 15, 2009. Provisions must be applied in annual reporting periods beginning after November 15, 2009 and interim periods within that annual period. The adoption of the guidance did not have a material impact on the Company’s financial statements.

Also, effective January 1, 2010, the Company adopted new guidance that indefinitely defers the above changes relating to the Company’s interests in entities that have all the attributes of an investment company or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those applied by an investment company. As a result, the guidance discussed in the preceding paragraph did not apply to certain investment management trusts managed by Mercer. Mercer manages approximately $19 billion of assets in trusts or funds for which Mercer’s management or trustee fee is considered a variable interest. Mercer is not the primary beneficiary of these trusts or funds. Mercer’s only variable interest in any of these trusts or funds is its unpaid fees, if any. Mercer’s maximum exposure to loss of its interests is, therefore, limited to collection of its fees.

In January 2011, the Company adopted guidance issued by the FASB on revenue recognition regarding multiple-deliverable revenue arrangements. The adoption of this new guidance did not have a material impact on the Company’s financial statements.

In January 2011, the Company adopted guidance issued by the FASB which establishes a revenue recognition model for contingent consideration that is payable upon the achievement of an uncertain future event, referred to as a milestone. The scope of this guidance is limited to research or development arrangements and requires an entity to record the milestone payment in its entirety in the period received if the milestone meets all the necessary criteria to be considered substantive. However, entities would not be precluded from making an accounting policy election to apply another appropriate accounting policy that results in the deferral of some portion of the arrangement consideration. The adoption of this new guidance did not have a material impact on the Company’s financial statements.

In May 2010, the FASB issued guidance for foreign currency issues and Venezuela’s highly inflationary status. The guidance states that Venezuela’s economy should be considered highly inflationary as of January 1, 2010 and therefore a U.S. dollar reporting entity must remeasure the financial statements of its Venezuelan subsidiaries as if the subsidiaries’ functional reporting currency were the entity’s reporting currency (i.e., the U.S. dollar). Any changes related to the conversion of non-U.S. dollar denominated balance sheet accounts must be recognized in earnings. The adoption of the guidance did not have a material impact on the Company’s financial statements.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Marsh & McLennan Companies, Inc. and Subsidiaries (“the Company”) is a global professional services firm providing advice and solutions in the areas of risk, strategy, and human capital. The Company’s subsidiaries include Marsh, which provides risk and insurance services; Guy Carpenter, which provides reinsurance services; Mercer, which provides human resource and related financial advice and services; and Oliver Wyman Group, which provides management consulting and other services. The Company’s approximately 52,000 employees worldwide provide analysis, advice and transactional capabilities to clients in over 100 countries.

The Company’s business segments are based on the services provided. Risk and Insurance Services includes risk management and insurance and reinsurance broking and services, provided primarily by Marsh and Guy Carpenter. Consulting, which comprises the activities of Mercer and Oliver Wyman Group, includes human resource consulting and related investment and outsourcing services, and specialized management, economic and brand consulting services.

In the first quarter of 2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”) and on August 3, 2010, the Company completed the sale of Kroll to Altegrity. With the Kroll disposition completed in August 2010, along with the previous disposals of other businesses between 2008 and 2010, the Company has divested its entire Risk Consulting and Technology segment. As described in Note 1 to the consolidated financial statements, based on the terms and conditions of the divestitures of the Corporate Advisory and Restructuring businesses (“CARG”) in 2008, the Company determined it has “continuing involvement” in those businesses, as that term is used in SEC Staff Accounting Bulletin Topic 5e. Therefore classification of CARG as discontinued operations is not appropriate, and their financial results in the current and prior periods are included in operating income. The run-off of the Company’s involvement in the CARG businesses is managed by the Company’s corporate departments, and consequently, the financial results of these businesses are included in “Corporate” for segment reporting purposes.

The gain on the sale of Kroll and the related tax benefits, and the after-tax loss on the sale of KLS, along with Kroll's and KLS's 2010 operating results are included in discontinued operations.

In January 2011, Marsh acquired RJF Agencies, an independent insurance agency in the upper Midwest. In February 2011, Marsh acquired Hampton Roads Bonding, a surety bonding agency for commercial, road, utility, maritime and government contractors in the state of Virginia, and the Boston office of Kinloch Consulting Group, Inc. In July 2011, Marsh acquired Prescott Pailet Benefits, an employee benefits broker based in Texas.

In the first quarter of 2010, Marsh acquired Haake Companies, Inc., an insurance broking firm in the Midwest region and Thomas Rutherfoord, Inc., an insurance broking firm in the Southeast and mid-Atlantic regions of the U.S. In the second quarter of 2010, Marsh acquired HSBC Insurance Brokers Ltd., an international provider of risk intermediary and risk advisory services and the Bostonian Group Insurance Agency, Inc. and Bostonian Solutions, Inc. (collectively the “Bostonian Group”), a regional insurance brokerage in New England. In the fourth quarter of 2010, Marsh acquired Trion, a U.S. private benefits specialist and SBS, a Georgia-based benefits brokerage and consulting firm.

In the first quarter of 2011, Mercer acquired Hammond Associates, an investment consulting company for endowments and foundations in the U.S. In June 2011, Mercer acquired Evaluation Associates, an investment consulting firm. In July 2011, Mercer acquired Mahoney Associates, a health and benefits advisory firm based in South Florida.

In July 2010, Mercer acquired Innovative Process Administration (“IPA”), a provider of health and benefit recordkeeping and employee enrollment technology. In August 2010, Mercer acquired ORC Worldwide, a premier provider of HR knowledge, data and solutions for professionals in numerous industries.

A reconciliation of segment operating income to total operating income is included in Note 17 to the consolidated financial statements included elsewhere in this report. The accounting policies used for each segment are the same as those used for the consolidated financial statements.

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.

Consolidated Results of Operations

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	Third Quarter				Nine Months
(In millions, except per share figures)	2011		2010		2011		2010
Revenue	$	2,806	$	2,524	$	8,618	$	7,765
Expense:
Compensation and Benefits	1,753		1,586		5,202		4,775
Other Operating Expenses	743		699		2,169		2,376
Operating Expenses	2,496		2,285		7,371		7,151
Operating Income	310		239		1,247		614
Income from Continuing Operations	133		128		738		373
Discontinued Operations, net of tax	2		43		17		292
Net Income Before Non-Controlling Interest	135		171		755		665
Net Income Attributable to the Company	$	130	$	168	$	737	$	652
Income From Continuing Operations Per Share:
Basic	$	0.24	$	0.23	$	1.32	$	0.66
Diluted	$	0.23	$	0.22	$	1.30	$	0.65
Net Income Per Share Attributable to the Company:
Basic	$	0.24	$	0.30	$	1.35	$	1.19
Diluted	$	0.24	$	0.30	$	1.33	$	1.18
Average Number of Shares Outstanding:
Basic	540		543		543		539
Diluted	549		548		552		543
Shares Outstanding at September 30,	538		543		538		543

The Company's consolidated operating income increased 30% to $310 million in the third quarter of 2011 compared with consolidated operating income of $239 million in the prior year reflecting increases of $44 million in Risk and Insurance Services and $23 million in Consulting.

The Company reported consolidated operating income of $1.2 billion for the first nine months of 2011 compared with $614 million in the prior year. The 2010 results include a net charge of $400 million in the Consulting segment due to the resolution of litigation brought by the Alaska Retirement Management Board (“ARMB”) against Mercer. Excluding this charge, operating income would have increased 23% in the first nine months of 2011 compared to 2010, reflecting increases of $178 million in Risk & Insurance Services and $62 million in Consulting.

Consolidated Revenue and Expense

The Company conducts business in many countries, as a result of which the impact of foreign exchange rate movements may distort period-to-period comparisons of revenue. Similarly, the revenue impact of acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue, presented below measures the change in revenue from one period to another by isolating these impacts. The impact of foreign currency exchange fluctuations and acquisitions and dispositions, including transfers among businesses, on the Company’s operating revenues by segment is as follows:

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(In millions of dollars)	Three Months Ended September 30,						% Change GAAP Revenue		Components of Revenue Change*
	Three Months Ended September 30,								Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
	2011			2010					Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
Risk and Insurance Services
Marsh	$	1,210		$	1,083		12	%	3	%	3	%	6	%
Guy Carpenter	251			233			8	%	2	%	3	%	3	%
Subtotal	1,461			1,316			11	%	3	%	3	%	5	%
Fiduciary Interest Income	14			11
Total Risk and Insurance Services	1,475			1,327			11	%	3	%	3	%	5	%
Consulting
Mercer	975			881			11	%	5	%	2	%	4	%
Oliver Wyman Group	364			322			13	%	4	%	—		9	%
Total Consulting	1,339			1,203			11	%	4	%	1	%	6	%
Corporate/Eliminations	(8		)	(6		)
Total Revenue	$	2,806		$	2,524		11	%	4	%	2	%	5	%



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

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



(In millions of dollars)	Three Months Ended September 30,				% Change GAAP Revenue		Components of Revenue Change*
	Three Months Ended September 30,						Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
	2011		2010				Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
Marsh:
EMEA	$	367	$	332	11	%	5	%	—		6	%
Asia Pacific	158		125		26	%	11	%	3	%	13	%
Latin America	84		73		16	%	3	%	—		13	%
Total International	609		530		15	%	6	%	1	%	8	%
U.S. / Canada	601		553		9	%	1	%	5	%	3	%
Total Marsh	$	1,210	$	1,083	12	%	3	%	3	%	6	%
Mercer:
Retirement	$	261	$	256	2	%	4	%	—		(2	)%
Health and Benefits	239		224		7	%	3	%	(3	)%	7	%
Rewards, Talent & Communications	173		142		21	%	4	%	4	%	13	%
Total Mercer Consulting	673		622		8	%	4	%	—		5	%
Outsourcing	186		168		11	%	6	%	4	%	1	%
Investment Consulting & Management	116		91		28	%	8	%	11	%	10	%
Total Mercer	$	975	$	881	11	%	5	%	2	%	4	%



Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as: acquisitions, dispositions and transfers among businesses.
*	Components of revenue change may not add due to rounding.

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(In millions of dollars)	Nine Months Ended September 30,						% Change GAAP Revenue		Components of Revenue Change*
	Nine Months Ended September 30,								Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
	2011			2010					Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
Risk and Insurance Services
Marsh	$	3,845		$	3,454		11	%	3	%	4	%	5	%
Guy Carpenter	848			791			7	%	1	%	1	%	5	%
Subtotal	4,693			4,245			11	%	2	%	4	%	5	%
Fiduciary Interest Income	36			33
Total Risk and Insurance Services	4,729			4,278			11	%	2	%	3	%	5	%
Consulting
Mercer	2,842			2,568			11	%	4	%	2	%	4	%
Oliver Wyman Group	1,077			958			12	%	4	%	—		9	%
Total Consulting	3,919			3,526			11	%	4	%	1	%	6	%
Corporate/Eliminations	(30		)	(39		)
Total Revenue	$	8,618		$	7,765		11	%	3	%	3	%	5	%



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



(In millions of dollars)	Nine Months Ended September 30,				% Change GAAP Revenue		Components of Revenue Change*
	Nine Months Ended September 30,						Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
	2011		2010				Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
Marsh:
EMEA	$	1,363	$	1,256	9	%	3	%	2	%	4	%
Asia Pacific	452		363		24	%	11	%	5	%	9	%
Latin America	228		191		19	%	2	%	—	%	17	%
Total International	2,043		1,810		13	%	4	%	2	%	6	%
U.S. / Canada	1,802		1,644		10	%	1	%	6	%	3	%
Total Marsh	$	3,845	$	3,454	11	%	3	%	4	%	5	%
Mercer:
Retirement	$	813	$	795	2	%	4	%	—		(1	)%
Health and Benefits	717		676		6	%	2	%	(3	)%	7	%
Rewards, Talent & Communications	417		337		24	%	4	%	7	%	13	%
Total Mercer Consulting	1,947		1,808		8	%	3	%	—		4	%
Outsourcing	550		491		12	%	6	%	5	%	1	%
Investment Consulting & Management	345		269		29	%	8	%	9	%	12	%
Total Mercer	$	2,842	$	2,568	11	%	4	%	2	%	4	%



Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as: acquisitions, dispositions and transfers among businesses.
*	Components of revenue change may not add due to rounding.

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Revenue

Consolidated revenue for the third quarter of 2011 was $2.8 billion, an increase of 11% compared with the same period in the prior year. On an underlying basis revenue increased 5%.

Revenue in the Risk and Insurance Services segment for the third quarter of 2011 increased 11% to $1.5 billion, from the same period in 2010, or 5% on an underlying basis. Within the Risk and Insurance Services segment, underlying revenue increased 6% for Marsh and 3% for Guy Carpenter. Marsh experienced revenue growth in all geographic operations, with particularly strong growth of 13% in Latin America and Asia Pacific. Revenue growth at Guy Carpenter was driven by its international operations. Consulting revenue increased 11% to $1.3 billion, resulting from increases of 11% in Mercer and 13% in Oliver Wyman. On an underlying basis, Consulting revenue increased 6% reflecting increases of 4% in Mercer and 9% in Oliver Wyman.

For the first nine months of 2011, Risk & Insurance Services revenue increased 11% from the same period in 2010, and 5% on an underlying basis. Consulting revenue increased 11%, resulting from an 11% increase at Mercer and a 12% increase at Oliver Wyman. On an underlying basis, Consulting revenue increased 6%, resulting from a 4% increase at Mercer and a 9% increase at Oliver Wyman.

Operating Expense

Consolidated operating expense in the third quarter of 2011 increased 9% from the same period in 2010. This reflects an increase slightly under 4% in underlying expenses, a 4% increase due to the impact of foreign exchange, and a 2% increase due to the impact of acquisitions. The increase in underlying expenses primarily reflects higher compensation and benefits costs, including increased pension costs, higher consulting costs, asset-based fees and expenses reimbursable from clients, partly offset by lower restructuring costs.

For the nine months ended September 30, 2011, operating expenses increased 3% from the same period in 2010. Expenses in 2010 included the net charge of $400 million related to the resolution of the ARMB litigation. Excluding the impact of this charge, expenses would have increased 9%, reflecting a 4% increase due to the impact of foreign exchange, a 2% increase due to the impact of acquisitions and a 3% increase in underlying expenses.

Restructuring

In the first nine months of 2011 the Company recorded total restructuring costs of $16 million, primarily related to severance and benefits, including approximately $5 million for cost reduction activities related to acquisitions. In the first nine months of 2010 the Company incurred restructuring costs of $87 million, primarily related to severance and benefits including approximately $34 million for cost reduction activities related to acquisitions.

Risk and Insurance Services

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



	Third Quarter						Nine Months
(In millions of dollars)	2011			2010			2011			2010
Revenue	$	1,475		$	1,327		$	4,729		$	4,278
Compensation and Benefits	878			799			2,605			2,414
Other Expenses	411			386			1,199			1,117
Expense	1,289			1,185			3,804			3,531
Operating Income	$	186		$	142		$	925		$	747
Operating Income Margin	12.6		%	10.7		%	19.6		%	17.5		%

Revenue

Revenue in the Risk and Insurance Services segment in the third quarter of 2011 increased 11% to $1.5 billion, or 5% on an underlying basis compared with the same period in 2010.

In Marsh, revenue in the third quarter of 2011 was $1.2 billion, an increase of 12% from the same quarter of the prior year resulting from an increase of 6% in underlying revenue, 3% from the impact of foreign currency translation and 3% from acquisitions. The underlying revenue growth was across all major geographic markets with

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particularly strong growth in Latin America and Asia Pacific. Underlying revenue increased 3% in the U.S. / Canada, 13% in Latin America and Asia Pacific and 6% in EMEA. Marsh's new business increased 4%.

In January 2011, Marsh acquired RJF Agencies, an independent insurance agency in the upper Midwest region of the U.S. In February 2011, Marsh acquired Hampton Roads Bonding, a surety bonding agency for commercial, road, utility, maritime and government contractors in the state of Virginia, and the Boston office of Kinloch Consulting Group, Inc.

In the first quarter of 2010, Marsh acquired Haake Companies, Inc., an insurance broking firm in the Midwest region and Thomas Rutherfoord, Inc., an insurance broking firm in the Southeast and mid-Atlantic regions of the U.S. In the second quarter of 2010, Marsh acquired HSBC Insurance Brokers Ltd., an international provider of risk intermediary and risk advisory services and the Bostonian Group Insurance Agency, Inc. and Bostonian Solutions, Inc. (collectively the “Bostonian Group”), a regional insurance brokerage in New England. In the fourth quarter of 2010 Marsh acquired Trion, a U.S. private benefits specialist and SBS, a Georgia-based benefits brokerage and consulting firm.

Guy Carpenter's revenue increased 8% to $251 million in the third quarter of 2011 compared with the same period in 2010, or 3% on an underlying basis, led by its international operations. The increase in underlying revenue reflects continued strong new business development and high client retentions.

Revenue in the Risk & Insurance Services segment increased 11% for the first nine months of 2011 compared with the same period of 2010, or 5% on an underlying basis.

Expense

Expenses in the Risk and Insurance Services segment increased 9% in the third quarter of 2011, compared with the same period in the prior year, reflecting a 4% increase related to the impact of foreign currency, a 2% increase from acquisitions and a 3% increase in underlying expenses. The increase in underlying expenses is primarily due to higher base salaries and incentive compensation costs, non-restructuring related severance costs and facilities and equipment costs, partly offset by lower restructuring and related costs.

Expenses for the nine-month period in 2011 increased 8% compared with prior year, reflecting an increase of 3% related to the impact of foreign currency, 4% increase from acquisitions and a 1% increase in underlying expenses.

Consulting

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



	Third Quarter						Nine Months
(In millions of dollars)	2011			2010			2011			2010
Revenue	$	1,339		$	1,203		$	3,919		$	3,526
Compensation and Benefits	813			732			2,407			2,190
Other Expenses	365			333			1,071			1,357
Expense	1,178			1,065			3,478			3,547
Operating Income	$	161		$	138		$	441		$	(21	)
Operating Income Margin	12.0		%	11.5		%	11.3		%	N/A

Revenue

Consulting revenue in the third quarter of 2011 increased 11% compared with the same period in 2010, or 6% on an underlying basis. Mercer's revenue was $975 million in the third quarter of 2011, an increase of 11%. On an underlying basis, Mercer's revenue increased 4%. Within Mercer's consulting lines, revenue increased 5% on an underlying basis compared with the third quarter of 2010, reflecting increases of 7% in health and benefits and 13% in rewards, talent and communications, partly offset by a decrease of 2% in retirement. Within retirement, revenue growth in the U.K. was offset by declines in the other geographies. Health and benefits continued its growth driven by the U.S. and Canada. Rewards, talent & communications produced double digit revenue growth for the fifth consecutive quarter. Outsourcing revenue grew 11% or 1% on an underlying basis, with growth in Asia Pacific partially offset by a decline in the U.S. Investment consulting & management revenue increased 28% or 10% on an

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underlying basis, reflecting continuing growth, particularly in the U.S. and EMEA. Oliver Wyman's revenue increased 13% to $364 million in the third quarter of 2011, or 9% on an underlying basis, driven by growth in its financial services, health-care, consumer, and manufacturing & transportation industry sectors.

Consulting revenue in the first nine months of 2011 increased 11% compared with the same period in 2010, or 6% on an underlying basis, with underlying growth of 4% at Mercer and 9% at Oliver Wyman.

Expense

Consulting expenses increased 11% in the third quarter of 2011 compared with the same period in 2010, reflecting a 4% increase from the impact of foreign exchange rates, a 1% increase from acquisitions and a 5% increase in underlying expenses. The increase in underlying expenses is primarily due to higher base-salaries and incentive compensation and benefits costs, including higher pension costs, and higher asset-based fees.

For the nine months ended September 30, 2011, expenses decreased 2%. Excluding the impact of the $400 million charge in 2010 related to litigation, expenses increased 11% from the 2010 period reflecting a 4% increase from the impact of foreign exchange rates, a 2% increase from acquisitions and a 5% increase in underlying expenses.

Corporate and Other

With the disposition of Kroll in August 2010, along with previous divestiture transactions between 2008 and 2010, the Company has divested its entire Risk Consulting and Technology segment. As described in Note 1 to the consolidated financial statements, based on the terms and conditions of the divestitures of the CARG businesses in 2008, the Company determined it has “continuing involvement” in those businesses, as that term is used in SEC Staff Accounting Bulletin Topic 5e. Therefore, classification of the CARG businesses as discontinued operations is not appropriate, and their financial results in the current and prior periods are included in operating income. The run-off of the Company’s involvement in the CARG businesses is managed by the Company’s corporate departments, and consequently, the financial results of these businesses are included in “Corporate” for segment reporting purposes.

The following results of Corporate and Other includes the Corporate Advisory and Restructuring operations:



	Third Quarter						Nine Months
(In millions of dollars)	2011			2010			2011			2010
Corporate and Other:
Corporate Advisory and Restructuring Operating Income	$	1		$	3		$	6		$	7
Corporate Expense	(38		)	(44		)	(125		)	(119		)
Total Corporate and Other	$	(37	)	$	(41	)	$	(119	)	$	(112	)

Corporate expenses in the third quarter of 2011 were $38 million compared with $44 million in the prior year. The decrease is primarily due to lower consulting fees and restructuring costs.

Corporate expenses for the nine months of 2011 increased $6 million from 2010, primarily due to higher incentive compensation and pension costs primarily due to executive positions added in corporate and higher outside services costs related to corporate initiatives, such as branding, partly offset by lower restructuring costs.

The CARG amounts reflect payments received related to the CARG businesses divested in 2008.

Interest

Interest income earned on corporate funds amounted to $9 million in the third quarter of 2011 compared with $6 million in the third quarter of 2010. The increase in interest income is due to the combined effect of higher average invested funds in 2011 and slightly higher average interest rates compared with the prior year. Interest income increased $8 million for the nine months ended September 30, 2011 compared with the prior year. Interest expense decreased $11 million and $31 million, respectively, in 2011 compared with the third quarter and nine month periods of 2010. The decrease is due to the maturity of $550 million of senior notes in the third quarter of 2010, the early extinguishment of a portion of the Company's outstanding notes during the third quarter of 2011, a lower net interest rate on the Company's debt subject to interest rate swaps and lower interest expense attributable to deferred

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purchase consideration related to acquisitions. These decreases are partly offset by interest on new senior notes issued during the third quarter of 2011.

Early Extinguishment of Debt

On July 15, 2011 the Company purchased a total of $600 million of the Outstanding Notes, $330 million of its 2014 Notes and $270 million of its 2015 Notes. The Company acquired the Notes at market value plus a tender premium, which exceeded its carrying value resulting in a charge of approximately $72 million in the third quarter of 2011.

Investment Income (Loss)

The Company recorded no net investment gains or losses in the third quarter of 2011. This compares with an investment loss of $2 million in the third quarter of 2010, primarily consisting of mark-to-market decreases on private equity investments.

For the first nine months of 2011, investment income was $13 million compared with $24 million in the prior year. This includes private equity gains recorded in both periods. The decrease in 2011 versus 2010 reflects the effects of recording an impairment loss in 2011 and a gain on the sale of equity securities in 2010.

Income Taxes

The Company's effective tax rate in the third quarter of 2011 was 32.8%. The rate reflects non-U.S. earnings subject to tax at rates below the U.S. statutory rate, partially offset by a deferred tax charge from re-measuring deferred tax assets for legislation that reduced tax rates in the U.K. The 30.4% effective tax rate for the first nine months of 2011 primarily reflects non-U.S. earnings subject to tax at rates below the U.S. statutory rate.

The Company reported an effective tax rate of 30.0% in continuing operations in the third quarter of 2010. The rate reflects non-U.S. earnings subject to tax at rates below the U.S. statutory rate and the recognition of uncertain tax benefits as a result of expiring statutes of limitations. This was partially offset by a deferred tax charge from re-measuring deferred tax assets for legislation that reduced tax rates in the U.K. The 20.8% effective tax rate for the first nine months of 2010 primarily reflects the benefit associated with the Alaska settlement recorded in the second quarter. This results from the deduction of the settlement from U.S. income, which has a relatively higher effective tax rate, combined with other pre-tax income that is subject to lower average effective tax rates applicable worldwide. Excluding the effect of the settlement, the effective tax rate for the first nine months was 29.6%.

Impacts on effective tax rates of recent years' accruals for severance, restructuring, and professional liability could not reasonably be estimated and therefore were reported in the interim periods in which they occurred. These factors resulted in highly variable effective tax rates that did not represent long term operating trends. Although we expect the effective tax rate to continue to be significantly variable, the degree of variation is expected to moderate with the anticipated decline in these items.

The effective tax rate is sensitive to the geographic mix and repatriation of the Company's earnings, which may result in higher or lower tax rates. U.S. federal and state corporate tax rates substantially exceed tax rates applicable outside the U.S. Over the past several years, the Company has experienced losses in its U.S. operations and has had significant earnings in its non-U.S. operations. In 2011 the forecasted pre-tax income in the U.K., Canada, Australia and Bermuda are expected to account for approximately 60% of the Company's total non-U.S. pre-tax income, with estimated effective rates in those countries of 27%, 28%, 30% and 0%, respectively. The U.K. effective tax rate excludes the deferred tax charge related to the tax legislation mentioned above. Consequently, continued improvement in the profitability of the Company's U.S.-based operations would tend to result in higher effective tax rates. Losses in certain jurisdictions cannot be offset by earnings from other operations, and may require valuation allowances affecting the rate, depending on estimates of the realizability of associated deferred tax assets. The tax rate is also sensitive to changes in unrecognized tax benefits, including the impact of settled tax audits and expired statutes of limitation.

Changes in tax laws or tax rulings may have a significant impact on our effective tax rate. For example, proposals for fundamental U.S. international tax reform, if enacted, could have a significant adverse impact on the effective tax rate while a reduction in the tax rate in a significant foreign jurisdiction could have a positive impact.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in the tax return. The Company's gross unrecognized tax benefits decreased from $199 million at December 31, 2010 to $154 million at September 30, 2011, primarily reflecting the effective settlement of

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issues on audit. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and approximately $80 million within the next twelve months due to settlement of audits and expiration of statutes of limitation.

Dispositions

In the first quarter of 2010, Kroll completed the sale of KLS. On August 3, 2010, the Company completed the sale of Kroll to Altegrity for cash consideration of $1.13 billion. The gain on the sale of Kroll and related tax benefits and the after-tax loss on the sale of KLS, including a tax provision of $36 million, along with Kroll’s and KLS’s 2010 comparative results of operations are included in discontinued operations in 2010 .

Discontinued operations for the nine months ended September 30, 2011 primarily relates to an insurance recovery for legal fees incurred at Putnam prior to its sale and a tax recovery under the indemnity related to the Putnam sale.

The Company's tax basis in its investment in the stock of Kroll at the time of sale exceeded the recorded amount primarily as a result of prior impairments of goodwill recognized for financial reporting, but not tax. Prior to the second quarter of 2010, a tax benefit was not recorded for this temporary difference because it was not apparent in the foreseeable future that it would reverse in a transaction that would result in a tax benefit. Since Kroll met the criteria for classification as a discontinued operation in the second quarter of 2010, the Company determined that it had the ability to carry back the capital loss realized against prior realized capital gains. Therefore, a $265 million deferred tax benefit was recorded in discontinued operations in the second quarter of 2010 to establish a deferred tax asset.

Summarized Statements of Income data for discontinued operations is as follows:



(In millions of dollars)	Three Months Ended September 30,					Nine Months Ended September 30,
(In millions of dollars)	2011		2010			2011			2010
Kroll Operations
Revenue	$	—	$	56		$	—		$	381
Expense	—		52			—			345
Net operating income	—		4			—			36
Income tax	—		1			—			16
Income from Kroll operations, net of tax	—		3			—			20
Other discontinued operations, net of tax	—		(7		)	—			(7		)
Income (loss) from discontinued operations, net of tax	—		(4		)	—			13
Disposals of discontinued operations	3		35			11			42
Income tax (credit) expense	1		(12		)	(6		)	(237		)
Disposals of discontinued operations, net of tax	2		47			17			279
Discontinued operations, net of tax	$	2	$	43		$	17		$	292
Discontinued operations, net of tax per share
—Basic	$	—	$	0.07		$	0.03		$	0.53
—Diluted	$	0.01	$	0.08		$	0.03		$	0.53

Liquidity and Capital Resources

The Company is organized as a holding company, a legal entity separate and distinct from its operating subsidiaries. As a holding company without significant operations of its own, the Company is dependent upon dividends and other payments from its operating subsidiaries to meet its obligations for paying principal and interest on outstanding debt obligations, for paying dividends to stockholders and for corporate expenses. Further, the Company derives a significant portion of its revenue and operating profit from operating subsidiaries located outside of the United States. Funds from the Company’s operating subsidiaries located outside of the United States are regularly repatriated to the United States out of annual earnings. At December 31, 2010, the Company had

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approximately $1.2 billion of cash and cash equivalents in its foreign operations of which all but approximately $121 million is considered to be permanently invested in those operations to fund foreign investments and working capital needs. The Company expects to continue its practice of repatriating foreign funds out of annual earnings. The analysis of the portion of 2011 earnings that the Company expects to repatriate and the portion that will be permanently reinvested will be finalized later in the year as the amount of non-U.S. earnings and the Company’s cash requirements become more certain. While management does not foresee a need to repatriate the funds which are currently deemed permanently invested, if facts or circumstances change management could elect to repatriate them, if necessary, which could result in higher effective tax rates in the future.

Operating Cash Flows

The Company generated $995 million of cash from operations for the nine months ended September 30, 2011, compared with $50 million provided by operations for the same period in 2010. These amounts reflect the net income of the Company during those periods, excluding gains or losses from investments and from the disposition of businesses, 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. Cash generated from the disposition of businesses is included in investing cash flows.

The Company received $322 million in cash refunds of U.S. federal income taxes during the second quarter of 2011, comprising $212 million from carrying back the net capital loss incurred in 2010 from the sale of Kroll and various other assets, and $110 million from the cash settlement of the IRS audit for the periods 2006 through 2008. The audit settlement primarily reflected the allowance of carry back claims for net operating losses and excess foreign tax credits arising in 2008. The impact on the tax provision of these events was reflected in prior periods and did not impact income tax expense reported during the quarter ended September 30, 2011.

Financing Cash Flows

Net cash used for financing activities was $891 million for the period ended September 30, 2011 compared with $931 million net cash used for the same period in 2010.

The Company paid dividends on its common shares of $358 million ($0.64 per share) during the first nine months of 2011, as compared with $333 million ($0.60 per share) during the first nine months of 2010.

On October 13, 2011, the Company and certain of its foreign subsidiaries entered into a $1.0 billion multi-currency five-year unsecured revolving credit facility, which replaced the $1.0 billion facility that was previously in place. The interest rate on this facility is based on libor plus a fixed margin which varies with the Company's credit ratings. The facility requires the Company to maintain certain coverage and leverage ratios which are tested quarterly. There were no borrowings outstanding under the prior facility at September 30, 2011.

In the second quarter of 2011, the Company acquired the remaining minority interest of a previously majority-owned entity for total cash consideration of $8 million.

In the first quarter of 2011 and 2010, the Company paid deferred purchase consideration of $13 million and $15 million, respectively, related to the purchase in 2009 of the minority interest of a previously controlled entity.

The Company's senior debt is currently rated Baa2 by Moody's and BBB- by Standard & Poor's. The Company's short-term debt is currently rated P-2 by Moody's and A-3 by Standard & Poor's. The Company carries a stable outlook from Moody's and negative outlook from Standard & Poor's.

On July 15, 2011, the Company purchased a total of $600 million of the Outstanding Notes comprised of $330 million of its 2014 Notes and $270 million of its 2015 Notes. The Company acquired the notes at fair value plus a tender premium, which exceeded its carrying value. A charge of approximately $72 million was recorded in the Consolidated Statement of Income in the third quarter of 2011 related to the extinguishment of this debt.

The Company used proceeds from the issuance of 4.80% ten-year $500 million senior notes in the third quarter of 2011 and cash on hand to fund the amounts associated with the tendered bonds.

During 2011, the Company repurchased approximately 12.2 million shares of its common stock for a total consideration of approximately $361 million at an average price per share of $29.44. The Company remains authorized to repurchase additional shares of its common stock up to a value of $553 million. There is no time limit on this authorization.

Investing Cash Flows

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Cash used for investing activities amounted to $273 million in the first nine months of 2011, compared with $817 million provided by investing activities during the same period in 2010.

The Company made seven acquisitions in the first nine months of 2011. Cash used for these acquisitions, net of cash acquired, was approximately $113 million. In addition, during the first nine months of 2011, the Company paid $19 million of deferred purchase and contingent consideration related to acquisitions made in prior years and $2 million for other intangible assets. Cash paid for acquisitions, net of cash acquired, in the first nine months of 2010 was $222 million. In addition, in the first nine months of 2010 the Company paid $21 million of deferred purchase consideration, $3 million for other intangible assets and $2 million of contingent purchase consideration related to acquisitions made in prior years. Remaining deferred cash payments of $184 million for acquisitions completed in the first nine months of 2011 and in prior years are recorded in accounts payable and accrued liabilities or other liabilities in the consolidated balance sheet at September 30, 2011. Cash generated from the disposition of Kroll in August 2010 was $1.13 billion. Cash from the disposition of KLS was $110 million in the first quarter of 2010.

In August, Marsh signed an agreement to acquire the brokerage business of Alexander Forbes, which will significantly expand Marsh's presence in South Africa. The transaction is subject to regulatory and other approvals and is targeted for completion in the fourth quarter of 2011.

The Company's additions to fixed assets and capitalized software, which amounted to $205 million in the first nine months of 2011 compared with $193 million in the first nine months of 2010, primarily related to computer equipment purchases, the refurbishing and modernizing of office facilities and software development costs.

In October 2011, the Company committed to invest $50 million in a new private equity fund that invests primarily in financial services companies managed by a company unrelated to Stone Point Capital. In addition, the Company has commitments for potential future investments of approximately $80 million in connection with its investments in Trident II and other funds managed by Stone Point Capital. The majority of the Company's investment commitments for funds managed by Stone Point are related to Trident II, the investment period for which is now closed for new investments and follow-on investments. Any remaining capital calls for Trident II would relate to management fees or other partnership expenses, if necessary. Significant future capital calls related to Trident II are not expected. Although it is anticipated that Trident II will be harvesting its remaining portfolio, the timing of any portfolio company sales and capital distributions is unknown and not controlled by the Company.

Commitments and Obligations

The Company’s contractual obligations of the types identified in the table below were of the following amounts as of September 30, 2011 (dollars in millions):



	Payment due by Period
Contractual Obligations	Total		Within 1 Year		1-3 Years		4-5 Years		After 5 Years
Current portion of long-term debt	$	260	$	260	$ —		$ —		$ —
Long-term debt	2,674		—		269		821		1,584
Interest on long-term debt	1,264		168		300		230		566
Net operating leases	2,321		341		549		420		1,011
Service agreements	339		98		96		69		76
Other long-term obligations	184		70		113		1		—
Total	$	7,042	$	937	$	1,327	$	1,541	$	3,237

The above does not include unrecognized tax benefits of $154 million, accounted for under ASC Topic No. 740, as the Company is unable to reasonably predict the timing of settlement of these liabilities, other than approximately $10 million that may become payable within one year. The above does not include liabilities established under ASC Topic No. 460 as the Company is unable to reasonably predict the timing of settlement of these liabilities. The above does not include pension liabilities of $871 million because the timing and amount of ultimate payment of such liability is dependent upon future events, including, but not limited to, future returns on plan assets, and changes in the discount rate used to measure the liabilities.

New Accounting Pronouncements

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Note 18 to the consolidated financial statements contains a discussion of recently issued accounting pronouncements and their impact or potential future impact on the Company’s financial results, if determinable.


Item 3.	Qualitative and Quantitative Disclosures About Market Risk

Market Risk and Credit Risk

Certain of the Company’s revenues, expenses, assets and liabilities are exposed to the impact of interest rate changes and fluctuations in foreign currency exchange rates and equity markets.

Interest Rate Risk and Credit Risk

The Company has historically managed its net exposure to interest rate changes by utilizing a mixture of variable and fixed rate borrowings to finance the Company’s asset base. During 2007, virtually all of the Company’s variable rate borrowings were repaid. In February 2011, the Company entered into two 3.5-year interest rate swaps to hedge changes in the fair value of the first $250 million of its 5.375% senior notes due in 2014. Under the terms of the swaps, the counterparties will pay the Company a fixed rate of 5.375% and the Company will pay interest at a floating rate of three-month LIBOR plus a fixed spread of 3.726%. The swaps are designated as fair value hedging instruments and are deemed to be perfectly effective in accordance with applicable accounting guidance.

Interest income generated from the Company’s cash investments as well as invested fiduciary funds will vary with the general level of interest rates.

The Company had the following investments subject to variable interest rates:



(In millions of dollars)	September 30, 2011
Cash and cash equivalents invested in money market funds, certificates of deposit and time deposits	$	1,714
Fiduciary cash and investments	$	4,118

Based on the above balances, if short-term interest rates increased or decreased by 10%, or 14 basis points, over the course of the year, annual interest income, including interest earned on fiduciary funds, would increase or decrease by approximately $2 million.

In addition to interest rate risk, our cash investments and fiduciary fund investments are subject to potential loss of value due to counterparty credit risk. To minimize this risk, the Company and its subsidiaries invest pursuant to a Board approved investment policy. The policy mandates the preservation of principal and liquidity and requires broad diversification with counterparty limits assigned based primarily on credit rating and type of investment. The Company carefully monitors its cash and fiduciary fund investments and will further restrict the portfolio as appropriate to market conditions. The majority of cash and fiduciary fund investments are invested in short-term bank deposits and liquid money market funds.

Foreign Currency Risk

The translated values of revenue and expense from the Company’s international operations are subject to fluctuations due to changes in currency exchange rates. The non-U.S. based revenue that is exposed to foreign exchange fluctuations is approximately 55% of total revenue. We periodically use forward contracts and options to limit foreign currency exchange rate exposure on net income and cash flows for specific, clearly defined transactions arising in the ordinary course of business. Although the Company has significant revenue generated in foreign locations which is subject to foreign exchange rate fluctuations, in most cases both the foreign currency revenue and expenses are in the functional currency of the foreign location. As such, the U.S. dollar translation of both the revenues and expenses, as well as the potentially offsetting movements of various currencies against the U.S. dollar, generally tends to mitigate the impact on net operating income of foreign currency risk. The Company estimates that a 10% movement of major foreign currencies (Euro, Sterling, Australian dollar and Canadian dollar) in the same direction against the U.S. dollar that held constant over the course of the year would increase or decrease full year net operating income by approximately $60 million.

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Equity Price Risk

The Company holds investments in both public and private companies as well as certain private equity funds managed by Stone Point Capital. Publicly traded investments of $20 million are classified as available for sale. Non-publicly traded investments of $34 million are accounted for using the cost method and $123 million are accounted for using the equity method. The investments that are classified as available for sale or that are not publicly traded are subject to risk of changes in market value, which if determined to be other than temporary, could result in realized impairment losses. The Company periodically reviews the carrying value of such investments to determine if any valuation adjustments are appropriate under the applicable accounting pronouncements.

Other

A number of lawsuits and regulatory proceedings are pending. See Note 16 to the consolidated financial statements included elsewhere in this report.

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Part I – Item 4. Controls & Procedures

a. Evaluation of Disclosure Controls and Procedures

Based on their evaluation, as of the end of the period of this report, the Company’s Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective.

b. Changes in Internal Controls

There were no changes in the Company’s internal controls over financial reporting that were identified in connection with the evaluation referred to under Part I – Item 4a above that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION


Item 1.	Legal Proceedings.

The information set forth in Note 16 to the consolidated financial statements provided in Part I of this report is incorporated herein by reference.


Item 1A.	Risk Factors.

The Company and its subsidiaries face a number of risks and uncertainties. In addition to the other information in this report and our other filings with the SEC, readers should consider carefully the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010. If any of the risks described in our Annual Report on Form 10-K or such other risks actually occur, our business, results of operations or financial condition could be materially adversely affected.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Repurchases of Equity Securities

The Company repurchased 4.4 million shares in the third quarter of 2011. In August 2011, Board of Directors of the Company authorized the share repurchase of an additional $500 million. Combined with the September 2010 authorization by the Company's Board of Directors to repurchase shares of its common stock up to a dollar value of $500 million, the Company's authorizations now total $1 billion.

The Company remains authorized to repurchase additional shares of its common stock up to a dollar value of approximately $553 million. There is no time limit on these authorizations.



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
July 1 - 31, 2011	__	__		__	$	179,099,861
August 1 - 31, 2011	3,500,463	$	28.15	3,500,463	$	580,548,954
September 1 - 30, 2011	940,994	$	28.76	940,994	$	553,488,567
Total Q3 2011	4,441,457	$	28.28	4,441,457	$	553,488,567

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Item 3.	Defaults Upon Senior Securities.

None.


Item 4.	Other Information.

None.


Item 5.	Exhibits.

See the Exhibit Index immediately following the signature page of this report, which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date:	November 4, 2011	/s/ Vanessa A. Wittman
		Vanessa A. Wittman
		Executive Vice President & Chief Financial Officer

Date:	November 4, 2011	/s/ Robert J. Rapport
		Robert J. Rapport
		Senior Vice President & Controller
		(Chief Accounting Officer)

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EXHIBIT INDEX



Exhibit No.		Exhibit Name

10.1		Form of 2011 Long-term Incentive Award granted on June 1, 2011 under the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan

12.1		Statement Re: Computation of Ratio of Earnings to Fixed Charges

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

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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EXHIBIT 10.1

MARSH & McLENNAN COMPANIES, INC.

2011 INCENTIVE AND STOCK AWARD PLAN

TERMS AND CONDITIONS

[YEAR] RESTRICTED STOCK UNITS, PERFORMANCE STOCK UNITS,

STOCK OPTIONS AND CASH AWARDS

GRANTED ON [DATE]

TABLE OF CONTENTS



I. BACKGROUND	3
II. AWARDS	3
A. General	3
1. Grant of Award and Award Types	3
2. Rights of Award Holders	3
3. Restrictive Covenants Agreement	3
B. Stock Units	4
1. General	4
2. Vesting	4
3. Dividend Equivalents	4
4. Delivery of Shares	4
C. Performance Stock Units	4
1. General	4
2. Vesting	5
3. Dividend Equivalents	5
4. Delivery of Shares	5
D. Options	6
1. General	6
2. Vesting	6
3. Term	6
4. Exercisability	6
5. Method of Exercise of an Option	6
a. General Procedures	6
b.Payment of Exercise Price	6
c. Distribution of Option Shares	6
E. Cash Awards	7
1. General	7
2. Vesting	7
3. Payment of Award	7
4. Form of Payment	7
F. Satisfaction of Tax Obligations	7
1. Recommendation	7
2. U.S. Employees	7
3. Non- U.S. Employees	8
III. EMPLOYMENT EVENTS	9
A. Death	9
B. Permanent Disability	9
C. Normal Retirement- Outside the European Union	10
D. Early Retirement- Outside the European Union	10
E. Retirement Treatment- Within the European Union	11
F. Termination by the Company Other Than for Cause	12
G. All Other Terminations	13
H. Condition to Vesting of Award Prior To a Scheduled Vesting Date or the PSU Scheduled Vesting Date and Exercisability of Options Following Termination	13
I. Determination of Pro Rata Vesting upon Termination of Employment	14
J. Distribution in Respect of Performance Stock units that Vest Upon Termination of Employment	14
K. Section 409 A of the Code	15
IV. CHANGE IN CONTROL PROVISIONS	16
V. DEFINITIONS	17
VI. ADDITIONAL PROVISIONS	19
VII. QUESTIONS AND ADDITIONAL INFORMATION	21


I.	BACKGROUND

An award (“ Award ”) has been granted to you under the Marsh & McLennan Companies, Inc. 2011 Incentive and Stock Award Plan (the “ Plan ”). The type of Award, the number of shares of Marsh & McLennan Companies, Inc. (“ Marsh & McLennan Companies ”) common stock or the amount of cash covered by such Award, and the vesting schedule applicable to that Award are specified in materials provided to you by Global & Executive Compensation (“ Grant Documentation ”). The Award is also subject to the terms and conditions set forth herein (the “ Terms and Conditions ”). For employees outside the United States, the awards are subject to additional terms and conditions as set forth in the country-specific notices (the “ Country-Specific Notices” ). The Prospectus dated [DATE], also describes important information about the Plan. The Terms and Conditions, the Country-Specific Notices (if applicable), and the Plan will be referred to herein as the “ Award Documentation”. As used herein, “Common Stock” means common stock of Marsh & McLennan Companies.

Capitalized terms in these Terms and Conditions are defined in Section V.


II.	AWARDS


A.	General.


1.	Grant of Award and Award Types. The types of awards that may have been granted to you under the Plan are described below. The description of a type of award in these Terms and Conditions that is not part of your Award does not give or imply any right to such type of award.

Rights of Award Holders. Unless and until the vesting conditions of the Award have been satisfied and cash or shares of Common Stock, as applicable, have been delivered to you in accordance with the Award Documentation, you have only the rights of a general unsecured creditor. Unless and until shares of Common Stock have been delivered to you, you have none of the attributes of ownership to such shares (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).

Restrictive Covenants Agreement. A Restrictive Covenants Agreement in a form determined by Marsh & McLennan Companies (“ Restrictive Covenants Agreement ”) must be in place in order to accept your Award, you must execute or reaffirm, as determined by Marsh & McLennan Companies in its sole discretion, the Restrictive Covenants Agreement in order for your Award to vest as provided in Section III, and you must further execute or reaffirm, as determined by Marsh & McLennan Companies in its sole discretion, the Restrictive Covenants Agreement in order to exercise an Option whether or not you are employed by the Company at that time. Failure to timely execute or reaffirm and comply with the Restrictive Covenants Agreement by the

date specified in the Grant Documentation or in Section III.H, as applicable, will result in forfeiture of all of your rights, title and interest in and to the Award.


B.	Stock Units


1.	General. A restricted stock unit (“ RSU ” or “ Stock Unit ”) represents an unfunded and unsecured promise to deliver (or cause to be delivered) to you, subject to the Award Documentation, one share of Common Stock.

Vesting. Subject to your continued employment, 33-1/3% of the Stock Units will vest on the 15 ^th of the month in which each of the first three anniversaries of the grant date of the Award occur. Any date on which a Stock Unit is scheduled to vest is a “ Scheduled Vesting Date .” If your employment terminates prior to a Scheduled Vesting Date, your right to the Stock Units will be determined in accordance with Section III below.

Dividend Equivalents. Dividend equivalents equal to the dividend payment (if any) that would have been made in respect of one share of Common Stock for each outstanding Stock Unit covered by the Award will accrue in U.S. dollars on each dividend record date that occurs on or after the grant date of the Award while the Award is outstanding. Accrued dividend equivalents will vest when the corresponding Stock Units covered by the Award in respect of which such dividend equivalents were accrued vest. Such vested dividend equivalents will be delivered after the shares of Common Stock in respect of such vested Stock Units are delivered and within the time period provided in Section II.B.4, subject to the satisfaction of any applicable tax obligations, as described in Section II.F. Dividend equivalents will be accrued only with respect to Stock Units that are outstanding on a dividend record date and will not be paid on Stock Units that do not vest or are forfeited.

Delivery of Shares. Shares of Common Stock in respect of the Stock Units covered by the Award shall be distributed to you as soon as practicable after vesting, and in no event later than 60 days after vesting. The delivery of shares of Common Stock in respect of the Stock Units is conditioned on the satisfaction of any applicable tax obligations, as described in Section II.F. Any shares of Common Stock and/or cash or other property that may be deliverable to you following your death shall be delivered to the person or persons to whom your rights pass by will or the law of descent and distribution, and such delivery shall completely discharge the Company's obligations under the Award.


C.	Performance Stock Units


1.	General. A performance stock unit (“ PSU ”) represents an unfunded and unsecured promise to deliver (or cause to be delivered) to you, subject to the Award Documentation, a minimum of zero (0) and up to a maximum of two (2) shares of Common Stock, depending on the achievement, as determined by the Compensation Committee of the Board of Directors of

Marsh & McLennan Companies (the “ Committee ”), of the financial performance objectives established by the Committee for the Performance Period. If your employment terminates prior to the PSU Scheduled Vesting Date (defined below), the number of shares of Common Stock deliverable in respect of a PSU shall be determined as provided in Section III below.

Vesting. Subject to your continued employment, the PSUs are scheduled to vest on the third anniversary of the grant date of the Award (the “ PSU Scheduled Vesting Date ”). If your employment terminates prior to the PSU Scheduled Vesting Date, your right to the PSUs, and the number of shares of Common Stock delivered in respect of each PSU, will be determined in accordance with Section III below.

Dividend Equivalents. Dividend equivalents equal to the dividend payment (if any) that would have been made in respect of one share of Common Stock for each outstanding PSU covered by the Award will accrue in U.S. dollars on each dividend record date that occurs on or after the grant date of the Award while the Award is outstanding. Dividend equivalents will vest when the corresponding PSUs covered by the Award in respect of which such dividend equivalents were accrued vest. Vested dividend equivalents equal to the dividend payment (if any) that would have been made for each dividend record date occurring on or after the grant date of the Award while the Award is outstanding in respect of the number of shares of Common Stock determined under Section II.C.1 to be delivered in respect of vested PSUs will be delivered after the shares of Common Stock in respect of such vested PSUs are delivered and within the time period provided in Section II.C.4, subject to the satisfaction of any applicable tax obligations, as described in Section II.F. Dividend equivalents (if any) will be paid only with respect to PSUs that are outstanding on a dividend record date and will not be paid on PSUs that do not vest or are forfeited.

Delivery of Shares. Shares of Common Stock deliverable in respect of the PSUs covered by the Award that vest on the PSU Scheduled Vesting Date shall be distributed to you as soon as practicable after vesting, and in no event later than 60 days after vesting. If your employment terminates prior to the PSU Scheduled Vesting Date, shares of Common Stock in respect of the PSUs covered by the Award that vest on such termination of employment shall be distributed to you as provided in Section III. The delivery of shares of Common Stock in respect of the PSUs is conditioned on your satisfaction of any applicable tax obligations as described in Section II.F. Any shares of Common Stock and/or cash or other property that may be deliverable to you following your death shall be delivered to the person or persons to whom your rights pass by will or the law of descent and distribution, and such delivery shall completely discharge the Company's obligations under the Award.


D.	Options


1.	General. A stock option (“ Option ”), whether qualified or nonqualified, represents the right to purchase the number of shares of Common Stock specified in the Grant Documentation (the “ Option Shares ”) at the exercise price specified in the Grant Documentation.

Vesting. Subject to your continued employment, 25% of the Option Shares covered by the Option will vest on each of the first four anniversaries of the grant date of the Award. Any date on which an Option Share covered by the Option is scheduled to vest is a “ Scheduled Vesting Date .” If your employment terminates prior to a Scheduled Vesting Date, your right to the unvested Option Shares covered by the Option will be determined in accordance with Section III below.


3.	Term. Subject to your continued employment, the Option will expire on the day immediately preceding the tenth anniversary of the grant date of the Award. If your employment terminates before the Option expires, your right to exercise any vested Option Shares covered by the Option will be determined in accordance with Section III below.


4.	Exercisability. The Option Shares covered by the Option will become exercisable when they vest.


5.	Method of Exercise of an Option.

General Procedures. An Option may be exercised by written notice to Marsh & McLennan Companies or an agent appointed by Marsh & McLennan Companies, in form and substance satisfactory to Marsh & McLennan Companies, which must state the election to exercise such Option, the number of Option Shares for which such Option is being exercised and such other representations and agreements as may be required pursuant to the provisions of the Award Documentation (the “ Exercise Notice ”). The Exercise Notice must be accompanied by (i) any required income tax forms and (ii) a reaffirmation of the Restrictive Covenants Agreement, unless the Option is being exercised after your death in accordance with Section III below.


b.	Payment of Exercise Price. Payment of the aggregate exercise price may be made with U.S. dollars or by tendering shares of Common Stock (including shares of Common Stock acquired from a stock option exercise or a stock unit award vesting).


c.	Distribution of Option Shares. The shares of Common Stock from the Option exercise will be distributed as specified in the Exercise Notice, after you have satisfied applicable tax obligations, as described in Section II.F, and fees.


E.	Cash Awards


1.	General. An Award denominated in cash in the amount specified in the Grant Documentation (“ Cash Award ”) shall be credited to a bookkeeping account on the date the Award is granted (the “ Cash Account ”). A Cash Award represents an unfunded and unsecured promise to deliver (or cause to be delivered) to you, subject to the Award Documentation, the amount credited to the Cash Account.

Vesting. Subject to your continued employment, 33-1/3% of the amount credited to the Cash Account will vest on the 15 ^th of the month in which each of the first three anniversaries of the grant date of the Award occur. Any date on which all or a portion of the amount credited to the Cash Account is scheduled to vest is a “ Scheduled Vesting Date .” If your employment terminates prior to a Scheduled Vesting Date, your right to the amount credited to the Cash Account will be determined in accordance with Section III below.

Payment of Award. Your Award shall be paid on, or as soon as practicable after, vesting, and in no event later than 60 days after vesting. The delivery of the amount credited to the Cash Account is conditioned on the satisfaction of any applicable tax obligations, as described in Section II.F. Any amount that may be deliverable to you following your death shall be delivered to the person or persons to whom your rights pass by will or the law of descent and distribution, and such delivery shall completely discharge the Company's obligations under the Award.

Form of Payment. At the election of Marsh & McLennan Companies, the amount credited to the Cash Account will be distributed in cash or in shares of Common Stock under the Plan. If Marsh & McLennan Companies elects to distribute shares of Common Stock, the average of the high and low selling prices of Common Stock on the New York Stock Exchange on the trading day immediately preceding the applicable Scheduled Vesting Date will be used to convert the value of the amount credited to the Cash Account, in U.S. Dollars, into shares of Common Stock.


F.	Satisfaction of Tax Obligations.


1.	Recommendation. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the Award.


2.	U.S. Employees.


a.	Stock Units, Performance Stock Units and Cash Awards. Applicable employment taxes are required by law to be withheld when a Stock Unit, PSU or the amount credited to a Cash Account vests, or,

if later, when the number of shares of Common Stock deliverable in respect of a PSU is determined. Applicable income taxes are required by law to be withheld when shares of Common Stock (or cash, as applicable) in respect of Stock Units, PSUs or the amount credited to a Cash Account are delivered to you. A sufficient number of whole shares of Common Stock or portion of the amount credited to the Cash Account, as applicable, will be retained by Marsh & McLennan Companies to satisfy the tax-withholding obligation.

Options. Applicable taxes (including employment taxes) are required by law to be withheld when a nonqualified Option is exercised. A sufficient number of whole shares of Common Stock resulting from the Option exercise will be retained by Marsh & McLennan Companies to satisfy the tax-withholding obligation unless you elect in the Exercise Notice to satisfy all applicable tax withholding in another manner.


3.	Non-U.S. Employees.

Stock Units, Performance Stock Units and Cash Awards. In most countries, the value of a Stock Unit, PSU or Cash Award is generally not taxable on the grant date. If the value of the Stock Unit, PSU or Cash Award is not taxable on the grant date, it will, in most countries, be taxed at a later time, for example, upon delivery of shares of Common Stock in respect of the Stock Unit or PSU, and/or the subsequent sale of the shares of Common Stock, or upon delivery of the amount credited to a Cash Account.


b.	Options. In most countries, the value of an Option is generally not taxable on the grant date. If the value of the Option is not taxable on the grant date, it will, in most countries, be taxed at a later time, for example, upon exercise of the Option and delivery of shares of Common Stock in respect of the Option, and/or the subsequent sale of the shares of Common Stock.

Withholding. Marsh & McLennan Companies and/or your local employer shall have the power and the right to deduct and withhold from your Award and other compensation, or require you to remit to Marsh & McLennan Companies and to your local employer, an amount sufficient to satisfy any taxes that Marsh & McLennan Companies considers are payable under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gain taxes, transfer taxes, social security contributions, and National Insurance Contributions with respect to the Award, including any and all associated tax events derived therefrom. If applicable, Marsh & McLennan Companies and/or your local employer may retain and sell a sufficient number of shares of Common Stock distributable in respect of the Award for this purpose.


III.	EMPLOYMENT EVENTS


A.	Death.


1.	Stock Units. In the event your employment is terminated because of your death, the Stock Units will vest at such termination of employment and will be distributed as described in Section II.B.4.


2.	Performance Stock Units . In the event your employment is terminated because of your death, the PSUs will vest at such termination of employment and will be distributed as described in Section III.J.1.

Options. In the event your employment is terminated because of your death, the Option will vest with respect to any unvested Option Shares and will become exercisable at such termination of employment. The person or persons to whom your rights under the Option shall pass by will or the laws of descent and distribution shall be entitled to exercise such Option with respect to newly vested Option Shares (and any Option Shares that were already vested at the time of your death) within two years after the date of death, but in no event shall the Option be exercised beyond the expiration date of the Award.


4.	Cash Awards. In the event your employment is terminated because of your death, the amount credited to your Cash Account will vest and will be distributed as described in Section II.E.3.


B.	Permanent Disability.


1.	Stock Units. Upon the occurrence of your Permanent Disability, the Stock Units will vest and will be distributed as described in Section II.B.4, provided that you satisfy the condition described in Section III.H.


2.	Performance Stock Units. Upon the occurrence of your Permanent Disability, the PSUs will vest and will be distributed as described in Section III.J.1 provided that you satisfy the condition described in Section III.H.

Stock Options. Upon the occurrence of your Permanent Disability, the Option will vest with respect to any unvested Option Shares and will become exercisable, provided that you satisfy the condition described in Section III.H. Provided that you satisfy the condition described in Section III.H., such newly vested Option Shares (and any Option Shares that were already vested at the time your Permanent Disability occurred) shall be exercisable for two years following the occurrence of your Permanent Disability, but in no event shall the Option be exercised beyond the expiration date of the Award.


4.	Cash Awards. Upon the occurrence of your Permanent Disability, the amount credited to your Cash Account will vest and will be distributed as

described in Section II.E.3, provided that you satisfy the condition described in Section III.H.


C.	Normal Retirement - Outside the European Union.


1.	Stock Units. In the event you retire from the Company on or after your Normal Retirement Date, the Stock Units will vest at such termination of employment and will be distributed as described in Section II.B.4, provided that you satisfy the condition described in Section III.H.

Performance Stock Units. In the event (a) your employment is terminated by the Company other than for Cause on or after your Normal Retirement Date or (b) you retire from the Company on or after your Normal Retirement Date, the PSUs will vest at such termination of employment and will be distributed as described in Section III.J.1 or Section III.J.2, respectively, provided that you satisfy the condition described in Section III.H.

Stock Options. In the event you retire from the Company on or after your Normal Retirement Date, the Option will vest with respect to any unvested Option Shares as provided in Section II.D.2 and will become exercisable as provided in Section II.D.4, provided that you satisfy the condition described in Section III.H. Provided that you satisfy the condition described in Section III.H., such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of the fifth anniversary of your termination of employment and the expiration date of the Award.


4.	Cash Awards. In the event you retire from the Company on or after your Normal Retirement Date, the amount credited to your Cash Account will vest at such termination of employment and will be distributed as described in Section II.E.3, provided that you satisfy the condition described in Section III.H.


D.	Early Retirement - Outside the European Union.


1.	Stock Units. In the event you retire from the Company on or after your Early Retirement Date and before your Normal Retirement Date, the Stock Units will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.B.4, provided that you satisfy the condition described in Section III.H.


2.	Performance Stock Units. In the event (a) your employment is terminated by the Company other than for Cause on or after your Early Retirement Date and before your Normal Retirement Date, subject to the vesting provisions of Section IV.A or (b) you retire from the Company on or after your Early Retirement Date and before your Normal Retirement

Date, the PSUs will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section III.J.1 or Section III.J.2, respectively, provided that you satisfy the condition described in Section III.H.

Stock Options. In the event you retire from the Company on or after your Early Retirement Date and before your Normal Retirement Date, the Option will vest with respect to any unvested Option Shares as provided in Section II.D.2 and will become exercisable as provided in Section II.D.4, provided that you satisfy the condition described in Section III.H. Provided that you satisfy the condition described in Section III.H., such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of the fifth anniversary of your termination of employment and the expiration date of the Award.


4.	Cash Awards. In the event you retire from the Company on or after your Early Retirement Date and before your Normal Retirement Date, the amount credited to your Cash Account will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.E.3, provided that you satisfy the condition described in Section III.H.


E.	Retirement Treatment - Within the European Union.


1.	Stock Units. In the event you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, the Stock Units will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.B.4, provided that you satisfy the condition described in Section III.H.

Performance Stock Units. In the event (a) your employment is terminated by the Company other than for Cause and you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, subject to the vesting provisions of Section IV.A or (b) you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, the PSUs will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section III.J.1 or Section III.J.2, respectively, provided that you satisfy the condition described in Section III.H.

Stock Options. In the event you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, the Option will vest with respect to any unvested Option Shares as provided in Section II.D.2 and will become exercisable as provided in Section II.D.4, provided that you satisfy the condition described in Section III.H. Provided that you satisfy the

condition described in Section III.H., such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of the fifth anniversary of your termination of employment and the expiration date of the Award.

Cash Awards. In the event you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, the amount credited to your Cash Account will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.E.3, provided that you satisfy the condition described in Section III.H.


F.	Termination by the Company Other Than for Cause.


1.	Stock Units. In the event your employment is terminated by the Company other than for Cause, the Stock Units will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.B.4, provided that you satisfy the condition described in Section III.H.


2.	Performance Stock Units. In the event your employment is terminated by the Company other than for Cause, the PSUs will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section III.J.1 provided that you satisfy the condition described in Section III.H.

Stock Options. In the event your employment is terminated by the Company other than for Cause, rights, title and interest in and to any unvested Option Shares will be forfeited upon such termination of employment. Provided that you satisfy the condition described in Section III.H., any Option Shares that were vested at the time of your termination of employment shall be exercisable until the earlier of 90 days following your termination of employment and the expiration date of the Award.


4.	Cash Awards. In the event your employment is terminated by the Company other than for Cause, the amount credited to your Cash Account will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.E.3, provided that you satisfy the condition described in Section III.H.

Sale of Business Unit. For the avoidance of doubt, in the event of a sale or similar transaction involving the business unit for which you work (“ Employing Company ”) as a result of which the Employing Company ceases to be a subsidiary or affiliate of Marsh & McLennan Companies, your employment will be deemed terminated by the Company other than for Cause, even if your employment with the Employing Company continues after the sale.

Retirement Eligibility at the Time of Termination Other than for Cause. For the avoidance of doubt, in the event your termination of employment is on or after your Early Retirement Date and before your Normal Retirement Date, on or after your Normal Retirement Date or you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment and your employment is terminated by the Company other than for Cause (including through a sale or similar transaction involving your Employing Company), any Stock Units, Options or amount credited to a Cash Account covered by your Award will be treated as set forth in Sections III.C through E, as applicable, and any PSUs covered by your Award will be treated as set forth in Sections III.C.2(a), III.D.2(a), III.E.2(a), as applicable.


G.	All Other Terminations.

For all other terminations of employment not described in Sections III.A through F above (including, but not limited to, a termination by the Company for Cause), all of your rights, title and interest in and to the Award, whether vested or unvested, shall be forfeited on the date of such termination of employment. For purposes of these Terms and Conditions, your employment will be treated as terminated when you are no longer employed by the Company.


H.	Condition to Vesting of Award Prior To a Scheduled Vesting Date or the PSU Scheduled Vesting Date and Exercisability of Options Following Termination.

In the event of your Permanent Disability, termination of employment on or after your Early Retirement Date and before your Normal Retirement Date, on or after your Normal Retirement Date or you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, or your termination of employment other than for Cause as described in Sections III.B through F, you will be required to execute or reaffirm, as determined by Marsh & McLennan Companies in its sole discretion, and return to Marsh & McLennan Companies (or an agent appointed by Marsh & McLennan Companies) a Restrictive Covenants Agreement within 30 days following your termination of employment or the occurrence of your Permanent Disability as a condition to vesting of any unvested portion of the Award and as a condition to the exercisability of the Option following your termination of employment or the occurrence of your Permanent Disability. Failure to timely execute or reaffirm and comply with the Restrictive Covenants Agreement will result in forfeiture of all of your rights, title and interest in and to the Award including, but not limited to, any Option Shares that were vested at the time of your termination of employment.


I.	Determination of Pro Rata Vesting upon Termination of Employment. The number of Stock Units or PSUs or the portion of the amount credited to your Cash Account, as applicable, that vests on a pro rata basis upon termination of employment will be determined using the following formula:

where


A =	the number of Stock Units or PSUs covered by the Award or the amount of cash covered by the Award, as applicable;


B =	the number of days in the period beginning on the grant date of the Award and ending on the employment termination date;


C =	the number of days in the period beginning on the grant date of the Award and ending on the last Scheduled Vesting Date or the PSU Scheduled Vesting Date, as applicable; and


D =	the number of Stock Units or PSUs or the amount credited to your Cash Account, as applicable, that has previously vested.


J.	Distribution in Respect of Performance Stock Units that Vest Upon Termination of Employment

Termination of Employment Because of Death, Permanent Disability or Termination by the Company Other Than for Cause Whether or Not Retirement Eligible. In the event of your termination of employment due to your death, the occurrence of your Permanent Disability, or termination by the Company other than for Cause, as described in Section III.A.2, III.B.2, III.C.2(a), III.D.2(a), III.E.2(a) or III.F.2, you will receive, as soon as practicable after such termination of employment or occurrence of Permanent Disability and in no event later than 60 days following such termination of employment or occurrence of Permanent Disability, the number of shares of Common Stock determined under Section II.C.1 in respect of the number of PSUs that vested in accordance with such termination of employment or occurrence of your Permanent Disability, as applicable; provided that, in the event your termination of employment or the occurrence of your Permanent Disability occurs on or prior to December 31 of the year in which the PSUs are granted, you will receive one (1) share of Common Stock in respect of each PSU covered by the Award that vests upon your termination of employment or the occurrence of your Permanent Disability; provided further that, in the event a Change in Control occurs on or prior to December 31 of the year in which the PSUs are granted and your termination of employment or the occurrence of your Permanent Disability occurs following such Change in Control, you will receive one (1) share of Common Stock in respect of each PSU covered by the Award that vests

upon your termination of employment or the occurrence of your Permanent Disability.

Termination of Employment Because of Normal Retirement, Early Retirement or Eligibility for Retirement Treatment. In the event of your termination of employment due to Normal Retirement, Early Retirement or you are determined to be eligible for retirement treatment, as described in Section III.C.2(b), III.D.2(b) or III.E.2(b), you will receive, as soon as practicable after the PSU Scheduled Vesting Date and in no event later than 60 days following the PSU Scheduled Vesting Date, the number of shares of Common Stock determined under Section II.C.1 in respect of the number of PSUs that vested in accordance with such termination of employment; provided that, in the event a Change in Control occurs on or prior to December 31 of the year in which the PSUs are granted and your termination of employment occurs following such Change in Control, you will receive one (1) share of Common Stock in respect of each PSU covered by the Award that vests upon your termination of employment.


K.	Section 409A of the Code.

Notwithstanding any provision herein, your Award may be subject to additional restrictions to ensure compliance with the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder (regarding nonqualified deferred compensation) (“ Section 409A of the Code ”). The Committee intends to administer the Awards in accordance with Section 409A of the Code and reserves the right to make changes in the terms or operations of the Awards (including changes that may have retroactive effect) deemed necessary or desirable to comply with Section 409A of the Code. This means, for example, that the timing of distributions may be different from those described in this document or in other materials relating to the Award or the Plan that do not reflect Section 409A of the Code. If your Award is not in compliance with Section 409A of the Code, you may be subject to immediate taxation of all unpaid awards under the Plan that are subject to Section 409A of the Code at your regular income tax rate, plus a 20% additional tax, plus interest at the underpayment rate plus 1%.


2.	Notwithstanding any provision herein, if any portion of your Award is determined to be nonqualified deferred compensation subject to Section 409A of the Code, any references to “termination of employment,” or “when you are no longer employed” in these Terms and Conditions shall have the following meaning:

Your “termination of employment” (or similar terms) shall occur when you have incurred a “separation from service” within the meaning of Section 409A of the Code and as further defined herein. Specifically, you will have incurred a “separation from service” when the level of

services you provide to Marsh & McLennan Companies or any of its affiliates in any capacity, including as an employee, director, independent contractor or consultant, does not exceed 20% of the level of services that you provided to Marsh & McLennan Companies and its affiliates in the preceding 36 months (or shorter period of service if, for example, your total service with Marsh & McLennan Companies is less than 36 months), all as determined in accordance with Section 409A of the Code. In determining whether a “separation from service” has occurred, any period of up to six months during which you are on a bona fide leave of absence or up to 29 months during which you are absent from work due to a disability for which you are receiving Marsh & McLennan Companies Long-Term Disability benefits will be ignored.

Notwithstanding any provision herein, if at the time of the termination of your employment you are a “specified employee” (as defined in Section 409A of the Code) no portion of your Award that is determined to be nonqualified deferred compensation subject to Section 409A of the Code shall be distributed until the first day of the seventh month after your termination of employment and any such distributions to which you would otherwise be entitled during the first six months following your termination of employment will be accumulated and paid without interest on the first day of the seventh month after your termination of employment. The provisions of this subparagraph will only apply if and to the extent required to avoid any “additional tax” under Section 409A of the Code. This subparagraph does not guarantee that your Award will not be subject to “additional tax” or other adverse tax consequences under Section 409A of the Code.

Notwithstanding any provision herein, in the event a Change in Control occurs on or prior to December 31 of the year in which the PSUs are granted and the PSU Scheduled Vesting Date is after your Early Retirement Date and before your Normal Retirement Date, on or after your Normal Retirement Date or you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, shares of Common Stock deliverable in respect of the PSUs covered by the Award that vest on the PSU Scheduled Vesting Date shall be distributed to you as soon as practicable after vesting, and in no event later than March 15 in the year vesting occurs.


IV.	CHANGE IN CONTROL PROVISIONS

Upon the occurrence of a “Change in Control” of Marsh & McLennan Companies, as defined in the Plan, the Award will continue to vest in accordance with its regular vesting schedule as specified in Section II and subject to the employment events provisions in Section III; provided that, the Award will become fully vested upon your termination of employment by the Company

other than for Cause or by you for Good Reason during the 24-month period following such Change in Control and will be treated as follows:


A.	Stock Units. Any Stock Units covered by the Award will be distributed as described in Section II.B.4.


B.	Performance Stock Units. Any PSUs covered by the Award will be distributed in accordance with Section III.J.1; provided that, if such Change in Control occurs on or prior to December 31 of the year in which the PSUs are granted, you will receive one (1) share of Common Stock in respect of each PSU covered by the Award that vests.


C.	Stock Options. Such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of 90 days following your termination of employment and the expiration date of the Award.


D.	Cash Awards. Any amount credited to your Cash Account will be distributed as described in Section II.E.3.

For the avoidance of doubt, in the event your termination of employment by the Company other than for Cause or by you for Good Reason during the 24-month period following such Change in Control is on or after your Early Retirement Date and before your Normal Retirement Date, on or after your Normal Retirement Date or you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, any Stock Units, PSUs, Options or amount credited to a Cash Account covered by your Award will be treated as described in this Section IV; provided that such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of the fifth anniversary of your termination of employment and the expiration date of the Award.


V.	DEFINITIONS

As used in these Terms and Conditions:


A.	“Cause” shall mean:


1.	willful failure to substantially perform the duties consistent with your position which is not remedied within 30 days after receipt of written notice from the Company specifying such failure;


2.	willful violation of any written company policies including but not limited to, the Company's code of business conduct & ethics;


3.	commission at any time of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude;


4.	unlawful use (including being under the influence) or possession of illegal drugs;


5.	any gross negligence or willful misconduct resulting in a material loss to the Company, or material damage to the reputation of the Company; or


6.	any violation of any statutory or common law duty of loyalty to the Company, including the commission at any time of any act of fraud, embezzlement, or material breach of fiduciary duty against the Company.


B.	“Company” shall mean Marsh & McLennan Companies or any of its subsidiaries or affiliates.


C.	“Good Reason” shall mean any of the following without your written consent:


1.	a material reduction in your base salary;


2.	a material reduction in your annual incentive opportunity (including a material adverse change in the method of calculating your annual incentive);


3.	a material diminution of your duties, responsibilities or authority; or


4.	a relocation of more than 50 miles from your office location in effect immediately prior to the Change in Control;

provided that you provide Marsh & McLennan Companies with written notice of your intent to terminate your employment for Good Reason within 60 days of your becoming aware of any circumstances set forth above (with such notice indicating the specific termination provision above on which you are relying and describing in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the indicated provision) and that you provide Marsh & McLennan Companies with at least 30 days following receipt of such notice to remedy such circumstances.


D.	“Normal Retirement Date” and “Early Retirement Date” shall have the respective meanings given such terms (or any comparable substitute terms or concepts) set forth in the primary retirement plan or program applicable to you upon your termination of employment (whether sponsored by Marsh & McLennan Companies, your employer or otherwise).

“Performance Period” shall mean the period that begins on [DATE] and ends on [DATE], provided that in the event of a termination of your employment described in Section III.A.2, III.C.2(a), III.D.2(a), III.E.2(a) or III.F.2 or the occurrence of your Permanent Disability described in Section III.B.2 prior to a Change in Control, such period will end on December 31 of the year prior to such termination of employment or occurrence of your

Permanent Disability for the PSUs covered by your Award; and provided further that in the event of a Change in Control, such period will end on December 31 of the year prior to the occurrence of such Change in Control.

“Permanent Disability” will be deemed to occur when it is determined (by Marsh & McLennan Companies' disability carrier for the primary long-term disability plan or program applicable to you because of your employment with the Company) that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.


G.	“Retirement Treatment Committee” is comprised of employees of the Company appointed by the Committee.


H.	Additional Definitions.

The terms below are defined on the following pages



Award	3
Award Documentation	3
Cash Account	7
Cash Award	7
Change in Control	16
Committee	5
Common Stock	3
Country-Specific Notices	3
Employing Company	12
Exercise Notice	6
Grant Documentation	3
Marsh & McLennan Companies	3
Option	6
Option Shares	6
Plan	3
PSU	4
PSU Scheduled Vesting Date	5
Restrictive Covenants Agreement	3
RSU	4
Scheduled Vesting Date	4,6,7
Section 409A	15
Stock Unit	4
Terms and Conditions	3


VI.	ADDITIONAL PROVISIONS


A.	Additional Provisions-General


1.	Administrative Rules. The Award shall be subject to such additional administrative regulations as the Committee may, from time to time,

adopt. All decisions of the Committee upon any questions arising under the Award Documentation shall be conclusive and binding. The Committee may delegate to any other individual or entity the authority to perform any or all of the functions of the Committee under the Award, and references to the Committee shall be deemed to include any such delegate.

Amendment. The Committee may, in its sole discretion, amend the terms of the Award; provided, however, that if the Committee concludes, in its sole discretion, that such amendment is likely to materially impair your rights with respect to the Award, such amendment shall not be implemented with respect to your Award without your consent, except to the extent that any such action is made to cause the Award to comply with applicable law, stock market or exchange rules and regulations, or accounting or tax rules and regulations, or is otherwise made in accordance with Section VI.A.4.


3.	Limitations. Payment of your Award is not secured by trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific asset of the Company by reason of the Award. Your right to payment of your Award is the same as the right of an unsecured general creditor of the Company.


4.	Cancellation or Clawback of Awards. Marsh & McLennan Companies may, to the extent permitted by applicable law and stock exchange rules or by any applicable Marsh & McLennan Companies policy or arrangement or as specified in an Award Agreement, cancel, reduce or require reimbursement of any Awards granted to you.


B.	Additional Provisions-Outside the United States

Changes to Delivery. In the event that Marsh & McLennan Companies considers that due to legal, regulatory or tax issues the normal delivery of an Award to a participant outside the United States would not be appropriate, then Marsh & McLennan Companies may, in its sole discretion, determine how the value of the Award will be delivered. Without limitation, this may include making any payments due under the Award in cash instead of shares of Common Stock, or in shares of Common Stock instead of cash, in an amount equivalent to the value of the Award on the date of exercise (for Options) or vesting (for other equity-based awards) after payment of applicable taxes, fees and any exercise price. If the value of an Award is to be delivered in cash instead of shares of Common Stock, Marsh & McLennan Companies may sell any shares of Common Stock distributable in respect of the Award on your behalf and use the proceeds (after payment of applicable taxes, fees and any exercise price) to satisfy the Award.

Amendment and Modification. The Committee may modify the terms of any Award under the Plan granted to you if you are, at the time of grant or during the term of the Award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order for such Award to conform to laws, regulations, and customs of the country in which you are then resident or primarily employed, or so that the value and other benefits of the Award to you, as affected by non-U.S. tax laws and other restrictions applicable as a result of your residence or employment outside the United States, shall be comparable to the value of such an Award to an individual who is resident or primarily employed in the United States.


VII.	QUESTIONS AND ADDITIONAL INFORMATION

Please retain this document in your permanent records. If you have any questions regarding the Plan or your Award or if you would like an account statement detailing each type of equity-based award or cash award and the number of shares of Common Stock or cash value (as applicable) covered by such equity-based award or cash award that comprises your Award, and the exercise price, vesting date(s) and expiration date of such equity-based awards or cash awards that comprise your Award, or any other information, please contact:

Global & Executive Compensation

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, New York 10036-2774

United States of America

Telephone Number: +1 212 345-9722

Facsimile Number: +1 212 948-8481

Email: mmc.compensation@mmc.com

Exhibit 12.1

Marsh & McLennan Companies, Inc. and Subsidiaries

Ratio of Earnings to Fixed Charges

(In millions, except ratios)



	Nine Months Ended September 30, 2011		Years Ended December 31,
	(Unaudited)			2010		2009		2008		2007		2006
Earnings
Income before income taxes	$	1,060		$	769	$	552	$	494	$	759	$	799
Interest expense	149			233		241		220		266		303
Portion of rents representative of the interest factor	114			140		132		145		162		162
	$	1,323		$	1,142	$	925	$	859	$	1,187	$	1,264
Fixed Charges
Interest expense	$	149		$	233	$	241	$	220	$	266	$	303
Portion of rents representative of the interest factor	114			140		132		145		162		162
	$	263		$	373	$	373	$	365	$	428	$	465
Ratio of Earnings to Fixed Charges	5.0			3.1		2.5		2.4		2.8		2.7

Exhibit 31.1

CERTIFICATIONS

I, Brian Duperreault, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	November 4, 2011	/s/ Brian Duperreault
		Brian Duperreault
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Vanessa A. Wittman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the “registrant”);

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



Date:	November 4, 2011	/s/ Vanessa A. Wittman
		Vanessa A. Wittman
		Executive Vice President & Chief Financial Officer

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

The certification set forth below is being submitted in connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011 of Marsh & McLennan Companies, Inc. (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Brian Duperreault, the President and Chief Executive Officer, and Vanessa A. Wittman, the Executive Vice President & Chief Financial Officer, of Marsh & McLennan Companies, Inc. each certifies that, to the best of his or her knowledge:


1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and


2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Marsh & McLennan Companies, Inc.



Date:	November 4, 2011	/s/ Brian Duperreault
		Brian Duperreault
		President and Chief Executive Officer



Date:	November 4, 2011	/s/ Vanessa A. Wittman
		Vanessa A. Wittman
		Executive Vice President & Chief Financial Officer