2017 Opportunity in dynamic times MARSH & McLENNAN COMPANIES ANNUAL REPORT With roots dating back to 1871, Marsh & McLennan is the world’s leading professional services firm in the areas of risk, strategy and people. Our market-leading businesses help clients WE ARE COMMITTED TO: minimize risk, maximize opportunity and ENABLING CLIENT SUCCESS energize their people to achieve great things: We anticipate the needs of our clients and act as their trusted advisors. RISK & INSURANCE SERVICES FINDING THE SMARTER WAY MARSH GUY CARPENTER We never stop searching for a Insurance broking and risk Reinsurance and capital strategies better solution. management solutions WORKING SIDE BY SIDE We collaborate to harness our CONSULTING collective intelligence. MERCER OLIVER WYMAN LIVING THE GREATER GOOD Health, wealth and Strategy, economic and We act with integrity and strive career consulting brand consulting to improve our communities around the world. This annual report contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. Please see “Information Concerning Forward-Looking Statements” on page (i) in the Form 10-K included in this annual report. “ Marsh & McLennan’s unique range of capabilities is more important today than ever. It not only sets us apart from other professional services firms, it positions us to deliver consistently strong performance, as we did again in 2017.” DAN GLASER PRESIDENT AND CHIEF EXECUTIVE OFFICER MARSH & McLENNAN COMPANIES To our shareholders, 2017 was a year of disruption and challenge for the world. It tested the resilience of millions of people affected by extreme weather and natural disasters. It strained the limits of cooperation and diplomacy among nations and within governments. And it made demands on our larger society, as cultural flashpoints prompted us to articulate and reaffirm our fundamental values and beliefs. Underpinning this complex and dynamic landscape are issues related to risk, strategy and people. Marsh & McLennan’s expertise in these three core areas is at the heart of our sustained ability to create value. We develop solutions for clients that address the most pressing challenges of the day: shifting demographics, healthcare, cyber security, natural catastrophes and accelerating digital transformation, to list just a few. 1 I’m exceedingly proud of how our colleagues We also delivered margin expansion in both around the world harness our collective our Risk and Insurance Services and Consulting expertise to help address these challenges. segments, and strong growth in adjusted Amidst the tumult of 2017, our people earnings per share. continued to deliver for our clients, while Adjusted operating income1 rose 10% to also supporting each other. $3 billion and our consolidated adjusted Marsh & McLennan’s unique range of margin increased 70 basis points to 21.2%, our capabilities is more important today than ever. tenth consecutive year of margin improvement. It not only sets us apart from other professional Our adjusted EPS grew 15% to $3.92, services firms, it positions us to deliver compared with $3.42 in 2016, resulting in consistently strong performance, as we did a strong shareholder return of 22.7%. again in 2017. Behind these results are nearly 65,000 dedicated colleagues who work side by Since 2009, our adjusted EPS has grown at a side to make a meaningful difference in critical compound annual growth rate of 13%. The moments — for our clients, our communities consistency of our results during that time and the larger society that surrounds us. further sets us apart. We are among the elite 5% of S&P 500 companies with revenue over I am pleased to report the progress our firm $5 billion that have grown adjusted EPS by at made in 2017. least 8% in each year since 2009. In our operating segments, Risk and Insurance 8 years Services revenue of $7.6 billion reflected an increase of 7%, or 3% on an underlying OF CONSECUTIVE ADJUSTED MARGIN basis. Adjusted operating income rose 11% GROWTH IN BOTH SEGMENTS to $1.9 billion, with the adjusted margin expanding 80 basis points to 25.5%. ANOTHER YEAR OF STRONG FINANCIAL Marsh continued to generate underlying PERFORMANCE revenue growth, with 2017 marking the seventh straight year of 3% or more. Marsh & McLennan produced excellent financial results in 2017. We generated Guy Carpenter produced 4% underlying $14 billion in consolidated revenue for the revenue growth for 2017— continuing its year, an increase of 6% compared with record of positive underlying revenue 2016, or 3% on an underlying basis. growth that started in 2009. 1 For a reconciliation of non-GAAP results to GAAP results, as related to all non-GAAP references presented in this letter, 2 please refer to the Company’s Form 8-K, dated February 1, 2018, available on the Company’s website at mmc.com. Our Consulting segment produced revenue We have also consistently delivered value of $6.4 billion, an increase of 5%, or 4% on over time — over the past 10 years, our annual an underlying basis. Adjusted operating EPS growth has exceeded the S&P 500 by an income rose 6% to $1.2 billion, up from average of six percentage points. $1.1 billion in 2016. The adjusted margin Over the long term, we expect to grow EPS at was a strong 18.7%. a higher rate than the S&P 500 with lower capital Mercer delivered 2% underlying revenue requirements — and lower relative volatility. growth for the year, and its underlying revenue growth of 4% in the fourth quarter positions OUR VIEW OF THE MARKETS us well for 2018. While the nature of global risks will always change, one constant is the direct relevance of the world’s top concerns to Marsh & $2.5 billion McLennan’s expertise in risk, strategy and people. OF CAPITAL DEPLOYED IN 2017 TO ACQUISITIONS, SHARE REPURCHASES AND DIVIDENDS Look no further than the impact of technology. From artificial intelligence to cryptocurrencies, technology continues to transform our lives Oliver Wyman generated underlying revenue and tantalize us with its potential to solve growth of 7% for 2017, in line with its strong some of the world’s biggest challenges. But average annual underlying growth of 6% with advancement comes risk. Cyber, as an since 2010. example, is a man-made peril spreading faster than companies can keep up. For the fourth year in a row, we fulfilled our two capital commitments to shareholders: Technological advances also create 1) Increase our dividends per share by anxiety about the future of work. Digital double digits; and transformation is reshaping virtually every 2) Reduce our total shares outstanding. industry. The cloud, the advent of the internet of things, advances in machine learning and In 2017, we returned more than $1.6 billion faster networks are enabling our clients to to our shareholders in the form of dividends realize the potential of new ideas faster than and share repurchases. We reduced our ever before, and at less cost. Imagine what will share count by six million shares, or 1.1%, and be possible, both positive and negative, when increased our dividends per share by 10%. artificial intelligence and robotics become more integrated. 3 “ We are among the elite 5% of S&P 500 companies with revenue over $5 billion that have grown adjusted EPS by at least 8% in each year since 2009.” Highest adjusted margins in Risk & Risk & Insurance Services and 21.2% Insurance Services and Consulting in Consulting adjusted consolidated adjusted margin — an operating income each at increase of 1,240 basis points 14 YEARS since 2007 RECORD HIGH 10 CONSECUTIVE Annual revenue exceeds YEARS $14 BILLION of consolidated adjusted margin expansion 8 YEARS of consecutive underlying revenue growth in the 3-5 percent range 5 5% 5% 4 4% 4% 3 3% 3% 3% 3% 2 1 0 2010 2011 2012 2013 2014 2015 2016 2017 Committed more than 10% DIVIDEND $6 BILLION across 140+ acquisitions and GROWTH investments since 2009 delivering on our annual commitment to increase dividends per share by double digits Clients in more than NEARLY 65,000 130 COUNTRIES colleagues around the world making a difference for clients in critical moments them. In a complex and volatile environment, “Whether issues are economic, many organizations must seek advisors to environmental, geopolitical, help them navigate the immediate issues of the day — and to craft the strategies that cultural or technological, Marsh & will enable their businesses to prosper well into the future. We’re pleased that many McLennan is working on almost leaders are turning to Marsh & McLennan every one of them.” for insights and expertise on what can be achieved in an age of disruption and transformative opportunity. Embedded in the promise of technology is OUR COMMITMENT TO LONG-TERM GROWTH a human challenge. Research shows that only about a third of employees’ skills today 2017 forced businesses, governments, will be relevant in the future. In addition to organizations — and our larger society — to immediate issues like the retirement savings respond to sudden shocks and shifts. That gap and sustainable healthcare, organizations is what Marsh & McLennan is built to do. In must confront the existential challenge of ways big and small, today and for the long reimagining their entire workforce, including term, everyone at Marsh & McLennan is in how to use technology to augment, rather than the business of change. Together, we help replace, their greatest asset — their people. our clients realize new futures, align their workforces and make the possible practical The world continues to experience powerful by foreseeing and understanding the risks. social and cultural changes as society evolves against a backdrop of rapid technological With our strategic positioning centered change and volatility. Gender equality is one on risk, strategy and people issues, we’ve such issue.