MARSH & MCLENNAN COMPANIES, INC.MRSH
MARSH & MCLENNAN COMPANIES, INC. Revenue Disclosure
Revenue
The core principle of the revenue recognition guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
To achieve this principle, the entity applies the following steps: identify the contract(s) with the customer, identify the performance obligations in the contract(s), determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. In accordance with the accounting guidance, a performance obligation is satisfied either at a "point in time" or "over time", depending on the nature of the product or service provided, and the specific terms of the contract with customers.
Other revenue included in the consolidated statements of income that is not from contracts with customers is less than 1% of total revenue and is not presented as a separate line item.
Risk and Insurance Services
Risk and Insurance Services revenue reflects compensation for brokerage and consulting services through commissions and fees. Commission rates and fees vary in amount and can depend on a number of factors, including the type of insurance or reinsurance coverage provided, the particular insurer or reinsurer selected, and the capacity in which the broker acts and negotiates with clients. For the majority of the insurance and reinsurance brokerage arrangements, advice and services provided which culminate in the placement of an effective policy are considered a single performance obligation. Arrangements with clients may include the placement of a single policy (single performance obligation), multiple policies or a combination of policy placements and other services. Consideration related to such "bundled arrangements" is allocated to the individual performance obligations based on their stand alone selling price (multiple performance obligations).
Revenue for policy placement is generally recognized on the policy effective date, at which point control over the services provided by the Company has transferred to the client and the client has accepted the services. In many cases, fee compensation may be negotiated in advance, based on the type of risk, coverage required and service provided by the Company and ultimately, the extent of the risk placed into the insurance market or retained by the client. The trends and comparisons of revenue from one period to the next can be affected by changes in premium rate levels, fluctuations in client risk retention and increases or decreases in the value of risks that have been insured, as well as new and lost business, and the volume of business from new and existing clients. Fees for non-risk transfer services provided to clients are recognized over time in the period the services are provided, using a proportional performance model, primarily based on input measures. Revenue is typically recognized over time using an input measure of time expended to date relative to total estimated time to be incurred at project completion. Incurred hours represent services rendered and thereby faithfully depicts the transfer of control to the customer.
Revenue related to reinsurance brokerage for excess of loss ("XOL") treaties is estimated based on contractually specified minimum or deposit premiums, and adjusted as additional evidence of the ultimate amount of brokerage is received. Revenue for quota share treaties is estimated based on indications of estimated premium income provided by the ceding insurer. The estimated brokerage revenue recognized for quota share treaties is constrained to an amount that is probable to not have a significant negative adjustment. The estimated revenue and the constraint are evaluated as additional evidence of the ultimate amount of underlying risks to be covered and are received over the 12 to 18 months following the effective date of the placement.
In addition to compensation from its clients, Marsh Risk also receives other compensation, separate from retail fees and commissions, from insurance companies. This other compensation includes, among other things, payments for consulting and analytics services provided to insurers; compensation for administrative and other services (including fees for underwriting services and services provided to or on behalf of insurers relating to the administration and management of quota shares, panels and other facilities in which insurers participate), and insurer revenue, paid by insurers based on factors such as volume or profitability of Marsh Risk's placements primarily in Marsh McLennan Agency ("MMA") and parts of Marsh Risk's international operations.
Revenue for contingent commissions from insurers is recorded at a point in time, estimated based on historical evidence of the achievement of the respective contingent metrics and recorded as the underlying policies that contribute to the achievement of the metric are placed. Due to the uncertainty of the amount of contingent consideration that will be received, the estimated revenue is constrained to an amount that is probable to not have
a significant negative adjustment. Contingent consideration is generally received in the first quarter of the subsequent year.
A significant portion of the Company's Risk and Insurance Services revenue is commission revenue for brokerage arrangements recognized at a point in time on the effective date of the underlying policy. Commission revenue is estimated using historical information about the risks to be covered over the policy period, some of which are dependent on variable factors such as number of employees covered, covered payroll, airline passenger miles flown, shipped tonnage of marine cargo and others. Marsh Risk and Guy Carpenter also receive interest income on certain funds (such as premiums and claims proceeds) held in a fiduciary capacity for others.
Insurance brokerage commissions are generally invoiced on the policy effective date. Fee based arrangements generally include a percentage of the total fee due upon signing the arrangement, with additional fixed installments payable over the remainder of the year. Payment terms range from receipt of invoice up to 30 days from invoice date.
Reinsurance brokerage revenue is recognized on the effective date of the treaty. Payment terms depend on the type of reinsurance. For XOL treaties, brokerage revenue is typically collected in 4 installments during an annual treaty period based on a contractually specified minimum or deposit premium. For proportional or quota share treaties, brokerage is billed as underlying insured risks attach to the reinsurance treaty, generally over 12 to 18 months.
Consulting
The major component of revenue in the Consulting business is fees paid by clients for advice and services.
Mercer, principally through its health line of business, also earns revenue in the form of commissions received from insurance companies for the placement of group (and occasionally individual) insurance contracts, primarily health, life and accident coverages. Revenue for Mercer’s investment management business and certain of Mercer’s defined benefit and contribution administration services consists principally of fees based on assets under delegated management or administration. For a majority of the Mercer-managed investment funds, revenue received from Mercer's investment management clients as sub-advisor fees is reported on a gross basis rather than a net basis, with the sub-advisor fees included in other operating expenses.
Consulting projects in Mercer’s wealth and career businesses, and consulting projects in Marsh Management Consulting, typically consist of a single performance obligation, which is recognized over time as control is transferred continuously to customers. Therefore, revenue is typically recognized over time using an input measure of time expended to date relative to total estimated time to be incurred at project completion. Incurred hours represent services rendered and thereby faithfully depicts the transfer of control to the customer.
On a limited number of engagements, performance fees may also be earned for achieving certain prescribed performance criteria. Revenue for achievement is estimated and constrained to an amount that is probable to not have a significant negative adjustment.
For consulting projects, Mercer generally invoices monthly in arrears with payment due within 30 days of the invoice date. Fees for delegated management services are either deducted from the net asset value of the fund or invoiced to the client on a monthly or quarterly basis in arrears. Marsh Management Consulting typically bills its clients 30 to 60 days in arrears with payment due upon receipt of the invoice.
Health brokerage and consulting services are components of both Marsh Risk, which includes MMA, and Mercer, with approximately 51% of such revenues reported in Mercer. Health contracts typically involve a series of distinct services that are treated as a single performance obligation. Revenue for these services is recognized over time based on the amount of remuneration the Company expects to be entitled in exchange for these services. Payments for health brokerage and consulting services are typically paid monthly in arrears from carriers based on insured lives under the contract.
The following table disaggregates various components of the Company's revenue:
| For the Years Ended December 31, | ||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Marsh Risk: | ||||||||||||||||||||
| EMEA | $ | 3,812 | $ | 3,530 | $ | 3,262 | ||||||||||||||
| Asia Pacific | 1,460 | 1,414 | 1,295 | |||||||||||||||||
| Latin America | 571 | 575 | 559 | |||||||||||||||||
| Total International | 5,843 | 5,519 | 5,116 | |||||||||||||||||
| U.S./Canada | 8,523 | 7,017 | 6,262 | |||||||||||||||||
| Total Marsh Risk | 14,366 | 12,536 | 11,378 | |||||||||||||||||
| Guy Carpenter | 2,496 | 2,362 | 2,258 | |||||||||||||||||
| Subtotal | 16,862 | 14,898 | 13,636 | |||||||||||||||||
| Fiduciary interest income | 403 | 497 | 453 | |||||||||||||||||
| Total Risk and Insurance Services | $ | 17,265 | $ | 15,395 | $ | 14,089 | ||||||||||||||
| Mercer: | ||||||||||||||||||||
| Wealth (a) | $ | 2,819 | $ | 2,584 | $ | 2,507 | ||||||||||||||
| Health (a) | 2,284 | 2,100 | 2,061 | |||||||||||||||||
| Career | 1,087 | 1,059 | 1,019 | |||||||||||||||||
| Total Mercer | 6,190 | 5,743 | 5,587 | |||||||||||||||||
| Marsh Management Consulting (b) | 3,604 | 3,390 | 3,122 | |||||||||||||||||
| Total Consulting | $ | 9,794 | $ | 9,133 | $ | 8,709 | ||||||||||||||
| Total Segments | $ | 27,059 | $ | 24,528 | $ | 22,798 | ||||||||||||||
| Corporate/Eliminations | (78) | (70) | (62) | |||||||||||||||||
| Total | $ | 26,981 | $ | 24,458 | $ | 22,736 | ||||||||||||||
(a)Revenue in 2024 includes a net gain of $35 million from the sale of the U.K. pension administration and U.S.health and benefits administration businesses, that comprised of a $70 million gain in Wealth, offset by a $35 million loss in Health.
(b)Revenue in 2024 includes a gain of $20 million from the sale of a business in Marsh Management Consulting.
The following table provides contract assets and contract liabilities information from contracts with customers:
December 31, (In millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Contract assets | $ | 540 | $ | 473 | $ | 357 | ||||||||||||||
| Contract liabilities | $ | 927 | $ | 866 | $ | 869 | ||||||||||||||
The Company records accounts receivable when the right to consideration is unconditional, subject only to the passage of time. Contract assets primarily relate to quota share reinsurance brokerage and contingent insurer revenue. The Company does not have the right to bill and collect revenue for quota share brokerage until the underlying policies written by the ceding insurer attach to the treaty. Estimated revenue related to achievement of volume or loss ratio metrics cannot be billed or collected until all related policy placements are completed and the contingency is resolved. Contract assets are included in other current assets in the Company's consolidated balance sheets.
Contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities are included in current liabilities in the Company's consolidated balance sheets.
Details of the change in Contract Assets and Contract Liabilities for 2025 and 2024 are as follows:
| For the Years Ended December 31, | ||||||||||||||
| (In millions) | 2025 | 2024 | ||||||||||||
| Contract Assets | ||||||||||||||
Balance at January 1, | $ | 473 | $ | 357 | ||||||||||
| Additions (a) | 1,046 | 963 | ||||||||||||
| Transfers to accounts receivable (b) | (984) | (844) | ||||||||||||
| Effect of foreign exchange rate changes | 5 | (3) | ||||||||||||
Balance at December 31, | $ | 540 | $ | 473 | ||||||||||
| Contract Liabilities | ||||||||||||||
Balance at January 1, | $ | 866 | $ | 869 | ||||||||||
| Cash received for performance obligations not yet fulfilled | 884 | 847 | ||||||||||||
| Revenue recognized | (846) | (835) | ||||||||||||
| Effect of foreign exchange rate changes | 23 | (15) | ||||||||||||
Balance at December 31, | $ | 927 | $ | 866 | ||||||||||
(a)Includes $69 million from the acquisition of McGriff in 2024.
(b)Amounts transferred to accounts receivable as the rights to bill and collect became unconditional.
The amount of revenue recognized in 2025, 2024 and 2023 from performance obligations satisfied in previous periods, mainly due to variable consideration from contracts with insurers, quota share business and consulting contracts previously considered constrained was $83 million, $73 million and $71 million, respectively.
The Company applies the practical expedient and does not disclose the value of unsatisfied performance obligations for (1) contracts with original contract terms of one year or less and (2) contracts where the Company has the right to invoice for services performed.
Costs to Obtain and Fulfill a Contract
The Company capitalizes the incremental costs to obtain contracts primarily related to commissions or sales bonus payments in both segments. These deferred costs are amortized over the expected life of the underlying customer relationships.
In Risk and Insurance Services, the Company capitalizes certain pre-placement costs that are considered fulfillment costs that meet the following criteria: these costs (1) relate directly to a contract, (2) enhance resources used to satisfy the Company’s performance obligation and (3) are expected to be recovered through revenue generated by the contract. These costs are amortized at a point in time when the associated revenue is recognized.
In Consulting, the Company incurs fulfillment costs necessary to facilitate the delivery of the contracted services. These costs are capitalized and amortized over the initial contract term plus expected renewal periods.
At December 31, 2025, the Company’s capitalized assets related to deferred implementation costs, costs to obtain and costs to fulfill were $1 million, $459 million and $438 million, respectively. At December 31, 2024, the Company's capitalized assets related to deferred implementation costs, costs to obtain and costs to fulfill were $3 million, $396 million and $397 million, respectively. Costs to obtain and deferred implementation costs are primarily included in other assets and costs to fulfill are primarily included in other current assets in the Company's consolidated balance sheets. The Company recorded compensation and benefits expense of $2.1 billion, $1.9 billion and $1.8 billion for the years ended December 31, 2025, 2024 and 2023, respectively, related to the amortization of these capitalized assets.
A significant portion of deferred costs to fulfill in Risk and Insurance Services is amortized within 3 to 6 months. Therefore, the deferral of the cost and its amortization often occur in the same annual period. The Company has elected to use the practical expedient and recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets is one year or less.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 9, 2026 | Showing above |
| 2024 | Feb 10, 2025 | |
| 2023 | Feb 12, 2024 | |
| 2022 | Feb 13, 2023 | |
| 2021 | Feb 16, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.