Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The Company is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The Company performs the annual impairment assessment for each of its reporting units during the third quarter of each year. In accordance with applicable accounting guidance, a company can assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test. Alternatively, the company may elect to proceed directly to the quantitative goodwill impairment test. In 2019, the Company elected to perform a quantitative impairment assessment. Fair values of the reporting units were estimated using a market approach. Carrying values for the reporting units are based on balances at the prior quarter end and include directly identified assets and liabilities, as well as an allocation of those assets and liabilities not recorded at the reporting unit level. The Company completed its 2019 annual review in the third quarter and concluded goodwill was not impaired, as the fair value of each reporting unit exceeded its carrying value by a substantial margin.

The recent developments in the COVID-19 pandemic have resulted in uncertainty in the global economy, and declines in equity markets, including in the Company’s share price. The Company considered whether such events would indicate an interim goodwill assessment should be performed. The Company considered its current projections, the Company’s share price in relation to the share price when the quantitative assessment was performed in the third quarter of 2019 and the substantial margin by which the fair values of the reporting units exceeded their carrying values. Based on its analysis, the Company concluded that the current events and circumstances related to the COVID-19 pandemic do not indicate an impairment of goodwill is more likely than not.

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. The Company does not have any indefinite lived intangible assets.

Changes in the carrying amount of goodwill are as follows:



March 31,
(In millions)	2020			2019
Balance as of January 1,	$	14,671		$	9,599
Goodwill acquired	142			97
Other adjustments^(a)	(401		)	43
Balance at March 31,	$	14,412		$	9,739

^(a)Primarily reflects the impact of foreign exchange.

The entire amount of goodwill acquired of $142 million in 2020, all of which is related to the Risk and Insurance Services segment, is deductible for tax purposes. The goodwill arising from the acquisitions consist largely of the synergies and economies of scale expected from combining the operations of the Company and the acquired entities and the trained and assembled workforce acquired.

Goodwill allocable to the Company’s reportable segments at March 31, 2020 is as follows: Risk and Insurance Services, $11.3 billion and Consulting, $3.1 billion.

The gross cost and accumulated amortization of identified intangible assets at March 31, 2020 and December 31, 2019 are as follows:



	March 31, 2020						December 31, 2019
(In millions)	Gross Cost		Accumulated Amortization		Net Carrying Amount		Gross Cost		Accumulated Amortization		Net Carrying Amount
Client Relationships	$	3,450	$	951	$	2,499	$	3,494	$	897	$	2,597
Other ^(a)	373		209		164		380		203		177
Amortized intangibles	$	3,823	$	1,160	$	2,663	$	3,874	$	1,100	$	2,774

^(a) Primarily non-compete agreements, trade names and developed technology.

Aggregate amortization expense for the three months ended March 31, 2020 and 2019 was $86 million and $51 million, respectively. The estimated future aggregate amortization expense is as follows:



For the Years Ending December 31,
(In millions)	Estimated Expense
2020 (excludes amortization through March 31, 2020)	$	249
2021	325
2022	298
2023	277
2024	266
Subsequent years	1,248
	$	2,663