XML 34 R23.htm IDEA: XBRL DOCUMENT v3.20.2
Restructuring Costs
 6 Months Ended
Jun. 30, 2020
Restructuring and Related Activities [Abstract]  
Restructuring Costs Restructuring Costs
JLT Related Integration and Restructuring
The Company is currently integrating JLT, which involves combining the business practices and co-locating colleagues in most geographies, rationalizing real estate leases around the world, realizing of synergies and migrating legacy JLT systems onto the Company's information technology environment and security protocols. The Company is also incurring cost for consulting fees related to integration management processes and legal fees related to rationalizing legal entity structures to reduce costs, mitigate risks and improve operational transparency.
Costs will be recognized based on applicable accounting guidance which includes accounting for disposal or exit activities, guidance related to impairment of long lived assets (for right of use assets related to real estate leases), as well as other costs resulting from accelerated depreciation or amortization of leasehold improvements and other property and equipment. Based on its current estimates, the Company expects to incur costs of approximately $700 million in connection with the integration and restructuring of the combined businesses, primarily related to severance, real estate rationalization, information technology rationalization, consulting fees related to the management of the integration processes and legal fees related to the rationalization of legal entity structures. The Company incurred $335 million in 2019 and $137 million in the first six months of 2020 and expects most of the remaining costs to be incurred in 2020, with a modest amount in 2021. These integration and restructuring plans may change during implementation, which may change our current cost and related savings estimates, as the Company continues to refine its detailed plans for each business and location.
In connection with the JLT integration and restructuring, in the first six months of 2020 the Company incurred costs of $137 million: $100 million in RIS, $17 million in Consulting, and $20 million in Corporate. The severance and related costs were included in compensation and benefits and the other costs were included in other operating expenses in the consolidated statement of income.
Details of the JLT integration and restructuring activity from January 1, 2019 through June 30, 2020, is as follows:    
 
(In millions)
Severance
 
Real Estate Related Costs (a)
 
Information Technology (a)
 
Consulting and Other Outside Services (b)
 
Total
Liability at 1/1/19
$
—

 
$
—

 
$
—

 
$
—

 
$
—

2019 Charges
154

 
38

 
45

 
98

 
335

Cash payments
(112
)
 
(14
)
 
(45
)
 
(94
)
 
(265
)
Non-cash charges
—

 
(19
)
 
—

 
(4
)
 
(23
)
Liability at 12/31/19
$
42

 
$
5

 
$
—

 
$
—

 
$
47

2020 Charges
29

 
31

 
37

 
40

 
137

Cash payments
(56
)
 
(4
)
 
(34
)
 
(33
)
 
(127
)
Non-cash charges
—

 
(21
)
 
(3
)
 
—

 
(24
)
Liability at 6/30/2020
$
15

 
$
11

 
$
—

 
$
7

 
$
33

(a) Includes data center contract termination costs and temporary infrastructure leasing costs.
(b) Includes consulting fees related to the management of the integration processes and legal fees related to the rationalization of legal entity structures.
Other Restructuring
During 2018 and 2019, Marsh initiated programs to simplify its organization structure and realign and rebrand certain of its businesses. The Company incurred severance and consulting costs of $2 million for the six month period ended June 30, 2020, related to these initiatives.
During the fourth quarter of 2018, Mercer initiated a program to restructure its business to further optimize the way Mercer operates, setting up the Company for a more fluid and nimble structure and operating model for the future. The Company incurred restructuring severance and consulting costs of $6 million for the six month period ended June 30, 2020 related to this initiative.
In addition to the charges discussed above, the Company incurred costs of $12 million at Corporate in 2020 that reflect consulting costs related to the restructure of the Global HR function and adjustments to restructuring liabilities for future rent under non-cancellable leases.
After further evaluation of our sublease assumptions, the Company recorded a ROU asset impairment charge of $11 million in the second quarter of 2020 to reflect the current market environment.
The following details other restructuring liabilities for actions initiated prior to 2020:
(In millions)
Liability at
1/1/19
 
Amounts
Accrued
 
Cash
Paid
 
Other 
 
Liability at 12/31/19
 
Amounts
Accrued
 
Cash
Paid
 
Other 
 
Liability at 6/30/2020
Severance
$
73

 
$
73

 
$
(91
)
 
$
(4
)
 
$
51

 
$
6

 
$
(45
)
 
$
—

 
$
12

Future rent under non-cancelable leases and other costs
39

 
39

 
(21
)
 
(6
)
 
51

 
14

 
(19
)
 
(1
)
 
$
45

Total
$
112

 
$
112

 
$
(112
)
 
$
(10
)
 
$
102

 
$
20

 
$
(64
)
 
$
(1
)
 
$
57

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 and accrued liabilities, other liabilities or accrued compensation and employee benefits, depending on the nature of the items.