Goodwill and Other Intangibles

9 Months Ended

Sep. 30, 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 quantitative goodwill impairment test. Alternatively, the Company may elect to proceed directly to the quantitative goodwill impairment test. In 2019, the Company elected to do a quantitative assessment and determined that goodwill was not impaired, as the fair value of each reporting unit exceeded its carrying value by a substantial margin. In 2020, the Company elected to perform a qualitative impairment assessment. As part of its assessment, the Company considered numerous factors, including that the fair value of each reporting unit exceeds its carrying value by a substantial margin based on its most recent estimates, whether significant acquisitions or dispositions occurred which might alter the fair value 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. The Company completed its qualitative assessment in the third quarter of 2020 and concluded that a quantitative goodwill impairment test was not required in 2020 and that goodwill was not impaired.

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:


September 30,
(In millions)	2020		2019
Balance as of January 1,	$	14,671	$	9,599
Goodwill acquired	462		4,962
Other adjustments(a)	(99)		(275)
Balance at September 30,	$	15,034	$	14,286

(a) Primarily reflects the impact of foreign exchange and dispositions.

The entire amount of goodwill acquired of $462 million in 2020 is related to the Risk and Insurance Services segment, of which $140 million is deductible for tax purposes. The goodwill arising from the acquisitions consists 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 September 30, 2020 is as follows: Risk and Insurance Services, $11 billion and Consulting, $4 billion.

The gross cost and accumulated amortization of identified intangible assets at September 30, 2020 and December 31, 2019 are as follows:


	September 30, 2020						December 31, 2019
(In millions)	Gross Cost		Accumulated Amortization		Net Carrying Amount		Gross Cost		Accumulated Amortization		Net Carrying Amount
Client Relationships	$	3,644	$	1,095	$	2,549	$	3,494	$	897	$	2,597
Other (a)	381		219		162		380		203		177
Amortized intangibles	$	4,025	$	1,314	$	2,711	$	3,874	$	1,100	$	2,774

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

Aggregate amortization expense for the nine months ended September 30, 2020 and 2019 was $265 million and $235 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 September 30, 2020)	$	92
2021	351
2022	323
2023	299
2024	286
Subsequent years	1,360
	$	2,711

The developments in the COVID-19 pandemic have resulted in uncertainty in the global economy and volatility in the equity markets. The Company considered whether such events would indicate that identified intangible assets and other long lived assets may not be recoverable. Based on its analysis, the Company concluded that the current events and circumstances related to the COVID-19 pandemic do not indicate that identified intangibles are not recoverable.