1st Quarter Results
Marsh & McLennan Co Inc
23 April 2003
Media Contacts: Investor Contact:
Barbara Perlmutter Jim Fingeroth Mike Bischoff
MMC Kekst and Company MMC
(212) 345-5585 (212) 521-4819 (212) 345-5470
MMC REPORTS FIRST QUARTER RESULTS
Earnings Per Share Rises 11 Percent
Strong Performance Driven by Risk and Insurance Services
NEW YORK, NEW YORK, April 23, 2003-Marsh & McLennan Companies, Inc. (MMC) today
reported financial results for the quarter ended March 31, 2003. Consolidated
revenues increased 8 percent to $2.9 billion from $2.6 billion in the first
quarter of 2002. Net income grew 6 percent to $443 million from $418 million,
and earnings per share increased 11 percent to $.81 from $.73.
Jeffrey W. Greenberg, chairman, said: 'MMC's first quarter results were driven
by Marsh's strong performance. Insurance and reinsurance broking operations
achieved double-digit growth throughout all geographies. Putnam continued to
take steps to improve its operations and strengthen its prospects for growth.
Mercer performed well, increasing revenues and profits at the strongest pace in
two years.'
Risk and insurance services revenues in the first quarter rose to $1.8 billion
from $1.5 billion, an increase of 20 percent. Marsh's revenue growth on a
constant currency basis was 15 percent. (Constant currency measures the change
in revenue using consistent currency exchange rates, before acquisitions.)
Operating income increased 21 percent to $560 million from $462 million. Clients
have a heightened awareness that risks have increased and become more complex.
At the same time, they are facing restricted terms and conditions, coverage
exclusions, and higher prices for commercial liability insurance. Marsh's full
range of specialized services and its unparalleled access to worldwide insurance
markets are of great value to clients. In the first quarter, risk management and
insurance broking revenues grew 23 percent (17 percent on a constant currency
basis), and reinsurance broking and services grew 26 percent (23 percent on a
constant currency basis).
Putnam's revenues declined 25 percent to $445 million, and operating income
declined from $175 million to $103 million, reflecting the weakness in U.S.
equity markets. Profitability in the quarter also was affected by the reduction
in value of Putnam's investments, including start-up funds. Within its
investment management area, Putnam added new leadership and refined its
decision-making processes. Putnam's average assets under management during the
first quarter were $244 billion, a decline of 21 percent from the $310 billion
in average assets in last year's first quarter. Positive asset flows in Putnam's
institutional and international businesses were more than offset by net outflows
in retail mutual funds. Total assets under management on March 31, 2003 were
$241 billion, 4 percent lower than the $251 billion of assets at year-end 2002.
Mercer's revenues in the first quarter increased 12 percent to $634 million from
$565 million. Operating income rose 12 percent to $83 million from $74 million.
Mercer's revenue growth on a constant currency basis was 5 percent. Mercer's
first quarter results reflect growth in almost all of its consulting practices,
including significant improvement in health care and group benefits, human
capital, and organizational change consulting. Growth in retirement services and
economic consulting continued, with a decline in management consulting.
MMC continued to produce strong cash flow in the first quarter. The company paid
$151 million in dividends to shareholders and repurchased 7.8 million shares of
common stock for $321 million. As a result of MMC's share repurchase program,
which more than offset requirements of stock benefit plans, shares outstanding
were reduced by 2.4 million in the quarter and 12.9 million over the past 12
months.
MMC is a global professional services firm with annual revenues exceeding $10
billion. It is the parent company of Marsh Inc., the world's leading risk and
insurance services firm; Putnam Investments, one of the largest investment
management companies in the United States; and Mercer Inc., a major global
provider of consulting services. Approximately 59,000 employees provide
analysis, advice and transactional capabilities to clients in over 100
countries. Its stock (ticker symbol: MMC) is listed on the New York, Chicago,
Pacific, and London stock exchanges. MMC's website address is www.mmc.com.
This press release contains certain statements relating to future results, which
are forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such statements may include, without limitation,
discussions concerning revenues, expenses, earnings, cash flow, capital
structure, pension funding, financial losses and expected insurance recoveries
resulting from the September 11, 2001 attack on the World Trade Center in New
York City, as well as market and industry conditions, premium rates, financial
markets, interest rates, foreign exchange rates, contingencies and matters
relating to MMC's operations and income taxes. Such forward-looking statements
are based on available current market and industry materials, experts' reports
and opinions and long-term trends, as well as management's expectations
concerning future events impacting MMC. Forward-looking statements by their very
nature involve risks and uncertainties. Factors that may cause actual results to
differ materially from those contemplated by any forward-looking statements
contained herein include, in the case of MMC's risk and insurance services and
consulting businesses, the amount of actual insurance recoveries and financial
losses from the September 11 attack on the World Trade Center, or other adverse
consequences from that incident. Other factors that should be considered in the
case of MMC's risk and insurance services business are changes in competitive
conditions, movements in premium rate levels, the continuation of difficult
conditions for the transfer of commercial risk and other changes in the global
property and casualty insurance markets, the impact of terrorist attacks,
natural catastrophes, and mergers between client organizations, including
insurance and reinsurance companies. Factors to be considered in the case of
MMC's investment management business include changes in worldwide and national
equity and fixed income markets, actual and relative investment performance, the
level of sales and redemptions, and the ability to maintain investment
management and administrative fees at appropriate levels; and with respect to
all of MMC's activities, changes in general worldwide and national economic
conditions, changes in the value of investments made in individual companies and
investment funds, fluctuations in foreign currencies, actions of competitors or
regulators, changes in interest rates or in the ability to access financial
markets, developments relating to claims, lawsuits and contingencies,
prospective and retrospective changes in the tax or accounting treatment of
MMC's operations, and the impact of tax and other legislation and regulation in
the jurisdictions in which MMC operates.
Forward-looking statements speak only as of the date on which they are made, and
MMC undertakes no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which it is made or to reflect the
occurrence of unanticipated events. Please refer to Marsh & McLennan Companies'
2002 Annual Report on Form 10-K for 'Information Concerning Forward-Looking
Statements,' its reports on Form 8-K, and quarterly reports on Form 10-Q.
MMC is committed to providing timely and materially accurate information to the
investing public, consistent with our legal and regulatory obligations. To that
end, MMC and its operating companies use their websites to convey meaningful
information about their businesses, including the anticipated release of
quarterly financial results, and the posting of updates of assets under
management at Putnam. Monthly updates of total assets under management at Putnam
will be posted to the MMC website the first business day following the end of
each month, except at the end of March, June, September, and December, when such
information will be released with MMC's quarterly earnings announcement. Putnam
posts mutual fund and performance data to its website regularly. Assets for most
Putnam retail mutual funds are posted approximately two weeks after each
month-end. Mutual fund net asset value (NAV) is posted daily. Historical
performance and Lipper rankings are also provided. Investors can link to MMC and
its operating company websites through www.mmc.com.
Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share figures)
(Unaudited)
Three Months Ended
March 31,
2003 2002
Revenue:
Risk and Insurance Services $1,773 $1,476
Investment Management 445 594
Consulting 634 565
______ ______
Total Revenue 2,852 2,635
______ ______
Expense:
Compensation and Benefits 1,378 1,249
Other Operating Expenses 757 699
______ ______
Total Expense 2,135 1,948
______ ______
Operating Income 717 687
Interest Income 6 5
Interest Expense (43) (37)
______ ______
Income Before Income Taxes and Minority Interest Expense 680 655
Income Taxes 232 232
Minority Interest Expense, Net of Tax 5 5
______ ______
Net Income $ 443 $ 418
====== ======
Basic Net Income Per Share $0.83 $0.76
====== ======
Diluted Net Income Per Share $0.81 $0.73
====== ======
Average Number of
Shares Outstanding - Basic 536 548
====== ======
Average Number of
Shares Outstanding - Diluted 547 569
====== ======
Marsh & McLennan Companies, Inc.
Supplemental Information
(In millions) (Unaudited)
Three Months Ended
March 31,
2003 2002
Operating Income Including Minority Interest Expense:
Risk and Insurance Services $560 $462
Investment Management 103 175
Consulting 83 74
Corporate (34) (29)
______ ______
712 682
______ ______
Minority Interest Expense, Net of Tax, Included Above:
Risk and Insurance Services 3 1
Investment Management 2 4
______ ______
5 5
______ ______
Operating Income $717 $687
====== ======
Segment Operating Margins:
Risk and Insurance Services 31.6% 31.3%
Investment Management 23.1% 29.5%
Consulting 13.1% 13.1%
Consolidated Operating Margin 25.1% 26.1%
Pretax Margin 23.8% 24.9%
Effective Tax Rate 34.0% 35.5%
Interest Income on Fiduciary Funds $ 31 $ 27
Investment Income $ 11 $ 32
Shares Outstanding at End of Period 536 549
Potential Minority Interest Associated with the Putnam
Equity Partnership Plan Net of Dividend Equivalent
Expense Related to MMC Common Stock Equivalents $ - $ 1
MMC's consolidated effective tax rate was 35% for the year ended December 31, 2002. As a result of the geographic mix
of MMC's businesses, the effective tax rate in 2003 should approximate 34%.
Marsh & McLennan Companies, Inc.
Supplemental Information
(Unaudited)
Revenue Analysis (millions) Three Months Ended % Change Currency/
March 31, GAAP Constant Acquisitions
2003 2002 (b) Revenue Currency (c) Impact
Risk & Insurance Services
Risk Management and Insurance Broking $1,323 $1,076 23% 17% 6%
Reinsurance Broking and Services 234 185 26% 23% 3%
Related Insurance Services (a) 216 215 - - -
______ ______
Total Risk & Insurance Services 1,773 1,476 20% 15% 5%
Investment Management 445 594 (25)% (25)% -
Consulting
Retirement Services 300 270 11% 4% 7%
Health Care & Group Benefits 98 84 17% 13% 4%
Human Capital 86 78 10% 5% 5%
Management and Organizational Change 81 68 19% (5)% 24%
Economic 37 33 12% 11% 1%
______ ______
602 533 13% 5% 8%
Reimbursed Expenses 32 32 - - -
______ ______
Total Consulting 634 565 12% 5% 7%
_____ _____
Total $2,852 $2,635 8% 4% 4%
====== ======
(a) Includes affinity, claims management and MMC Capital businesses. Related insurance services revenue included
strong growth in claims management offset by declines in affinity business.
(b) Quarterly revenue for 2002 under the above captions is available upon request.
(c) Constant currency measures the change in revenue using consistent currency exchange rates, before acquisitions and
dispositions.
Putnam Assets Under Management (billions) March 31, Dec. 31, Sept. 30, June 30, March 31,
2003 2002 2002 2002 2002
Mutual Funds:
Growth Equity $ 43 $ 45 $ 45 $ 58 $ 73
Value Equity 36 40 38 49 55
Blend Equity 30 33 32 40 46
Fixed Income 46 46 46 44 43
_____ _____ _____ _____ _____
Total Mutual Fund Assets 155 164 161 191 217
_____ _____ _____ _____ _____
Institutional:
Equity 64 66 59 74 79
Fixed Income 22 21 18 19 18
_____ _____ _____ _____ _____
Total Institutional Assets 86 87 77 93 97
_____ _____ _____ _____ _____
Total Ending Assets $241 $251 $238 $284 $314
===== ===== ===== ===== =====
Assets from Non-US Investors $ 33 $ 33 $ 27 $ 30 $ 30
===== ===== ===== ===== =====
Average Assets Under Management:
Quarter-To-Date $244 $249 $257 $301 $310
===== ===== ===== ===== =====
Year-To-Date $244 $279 $289 $305 $310
===== ===== ===== ===== =====
Net New Sales/(Redemptions) including
Dividends Reinvested:
Quarter-To-Date $(1.3) $ 0.4 $ (7.1) $(3.2) $(0.4)
====== ====== ====== ====== ======
Year-To-Date $(1.3) $(10.3) $(10.7) $(3.6) $(0.4)
====== ====== ====== ====== ======
Categories of mutual fund assets reflect style designations aligned with Putnam's various prospectuses. All quarter-end
assets conform with the current investment mandate for each product.
This information is provided by RNS
The company news service from the London Stock Exchange
Tuesday, 14th May 2024
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