MMC Reports Second Quarter 2007 Results
Marsh & McLennan
Consolidated Revenue Increases 7 Percent to $2.8 Billion
Income from Continuing Operations Up 7 Percent
Board Authorizes $1.5 Billion Share Repurchase Program
Marsh & McLennan Companies, Inc. (MMC) today reported financial results for the
second quarter and six months ended June 30, 2007.
In the quarter, consolidated revenue was $2.8 billion, up 7 percent from the
second quarter of 2006, or 4 percent on an underlying basis. Income from
continuing operations was $140 million, or $.25 per share, compared with $131
million, or $.24 per share, last year. Income from discontinued operations, net
of tax, which primarily reflects the results of Putnam Investments, was $37
million, or $.06 per share, compared with $41 million, or $.07 per share, last
year. Net income rose 3 percent to $177 million, or $.31 per share, from $172
million, or $.31 per share, a year ago. Noteworthy items, described in the
attached supplemental schedules, reduced earnings per share by $.04, compared
with a reduction of $.05 per share in the second quarter of 2006.
For the six months ended June 30, consolidated revenue of $5.6 billion increased
6 percent from $5.3 billion in the year-ago period, or 3 percent on an
underlying basis. Income from continuing operations was $368 million, or $.66
per share, an increase of 11 percent from $331 million, or $.60 per share, in
the year-ago period. Income from discontinued operations, net of tax, was $77
million, or $.13 per share, compared with $257 million, or $.45 per share, in
the prior-year period. Net income was $445 million, or $.79 per share, compared
with $588 million, or $1.05 per share, last year, reflecting the gain on the
sale of Sedgwick Claims Management Services in the first quarter of 2006.
'MMC achieved another quarter of solid revenue growth,' said Michael G.
Cherkasky, president and chief executive officer of MMC. 'Although profitability
varied across our business segments, the overall revenue gain illustrates our
long-term growth strategy. We will continue our strategy of growing revenue and
investing in the future, with continued attention on expense discipline. The
sale of Putnam Investments, completed last week, will allow us to concentrate on
our core businesses and return a substantial amount of capital to shareholders.
We are very pleased that MMC's Board of Directors has approved a $1.5 billion
share repurchase program, which will begin as soon as possible.'
Risk and Insurance Services
Risk and insurance services revenue in the second quarter was $1.4 billion, an
increase of 2 percent from the second quarter of 2006.
In the quarter, Marsh's revenue was $1.1 billion, up 2 percent from last year.
Excluding the impact of market services revenue of $34 million in the year ago
period, underlying revenue increased 2 percent in the quarter with 3 percent
growth in the Americas. The second quarter of 2006 was the last period in which
Marsh recorded significant revenue from prior market service agreements, and
there was no such revenue in this year's second quarter. Geographically, Marsh's
revenue included $627 million in the Americas, $392 million in EMEA and $105
million in Asia Pacific. New business increased in the second quarter, marking
the fifth consecutive quarter that new business increased. Premium rate declines
in the commercial insurance marketplace continued.
Guy Carpenter's second quarter revenue was $217 million, representing 2 percent
growth on a reported basis and 1 percent growth on an underlying basis. This was
achieved despite a continued decline in U.S. property catastrophe rates from the
peak levels at mid-year renewals of 2006, as well as higher risk retention by
clients.
Risk Capital Holdings had revenue of $32 million in the second quarter, compared
with $28 million in the same period of 2006.
Profitability in the Risk and Insurance Services segment declined from the prior
year, reflecting the absence of market services revenue and that expenses to
support Marsh's long-term growth initiatives impacted this quarter to a greater
extent than expected.
For the first six months of 2007, revenue for the risk and insurances segment
was $2.9 billion, an increase of 1 percent from the year-ago period. Marsh
revenue of $2.3 billion rose 1 percent from the year-ago period, and Guy
Carpenter's revenue rose 3 percent to $509 million.
Consulting
MMC's Consulting segment achieved a revenue increase of 16 percent to $1.2
billion in the second quarter. Revenue rose 11 percent on an underlying basis.
Mercer Human Resource Consulting increased revenue 12 percent to $842 million in
the second quarter, and 8 percent on an underlying basis. This growth was
achieved throughout Mercer's operations: retirement and investment produced $319
million in revenue, an increase of 13 percent; health and benefits, $199 million
or 9 percent growth; outsourcing, $185 million or 17 percent growth; and talent,
$114 million or 8 percent growth.
The Oliver Wyman Group, now the umbrella brand for all of the former Mercer
Specialty consulting businesses, grew revenue 27 percent to $376 million in the
second quarter, or 18 percent on an underlying basis.
Overall, the Consulting segment's profitability grew 28 percent and its margin
improved to 13.1 percent from 11.8 percent a year ago, driven primarily by
double-digit earnings growth at Mercer.
For the six-month period, the Consulting segment posted revenue of $2.3 billion,
a 15 percent increase over last year. Mercer increased revenue by 10 percent to
$1.6 billion, while the Oliver Wyman Group grew revenue 26 percent to $705
million.
Risk Consulting and Technology
Kroll's revenue was $251 million in the second quarter, declining 6 percent from
the year-ago quarter, or 4 percent on an underlying basis.
Quarterly revenue in Kroll's technology operations rose 7 percent, led by Kroll
Ontrack, the legal technology and electronic data recovery business. Revenue in
Kroll's consulting operations decreased 17 percent from a year ago, reflecting a
significant reduction in the level of client success fees for completed
engagements from those received in the second quarter of 2006.
For the six-month period, Kroll's revenue was $486 million, a decline of 3
percent, or 2 percent on an underlying basis.
Investment Management - Discontinued Operations
Putnam's results are classified as discontinued operations. In the second
quarter, Putnam had revenue of $330 million, a decrease of 2 percent from the
second quarter of 2006. Putnam's assets under management on June 30, 2007, were
$193 billion, comprising $121 billion in mutual fund assets and $72 billion in
institutional assets. Average assets under management were $193 billion,
compared with $185 billion in the second quarter of 2006.
Other Items
As announced on August 3, 2007, Great-West Lifeco, a financial holding company
controlled by Power Financial Corp., completed its purchase of Putnam
Investments for $3.9 billion in cash. The cash proceeds to MMC after taxes and
minority interest are expected to approach $2.5 billion.
MMC's net debt position, which is total debt less cash and cash equivalents, was
$3.8 billion at the end of the second quarter, compared with $4 billion at the
end of the 2006 second quarter.
In July 2007, MMC completed a previously announced $500 million accelerated
share repurchase program.
Conference Call
A conference call to discuss second quarter 2007 results will be held today at
8:30 a.m. Eastern Time. To participate in the teleconference, please dial (866)
564-7444 or (719) 234-0008 (international). The access code for both numbers is
3681547. The audio webcast may be accessed at www.mmc.com. A replay of the
webcast will be available approximately two hours after the event at the same
web address.
MMC (Marsh & McLennan Companies) is a global professional services firm
providing advice and solutions in the areas of risk, strategy and human capital.
It is the parent company of the world's leading risk experts and specialty
consultants, including Marsh, the insurance broker and business risk advisor;
Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting
firm; Mercer Human Resource Consulting, the provider of HR and related financial
advice and services; and Oliver Wyman, the management consultancy. With more
than 54,000 employees worldwide and annual revenue of approximately $11 billion,
MMC provides analysis, advice, and transactional capabilities to clients in more
than 100 countries. Its stock (ticker symbol: MMC) is listed on the New York,
Chicago, and London stock exchanges. MMC's website address is www.mmc.com.
This press release contains 'forward-looking statements,' as defined in the
Private Securities Litigation Reform Act of 1995. These statements, which
express management's current views concerning future events or results, use
words like 'anticipate,' 'assume,' 'believe,' 'continue,' 'estimate,' 'expect,'
'intend,' 'plan,' 'project' and similar terms, and future or conditional tense
verbs like 'could,' 'should,' 'will' and 'would.' For example, we may use
forward-looking statements when addressing topics such as: future actions by
regulators; the outcome of contingencies; changes in our business strategies and
methods of generating revenue; the development and performance of our services
and products; market and industry conditions, including competitive and pricing
trends; changes in the composition or level of MMC's revenues; our cost
structure and the outcome of restructuring and other cost-saving initiatives;
share repurchase programs; the expected impact of acquisitions and dispositions;
and MMC's cash flow and liquidity.
Forward-looking statements are subject to inherent risks and uncertainties.
Factors that could cause actual results to differ materially from those
expressed or implied in our forward-looking statements include:
-- the economic and reputational impact of litigation and regulatory
proceedings described in the notes to our financial statements;
-- our ability to effectively deploy the proceeds received by MMC in August
2007 from the sale of Putnam, and the timing of our use of those
proceeds;
-- our ability to achieve profitable revenue growth in our risk and
insurance services segment by providing both traditional insurance
brokerage services and additional risk advisory services;
-- our ability to retain existing clients and attract new business, and our
ability to recruit and retain key employees;
-- revenue fluctuations in risk and insurance services relating to the net
effect of new and lost business production and the timing of policy
inception dates;
-- the impact on risk and insurance services commission revenues of changes
in the availability of, and the premiums insurance carriers charge for,
insurance and reinsurance products, including the impact on premium
rates and market capacity attributable to catastrophic events such as
hurricanes;
-- the impact on renewals in our risk and insurance services segment of
pricing trends in particular insurance markets, fluctuations in the
general level of economic activity and decisions by insureds with
respect to the level of risk they will self-insure;
-- the impact on our consulting segment of pricing trends, utilization
rates, legislative changes affecting client demand, and the general
economic environment;
-- our ability to implement our restructuring initiatives and otherwise
reduce or control expenses and achieve operating efficiencies, including
our ability to generate anticipated savings and operational improvements
from the actions we announced in September 2006;
-- the impact of competition, including with respect to pricing and the
emergence of new competitors;
-- fluctuations in the value of Risk Capital Holdings' investments;
-- our exposure to potential liabilities arising from errors and omissions
claims against us;
-- our ability to meet our financing needs by generating cash from
operations and accessing external financing sources, including the
potential impact of rating agency actions on our cost of financing or
ability to borrow;
-- our ability to make strategic acquisitions and dispositions and to
integrate, and realize expected synergies, savings or strategic benefits
from, the businesses we acquire;
-- the impact on our operating results of foreign exchange fluctuations;
-- changes in applicable tax or accounting requirements, and potential
income statement effects from the application of FIN 48 ('Accounting for
Uncertainty in Income Taxes') and SFAS 142 ('Goodwill and Other
Intangible Assets'); and
-- the impact of, and potential challenges in complying with, legislation
and regulation in the jurisdictions in which we operate, particularly
given the global scope of our businesses and the possibility of
conflicting regulatory requirements across the jurisdictions in which we
do business.
The factors identified above are not exhaustive. MMC and its subsidiaries
operate in a dynamic business environment in which new risks may emerge
frequently. Accordingly, MMC cautions readers not to place undue reliance on its
forward-looking statements, which speak only as of the dates on which they are
made. MMC undertakes no obligation to update or revise any forward-looking
statement to reflect events or circumstances arising after the date on which it
is made. Further information concerning MMC and its businesses, including
information about factors that could materially affect our results of operations
and financial condition, is contained in MMC's filings with the Securities and
Exchange Commission, including the 'Risk Factors' section of MMC's annual report
on Form 10-K for the year ended December 31, 2006.
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Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share figures)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue:
Service Revenue $2,788 $2,606 $5,551 $5,229
Investment Income (Loss) 31 28 80 79
-------- -------- -------- --------
Total Revenue 2,819 2,634 5,631 5,308
-------- -------- -------- --------
Expense:
Compensation and Benefits 1,692 1,641 3,369 3,227
Other Operating Expenses 854 730 1,602 1,481
-------- -------- -------- --------
Total Expense 2,546 2,371 4,971 4,708
-------- -------- -------- --------
Operating Income 273 263 660 600
Interest Income 15 12 34 27
Interest Expense (75) (78) (146) (156)
-------- -------- -------- --------
Income Before Income Taxes and
Minority Interest Expense 213 197 548 471
Income Taxes 70 64 176 137
Minority Interest Expense, Net of
Tax 3 2 4 3
-------- -------- -------- --------
Income from Continuing Operations 140 131 368 331
Discontinued Operations, Net of
Tax 37 41 77 257
-------- -------- -------- --------
Net Income $177 $172 $445 $588
======== ======== ======== ========
Basic Net Income Per Share
- Continuing Operations $0.26 $0.24 $0.67 $0.60
======== ======== ======== ========
- Net Income $0.32 $0.31 $0.81 $1.07
======== ======== ======== ========
Diluted Net Income Per Share
- Continuing Operations $0.25 $0.24 $0.66 $0.60
======== ======== ======== ========
- Net Income $0.31 $0.31 $0.79 $1.05
======== ======== ======== ========
Average Number of Shares
Outstanding
- Basic 548 549 551 548
======== ======== ======== ========
- Diluted 558 555 560 555
======== ======== ======== ========
Shares Outstanding at 6/30 542 550 542 550
======== ======== ======== ========
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Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended
(Millions) (Unaudited)
Components of Revenue Change
Three Months --------------------------------
Ended % Change Acquisitions/
June 30, GAAP Currency Dispositions Underlying
---------------
2007 2006 Revenue Impact Impact Revenue
------- ------- ------- --------------------------------
Risk and
Insurance
Services
Insurance
Services $1,124 $1,106 2% 3% - (1)%
Reinsurance
Services 217 214 2% 1% - 1%
Risk Capital
Holdings 32 28 10% - - 10%
------- -------
Total Risk
and
Insurance
Services 1,373 1,348 2% 3% - (1)%
------- -------
Consulting
Mercer Human
Resource
Consulting 842 751 12% 4% - 8%
Oliver Wyman
Group 376 297 27% 4% 5% 18%
------- -------
Total
Consulting 1,218 1,048 16% 4% 1% 11%
------- -------
Risk
Consulting &
Technology 251 265 (6)% 2% (4)% (4)%
------- -------
Total
Operating
Segments 2,842 2,661 7% 3% - 4%
Corporate
Eliminations (23) (27)
------- -------
Total
Revenue $2,819 $2,634 7% 3% - 4%
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Revenue Details
The following table provides more detailed revenue information for certain of
the components above:
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Three Months Ended
% Change
June 30, GAAP
------------------
2007 2006 Revenue
-------- -------- ----------
Insurance Services:
Americas $627 $634 (1)%
EMEA 392 378 4%
Asia Pacific 105 94 12%
-------- --------
Total Insurance Services $1,124 $1,106 2%
======== ========
Mercer Human Resource Consulting:
Retirement and Investment $319 $282 13%
Health and Benefits 199 183 9%
Outsourcing 185 159 17%
Talent 114 107 8%
Reimbursed Expenses 25 20 N/A
-------- --------
Total Mercer Human Resource Consulting $842 $751 12%
-------- --------
Risk Consulting & Technology:
Technology $141 $132 7%
Consulting 110 133 (17)%
-------- --------
Total Risk Consulting & Technology $251 $265 (6)%
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Notes
Underlying revenue measures the change in revenue, before the impact
of acquisitions and dispositions, using consistent currency exchange
rates.
Insurance Services revenue includes market services revenue of $0
million and $34 million for the three months ended June 30, 2007 and
2006, respectively. Excluding market services revenue, underlying
revenue for both Insurance Services and Risk and Insurance Services
increased 2%.
The decline in market services revenue primarily impacted revenue in
the Americas. Excluding the impact of market services revenue,
underlying revenue increased 3% in the Americas.
Interest income on fiduciary funds amounted to $49 million and $44
million for the three months ended June 30, 2007 and 2006,
respectively.
Revenue includes net investment income (loss) of $31 million and $28
million for Risk and Insurance Services for the three months ended
June 30, 2007 and 2006, respectively.
Risk Capital Holdings owns investments in private equity funds and
insurance and financial services firms.
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Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Six Months Ended
(Millions) (Unaudited)
Components of Revenue Change
Six Months ---------------------------------
Ended % Change Acquisitions/
June 30, GAAP Currency Dispositions Underlying
---------------
2007 2006 Revenue Impact Impact Revenue
------- ------- ------- -------- ------------- ----------
Risk and
Insurance
Services
Insurance
Services $2,266 $2,252 1% 3% - (2)%
Reinsurance
Services 509 495 3% 2% - 1%
Risk Capital
Holdings 81 74 9% - - 9%
------- -------
Total Risk
and
Insurance
Services 2,856 2,821 1% 3% - (2)%
------- -------
Consulting
Mercer Human
Resource
Consulting 1,642 1,490 10% 4% - 6%
Oliver Wyman
Group 705 559 26% 4% 5% 17%
------- -------
Total
Consulting 2,347 2,049 15% 4% 2% 9%
------- -------
Risk
Consulting &
Technology 486 499 (3)% 2% (3)% (2)%
------- -------
Total
Operating
Segments 5,689 5,369 6% 3% - 3%
Corporate
Eliminations (58) (61)
------- -------
Total
Revenue $5,631 $5,308 6% 3% - 3%
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Revenue Details
The following table provides more detailed revenue information for certain of
the components presented above:
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Six Months Ended % Change
June 30, GAAP
----------------
2007 2006 Revenue
------- ------- --------
Insurance Services:
Americas $1,167 $1,202 (3)%
EMEA 916 886 3%
Asia Pacific 183 164 12%
------- -------
Total Insurance Services $2,266 $2,252 1%
======= =======
Mercer Human Resource Consulting:
Retirement and Investment $638 $570 12%
Health and Benefits 382 366 4%
Outsourcing 361 315 15%
Talent 213 200 7%
Reimbursed Expenses 48 39 N/A
------- -------
Total Mercer Human Resource Consulting $1,642 $1,490 10%
------- -------
Risk Consulting & Technology:
Technology $273 $248 10%
Consulting 213 251 (15)%
------- -------
Total Risk Consulting & Technology $486 $499 (3)%
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Notes
Underlying revenue measures the change in revenue, before the impact
of acquisitions and dispositions, using consistent currency exchange
rates.
Insurance Services revenue includes market services revenue of $2
million and $40 million for the six months ended June 30, 2007 and
2006, respectively. Excluding market services revenue, underlying
revenue for Insurance Services decreased 1% and was flat for Risk and
Insurance Services.
The decline in market services revenue primarily impacted revenues in
the Americas. Excluding the impact of market services revenue,
underlying revenue decreased 1% in the Americas.
Interest income on fiduciary funds amounted to $96 million and $85
million for the six months ended June 30, 2007 and 2006,
respectively.
Revenue includes net investment income (loss) of $80 million and $78
million for Risk and Insurance Services and $0 million and $1 million
for Consulting for the six months ended June 30, 2007 and 2006,
respectively.
Risk Capital Holdings owns investments in private equity funds and
insurance and financial services firms.
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Marsh & McLennan Companies, Inc.
Supplemental Information
(Millions) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue:
Risk and Insurance Services $ 1,373 $ 1,348 $ 2,856 $ 2,821
Consulting 1,218 1,048 2,347 2,049
Risk Consulting & Technology 251 265 486 499
-------- -------- -------- --------
2,842 2,661 5,689 5,369
Corporate Eliminations (23) (27) (58) (61)
-------- -------- -------- --------
$ 2,819 $ 2,634 $ 5,631 $ 5,308
-------- -------- -------- --------
Operating Income (Loss) :
Risk and Insurance Services $ 125 $ 139 $ 384 $ 407
Consulting 159 124 297 237
Risk Consulting & Technology 32 42 58 66
Corporate (43) (42) (79) (110)
-------- -------- -------- --------
$ 273 $ 263 $ 660 $ 600
-------- -------- -------- --------
Segment Operating Margins:
Risk and Insurance Services 9.1% 10.3% 13.4% 14.4%
Consulting 13.1% 11.8% 12.7% 11.6%
Risk Consulting & Technology 12.7% 15.8% 11.9% 13.2%
Consolidated Operating Margin 9.7% 10.0% 11.7% 11.3%
Pretax Margin 7.6% 7.5% 9.7% 8.9%
Effective Tax Rate 32.9% 32.5% 32.1% 29.1%
Potential Minority Interest
Associated with the Putnam
Equity Partnership Plan $ 2 $ 3 $ 4 $ 5
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Marsh & McLennan Companies, Inc.
Supplemental Information- Continuing Operations
(Millions) (Unaudited)
Significant Items Impacting the Comparability of Financial Results:
The year-over-year comparability of MMC's financial results for the
second quarter and six months ended June 30 are affected by a number
of noteworthy items. The following table identifies the impact of
noteworthy items on segment and consolidated operating income for the
periods indicated.
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Risk
Risk & Consulting
Insurance & Corporate &
Services Consulting Technology Eliminations Total
---------- ---------- ---------- ------------ -----
Three Months Ended
June 30, 2007
-------------------
Restructuring
Charges (a) $ 4 $ 1 $ - $ 5 $ 10
Accelerated
Amortization/
Depreciation 3 2 - - 5
Settlement, Legal
and Regulatory (b) 15 - - - 15
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $ 22 $ 3 $ - $ 5 $ 30
---------- ---------- ---------- ------------ -----
Three Months Ended
June 30, 2006
-------------------
Restructuring
Charges (a) $ 26 $ (1) $ - $ 1 $ 26
Accelerated
Amortization/
Depreciation 16 - - 3 19
Settlement, Legal
and Regulatory (b) 11 - - - 11
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $ 53 $ (1) $ - $ 4 $ 56
---------- ---------- ---------- ------------ -----
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Risk
Risk & Consulting
Insurance & Corporate &
Services Consulting Technology Eliminations Total
---------- ---------- ---------- ------------ -----
Six Months Ended
June 30, 2007
-------------------
Restructuring
Charges (a) $ 28 $ 1 $ - $ 11 $ 40
Accelerated
Amortization/
Depreciation 8 5 - 3 16
Settlement, Legal
and Regulatory (b) 26 - - - 26
Other (c) - - - (14) (14)
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $ 62 $ 6 $ - $ - $ 68
---------- ---------- ---------- ------------ -----
Six Months Ended
June 30, 2006
-------------------
Restructuring
Charges (a) $ 45 $ (1) $ - $ 27 $ 71
Accelerated
Amortization/
Depreciation 21 - - 3 24
Settlement, Legal
and Regulatory (b) 21 - - - 21
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $ 87 $ (1) $ - $ 30 $116
---------- ---------- ---------- ------------ -----
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Notes
(a) Primarily includes severance and related charges, costs for future
rent and other real estate costs, and consulting costs related to
cost reduction initiatives.
(b) Reflects legal fees arising out of the civil complaint relating to
market service agreements and other issues filed against MMC and
Marsh by the New York State Attorney General in October 2004 and
settled in January 2005, and indemnification of former employees for
legal fees they have incurred in connection with the events of
October 2004.
(c) Represents an accrual adjustment related to the separation of
former MMC senior executives.
The above schedules exclude credits of $10 million and $7 million for
the three months and six months ended June 30, 2006 that related to
Putnam which is included in discontinued operations.
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Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions) (Unaudited)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,117 $ 2,015
Net receivables 3,028 2,718
Assets of discontinued operations 1,570 1,921
Other current assets 294 322
------------ ------------
Total current assets 6,009 6,976
Goodwill and intangible assets 7,606 7,595
Fixed assets, net 969 990
Long-term investments 99 124
Pension related asset 675 613
Other assets 1,831 1,839
------------ ------------
TOTAL ASSETS $ 17,189 $ 18,137
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 1,341 $ 1,111
Accounts payable and accrued liabilities 2,519 2,486
Regulatory settlements-current portion 175 178
Accrued compensation and employee benefits 788 1,230
Liabilities of discontinued operations 339 782
Accrued income taxes 49 131
Dividends payable 104 -
------------ ------------
Total current liabilities 5,315 5,918
Fiduciary liabilities 3,875 3,587
Less - cash and investments held in a
fiduciary capacity (3,875) (3,587)
------------ ------------
- -
Long-term debt 3,608 3,860
Regulatory settlements - 173
Pension, postretirement and postemployment
benefits 1,051 1,085
Liabilities for errors and omissions 630 624
Other liabilities 926 658
Total stockholders' equity 5,659 5,819
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,189 $ 18,137
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Marsh & McLennan Companies, Inc.
Supplemental Information - Discontinued Operations
(Millions) (Unaudited)
On January 31, 2007, MMC entered into a stock purchase agreement with
Great-West Lifeco ('GWL'), a financial holding company controlled by
Power Financial Corporation, pursuant to which GWL agreed to purchase
Putnam Investments Trust. The transaction closed on August 3, 2007.
Putnam's results of operations for the three months and six months
ended June 30, 2007 and 2006, respectively, were segregated and
reported as discontinued operations in the accompanying consolidated
statements of income.
In 2006, MMC sold its majority interest in Sedgwick Claims Management,
a provider of claims management and associated productivity services;
Price Forbes, its U.K.-based insurance wholesale operation; and Kroll
Security International, its international high-risk asset and
personal protection business. The gains or losses on these disposals,
as well as their results of operations, are reported as discontinued
operations in the accompanying consolidated statements of income.
Summarized Statements of Income data for discontinued operations is as
follows:
Three Months Ended
June 30,
------------------
2007 2006
-------- --------
Putnam:
Revenue $330 $339
Expense 265 263
-------- --------
Net Operating Income 65 76
Other Discontinued Operations - Income before
provision for income tax (1) (1)
Provision for income tax 27 34
-------- --------
Discontinued operations, net of tax $37 $41
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Six Months Ended
June 30,
------------------
2007 2006
-------- --------
Putnam:
Revenue $686 $684
Expense 546 544
-------- --------
Net Operating Income 140 140
Other Discontinued Operations - Income before
provision for income tax (2) (1)
Provision for income tax 61 58
-------- --------
Income from discontinued operations, net of tax 77 81
-------- --------
Gain on disposal of discontinued operations - 306
Provision for income tax - 130
-------- --------
Gain on disposal of discontinued operations, net of
tax - 176
-------- --------
Discontinued operations, net of tax $77 $257
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Notes
Putnam's results for the three months and six months ended June 30,
2006 include credits of $10 million and $7 million, respectively,
primarily related to an insurance recovery of previously expensed
legal fees.
Putnam's results through August 2, 2007 will be included in MMC's
consolidated results.
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Marsh & McLennan Companies, Inc.
Supplemental Information - Putnam Assets Under Management
(Billions) (Unaudited)
June 30, March 31, Dec 31, Sept. 30, June 30,
2007 2007 2006 2006 2006
-------- --------- ------- --------- --------
Mutual Funds:
Growth Equity $ 24 $ 24 $ 26 $ 26 $ 27
Value Equity 37 36 37 36 36
Blend Equity 30 29 28 26 26
Fixed Income 30 30 33 30 30
-------- --------- ------- --------- --------
Total Mutual Fund
Assets 121 119 124 118 119
-------- --------- ------- --------- --------
Institutional:
Equity 38 36 36 34 32
Fixed Income 34 33 32 30 29
-------- --------- ------- --------- --------
Total Institutional
Assets 72 69 68 64 61
-------- --------- ------- --------- --------
Total Ending Assets $ 193 $ 188 $ 192 $ 182 $ 180
======== ========= ======= ========= ========
The asset information
above includes the
following:
Assets from Non-US
Investors $ 41 $ 38 $ 36 $ 34 $ 31
======== ========= ======= ========= ========
Assets in Prime Money
Market Funds $ 2.3 $ 1.6 $ 4.3 $ 0.5 $ 0.6
======== ========= ======= ========= ========
Average Assets Under
Management:
Quarter $ 193 $ 189 $ 189 $ 179 $ 185
======== ========= ======= ========= ========
Year-to-Date $ 191 $ 189 $ 186 $ 185 $ 188
======== ========= ======= ========= ========
Net Flows including
Dividends Reinvested:
Quarter $ (3.1) $ (6.0) $ (0.1) $ (3.1) $ (6.0)*
======== ========= ======= ========= ========
Year-to-Date $ (9.1) $ (6.0) $(15.8) $ (15.7) $ (12.6)
======== ========= ======= ========= ========
Impact of
Market/Performance on
Ending Assets Under
Management $ 8.1 $ 1.8 $ 9.9 $ 5.5 $ (3.5)
======== ========= ======= ========= ========
* Net redemptions in the quarter ended June 30, 2006 includes $2.8
billion of redemptions in institutional equity resulting from ending
Putnam's alliance with an Australian partner.
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.
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-0-
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CONTACT: MMC
Media:
Christine Walton, 212-345-0675
christine.walton@mmc.com
OR
Investor:
Mike Bischoff, 212-345-5470
jmichael.bischoff@mmc.com
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