MMC Reports Third Quarter 2007 Results
Consolidated Revenue Increases 10 Percent to $2.8 Billion
Significant Gain on Sale of Putnam Investments
Marsh & McLennan
Marsh & McLennan Companies, Inc. (MMC) today reported financial results for the
third quarter and nine months ended September 30, 2007.
In the quarter, consolidated revenue was $2.8 billion, up 10 percent from the
third quarter of 2006, or 6 percent on an underlying basis. Income from
continuing operations was $80 million, or $.15 per share, compared with $133
million, or $.24 per share, last year. Discrete tax items negatively impacted
earnings per share from continuing operations by $.04 in the current year
quarter.
Income from discontinued operations, net of tax, was $1.9 billion, or $3.45 per
share, compared with $43 million, or $.07 per share, last year. These results
reflect the gain on the sale of Putnam Investments on August 3, 2007, as well as
$.02 per share attributable to Putnam's operations in July 2007.
Net income was $1.9 billion, or $3.60 per share, compared with $176 million, or
$.31 per share, last year. Noteworthy items, described in the attached
supplemental schedules, reduced earnings per share by $.04 in the third quarter
of 2007, compared with a reduction of $.06 in the third quarter of 2006.
For the nine months ended September 30, 2007, consolidated revenue of $8.4
billion increased 7 percent from $7.8 billion in the year-ago period, or 3
percent on an underlying basis. Income from continuing operations was $448
million, or $.81 per share, a decrease of 3 percent from $464 million, or $.84
per share, in the year-ago period. Income from discontinued operations, net of
tax, was $1.9 billion, or $3.50 per share, compared with $300 million, or $.52
per share, last year, reflecting gains on the Putnam transaction in the third
quarter of 2007 and the sale of Sedgwick Claims Management Services in the first
quarter of 2006. Net income was $2.4 billion, or $4.31 per share, compared with
$764 million, or $1.36 per share, last year.
'Despite continued strong performance in our consulting businesses, MMC's
third-quarter results were significantly impacted by unacceptable financial
performance in our insurance broking business. We have changed the leadership at
Marsh and are taking comprehensive actions to improve profitability,' said
Michael G. Cherkasky, president and chief executive officer of MMC. 'New
business in insurance and reinsurance broking compensated for extremely soft
market conditions. Mercer and Oliver Wyman continued to perform at exceptional
levels, producing strong revenue and earnings growth, while Kroll's underlying
revenue growth was 11 percent.'
Risk and Insurance Services
Risk and insurance services revenue in the third quarter was $1.3 billion, an
increase of 6 percent from the third quarter of 2006 or 2 percent on an
underlying basis. Operating income declined in the quarter to $65 million from
$143 million a year ago. Expenses rose in the quarter due to the effects of
foreign exchange; incentive compensation accruals for professional staff at
Marsh and incremental expenses relating to the departure of Marsh's former CEO;
the effect of favorable professional liability experience in the third quarter
of 2006; and costs associated with Marsh's advertising campaign initiated in the
spring of 2007.
In the quarter, Marsh's revenue was $1 billion, up 3 percent from last year on a
reported basis, and a decline of 1 percent on an underlying basis. Premium rate
declines in the commercial insurance marketplace continued to accelerate in the
third quarter, contributing to a sequential quarterly decline in client
retention rates. Geographically, revenue included $598 million in the Americas,
an increase of 1 percent from the prior year; $345 million in EMEA, up 5
percent; and $96 million in Asia Pacific, an increase of 10 percent. Marsh's new
business increased for the sixth consecutive quarter.
Guy Carpenter's third quarter revenue was $226 million, representing 5 percent
growth from the prior year's quarter on a reported basis and 4 percent growth on
an underlying basis. This growth, which was primarily due to continued strong
new business, was achieved despite a significant decline in U.S. property
catastrophe premium rates as well as higher risk retention by clients.
Risk Capital Holdings had revenue of $74 million in the third quarter, compared
with $45 million in the same period of 2006. This revenue was predominantly due
to higher mark-to-market gains arising from private equity investments. No
investments were sold in the quarter.
For the nine months ended September 30, 2007, revenue for the risk and insurance
services segment was $4.2 billion, an increase of 3 percent from the year-ago
period. Marsh's revenue rose 1 percent from last year to $3.3 billion, and Guy
Carpenter's revenue rose 4 percent to $735 million. Underlying revenue for the
segment was unchanged from the prior year.
Consulting
MMC's consulting segment revenue grew 14 percent to $1.2 billion in the third
quarter on a reported basis, and 9 percent on an underlying basis. The segment's
operating income grew to $148 million from $112 million last year.
Mercer increased revenue 11 percent to $844 million in the third quarter, and 7
percent on an underlying basis. This growth was achieved throughout Mercer's
operations: retirement and investment had $307 million of revenue, an increase
of 13 percent; health and benefits, $197 million, or 4 percent growth;
outsourcing, $187 million, grew 14 percent; and talent, $128 million, increased
11 percent.
The strong demand for consulting services offered by the Oliver Wyman Group
continued for the fourth year in a row. Oliver Wyman grew revenue 23 percent to
$374 million in the third quarter, or 17 percent on an underlying basis.
Management, economic and brand consulting all produced double-digit revenue
growth.
For the nine months ended September 30, 2007, the consulting segment generated
revenue of $3.6 billion, a 14 percent increase over last year. Mercer increased
revenue by 10 percent to $2.5 billion, and Oliver Wyman grew revenue 25 percent
to $1.1 billion.
Risk Consulting and Technology
Kroll's revenue was $260 million in the third quarter, an increase of 9 percent
from the year-ago quarter, or 11 percent on an underlying basis. Operating
income at Kroll was $31 million in the quarter, compared with $38 million last
year. This decline was largely attributable to higher compensation expense in
the corporate advisory and restructuring business to retain key professional
staff in anticipation of future increased activity.
Quarterly revenue in Kroll's technology operations increased 14 percent to $147
million, led by the Kroll Ontrack legal technology unit and Kroll's background
screening business. Revenue in Kroll's consulting operations rose 4 percent, to
$113 million.
For the nine months ended September 30, 2007, Kroll's revenue was $746 million,
up 1 percent, or 2 percent on an underlying basis. Technology revenue increased
11 percent to $420 million, while consulting was down 9 percent to $326 million.
The decline in Kroll's consulting revenue primarily reflects a significant
reduction in client success fees for completed engagements compared to those
received in 2006.
Other Items
On August 3, 2007, Great-West Lifeco, a financial holding company controlled by
Power Financial Corp., completed its purchase of Putnam for $3.9 billion in
cash. Following the tax payments on the transaction that MMC expects to make in
the fourth quarter of 2007, the cash proceeds to MMC after minority interest
should approach $2.5 billion.
MMC's tax rate on ongoing operations was 32 percent for the third quarter of
2007. The effective tax rate in the quarter primarily reflects the unfavorable
impact of tax rate changes in certain international jurisdictions.
On August 24, 2007, MMC entered into an $800 million accelerated share
repurchase transaction and received an initial 21 million shares of its common
stock, with the remaining shares to be received upon the transaction's
completion. In July 2007, MMC completed a previously announced $500 million
accelerated share repurchase transaction, under which it repurchased a total of
16 million shares. Primarily as a result of these two repurchase transactions,
MMC's average diluted shares outstanding decreased from 558 million in the
second quarter of 2007 to 540 million in the third quarter. A further reduction
of average shares outstanding will occur in the fourth quarter.
MMC's cash position at the end of the third quarter was $2.8 billion, increasing
from $1.1 billion at the end of the second quarter. Debt decreased to $3.9
billion from $4.9 billion. These changes were primarily attributable to the
receipt of proceeds from the Putnam transaction, partially offset by the funding
of the $800 million share repurchase in the third quarter.
Conference Call
A conference call to discuss third quarter 2007 results will be held today at
8:30 a.m. Eastern Time. To participate in the teleconference, please dial 877
723 9520. Callers from outside the United States should dial 719 325 4831. The
access code for both numbers is 4218483. The live 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 a number of the world's leading risk experts and
specialty consultants, including Marsh, the insurance broker and risk advisor;
Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting
firm; Mercer, the provider of HR and related financial advice and services; and
Oliver Wyman, the management consultancy. With more than 55,000 employees
worldwide and annual revenue of $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,' 'may,' 'might,' '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 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 retain key employees;
-- revenue fluctuations in risk and insurance services relating to the
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;
-- 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 Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2007 2006 2007 2006
------ ------ ------ ------
Revenue:
Service Revenue $2,718 $2,486 $8,269 $7,715
Investment Income (Loss) 76 46 156 125
------ ------ ------ ------
Total Revenue 2,794 2,532 8,425 7,840
------ ------ ------ ------
Expense:
Compensation and Benefits 1,790 1,589 5,159 4,816
Other Operating Expenses 810 699 2,412 2,180
------ ------ ------ ------
Total Expense 2,600 2,288 7,571 6,996
------ ------ ------ ------
Operating Income 194 244 854 844
Interest Income 30 15 64 42
Interest Expense (65) (75) (211) (231)
------ ------ ------ ------
Income Before Income Taxes and Minority
Interest Expense 159 184 707 655
Income Taxes 75 48 251 185
Minority Interest Expense, Net of Tax 4 3 8 6
------ ------ ------ ------
Income from Continuing Operations 80 133 448 464
Discontinued Operations, Net of Tax 1,865 43 1,942 300
------ ------ ------ ------
Net Income $1,945 $176 $2,390 $764
====== ====== ====== ======
Basic Net Income Per Share - Continuing
Operations $0.15 $0.24 $0.82 $0.85
====== ====== ====== ======
- Net Income $3.64 $0.32 $4.39 $1.39
====== ====== ====== ======
Diluted Net Income Per Share - Continuing
Operations $0.15 $0.24 $0.81 $0.84
====== ====== ====== ======
- Net Income $3.60 $0.31 $4.31 $1.36
====== ====== ====== ======
Average Number of Shares Outstanding -
Basic 534 550 545 549
====== ====== ====== ======
- Diluted 540 554 553 555
====== ====== ====== ======
Shares Outstanding at 9/30 520 551 520 551
====== ====== ====== ======
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Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Three Months Ended
(Millions) (Unaudited)
Three Months Components of Revenue Change
Ended ------------------------------
% Change Acquisitions/
September 30, GAAP CurrencyDispositionsUnderlying
-------------
2007 2006 Revenue Impact Impact Revenue
------ ------ ------- ------------------------------
Risk and Insurance
Services
Insurance Services$1,039 $1,009 3% 3% 1% (1)%
Reinsurance
Services 226 214 5% 1% - 4%
Risk Capital
Holdings 74 45 66% - - 66%
------ ------
Total Risk and
Insurance
Services 1,339 1,268 6% 3% 1% 2%
------ ------
Consulting
Mercer 844 762 11% 4% - 7%
Oliver Wyman Group 374 304 23% 4% 2% 17%
------ ------
Total
Consulting 1,218 1,066 14% 4% 1% 9%
------ ------
Risk Consulting &
Technology 260 239 9% 2% (4)% 11%
------ ------
Total Operating
Segments 2,817 2,573 10% 4% - 6%
Corporate
Eliminations (23) (41)
------ ------
Total Revenue $2,794 $2,532 10% 4% - 6%
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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
September 30, GAAP
-------------
2007 2006 Revenue
------ ------ -------
Insurance Services:
Americas $598 $594 1%
EMEA 345 329 5%
Asia Pacific 96 86 10%
------ ------
Total Insurance Services $1,039 $1,009 3%
====== ======
Mercer:
Retirement and Investment $307 $271 13%
Health and Benefits 197 189 4%
Outsourcing 187 165 14%
Talent 128 115 11%
Reimbursed Expenses 25 22 N/A
------ ------
Total Mercer $844 $762 11%
------ ------
Risk Consulting & Technology:
Technology $147 $129 14%
Consulting 113 110 4%
------ ------
Total Risk Consulting & Technology $260 $239 9%
====== ======
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Notes
Underlying revenue measures the change in revenue, before the impact
of acquisitions and dispositions, using consistent currency exchange
rates.
Interest income on fiduciary funds amounted to $53 million and $50
million for the three months ended September 30, 2007 and 2006,
respectively.
Revenue includes net investment income (loss) of $76 million and $46
million for Risk and Insurance Services for the three months ended
September 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
Nine Months Ended
(Millions) (Unaudited)
Components of Revenue Change
Nine Months ---------------------------------
Ended % Change Acquisitions/
September 30, GAAP Currency Dispositions Underlying
-------------
2007 2006 Revenue Impact Impact Revenue
------ ------ ------- -------- ------------- ----------
Risk and
Insurance
Services
Insurance
Services $3,305 $3,261 1% 3% - (2)%
Reinsurance
Services 735 709 4% 2% - 2%
Risk Capital
Holdings 155 119 31% - - 31%
------ ------
Total Risk
and
Insurance
Services 4,195 4,089 3% 3% - -
------ ------
Consulting
Mercer 2,486 2,252 10% 4% - 6%
Oliver Wyman
Group 1,079 863 25% 4% 4% 17%
------ ------
Total
Consulting 3,565 3,115 14% 4% 1% 9%
------ ------
Risk Consulting
& Technology 746 738 1% 2% (3)% 2%
------ ------
Total Operating
Segments 8,506 7,942 7% 3% 1% 3%
Corporate
Eliminations (81) (102)
------ ------
Total Revenue$8,425 $7,840 7% 3% 1% 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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Nine Months
Ended % Change
September 30, GAAP
-------------
2007 2006 Revenue
------ ------ -------
Insurance Services:
Americas $1,765 $1,796 (2)%
EMEA 1,261 1,215 4%
Asia Pacific 279 250 11%
------ ------
Total Insurance Services $3,305 $3,261 1%
====== ======
Mercer:
Retirement and Investment $945 $841 12%
Health and Benefits 579 555 4%
Outsourcing 548 480 14%
Talent 341 315 8%
Reimbursed Expenses 73 61 N/A
------ ------
Total Mercer $2,486 $2,252 10%
====== ======
Risk Consulting & Technology:
Technology $420 $377 11%
Consulting 326 361 (9)%
------ ------
Total Risk Consulting & Technology $746 $738 1%
====== ======
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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 $3
million and $43 million for the nine months ended September 30, 2007
and 2006, respectively. The decline in market services revenue
primarily impacted revenues in the Americas.
Interest income on fiduciary funds amounted to $149 million and $135
million for the nine months ended September 30, 2007 and 2006,
respectively.
Revenue includes net investment income (loss) of $156 million and $124
million for Risk and Insurance Services and $0 million and $1 million
for Consulting for the nine months ended September 30, 2007 and 2006,
respectively.
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Marsh & McLennan Companies, Inc.
Supplemental Information
(Millions) (Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2007 2006 2007 2006
------ ------ ------ ------
Revenue:
Risk and Insurance Services $1,339 $1,268 $4,195 $4,089
Consulting 1,218 1,066 3,565 3,115
Risk Consulting & Technology 260 239 746 738
------ ------ ------ ------
2,817 2,573 8,506 7,942
Corporate Eliminations (23) (41) (81) (102)
------ ------ ------ ------
$2,794 $2,532 $8,425 $7,840
------ ------ ------ ------
Operating Income (Loss) :
Risk and Insurance Services $65 $143 $449 $550
Consulting 148 112 445 349
Risk Consulting & Technology 31 38 89 104
Corporate (50) (49) (129) (159)
------ ------ ------ ------
$194 $244 $854 $844
------ ------ ------ ------
Segment Operating Margins:
Risk and Insurance Services 4.9% 11.3% 10.7% 13.5%
Consulting 12.2% 10.5% 12.5% 11.2%
Risk Consulting & Technology 11.9% 15.9% 11.9% 14.1%
Consolidated Operating Margin 6.9% 9.6% 10.1% 10.8%
Pretax Margin 5.7% 7.3% 8.4% 8.4%
Effective Tax Rate 47.2% 26.1% 35.5% 28.2%
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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
third quarter and nine months ended September 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
September 30, 2007
-------------------
Restructuring
Charges (a) $3 $- $- $11 $14
Accelerated
Amortization/
Depreciation 1 1 - 1 3
Settlement, Legal
and Regulatory (b) 12 - - - 12
Other - - - - -
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $16 $1 $- $12 $29
---------- ---------- ---------- ------------ -----
Three Months Ended
September 30, 2006
-------------------
Restructuring
Charges (a) $18 $18 $1 $4 $41
Accelerated
Amortization/
Depreciation 2 - - 3 5
Settlement, Legal
and Regulatory (b) 11 - - - 11
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $31 $18 $1 $7 $57
---------- ---------- ---------- ------------ -----
Risk
Risk & Consulting
Insurance & Corporate &
Services Consulting Technology Eliminations Total
---------- ---------- ---------- ------------ -----
Nine Months Ended
September 30, 2007
-------------------
Restructuring
Charges (a) $31 $1 $- $22 $54
Accelerated
Amortization/
Depreciation 9 6 - 4 19
Settlement, Legal
and Regulatory (b) 38 - - - 38
Other (c) - - - (14) (14)
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $78 $7 $- $12 $97
---------- ---------- ---------- ------------ -----
Nine Months Ended
September 30, 2006
-------------------
Restructuring
Charges (a) $63 $17 $1 $31 $112
Accelerated
Amortization/
Depreciation 23 - - 6 29
Settlement, Legal
and Regulatory (b) 32 - - - 32
---------- ---------- ---------- ------------ -----
Total Impact in
the Period $118 $17 $1 $37 $173
---------- ---------- ---------- ------------ -----
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Notes
(a) Primarily includes severance from restructuring activities and
related charges, costs for future rent and other real estate costs,
and fees 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 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 incremental costs of $13 million related
to the departure of Marsh's former CEO in the third quarter of 2007.
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Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions) (Unaudited)
September December
30, 31,
2007 2006
--------- --------
ASSETS
Current assets:
Cash and cash equivalents $2,819 $2,015
Net receivables 3,001 2,718
Assets of discontinued operations - 1,921
Other current assets 332 322
--------- --------
Total current assets 6,152 6,976
Goodwill and intangible assets 7,756 7,595
Fixed assets, net 983 990
Long-term investments 96 124
Pension related asset 713 613
Other assets 1,843 1,839
--------- --------
TOTAL ASSETS $17,543 $18,137
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $262 $1,111
Accounts payable and accrued liabilities 1,596 2,486
Regulatory settlements-current portion 176 178
Accrued compensation and employee benefits 1,073 1,230
Liabilities of discontinued operations - 782
Accrued income taxes 967 131
Dividends payable 99 -
--------- --------
Total current liabilities 4,173 5,918
Fiduciary liabilities 3,454 3,587
Less - cash and investments held in a fiduciary
capacity (3,454) (3,587)
--------- --------
- -
Long-term debt 3,607 3,860
Regulatory settlements - 173
Pension, postretirement and postemployment benefits 1,014 1,085
Liabilities for errors and omissions 632 624
Other liabilities 1,195 658
Total stockholders' equity 6,922 5,819
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,543 $18,137
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Marsh & McLennan Companies, Inc.
Supplemental Information - Discontinued Operations
(Millions) (Unaudited)
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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. The transaction closed on August 3, 2007. The gain on the
transaction and Putnam's results of operations are reported as
discontinued operations in MMC's consolidated statements of income.
The amounts reported in 2007 include Putnam's results through August
2, 2007.
In 2006, MMC sold its majority interest in Sedgwick Claims Management
Services; Price Forbes, its U.K.-based insurance wholesale operation;
and Kroll Security International. The net gains on these disposals,
as well as their results of operations, are reported as discontinued
operations in MMC's consolidated statements of income.
Summarized Statements of Income data for discontinued operations is as
follows:
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Three
Months
Ended
September
30,
-----------
2007 2006
------ ----
Putnam:
Revenue $112 $342
Expense 90 266
------ ----
Net Operating Income 22 76
Other Discontinued Operations - Income before provision for
income tax - 5
Provision for income tax 10 30
------ ----
Income from discontinued operations, net of tax 12 51
------ ----
Gain (loss) on disposal of discontinued operations 2,970 (8)
Provision for income tax 1,117 -
------ ----
Gain (loss) on disposal of discontinued operations, net of
tax 1,853 (8)
------ ----
Discontinued operations, net of tax $1,865 $43
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Nine Months
Ended
September 30,
-------------
2007 2006
------ ------
Putnam:
Revenue $798 $1,026
Expense 636 810
------ ------
Net Operating Income 162 216
Other Discontinued Operations - Income before provision
for income tax (2) 4
Provision for income tax 71 88
------ ------
Income from discontinued operations, net of tax 89 132
------ ------
Gain on disposal of discontinued operations 2,970 298
Provision for income tax 1,117 130
------ ------
Gain on disposal of discontinued operations, net of tax 1,853 168
------ ------
Discontinued operations, net of tax $1,942 $300
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Putnam's results for the three months and nine months ended September
30, 2006 include credits of $0 million and $7 million, respectively,
that were reflected in the schedule of noteworthy items in the prior
year's earnings release.
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Media:
MMC
Christine Walton, 212 345 0675
christine.walton@mmc.com
or
Investors:
MMC
Mike Bischoff, 212 345 5470
jmichael.bischoff@mmc.com
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