Marsh Q2 Results
Marsh & McLennan Co Inc
03 August 2006
News Release
Media Contact: Investor Contact:
Robin Liebowitz Mike Bischoff
MMC MMC
212 345 3963 212 345 5470
MMC REPORTS SECOND QUARTER 2006 RESULTS
NEW YORK, NEW YORK, August 3, 2006-Marsh & McLennan Companies, Inc. (MMC) today
reported financial results for the second quarter and six months ended June 30,
2006. Consolidated revenues for the quarter were $3 billion, unchanged from the
2005 second quarter. Net income was $172 million, or $.31 per share, compared
with $166 million, or $.31 per share, last year. Income from continuing
operations was $173 million, or $.31 per share, compared with $160 million, or
$.30 per share, in the second quarter of 2005. Stock option expense was $27
million, or $.03 per share, in the second quarter of 2006. Stock option expense
was not recorded in the first half of 2005 due to MMC's adoption of SFAS No. 123
(R) entitled 'Share-Based Payment' on July 1, 2005.
For the first six months of 2006, consolidated revenues of $6 billion were
essentially flat, compared with last year. Net income was $588 million, or $1.05
per share, compared with $300 million, or $.56 per share, in 2005. Results from
discontinued operations, net of tax, were $177 million, or $.32 per share,
compared with $11 million, or $.02 per share, in 2005. Income from continuing
operations was $411 million, or $.73 per share, compared with $289 million, or
$.54 per share, last year. Stock option expense for the first six months of 2006
was $67 million, or $.08 per share.
A number of noteworthy items affected second quarter and six months results in
2006 and 2005. Second quarter 2006 noteworthy items totaled $46 million, or $.05
per share. These items included restructuring and related costs; legal and
regulatory costs primarily related to market service agreements; and other items
indicated in the attached supplemental schedules. For the first six months of
2006, these noteworthy items totaled $109 million, or $.12 per share. In the
second quarter of 2005 and first six months of the year, noteworthy items
reduced earnings per share from continuing operations by $.12 and $.39,
respectively.
Michael G. Cherkasky, president and chief executive officer of MMC, said:
'Results for the quarter were mixed. Marsh achieved significant improvement in
both operating margin and new business development, particularly in North
America, which had improved retention rates from last year. However, underlying
revenues in Europe did not meet expectations, due primarily to lower client
retention levels. Guy Carpenter, Kroll, and Mercer Specialty Consulting all
reported excellent results, with double-digit growth in revenues and
profitability. Mercer Human Resource Consulting increased revenues, but
profitability was disappointing. Putnam performed as expected. We are encouraged
about the positive trends in all of our businesses, except for profitability in
Mercer HR, which we are addressing.'
Risk and Insurance Services
Risk and insurance services revenues declined 5 percent in the second quarter to
$1.3 billion, or 3 percent on an underlying basis. Half of this decline was due
to the planned reduction in sales of investments held through Risk Capital
Holdings, which had second quarter revenues of $28 million, compared with $54
million in the prior year period.
Operating income increased markedly throughout the first half of the year,
primarily reflecting expense savings from previously announced restructuring
efforts. The operating margin for the first half of 2006 improved to 14.4
percent from 7.4 percent last year. Adjusting for the impact of noteworthy items
and 2006 stock option expense, segment operating margin was 18.5 percent in the
first half of 2006, compared with 15.7 percent in the same period of 2005.
Please see the attached supplemental schedules for a reconciliation of these
non-GAAP financial measures to reported GAAP results.
Marsh revenues declined 6 percent in the second quarter to $1.1 billion, or 4
percent on an underlying basis. Marsh's new business grew 8 percent globally,
led by 18 percent growth in the United States. In Europe, new business
development was essentially flat, compared with last year's strong second
quarter. European underlying revenues declined, primarily in Continental Europe.
Despite the sharp increase in U.S. property insurance rates in coastal areas,
overall property and casualty insurance rates continued to decline in the
quarter.
Guy Carpenter revenues rose to $214 million in the second quarter, an increase
of 12 percent. This reflected strong new business levels in the quarter,
continuing the performance of the first quarter. The substantial increase in
U.S. coastal property catastrophe premium rates was offset by limited market
capacity and higher risk retention by clients.
Risk Consulting and Technology
Kroll revenues increased 14 percent to $275 million in the second quarter, or 12
percent on an underlying basis. This strong performance was led by the corporate
advisory and restructuring business, which increased revenues due to client
success fees on completed engagements. Technology services, Kroll's largest
business unit, reported a 5 percent increase in underlying revenues. This unit
includes Kroll Ontrack's electronic discovery business, which responded
successfully to the pricing pressures experienced in the first quarter. Kroll's
operating income for the quarter increased 11 percent over 2005.
Consulting
Consulting revenues increased 8 percent to $1 billion in the second quarter.
Mercer Human Resource Consulting increased revenues 4 percent to $751 million.
Mercer HR's largest business, retirement consulting, increased underlying
revenues 2 percent in the quarter. Human capital grew revenues 15 percent and HR
Services 5 percent. Health and benefits revenues declined 4 percent. Despite
Mercer HR's revenue growth, an increase in compensation expenses, including
increased staff levels, contributed to a decline in segment profitability for
the quarter.
Mercer Specialty Consulting revenues grew 17 percent to $297 million in the
second quarter, reflecting continued excellent performance in all businesses.
Mercer Oliver Wyman's financial services and risk consulting increased
underlying revenues 19 percent, Mercer Management Consulting's strategy and
operations grew revenues 11 percent, and economic consulting rose 14 percent.
Based on this strong revenue growth, Mercer Specialty Consulting reported a
marked increase in profitability.
Investment Management
Putnam revenues declined 10 percent to $339 million in the second quarter.
Average assets under management were $185 billion, compared with $196 billion in
the second quarter of 2005. Ending assets on June 30, 2006 were $180 billion,
comprising $119 billion in mutual fund assets and $61 billion in institutional
assets. Net redemptions were $6 billion, which included $2.8 billion due to the
ending of Putnam's alliance with its Australian partner.
Other Items
MMC's financial position remains strong. During the second quarter, MMC made its
second scheduled payment, in the amount of $255 million, for restitution to
policyholder clients. Despite this, total net debt, which is total debt less
cash and cash equivalents, was $3.9 billion at the end of the second quarter,
essentially the same amount as at the end of the first quarter.
MMC's consolidated effective tax rate in the second quarter was 35.3 percent,
compared with 29.9 percent in the second quarter of 2005. The rate in last
year's second quarter reflected the favorable resolution of certain tax return
audit issues.
Conference Call
A conference call to discuss second quarter 2006 results will be held today at
10:00 a.m. Eastern Time. To participate in the teleconference, please dial 800
240 8621 or 303 205 0033 (international). The access code for both numbers is
1634903. The audio webcast may be accessed at www.mmc.com. A replay of the
webcast will be available beginning approximately two hours after the event at
the same web address.
MMC is a global professional services firm with annual revenues of approximately
$12 billion. It is the parent company of Marsh, the world's leading risk and
insurance services firm; Guy Carpenter, the world's leading risk and reinsurance
specialist; Kroll, the world's leading risk consulting company; Mercer, a major
global provider of human resource and specialty consulting services; and Putnam
Investments, one of the largest investment management companies in the United
States. Approximately 55,000 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 '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 our
management or regulators; the outcome of contingencies; changes in our business
strategy; changes in our business practices 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; the 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 brought by federal and state regulators and law enforcement
authorities concerning our insurance and reinsurance brokerage and
investment management operations (including the complaints relating to
market service agreements and other matters filed by, respectively, the New
York Attorney General's office in October 2004, the Connecticut Attorney
General's office in January 2005 and the Florida Attorney General's office
and Department of Financial Services in March 2006, and proceedings relating
to market-timing matters at Putnam); and class actions, derivative actions
and individual suits filed by policyholders and shareholders in connection
with the foregoing;
• in light of Marsh's elimination of contingent commission arrangements in
late 2004, 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,
particularly in our risk and insurance services segment, and our ability to
retain key employees;
• period-to-period 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 premiums
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 and utilization
rates;
• the actual and relative investment performance of Putnam's mutual funds
and institutional and other advisory accounts, and the extent to which
Putnam reverses its recent net redemption experience, increases assets under
management and maintains management and administrative fees at historical
levels;
• 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;
• the impact of increasing focus by regulators, clients and others on
potential conflicts of interest, particularly in connection with the
provision of consulting and investment advisory services;
• fluctuations in the value of Risk Capital Holdings' investments in
individual companies and investment funds;
• our ability to make strategic acquisitions and to integrate, and realize
expected synergies, savings or strategic benefits from, the businesses we
acquire;
• 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;
• the impact on our operating results of foreign exchange fluctuations;
and
• changes in the tax or accounting treatment of our operations, and the
impact of other legislation and regulation in the jurisdictions in which we
operate.
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.
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. 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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
------------------------------------------
Revenue:
Service Revenue $2,952 $2,926 $5,921 $5,939
Investment Income (Loss) 28 51 84 108
------------------------------------------
Total Revenue 2,980 2,977 6,005 6,047
------------------------------------------
Expense:
Compensation and Benefits 1,802 1,760 3,551 3,617
Other Operating Expenses 841 924 1,719 1,876
Total Expense 2,643 2,684 5,270 5,493
Operating Income 337 293 735 554
Interest Income 13 11 29 20
Interest Expense (78) (73) (156) (142)
Income Before Income Taxes and Minority 272 231 608 432
Interest Expense
Income Taxes 96 69 192 139
Minority Interest Expense, Net of Tax 3 2 5 4
Income from Continuing Operations 173 160 411 289
Discontinued Operations, Net of Tax (1) 6 177 11
Net Income $ 172 $ 166 $ 588 $ 300
Basic Net Income Per Share - Continuing $ 0.32 $ 0.30 $ 0.75 $ 0.54
Operations
- Net Income $ 0.31 $ 0.31 $ 1.07 $ 0.56
Diluted Net Income Per Share - Continuing $ 0.31 $ 0.30 $ 0.73 $ 0.54
Operations
- Net Income $ 0.31 $ 0.31 $ 1.05 $ 0.56
Average Number of Shares Outstanding - Basic 549 535 548 533
- Diluted 555 538 555 537
Shares Outstanding at 6/30 550 534 550 534
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
2006 2005 Revenue Impact Impact Revenue
------- ------ ------- ------- -------- -------
Risk and Insurance Services
Insurance Services $ 1,106 $ 1,172 (6)% - (2)% (4)%
Reinsurance Services 214 192 12% - - 12%
Risk Capital Holdings 28 54 (47)% - (7)% (40)%
------- ------
Total Risk and Insurance Services 1,348 1,418 (5)% - (2)% (3)%
------- ------
Risk Consulting & Technology 275 241 14% - 2% 12%
------- ------
Consulting
Human Resource Consulting 751 718 4% - - 4%
Specialty Consulting 297 254 17% - - 17%
------- ------
Total Consulting 1,048 972 8% - - 8%
------- ------
Investment Management 339 377 (10)% - - (10)%
------- ------
Total Operating Segments 3,010 3,008 - - (1)% 1%
Corporate Eliminations (30) (31)
------- ------
Total Revenue $2,980 $2,977 - - (1)% 1%
======= ======
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 $44 million and $36 million for the three
months ended June 30, 2006 and 2005, respectively.
Revenue includes investment income (loss) of $28 million and $50 million for Risk and
Insurance Services and $0 and $1 million for Investment Management for the three months ended
June 30, 2006 and 2005, respectively.
Risk Capital Holdings owns MMC's investments in insurance and financial services firms such
as Ace Ltd., XL Capital Ltd. and Axis Capital Holdings Ltd. as well as the Trident Funds.
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
2006 2005 Revenue Impact Impact Revenue
------- ------ ------- ------- -------- -------
Risk and Insurance Services
Insurance Services $ 2,252 $ 2,404 (6)% (1)% (2)% (3)%
Reinsurance Services 495 474 5% (1)% - 6%
Risk Capital Holdings 74 117 (37)% - (8)% (29)%
------- ------
Total Risk and Insurance Services 2,821 2,995 (6)% (1)% (2)% (3)%
------- ------
Risk Consulting & Technology 518 474 9% (1)% 1% 9%
------- ------
Consulting
Human Resource Consulting 1,490 1,413 5% (1)% - 6%
Specialty Consulting 559 483 16% (1)% - 17%
------- ------
Total Consulting 2,049 1,896 8% (1)% - 9%
------- ------
Investment Management 684 775 (12)% - - (12)%
------- ------
Total Operating Segments 6,072 6,140 (1)% (1)% (1)% 1%
Corporate Eliminations (67) (93)
------- ------
Total Revenue $6,005 $6,047 (1)% (1)% (1)% 1%
======= ======
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 $85 million and $71 million for the six months
ended June 30, 2006 and 2005, respectively.
Revenue includes investment income (loss) of $78 million and $106 million for Risk and
Insurance Services and $1 million and $0 for Consulting and $5 million and $2 million for
Investment Management for the six months ended June 30, 2006 and 2005, respectively.
Risk Capital Holdings owns MMC's investments in insurance and financial services firms such
as Ace Ltd., XL Capital Ltd. and Axis Capital Holdings Ltd. as well as the Trident Funds.
Marsh & McLennan Companies, Inc.
Supplemental Information
(Millions) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
-----------------------------------------
Revenue:
Risk and Insurance Services $1,348 $1,418 $2,821 $2,995
Risk Consulting & Technology 275 241 518 474
Consulting 1,048 972 2,049 1,896
Investment Management 339 377 684 775
-----------------------------------------
3,010 3,008 6,072 6,140
Eliminations (30) (31) (67) (93)
----------------------------------------------
$2,980 $2,977 $6,005 $6,047
----------------------------------------------
Operating Income (Loss) including
Minority Interest Expense:
Risk and Insurance Services $ 139 $ 86 $ 407 $ 223
Risk Consulting & Technology 40 36 61 73
Consulting 124 130 237 240
Investment Management 76 71 140 121
Corporate (42) (30) (110) (103)
$ 337 $ 293 $ 735 $ 554
Segment Operating Margins:
Risk and Insurance Services 10.3% 6.1% 14.4% 7.4%
Risk Consulting & Technology 14.5% 14.9% 11.8% 15.4%
Consulting 11.8% 13.4% 11.6% 12.7%
Investment Management 22.4% 18.8% 20.5% 15.6%
Consolidated Operating Margin 11.3% 9.8% 12.2% 9.2%
Pretax Margin 9.1% 7.8% 10.1% 7.1%
Effective Tax Rate 35.3% 29.9% 31.6% 32.2%
Potential Minority Interest Associated with
the Putnam
Equity Partnership Plan Net of Dividend
Equivalent
Expense Related to MMC Common Stock $ (3) $ - $ (5) $ -
Equivalents
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 second quarter and six-month financial results, and
of operating margins in Risk & Insurance services, is affected by a number of noteworthy items
and by stock option expense.
Noteworthy Items. The schedules below identify noteworthy items for the three- and six-month
periods ended June 30, 2006 and 2005. These items reflect certain direct and indirect costs of
legal and regulatory matters involving MMC, 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 market-timing and other
issues at Putnam.
Marsh's elimination of market service agreements in late 2004 has resulted in significant
changes to MMC's business operations. Accordingly, noteworthy items include: restructuring
charges in Risk & Insurance Services; restructuring charges in Corporate, relating in 2006 to
future rent on non-cancelable leases in MMC's New York headquarters building, and in 2005 to
the consolidation of office space in London; accelerated amortization of leasehold
improvements, relating primarily to vacating office space at MMC's headquarters prior to the
end of the lease term; and expense relating to employee retention awards in 2005.
Noteworthy items also include certain settlement costs and legal expenses attributable to the
legal and regulatory matters described above. In 2005, regulatory expenses in Risk & Insurance
Services include fees for professional services provided by other MMC companies; the resulting
inter-company balances are eliminated in Corporate. Noteworthy items also include an insurance
recoverable at Putnam in 2006 relating to previously expensed legal fees, and costs at Putnam
in 2005 to address issues relating to the calculation of certain amounts paid by the Putnam
mutual funds in previous years.
Risk & Risk Consulting Investment Corporate & Total
Insurance Consulting Management Eliminations
Services & Technology
---------------------------------------------------------------------------
Three Months Ended
June 30, 2006
-------------
Restructuring Charges $ 26 $ - $ (1) $ - $ 1 $ 26
Accelerated Amortization/ 16 - - - 3 19
Depreciation
Settlement, Legal and 11 - - - - 11
Regulatory
Insurance Recoverable - - - (10) - (10)
-------------------------------------------------------------------------
Total Impact in 2006 $ 53 $ - $ (1) $ (10) $ 4 $ 46
------------------------------------------------------------------------
Three Months Ended
June 30, 2005
Restructuring Charges $ 48 $ - $ - $ - $ 5 $ 53
Employee Retention Awards 23 - 10 - - 33
Settlement, Legal and 10 - - - (2) 8
Regulatory
Estimated Mutual Fund - - - 4 - 4
Reimbursement
Other 7 - - - - 7
-------------------------------------------------------------------------
Total Impact in 2005 $ 88 $ - $ 10 $ 4 $ 3 $105
------------------------------------------------------------------------
Six Months Ended
June 30, 2006
Restructuring Charges $ 45 $ - $ (1) $ - $ 27 $ 71
Accelerated Amortization/ 21 - - - 3 24
Depreciation
Settlement, Legal and 21 - - 3 - 24
Regulatory
Insurance Recoverable - - - (10) - (10)
--------------------------------------------------------------------------
Total Impact in 2006 $ 87 $ - $ (1) $ (7) $ 30 $109
-------------------------------------------------------------------------
Six Months Ended
June 30, 2005
Restructuring Charges $ 144 $ - $ - $ - $ 54 $198
Employee Retention Awards 38 - 20 - - 58
Settlement, Legal and 53 - - - (19) 34
Regulatory
Estimated Mutual Fund - - - 34 - 34
Reimbursement
Other 10 - - - (3) 7
--------------------------------------------------------------------------
Total Impact in 2005 $ 245 $ - $ 20 $ 34 $ 32 $331
--------------------------------------------------------------------------
Stock-Option Expense. The year-over-year comparability of MMC's second quarter and six-month
financial results is also affected by MMC's adoption, effective July 1, 2005, of SFAS 123 (R)
('Share Based Payment'). Beginning in the third quarter of 2005, MMC has recognized costs under
SFAS 123 (R), primarily related to stock options, which it did not recognize in prior periods.
Stock option expense for the three months ended June 30, 2006 was $27 million, as follows: Risk
& Insurance Services - $9, Risk Consulting & Technology - $1, Consulting - $10, Investment
Management - $2, Corporate - $5. Stock option expense for the six months ended June 30, 2006 was
$67 million, as follows: Risk & Insurance Services - $27, Risk Consulting & Technology - $2,
Consulting - $23, Investment Management - $7, Corporate - $8.
Impact on Operating Margins in Risk & Insurance Services. In Risk & Insurance Services,
noteworthy items and stock option expense together totaled $114 million in the first half of
2006, affecting segment operating margin by 4.1 points. Noteworthy items totaled $245 million in
the first half of 2005, affecting segment operating margin by 8.3 points. Adjusting for these
impacts, segment operating margin for the first half of 2006 was 18.5 percent, compared to15.7
percent for the first half of 2005. This adjusted segment operating margin is a non-GAAP
financial measure within the meaning of Regulation G promulgated by the Securities and Exchange
Commission. MMC believes that presenting this measure may help investors and others understand
aspects of Risk & Insurance Services operating performance that may not be apparent from MMC's
reported GAAP results. However, this non-GAAP financial measure is not a substitute for MMC's
reported GAAP information, and may not be comparable to similar information provided by industry
peers.
Marsh & McLennan Companies, Inc.
Supplemental Information - Putnam Assets Under Management
(Billions) (Unaudited)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2006 2006 2005 2005 2005
----------------------------------------------------------
Mutual Funds:
Growth Equity $ 27 $ 31 $ 31 $ 32 $ 33
Value Equity 36 37 37 38 39
Blend Equity 26 27 26 26 26
Fixed Income 30 31 32 33 34
---------------------------------------------------------
Total Mutual Fund Assets 119 126 126 129 132
--------------------------------------------------------
Institutional:
Equity 32 34 34 33 33
Fixed Income 29 29 29 30 30
--------------------------------------------------------
Total Institutional Assets 61 63 63 63 63
--------------------------------------------------------
Total Ending Assets $180 $189 $189 $192 $ 195
========================================================
Assets from Non-US Investors $ 31 $ 32 $ 32 $ 33 $ 34
========================================================
Average Assets Under Management:
Quarter $185 $190 $188 $195 $196
========================================================
Year-to-Date $188 $190 $196 $198 $200
========================================================
Net Redemptions including
Dividends Reinvested:
Quarter * $ (6.0) $ (6.6) $ (6.4) $ (8.5) $ (7.1)
==========================================================
Year-to-Date * $(12.6) $ (6.6) $(31.7) $(25.3) $(16.8)
==========================================================
Impact of Market/Performance on
Ending
Assets Under Management $ (3.5) $ 7.0 $ 2.8 $ 5.6 $ 3.1
==========================================================
* Net Redemptions in the three month and year-to-date periods ended June 30, 2006 include
$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.
Marsh & McLennan Companies, Inc.
Consolidated Balance Sheets
(Millions) (Unaudited)
June 30, December 31,
2006 2005
----------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,375 $ 2,020
Net receivables 2,921 2,730
Assets of discontinued operations 53 153
Other current assets 353 359
------------------------
Total current assets 4,702 5,262
Goodwill and intangible assets 7,816 7,773
Fixed assets, net 1,122 1,178
Long-term investments 329 277
Prepaid pension 1,647 1,596
Other assets 1,821 1,806
------------------------
TOTAL ASSETS $17,437 $ 17,892
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 699 $ 498
Accounts payable and accrued liabilities 1,704 1,733
Regulatory settlements-current portion 236 333
Accrued compensation and employee benefits 928 1,413
Liabilities of discontinued operations 170 89
Accrued income taxes 39 192
Dividends payable 94 93
------------------------
Total current liabilities 3,870 4,351
Fiduciary liabilities 4,228 3,795
Less - cash and investments held in a fiduciary
capacity
(4,228) (3,795)
-------------------------
Long-term debt 4,533 5,044
Regulatory settlements 172 348
Pension, postretirement and postemployment 1,228 1,180
benefits
Other liabilities 1,618 1,609
Total stockholders' equity 6,016 5,360
-------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,437 $17,892
=========================
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