MHM.L Regulatory News (MHM)

1 Nov 2006 12:59

Marsh & McLennan Co Inc01 November 2006 News Release Media Contact: John Dillard Investor Contact:Robin Liebowitz Edelman for MMC Mike BischoffMMC (212) 704-8174 MMC(212) 345-3963 (212) 345-5470 MMC REPORTS THIRD QUARTER 2006 RESULTS NEW YORK, NEW YORK, November 1, 2006-Marsh & McLennan Companies, Inc. (MMC)today reported financial results for the third quarter and nine months endedSeptember 30, 2006. Consolidated revenues for the quarter were $2.9 billion, anincrease of 4 percent from the 2005 third quarter. Consolidated net income morethan doubled to $176 million from $69 million last year, and earnings per sharegrew to $.31 from $.12. Earnings per share from continuing operations increasedto $.32 in the third quarter from $.11 last year. For the first nine months of 2006, consolidated revenues were $8.9 billion,compared with $8.8 billion for the same period of 2005. Consolidated net incomewas $764 million, or $1.36 per share, compared with $369 million, or $.68 pershare, in 2005. Results from discontinued operations, net of tax, were $173million, or $.31 per share, resulting primarily from MMC's sale of itsinvestment in Sedgwick Claims Management in January 2006. Results fromdiscontinued operations in 2005 were $17 million, or $.03 per share. Income fromcontinuing operations was $591 million, or $1.05 per share, compared with $352million, or $.65 per share, in 2005. Stock option expense in the first ninemonths of 2006 was $93 million. Stock option expense in the first nine months of2005 was $31 million, and related only to the third quarter, since MMC adoptedSFAS No. 123(R), "Share-Based Payment," on July 1, 2005. A number of noteworthy items affected financial results, including restructuringand related costs; legal and regulatory costs primarily related to marketservice agreements; and other items indicated in the attached supplementalschedules. In the third quarter and first nine months of 2006, noteworthy itemstotaled $57 million, or $.06 per share, and $166 million, or $.19 per share,respectively. In the third quarter and first nine months of 2005, noteworthyitems reduced earnings per share from continuing operations by $.19 and $.58,respectively. "MMC had a good third quarter," said Michael G. Cherkasky, president and chiefexecutive officer of MMC. "Consolidated revenue growth was the highest we haveachieved in two years. Our efforts to become more efficient across MMC producedsubstantially improved year-over-year profitability and margin, a continuationof the positive trends begun earlier this year. "Marsh continued its recovery. Improvement in new business was even strongerthis quarter, following growth in the second quarter. Client retention rates inthe quarter increased over the prior year. European operating performanceimproved, with increased new business and higher client retention levels andprofitability. These revenue trends allowed Marsh to report flat quarterlyunderlying revenues for the first time in two years, as well as substantiallyimproved profitability. Guy Carpenter, despite a challenging market environment,exhibited revenue growth as a result of continued new business development.Kroll continued the successful implementation of its business strategy,resulting in growth in key businesses. Mercer Human Resource Consulting reportedunderlying revenue growth in all of its businesses, and Mercer SpecialtyConsulting continued its double-digit revenue growth. Putnam performed asexpected, with positive institutional flows contributing to improved net flows.We are optimistic about our future prospects," Mr. Cherkasky concluded. Risk and Insurance Services Risk and insurance services revenues of $1.3 billion in the third quarter weresimilar to last year's third quarter, and flat on an underlying basis. Operatingincome increased markedly in the quarter to $143 million, compared with $20million last year, reflecting restructuring efforts, improved efficiencies, andcost discipline. The operating margin for the first nine months of 2006 improvedto 13.5 percent from 5.7 percent last year. Adjusting for the impact ofnoteworthy items and stock option expense, segment operating margin was 17.3percent in the first nine months of 2006, compared with 14.2 percent in the sameperiod of 2005. Please see the attached supplemental schedules for areconciliation of these non-GAAP financial measures to reported GAAP results. Marsh revenues were $1 billion in the third quarter, a decline of 2 percent, andflat on an underlying basis. Growth in new business continued, increasing 11percent globally. Guy Carpenter also experienced double-digit growth in newbusiness, resulting in revenues increasing 3 percent in the third quarter to$214 million. Although U.S. property catastrophe rates increased, rates on mostother lines of business were flat to down, and the market environment forproperty catastrophe reinsurance continued to be affected by limited reinsurercapacity and higher risk retention by clients. Risk Capital Holdings revenues of $45 million in the third quarter wereunchanged from the 2005 third quarter. More than half of the quarter's revenueswere unrealized mark-to-market gains. Revenues of $119 million through the firstnine months of 2006 declined from $162 million for the same period of 2005. Risk Consulting and Technology Kroll revenues increased 4 percent to $251 million, and operating income rose to$37 million in the third quarter. The technology services group, Kroll's largestbusiness unit, sustained its solid performance, led by the background screeningbusiness, which reported double-digit growth. The unit's electronic discoverybusiness responded successfully to market conditions and continued itsimprovement from the first quarter of this year. Consulting services reporteddouble-digit underlying revenue growth. Corporate advisory and restructuringperformed well, but its results were affected by the anticipated absence ofsuccess fees from major restructuring assignments such as those recorded in thesecond quarter of the year. Results for the security group reflected the orderlyexit from high-risk international assignments that had limited profitability andno longer fit Kroll's business strategy. Consulting Consulting revenues increased 13 percent to $1.1 billion in the third quarter,or 10 percent on an underlying basis. Year-to-date revenues increased 10 percentto $3.1 billion, or 9 percent on an underlying basis. Mercer Human ResourceConsulting increased revenues 10 percent to $762 million in the third quarter,or 7 percent on an underlying basis. Year-to-date revenues increased 7 percentto $2.3 billion. All of the Mercer HR businesses exhibited underlying revenuegrowth, driven by Europe and Asia. The health and benefits business increasedunderlying revenues by 5 percent, a notable improvement over previous quarters. Mercer Specialty Consulting revenues grew 22 percent to $304 million in thethird quarter, or 16 percent on an underlying basis. This exceptionalperformance was led by Mercer Oliver Wyman and the strategy and operationsbusiness, which increased underlying revenues 21 percent and 19 percent,respectively. Year-to-date revenues increased 18 percent to $863 million, or 17percent on an underlying basis. Investment Management Putnam revenues declined 8 percent to $342 million in the quarter. Ending assetson September 30, 2006 were $182 billion, comprising $118 billion in mutual fundassets and $64 billion in institutional assets. Average assets under managementwere $179 billion, compared with $195 billion in the third quarter of 2005.Institutional flows were positive for the first time since the third quarter of2003. Net outflows were approximately $3 billion in the quarter. Other Items MMC's net debt position, which is total debt less cash and cash equivalents, was$3.4 billion at the end of the 2006 third quarter, a decrease of over $450million from the end of the second quarter. Conference Call A conference call to discuss third quarter 2006 results will be held today at10:00 a.m. Eastern Time. To participate in the teleconference, please dial 866564 7444 or 719 234 0008 (international). The access code for both numbers is7646511. The audio webcast may be accessed at www.mmc.com. A replay of thewebcast will be available approximately two hours after the event at the sameweb 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 andinsurance services firm; Guy Carpenter, the world's leading risk and reinsurancespecialist; Kroll, the world's leading risk consulting company; Mercer, a majorglobal provider of human resource and specialty consulting services; and PutnamInvestments, one of the largest investment management companies in the UnitedStates. Approximately 55,000 employees provide analysis, advice, andtransactional capabilities to clients in over 100 countries. Its stock (tickersymbol: MMC) is listed on the New York, Chicago, Pacific, and London stockexchanges. MMC's website address is www.mmc.com. This press release contains "forward-looking statements," as defined in thePrivate Securities Litigation Reform Act of 1995. These statements, whichexpress management's current views concerning future events or results, usewords like "anticipate," "assume," "believe," "continue," "estimate," "expect,""intend," "plan," "project" and similar terms, and future or conditional tenseverbs like "could," "should," "will" and "would." For example, we may useforward-looking statements when addressing topics such as: future actions by ourmanagement or regulators; the outcome of contingencies; changes in our businessstrategy; changes in our business practices and methods of generating revenue;the development and performance of our services and products; market andindustry conditions, including competitive and pricing trends; changes in thecomposition or level of MMC's revenues; our cost structure; the impact ofacquisitions 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 thoseexpressed 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 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 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 dispositions 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, particularly given the global scope of our businesses. The factors identified above are not exhaustive. MMC and its subsidiariesoperate in a dynamic business environment in which new risks may emergefrequently. Accordingly, MMC cautions readers not to place undue reliance on itsforward-looking statements, which speak only as of the dates on which they aremade. MMC undertakes no obligation to update or revise any forward-looking statementto reflect events or circumstances arising after the date on which it is made.Further information concerning MMC and its businesses, including informationabout factors that could materially affect our results of operations andfinancial condition, is contained in MMC's filings with the Securities andExchange Commission. MMC and its operating companies use their websites to convey meaningfulinformation about their businesses, including the anticipated release ofquarterly financial results and the posting of updates of assets undermanagement at Putnam. Monthly updates of total assets under management at Putnamwill be posted to the MMC website the first business day following the end ofeach month. Putnam posts mutual fund and performance data to its websiteregularly. Assets for most Putnam retail mutual funds are posted approximatelytwo weeks after each month-end. Mutual fund net asset value (NAV) is posteddaily. Historical performance and Lipper rankings are also provided. Investorscan 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 Nine Months Ended September 30, September 30, ------------- ---------------- 2006 2005 2006 2005 ------- ------- --------- --------Revenue:Service Revenue $2,827 $2,731 $8,748 $8,670Investment Income (Loss) 57 48 141 156 ------- ------- --------- --------Total Revenue 2,884 2,779 8,889 8,826 ------- ------- --------- -------- Expense:Compensation and Benefits 1,742 1,731 5,293 5,348Other Operating Expenses 822 861 2,541 2,737 ------- ------- --------- --------Total Expenses 2,564 2,592 7,834 8,085 ------- ------- --------- -------- Operating Income 320 187 1,055 741 Interest Income 16 13 45 33 Interest Expense (75) (111) (231) (253) ------- ------- --------- -------- Income Before Income Taxesand Minority Interest Expense 261 89 869 521 Income Taxes 77 24 269 163 Minority Interest Expense,Net of Tax 4 2 9 6 ------- ------- --------- -------- Income from ContinuingOperations 180 63 591 352 Discontinued Operations, Netof Tax (4) 6 173 17 ------- ------- -------- -------- Net Income $ 176 $ 69 $ 764 $ 369 ======= ======= ========= ======== Basic Net Income Per Share -Continuing Operations $ 0.33 $ 0.12 $ 1.08 $ 0.66 ======= ======= ========= ========- Net Income $ 0.32 $ 0.13 $ 1.39 $ 0.69 ======= ======= ========= ======== Diluted Net Income Per Share- Continuing Operations $ 0.32 $ 0.11 $ 1.05 $ 0.65 ======= ======= ========= ========- Net Income $ 0.31 $ 0.12 $ 1.36 $ 0.68 ======= ======= ========= ======== Average Number of SharesOutstanding - Basic 550 539 549 535 ======= ======= ========= ========- Diluted 554 544 555 539 ======= ======= ========= ========Shares Outstanding at 9/30 551 544 551 544 ======= ======= ========= ======== Marsh & McLennan Companies, Inc. Supplemental Information - Revenue Analysis Three Months Ended (Millions) (Unaudited) Components of Revenue Change Three Months Ended % Change Acquisitions/ September 30, GAAP Currency Dispositions Underlying 2006 2005 Revenue Impact Impact Revenue ------ ------ ------- ------- ------- --------Risk and InsuranceServicesInsuranceServices $ 1,009 $ 1,028 (2)% 1% (3)% -ReinsuranceServices 214 207 3% - - 3%Risk CapitalHoldings 45 45 - - - - ------ ------Total Risk andInsuranceServices 1,268 1,280 (1)% 1% (2)% - ------ ------Risk Consulting& Technology 251 242 4% 1% 5% (2)% ------ ------ConsultingHuman ResourceConsulting 762 691 10% 3% - 7%SpecialtyConsulting 304 249 22% 2% 4% 16% ------ ------Total Consulting 1,066 940 13% 2% 1% 10% ------ ------ InvestmentManagement 342 371 (8)% - - (8)% ------ ------ Total OperatingSegments 2,927 2,833 3% 1% - 2% CorporateEliminations (43) (54) ------ ------ Total Revenue $2,884 $2,779 4% 1% - 3% ====== ====== Notes Underlying revenue measures the change in revenue, before the impact ofacquisitions and dispositions, using consistent currency exchange rates. Interest income on fiduciary funds amounted to $50 million and $43 million forthe three months ended September 30, 2006 and 2005, respectively. Revenue includes net investment income of $46 million and $45 million for Riskand Insurance Services and $11 and $3 million for Investment Management for thethree months ended September 30, 2006 and 2005, respectively. Risk Capital Holdings owns MMC's investments in insurance and financial servicesfirms, as well as MMC's investments in the Trident Funds. 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 2006 2005 Revenue Impact Impact Revenue ------ ------- ------- ------- -------- -------Risk and InsuranceServicesInsuranceServices $ 3,261 $3,432 (5)% (1)% (2)% (2)%ReinsuranceServices 709 681 4% (1)% - 5%Risk CapitalHoldings 119 162 (27)% - (6)% (21)% ------ -------Total Risk andInsuranceServices 4,089 4,275 (4)% - (2)% (2)% ------ -------Risk Consulting& Technology 769 716 7% - 2% 5% ------ -------ConsultingHuman ResourceConsulting 2,252 2,104 7% - - 7%SpecialtyConsulting 863 732 18% - 1% 17% ------ -------Total 3,115 2,836 10% - 1% 9%Consulting ------ ------- InvestmentManagement 1,026 1,146 (10)% - - (10)% ------ ------- Total OperatingSegments 8,999 8,973 - - (1)% 1% CorporateEliminations (110) (147) ------ ------- Total Revenue $8,889 $8,826 1% - (1)% 2% ====== ======= Notes Underlying revenue measures the change in revenue, before the impact ofacquisitions and dispositions, using consistent currency exchange rates. Interest income on fiduciary funds amounted to $135 million and $114 million forthe nine months ended September 30, 2006 and 2005, respectively. Revenue includes net investment income of $124 million and $151 million for Riskand Insurance Services and $1 and $0 million for Consulting and $16 and $5million for Investment Management for the nine months ended September 30, 2006and 2005, respectively. Risk Capital Holdings owns MMC's investments in insurance and financial servicesfirms, as well as MMC's investments in the Trident Funds. Marsh & McLennan Companies, Inc. Supplemental Information (Millions) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 ------- -------- ------- -------Revenue:Risk and Insurance Services $1,268 $1,280 $4,089 $4,275Risk Consulting & Technology 251 242 769 716Consulting 1,066 940 3,115 2,836Investment Management 342 371 1,026 1,146 ------- -------- ------- ------- 2,927 2,833 8,999 8,973Eliminations (43) (54) (110) (147) ------- -------- ------- ------- $2,884 $2,779 $8,889 $8,826 ------- -------- ------- -------Operating Income (Loss):Risk and Insurance Services $ 143 $ 20 $ 550 $ 243Risk Consulting & Technology 37 36 98 109Consulting 112 117 349 357Investment Management 77 83 217 204Corporate (49) (69) (159) (172) ------- -------- ------- ------- $ 320 $ 187 $ 1,055 $ 741 ------- -------- ------- ------- Segment Operating Margins:Risk and Insurance Services 11.3% 1.6% 13.5% 5.7%Risk Consulting & Technology 14.7% 14.9% 12.7% 15.2%Consulting 10.5% 12.4% 11.2% 12.6%Investment Management 22.5% 22.4% 21.2% 17.8% Consolidated Operating Margin 11.1% 6.7% 11.9% 8.4%Pretax Margin 9.0% 3.2% 9.8% 5.9%Effective Tax Rate 29.5% 27.0% 31.0% 31.3% Potential Minority InterestAssociated with the PutnamEquity Partnership Plan Net ofDividend EquivalentExpense Related to MMC CommonStock Equivalents $ 4 $ 1 $ 9 $ 2 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 third quarter and nine-month financialresults is affected by a number of noteworthy items, stock option expense andinterest expense. The following table identifies the impact of noteworthy itemson operating income for the periods indicated. Risk & Risk Insurance Consulting Investment Services & Technology Consulting Management Corporate TotalThree Months Ended --------- ----------- ---------- ---------- --------- -----September 30, 2006 RestructuringCharges (a) $ 18 $ 1 $ 18 $ - $ 4 $ 41AcceleratedAmortization/Depreciation 2 - - - 3 5Settlement,Legal andRegulatory (b) 11 - - - - 11 ----- ----- ------ ----- ----- -----Total Impact in 2006 $ 31 $ 1 $ 18 $ - $ 7 $ 57 ----- ----- ------ ----- ----- -----Three Months EndedSeptember 30, 2005 Restructuring Charges (a) $ 51 $ - $ - $ - $ 1 $ 52Employee RetentionAwards 50 - 10 - - 60Settlement, Legal andRegulatory (b) 16 - - (12) (5) (1)Estimated Mutual FundReimbursement (c) - - - 1 - 1Other 1 - - 4 1 6 ----- ----- ------ ----- ----- -----Total Impact in 2005 $ 118 $ - $ 10 $ (7) $ (3) $118 ----- ----- ------ ----- ----- -----Nine Months EndedSeptember 30, 2006 Restructuring Charges (a) $ 63 $ 1 $ 17 $ - $ 31 $ 112Accelerated Amortization/Depreciation 23 - - - 6 29Settlement, Legal andRegulatory (b) 32 - - (7) - 25 ----- ----- ------ ----- ----- -----Total Impact in 2006 $ 118 $ 1 $ 17 $ (7) $ 37 $166 ----- ----- ------ ----- ----- -----Nine Months EndedSeptember 30, 2005 Restructuring Charges (a) $ 195 $ - $ - $ - $ 55 $250Employee RetentionAwards 88 - 30 - - 118Settlement, Legal andRegulatory (b) 69 - - (12) (24) 33Estimated Mutual FundReimbursement (c) - - - 35 - 35Other 11 - - 4 (2) 13 ----- ----- ------ ----- ----- -----Total Impact in 2005 $ 363 $ - $ 30 $ 27 $ 29 $449 ----- ----- ------ ----- ----- ----- Notes: (a) Primarily includes severance and related charges and costs for future rentand other costs for real estate resulting from previously announced costreduction initiatives (see MMC's Form 10-Q for the period ended March 31, 2005and Form 8-K dated September 20, 2006 for more information). (b) Reflects costs of certain legal and regulatory matters, including legal feesand settlement costs arising out of: the civil complaint relating to marketservice agreements and other issues filed against MMC and Marsh by the New YorkState Attorney General in October 2004 and settled in January 2005; andmarket-timing and other issues at Putnam. Regulatory expenses in Risk andInsurance Services include fees for professional services provided by other MMCcompanies; the resulting inter-company balances are eliminated in Corporate. Thenegative amounts for Investment Management represent insurance recoveriesrelating to previously expensed legal fees. (c) Reflects costs to address issues relating to the calculation of certainamounts paid by the Putnam mutual funds in previous years. The previous paymentswere cost reimbursements by the Putnam mutual funds to Putnam for transferagency services related to defined contribution operations. Stock-Option Expense. The year-over-year comparability of MMC's third quarterand nine-month financial results is affected by MMC's adoption, effective July1, 2005, of SFAS 123(R) ("Share Based Payment"). Stock option expense for thethree months ended September 30, 2006 was $26 million: Risk and InsuranceServices - $11 million, Risk Consulting & Technology - $0 million, Consulting -$9 million, Investment Management - $4 million, Corporate - $2 million. Stockoption expense for the nine months ended September 30, 2006 was $93 million:Risk and Insurance Services - $38 million, Risk Consulting & Technology $2million, Consulting - $32 million, Investment Management - $11 million,Corporate - $10 million. A charge of $31 million for the quarter and nine monthsended September 30, 2005 is reflected in Corporate results. For comparisonpurposes, an approximate allocation of the 2005 expense follows: Risk andInsurance Services - $15 million, Consulting - $10 million, InvestmentManagement - $3 million, Corporate - $3 million. Impact on Operating Margins in Risk and Insurance Services. In Risk andInsurance Services, noteworthy items and stock option expense together totaled$156 million for the first nine months of 2006, affecting segment operatingmargin by 3.8 percentage points. Noteworthy items totaled $363 million for ninemonths of 2005, affecting segment operating margin by 8.5 percentage points.Adjusting for these impacts, segment operating margin for the first nine monthsof 2006 was 17.3 percent, compared to 14.2 percent for the first nine months of2005. This adjusted segment operating margin is a non-GAAP financial measurewithin the meaning of Regulation G promulgated by the Securities and ExchangeCommission. MMC believes that presenting this measure may help investors andothers understand aspects of Risk and Insurance Services operating performancethat may not be apparent from MMC's reported GAAP results. However, thisnon-GAAP financial measure is not a substitute for MMC's reported GAAPinformation, and may not be comparable to similar information provided byindustry peers. Interest Expense. 2005 interest expense includes a $34 million prepaymentpenalty related to a mortgage refinancing of MMC's headquarters building in NewYork. Marsh & McLennan Companies, Inc. Supplemental Information - Putnam Assets Under Management (Billions) (Unaudited) Sept. 30, June 30, March 31, Dec. 31, Sept. 2006 2006 2006 2005 2005 -------- -------- -------- -------- -------Mutual Funds:Growth Equity $ 26 $ 27 $ 31 $ 31 $ 32Value Equity 36 36 37 37 38Blend Equity 26 26 27 26 26Fixed Income 30 30 31 32 33 -------- -------- -------- -------- -------Total MutualFund Assets 118 119 126 126 129 -------- -------- -------- -------- ------- Institutional:Equity 34 32 34 34 33Fixed Income 30 29 29 29 30 -------- -------- -------- -------- -------TotalInstitutionalAssets 64 61 63 63 63 -------- -------- -------- -------- -------Total EndingAssets $182 $180 $189 $189 $192 ======== ======== ======== ======== =======Assets fromNon-USInvestors $ 34 $ 31 $ 32 $ 32 $ 33 ======== ======== ======== ======== ======= Average AssetsUnder Management:Quarter $179 $185 $190 $188 $195 ======== ======== ======== ======== =======Year-to-Date $185 $188 $190 $196 $198 ======== ======== ======== ======== ======= Net RedemptionsincludingDividendsReinvested:Quarter $ (3.1) $ (6.0) * $ (6.6) $ (6.4) $ (8.5) ======== ======== ======== ======== =======Year-to-Date $(15.7) $ (12.6) $ (6.6) $(31.7) $(25.3) ======== ======== ======== ======== ======= Impact of Market/Performance onEndingAssets UnderManagement $ 5.5 $ (3.5) $ 7.0 $ 2.8 $ 5.6 ======== ======== ======== ======== ======= * Net redemptions in the quarter include $2.8 billion of redemptions ininstitutional equity resulting from ending Putnam's alliance with an Australianpartner. Categories of mutual fund assets reflect style designations aligned withPutnam's various prospectuses. All quarter-end assets conform with the currentinvestment mandate for each product. Marsh & McLennan Companies, Inc. Consolidated Balance Sheets (Millions) (Unaudited) ----------- ---------- September 30, December 31, 2006 2005 ----------- ----------ASSETS Current assets:Cash and cash equivalents $1,682 $2,020Net receivables 2,800 2,730Assets of discontinued operations - 153Other current assets 367 359 ----------- ---------- Total current assets 4,849 5,262 Goodwill and intangible assets 7,845 7,773 Fixed assets, net 1,098 1,178Long-term investments 511 277Prepaid pension 1,684 1,596Other assets 1,828 1,806 ----------- ----------TOTAL ASSETS $17,815 $17,892 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:Short-term debt $1,219 $498Accounts payable and accrued liabilities 1,881 1,733Regulatory settlements-current portion 236 333Accrued compensation and employee benefits 1,188 1,413Liabilities of discontinued operations 39 89Accrued income taxes 64 192Dividends payable 94 93 ----------- ---------- Total current liabilities 4,721 4,351 Fiduciary liabilities 4,026 3,795Less - cash and investments held in a fiduciarycapacity (4,026) (3,795) ----------- ---------- - -Long-term debt 3,864 5,044Regulatory settlements 173 348Pension, postretirement and postemploymentbenefits 1,220 1,180Other liabilities 1,633 1,609 Total stockholders' equity 6,204 5,360 ----------- ----------TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,815 $17,892 =========== ========== This information is provided by RNS The company news service from the London Stock Exchange