MMC Reports Increased 2Q, Six Months Results

July 26, 2001

Marsh & McLennan Companies, Inc. (MMC), reported increased revenues and earnings for the quarter ended June 30, 2001.

The company stated that consolidated revenues rose 1 percent to $2.5 billion, net income grew 6 percent to $293 million, and earnings per share increased 6 percent to $1.02, compared with the second quarter of 2000. For the six months, consolidated revenues were essentially unchanged at $5.1 billion. Net income rose 8 percent to $662 million, and earnings per share grew 7 percent to $2.29.

Second quarter revenues from MMC’s risk and insurance services businesses rose 8 percent to $1.3 billion. Underlying revenues, which exclude the effects of foreign exchange, acquisitions, and dispositions, increased 10 percent. Margins rose 2 percentage points to 20 percent, and operating income increased 24 percent to $253 million. Marsh’s performance reflects improved operating efficiencies and continued consolidation savings from the Sedgwick acquisition. Marsh’s institutional business in North America, international specialty operations, consumer and program practices, and reinsurance broking contributed to these strong results.

Putnam’s average assets under management decreased 14 percent to $340 billion in the second quarter, a reflection of declines in the equity markets over the last year. On June 30, 2001, assets under management were $339 billion, a 6 percent increase over the end of the first quarter. Revenues decreased 12 percent to $696 million, and operating income declined 18 percent to $207 million. Margins for the first six months were 31 percent. Led by Putnam’s institutional businesses, net new sales for the first half of the year totaled $11 billion.

Mercer’s revenues grew 4 percent to $558 million, and operating income rose 6 percent to $91 million in the second quarter. Margins for the first half of the year approached 15 percent. Underlying revenues for human resource consulting, which is more than 80 percent of Mercer’s business, increased 11 percent. Management consulting revenues declined 23 percent. The slowing economy is having an effect on some of Mercer’s practices.

Cash flow has remained strong throughout the year. This has enabled MMC to repurchase 2.2 million shares of common stock in the second quarter and to increase its dividend effective in the third quarter.

Marsh & McLennan Companies (MMC) is a global professional services firm with annual revenues of $10 billion. It is the parent company of Marsh, the world’s leading risk and insurance services firm; Putnam Investments, one of the largest investment management companies in the U.S.; and Mercer Consulting Group, a major global provider of consulting services. Approximately 57,000 employees provide analysis, advice and transactional capabilities to clients in over 100 countries.

MMC’s website address is www.mmc.com.

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