S&P Keeps MMC on CreditWatch Negative

December 16, 2004

Standard & Poor’s Rating Services announced that its “BBB” long-term counterparty credit and senior debt ratings on Marsh & McLennan Cos. (MMC) will remain on CreditWatch negative.

The decision follows the announcement that MMC “has closed on a new $1.3 billion term loan facility and has executed an amendment of a $1.7 billion of existing revolving facilities consistent with the commitment letter disclosed in MMC’s Nov. 17, 2004, 8K filing, “said S&P.

“MMC’s closing on the restructured credit facilities is a positive event though consistent with our expectation that MMC has the resources and financial flexibility to manage its liquidity requirements,” stated S&P credit analyst Steven Ader.

The rating agency indicated, however, that while it expects “that MMC’s financial profile will be in compliance with the terms of the restructured credit facilities, the ratings also reflect expectations of diminished cashflow and earnings from the termination of MSAs, a modest adverse impact (up to 5 percent revenue loss) to Marsh’s business outlook, and the expectation that MMC will have the financial resources to manage any settlements reached in connection with outstanding legal and regulatory investigations.”

Keeping the ratings on CreditWatch with negative implications reflects “the continued ongoing uncertainties of this evolving situation, particularly the impact on Marsh’s competitive position, earnings, and cashflow,” S&P continued.

“Short of criminal charges being filed against the company by a legal authority, Standard & Poor’s continues to believe that the diversified operational profile of MMC, with several well-positioned operating business, will enable it to remain a viable and profitable entity into the future,” the bulletin concluded.

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