Marsh Unveils Q2 Report

August 2, 2005

Marsh & McLennan Companies Inc. (MMC) has reported financial results for the second quarter and six months ended June 30, 2005.

Consolidated revenues for the quarter increased 2 percent to $3.1 billion. Net income was $166 million, or $.31 per share, compared with $389 million, or $.73 per share, in last year’s second quarter. For the six months of 2005, consolidated revenues rose 1 percent to $6.3 billion. Net income was $300 million, or $.56 per share, compared with $835 million, or $1.56 per share, last year. Current year results include charges for restructuring, employee retention, and incremental regulatory and compliance expenses. Excluding noteworthy items, earnings per share would have been $.43 and $.95, respectively, for the second quarter and six months of 2005, compared with $.73 and $1.69, respectively, for the same periods of 2004.

Michael Cherkasky, president and chief executive officer of MMC, said: “Although much of our focus has been on the restructuring and turnaround at Marsh, we have made significant strides across all of MMC’s businesses to position the company for long-term profitable growth. A number of our businesses had very strong results this quarter, such as Kroll, Mercer Management Consulting, and Mercer Oliver Wyman.”

Risk and insurance services revenues declined 11 percent in the second quarter to $1.5 billion. Underlying revenues, which exclude acquisitions, dispositions, and foreign exchange, declined 13 percent. During the quarter, the insurance marketplace saw continued reductions in commercial premium rates. These conditions are expected to continue through the end of this year.

Marsh’s risk management and insurance broking revenues of $1 billion in the second quarter were 18 percent lower compared with last year. Excluding the effect of market services revenues, underlying revenues declined 8 percent, an improvement of 3 percentage points from the first quarter of 2005.

Guy Carpenter’s revenues declined 9 percent in the second quarter to $192 million, or 11 percent on an underlying basis. The effects of higher risk retention by clients and lower premium rates in the reinsurance marketplace were offset partially by new business. These conditions are likely to continue through the remainder of the year.

Related insurance services revenues rose 23 percent in the second quarter to $303 million, an increase of 17 percent on an underlying basis. Performance was excellent in all businesses for both the quarter and the first half of the year, with particularly strong growth reported by claims management, which increased revenues 30 percent in the quarter.

Kroll reported revenues of $267 million in the second quarter, with double-digit revenue growth over prior-year pre-acquisition levels. The technology services group achieved strong performance in legal technologies, background screening, and mortgage-related service offerings. The corporate advisory and restructuring practice, which is part of Kroll’s consulting services group, also recorded double-digit revenue growth.

Topics Profit Loss Marsh McLennan

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