MMC 1Q: Combined Revenues Up 5%; Marsh Revenues Unchanged

May 8, 2007

Marsh & McLennan Companies, Inc. (MMC) reported consolidated revenues in the first quarter of this year were $2.8 billion, an increase of 5 percent from the first quarter of 2006, or 1 percent on an underlying basis. Income from continuing operations rose 14 percent to $228 million, or $.41 per share, from $200 million, or $.36 per share last year.

Earnings per share was $.47 in the first quarter of 2007, including discontinued operations representing investment unit Putnam’s results. In the first quarter, the firm announced that Great-West Lifeco, a subsidiary of Power Financial Corp., agreed to purchase Putnam for $3.9 billion in cash. This transaction is expected to close in the second quarter.

Earnings per share were reduced by $.05 in the first quarter of 2007.

“The first quarter demonstrated the strength of MMC as a diversified company,” said Michael G. Cherkasky, president and chief executive officer of MMC. “We met our overall corporate performance expectations while we continued to position Marsh for success in the future.”

MMC’s board of directors has approved a $500 million share repurchase program.

Risk and Insurance Services
Risk and insurance services revenues in the first quarter were $1.5 billion, an increase of 1 percent from the first quarter of 2006, or a 2 percent decline on an underlying basis.

Revenues at the risk and insurance arm, Marsh, were $1.1 billion, unchanged from the first quarter of 2006. Geographically, Marsh revenues included $540 million in the Americas, a decline of 5 percent from the prior year’s quarter; $524 million in EMEA, an increase of 3 percent; and $78 million in Asia Pacific, an increase of 12 percent. New business increased 7 percent in the first quarter, reflecting growth of 5 percent in the Americas, 8 percent in EMEA, and 17 percent in Asia Pacific.

Premium rate declines in the commercial insurance marketplace continued through the first quarter. Underlying revenues declined 3 percent in the quarter, primarily due to lower retention rates in the United States.

Guy Carpenter’s reinsurance and risk management revenues increased 4 percent in the first quarter to $292 million, driven by 11 percent growth in new business. These results were achieved despite the decline in U.S. property catastrophe rates from the peak levels seen in the mid-year 2006 renewal season and higher risk retention by clients. Underlying revenues increased 2 percent in the quarter.

Risk Capital Holdings recognized revenues of $49 million in the first quarter, compared with $46 million in the same period of 2006. Revenues in the quarter were derived from MMC’s private equity fund investments.

Risk Consulting and Technology
Kroll’s revenues increased 1 percent in the first quarter to $235 million and were flat on an underlying basis. The technology-enabled solutions business increased revenues 14 percent to $132 million, due to continued strong performance in background screening and growth in the electronic discovery business. Kroll’s consulting business saw revenues decline 12 percent to $103 million, reflecting the expected level of activity in corporate advisory and restructuring.

Consulting
Consulting revenues increased 13 percent to $1.1 billion in the first quarter, with 7 percent growth on an underlying basis.

Mercer Human Resource Consulting increased revenues 8 percent to $800 million in the first quarter, with a 4 percent increase on an underlying basis. This growth was achieved throughout Mercer HR’s operations: retirement and investment produced $319 million in revenues, an increase of 11 percent; health and benefits, $183 million, the same level as last year; outsourcing, $176 million, an increase of 13 percent; and talent, $99 million, an increase of 6 percent.

Mercer Specialty Consulting’s revenues grew 25 percent to $329 million in the first quarter, with a 15 percent increase on an underlying basis, continuing the strong growth this group has achieved over the last four years. Each of the Mercer Specialty companies contributed to this exceptional performance.

Discontinued Operations
Due to the agreement to sell Putnam, announced on February 1, 2007, Putnam’s results for both years are now reflected in discontinued operations. Results from discontinued operations, net of tax, were $40 million, or $.06 per share, in the first quarter of 2007, reflecting Putnam’s results for the quarter, compared with $.39 per share last year, primarily due to a $.32 gain from the sale of Sedgwick Claims Management Services.

In the first quarter, Putnam had revenues of $356 million, an increase of 3 percent from the first quarter of 2006. Putnam’s assets under management on March 31, 2007 were $188 billion, comprising $119 billion in mutual fund assets and $69 billion in institutional assets. Average assets under management were $189 billion, compared with $190 billion for the first quarter of 2006.

MMC’s net debt position, which is total debt less cash and cash equivalents, was $3.5 billion at the end of the first quarter, compared with $3.8 billion at the end of the 2006 first quarter. In the first quarter, MMC increased its quarterly dividend by 12 percent, from $.17 to $.19.

Conference Call
A conference call to discuss first quarter 2007 results will be held today at 8:30 a.m. Eastern Time. To participate in the teleconference, please dial 800 390 5311 or 719 457 2086 (international). The access code for both numbers is 4680329. The audio webcast may be accessed at www.mmc.com. A replay of the webcast will be available approximately two hours after the event at the same web address.

Source: MMC
www.mmc.com.

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