Skip to content
AnalystLens

MARSH & MCLENNAN COMPANIES, INC. Annual Report, Year Ended Dec 31, 1999

Filing Date
Filed March 29, 2000
Period End
December 31, 1999
Securities
MRSHMMC
In the record · 2016–202610-K1110-Q338-K115

MRSH filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 115 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jan ’17Jan ’17
  2. Deal closed8-K · Apr ’19Apr ’19
  3. Material agreement8-K · Apr ’21Apr ’21
  4. Leadership change8-K · Jul ’25Jul ’25

01—Abstract

Summary

Summary of the 10-K filed March 29, 2000. Cited figures are marked; the original filing is the authoritative source.

Marsh & McLennan Companies (MMC) reported record 1999 results, with revenue up 27% to $9.157 billiona from $7.190 billion in 1998, driven largely by the November 1998 acquisition of Sedgwick Group plc.

Reported net income was $726 millionb ($2.62 diluted EPS), down from $796 million ($2.98) in 1998, because of $337 million in pre-tax special charges tied to the Sedgwick integration. Excluding those charges, management cites net income of $959 million and diluted EPS of $3.48, a 20% and 17% increase respectively. Operating income before special charges rose to about $1.8 billion, and the three segments (Marsh risk and insurance services, Putnam investment management, and Mercer consulting) all grew.

The growth engine was investment management. Putnam's assets under management rose 33% to $391 billionc, driven by a strong equity market, and segment operating margins improved to 31.3%. Risk and insurance services, the largest segment at $4.5 billion of revenue, grew organically only about 4% because commercial premium rates continued to decline, and management expects low single-digit growth in early 2000.

Consulting (Mercer) grew 26% reported and about 9% organically. Management expects roughly $160 milliond in net annual Sedgwick savings when integration completes, with about $30 million realized in 1999. The balance sheet absorbed significant leverage from the Sedgwick deal.

Long-term debt rose to $2.36 billion from $1.59 billion, and goodwill and intangibles reached $5.5 billion, about 42% of total assets. Operating cash flow was $1.0 billion. Key risks disclosed include a UK personal pension redress review with a contingent exposure of about $500 million (roughly $300 million expected to be recovered from insurers), ongoing J&H-related litigation, equity market dependence at Putnam, and the potential for softer insurance pricing to pressure the core broking business.

02—Key points

Key Highlights

  1. Revenue grew 27% to $9.16 billion in 1999, largely from the Sedgwick acquisition; organic revenue growth was approximately 9%.
  2. Reported diluted EPS fell to $2.62 from $2.98 due to $337 million of special charges; excluding these charges, diluted EPS rose 17% to $3.48.
  3. Putnam Investments' assets under management reached $391 billion, up 33%, and its segment operating margin expanded to 31.3%.
  4. Risk and insurance services organic growth was only about 4% as commercial property-casualty premium rates continued to decline.
  5. Long-term debt increased to $2.36 billion, and goodwill and intangibles reached $5.5 billion following the $2.2 billion Sedgwick purchase.
  6. Management targets about $160 million in net annual savings from the Sedgwick integration, with roughly $30 million realized in 1999.
  7. UK personal pension redress review carries a contingent exposure of about $500 million, of which about $300 million is expected to be recovered from insurers.

03—Questions

Frequently Asked Questions

  1. Why did MMC's reported earnings decline in 1999 even though revenue grew 27%?

    Net income fell to $726 million from $796 million, mainly because of $337 million in pre-tax special charges related to integrating Sedgwick. These charges reduced diluted EPS by about $0.86. Excluding them, net income rose to $959 million and diluted EPS rose to $3.48.

  2. Which business segment drove MMC's growth in 1999?

    Investment management (Putnam) was the strongest performer, with revenue up 17% and operating income up 24% to $841 million. Its growth reflected a rise in assets under management from $294 billion to $391 billion, helped by rising equity markets and net inflows. Consulting (Mercer) also grew strongly, with revenue up 26% and operating income up 29%.

  3. How much debt did MMC take on, and how is it managing leverage?

    Long-term debt rose to $2.36 billion from $1.59 billion. Most of the increase came from the Sedgwick financing, which MMC partly refinanced in 1999 through a $300 million common stock offering and $1 billion of senior notes due 2004 and 2009. MMC said internally generated cash ($1.0 billion of operating cash flow in 1999) is sufficient to cover recurring operating needs, dividends, capital spending and scheduled debt repayments.

  4. What are the main legal and regulatory risks disclosed in the filing?

    The most significant items are the UK Personal Investment Authority review of past personal pension sales, with contingent exposure of about $500 million (about $300 million expected to be recovered from insurers), and the J&H shareholder litigation (Aiena et al.), in which MMC itself was dismissed from three of the cases. Management concluded these matters are not expected to have a material adverse effect on consolidated results or financial position. The filing also notes that Putnam's revenue depends on equity market levels and that the IRS has questioned tax treatment of Putnam 12b-1 fees.

04—Continue

← View all 10-K filings