01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
Marsh & McLennan Companies, Inc. (MMC) reported consolidated revenue of $10.5 billiona for the year ended December 31, 2009.
The company operates across three segments: Risk and Insurance Services, Consulting, and Risk Consulting & Technology. Despite a challenging economic environment, the company demonstrated resilience, with its Risk and Insurance Services segment showing a revenue increase of 8%b at Guy Carpenter, offsetting a slight decline at Marsh. The Consulting segment experienced a revenue decrease, largely due to reduced client spending on advisory services.
The company addressed significant legal and regulatory matters, including a substantial settlement for class-action lawsuits, and incurred goodwill impairment charges primarily within its Risk Consulting & Technology segment. MMC's financial performance was impacted by these charges and the broader economic downturn, resulting in a net income of $227 millionc attributable to MMC for the year, a significant improvement from a net loss in the prior year. The company remains focused on expense management and strategic acquisitions to drive future growth.
02—Key points
Key Highlights
- Consolidated revenue for 2009 was $10.5 billion, down from $11.5 billion in 2008, reflecting challenging economic conditions and a negative foreign currency impact.
- The Risk and Insurance Services segment, the largest by revenue, saw a slight decrease in overall revenue but reported improved operating income, driven by strong performance at Guy Carpenter.
- The Consulting segment experienced a revenue decline of 11% as clients reduced spending on advisory services, impacting both Mercer and Oliver Wyman Group.
- Risk Consulting & Technology segment revenue decreased by 28%, with significant goodwill impairment charges of $315 million recorded in 2009.
- The company settled securities and ERISA class-action lawsuits for $435 million, with insurance recoveries partially offsetting the charge.
- MMC made several strategic acquisitions in the Risk and Insurance Services segment, including John B. Collins Associates, Inc., Rattner Mackenzie Limited, International Advisory Services Ltd., and The NIA Group, LLC, to enhance its market position.
- Operating expenses decreased by 11% in 2009 compared to 2008, aided by restructuring actions and expense control measures, though partially offset by significant non-recurring charges.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $9.83B$10.73B | −8.4% |
| Operating Expenses | $9.05B$10.05B | −9.9% |
| Operating Income | $778.00M$679.00M | +14.6% |
| Interest Expense | $241.00M$220.00M | +9.5% |
| Net Income | $227.00M-$73.00M | +411.0% |
| EPS (Basic) | $0.43$-0.13 | +430.8% |
| EPS (Diluted) | $0.42$-0.14 | +400.0% |
| Shares Outstanding (Basic) | 522.00M514.00M | +1.6% |
| Shares Outstanding (Diluted) | 524.00M515.00M | +1.7% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Marsh & McLennan's financial performance in 2009?
Marsh & McLennan's financial performance in 2009 was driven by a combination of factors, including the challenging global economic environment which impacted client spending on consulting services, and significant one-time charges such as goodwill impairment and legal settlements. The Risk and Insurance Services segment provided some resilience, while the Consulting segment saw reduced demand. The company also undertook restructuring initiatives to manage expenses.
How did the company address its legal and regulatory issues in 2009?
In 2009, MMC settled significant securities and ERISA class-action lawsuits for $435 million, with a portion of this cost recovered through insurance. This settlement resolved major legal challenges that had been a concern for investors. The company also continued to navigate other ongoing legal and regulatory matters.
What is the outlook for MMC's different business segments based on this report?
The report indicates a mixed outlook for the segments. The Risk and Insurance Services segment, particularly Guy Carpenter, showed strength and strategic acquisitions were made, suggesting continued focus and growth potential in this area. The Consulting segment faced headwinds due to economic conditions, indicating a more cautious outlook. The Risk Consulting & Technology segment continued to be impacted by impairments, suggesting ongoing restructuring or integration efforts.
Did MMC make any significant acquisitions or divestitures in 2009?
Yes, MMC made several strategic acquisitions in its Risk and Insurance Services segment during 2009, including John B. Collins Associates, Inc., Rattner Mackenzie Limited, International Advisory Services Ltd., and The NIA Group, LLC, to expand its capabilities and market reach. Additionally, Kroll sold its Government Services business (KGS) in the second quarter of 2009.
06—Continue