What was the primary driver of the revenue decline in the first quarter of 2001?

The primary driver of the revenue decline was the Investment Management segment, where revenue decreased by 19%. This was largely due to a significant decrease in average assets under management, which fell by 13% compared to the prior year, driven by a decline in equity markets.

How did the company manage expenses in this quarter?

Operating expenses decreased by 5% overall, or approximately 2% excluding foreign exchange, acquisitions, and dispositions. This reduction was attributed to lower incentive compensation in the investment management segment, reduced discretionary spending across all segments, and ongoing integration savings from the Sedgwick acquisition.

What is the company's outlook regarding the UK personal pension plan issue?

Marsh & McLennan Companies estimates its contingent exposure for UK personal pension plan reviews to be approximately $305 million, with an expectation to recover $240 million from insurers. While significant, the company believes that amounts in excess of anticipated insurance recoveries have been provided for and that the ultimate disposition of these matters will not have a material adverse effect on its financial position or results of operations.

Can you explain the increase in short-term debt?

Short-term debt increased significantly by $867 million during the quarter. This was primarily due to certain investments, including a $286 million purchase of a minority investment in Gruppo Bipop-Carire S.p.A., and seasonal demands related to incentive compensation payments.

MRSH/MMC 10-Q Quarterly Report Q1 FY2001 — Revenue, Net Income, EPS

Summary

Marsh & McLennan Companies, Inc. (MMC) reported its first quarter results for the period ending March 31, 2001. The company generated revenue of $2,594 million, a slight decrease of 3% from the prior year's first quarter, attributed primarily to a downturn in the investment management segment due to declining equity markets. However, operating income saw a modest increase to $645 million from $619 million in the same period last year, driven by improved performance in the Risk and Insurance Services segment and cost management initiatives across the company. Net income for the quarter was $369 million, or $1.33 per basic share, up from $337 million, or $1.26 per basic share, in the first quarter of 2000. This improvement reflects the revenue growth in key segments and a 5% reduction in overall operating expenses, partly due to integration savings from the Sedgwick acquisition and lower incentive compensation in investment management. Investors should note the continued strength in Risk and Insurance Services and the impact of market volatility on the Investment Management segment.

Key Highlights

1Consolidated revenue decreased 3% to $2,594 million, primarily due to a 19% decline in Investment Management revenue driven by lower average assets under management.
2Operating income increased 4.2% to $645 million, reflecting improved performance in Risk and Insurance Services and cost control measures.
3Net income rose to $369 million from $337 million in the prior year's first quarter, with basic EPS increasing to $1.33 from $1.26.
4Risk and Insurance Services segment revenue grew 5% to $1,354 million, with underlying growth of approximately 9% driven by new business and higher premium rates.
5Consulting segment revenue increased 6% to $550 million, primarily due to growth in retirement consulting services.
6The company continues to realize integration savings from the Sedgwick acquisition, with approximately $15 million realized in Q1 2001 and an expected total of $160 million in net annual savings.
7A significant contingent exposure related to UK personal pension plan reviews for Sedgwick and other subsidiaries is estimated at $305 million, with anticipated insurance recoveries of $240 million.

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2001

Summary

Key Highlights

Frequently Asked Questions