What was the impact of the September 11th terrorist attacks on Marsh & McLennan Companies?

The September 11th attacks had a profound impact, resulting in the loss of 295 employees, primarily from the Risk and Insurance Services segment. The company recorded pre-tax charges of $173 million related to the attacks, which included costs for victim support, asset write-offs, business disruption, and restructuring. Despite the tragedy and financial impact, MMC successfully implemented disaster recovery plans to ensure business continuity.

Why did Marsh & McLennan's revenue decline in the third quarter of 2001?

The overall revenue decline was largely due to a significant decrease in the Investment Management segment, where assets under management fell considerably. While the Risk and Insurance Services segment showed growth, it wasn't enough to offset the decline in investment management revenue. The company also noted a modest revenue decline in its Consulting segment.

How is the company managing its liquidity and capital resources?

MMC generated strong operating cash flow during the first nine months of 2001, increasing its cash and cash equivalents to $600 million. The company anticipates that internally generated funds will be sufficient to meet its operating needs, dividends, capital expenditures, and debt repayments. During the quarter, the company also increased its commercial paper borrowings to fund investments and share repurchases.

What are the significant accounting changes on the horizon for MMC?

MMC is preparing to adopt new accounting standards. Notably, starting January 1, 2002, the company will cease amortizing goodwill as required by SFAS No. 142, which is projected to increase annual earnings by at least $0.40 per share. The company is also evaluating the impact of SFAS No. 143 (Asset Retirement Obligations) and SFAS No. 144 (Impairment or Disposal of Long-Lived Assets).

MRSH/MMC 10-Q Quarterly Report Q3 FY2001 — Revenue, Net Income, EPS

Summary

Marsh & McLennan Companies, Inc. (MMC) reported its financial results for the third quarter and nine months ended September 30, 2001. The company experienced a decline in overall revenue compared to the previous year, primarily driven by a decrease in its Investment Management segment due to lower assets under management. However, the Risk and Insurance Services segment showed underlying revenue growth, bolstered by higher commercial insurance premium rates and new business. The most significant event impacting the quarter was the September 11th terrorist attacks, which directly affected MMC, resulting in the loss of 295 colleagues and substantial charges of $173 million pre-tax. These charges included costs for victim support, asset write-offs, business disruption, and restructuring efforts, partially offset by insurance recoveries. Despite these challenges, the company's disaster recovery plans were successfully implemented, ensuring business continuity. Management anticipates that internally generated funds will be sufficient to meet operating cash requirements and dividend payments.

Key Highlights

1Consolidated revenue decreased by 6% for the third quarter and 3% for the nine months ended September 30, 2001, compared to the prior year.
2The September 11th terrorist attacks resulted in a pre-tax charge of $173 million, significantly impacting net income and EPS.
3The Investment Management segment saw a substantial revenue decline of 29% in the third quarter due to a 23% decrease in average assets under management.
4The Risk and Insurance Services segment reported underlying revenue growth of approximately 10% for both the third quarter and nine months, driven by higher commercial insurance premium rates and net new business.
5Operating expenses, excluding September 11th charges, decreased by approximately 4% in the third quarter due to lower incentive compensation and cost reductions.
6MMC's cash and cash equivalents increased to $600 million as of September 30, 2001, up from $240 million at the end of 2000.
7The company announced it will cease the amortization of goodwill starting January 1, 2002, following the adoption of SFAS No. 142, which is expected to increase annual earnings by at least $0.40 per share.

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2001

Summary

Key Highlights

Frequently Asked Questions