What is the overall financial performance of Marsh & McLennan Companies in the third quarter and first nine months of 2006?

Marsh & McLennan Companies reported increased operating revenue and a significant rise in net income for both the third quarter and the first nine months of 2006 compared to the prior year. This improvement was driven by revenue growth in the Consulting and Risk Consulting & Technology segments, coupled with substantial reductions in operating expenses due to restructuring initiatives and lower legal and settlement costs.

Which business segments performed well, and which faced challenges?

The Consulting segment showed robust performance with double-digit revenue growth in both its specialty and HR consulting divisions. The Risk Consulting & Technology segment also saw revenue increases. However, the Investment Management segment (Putnam) experienced a revenue decline, primarily due to a decrease in average assets under management and net outflows.

What is the impact of the company's restructuring efforts and legal matters on its financial results?

Restructuring activities are a key driver of improved profitability, leading to significant cost savings in operating expenses. The company also benefited from reduced legal and settlement costs compared to the prior year, which had a positive impact on net income. The sale of discontinued operations also contributed positively to the net income figures.

How is the company managing its debt and liquidity?

MMC's net cash used by financing activities increased due to higher net debt repayments. The company paid dividends of approximately $280 million in the first nine months of 2006 and made no share repurchases. It has secured a significant multi-currency revolving credit facility and has recently issued senior notes. The company's senior debt is rated Baa2 by Moody's and BBB by Standard & Poor's, with a negative outlook from both agencies.

MRSH/MMC 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

Marsh & McLennan Companies, Inc. (MMC) reported its third quarter and nine-month results for the period ending September 30, 2006. The company's overall revenue showed modest growth, with operating revenue increasing by 4% to $2.88 billion for the third quarter and by 1% to $8.89 billion for the nine months, compared to the prior year. This growth was driven by strong performance in the Consulting segment, particularly its specialty consulting businesses, and continued expansion in Risk Consulting & Technology. Despite revenue increases, the company's net income experienced a significant jump from $69 million in Q3 2005 to $176 million in Q3 2006, and from $369 million in the first nine months of 2005 to $764 million in the same period of 2006. This improvement is largely attributed to a substantial reduction in operating expenses, driven by ongoing restructuring efforts and lower legal and settlement costs, as well as a positive impact from adopting SFAS 123(R) accounting for stock options, which shifted costs earlier in the year. The company also benefited from the sale of discontinued operations.

Key Highlights

1Total operating revenue increased by 4% to $2.88 billion in Q3 2006 and by 1% to $8.89 billion for the first nine months of 2006, compared to the prior year.
2Net income saw a significant increase, reaching $176 million in Q3 2006 ($0.31 per diluted share) and $764 million for the first nine months of 2006 ($1.36 per diluted share).
3Operating expenses decreased by 1% in Q3 2006 and by 3% for the first nine months of 2006, primarily due to restructuring savings and reduced legal/settlement costs.
4The Consulting segment demonstrated strong revenue growth, up 13% in Q3 and 10% year-to-date, driven by specialty consulting and HR consulting.
5The Investment Management segment (Putnam) experienced an 8% revenue decline in Q3 and a 10% decline year-to-date, reflecting lower average assets under management.
6The company continued its restructuring initiatives, with the 2006 Plan expected to yield $350 million in annualized savings.
7Significant progress was made in reducing legacy legal and settlement costs, contributing to improved profitability.

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2006

Summary

Key Highlights

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