What is the impact of the Putnam sale on Marsh & McLennan's financials?

The sale of Putnam Investments closed on August 3, 2007, for $3.9 billion. MMC expects net proceeds of approximately $2.5 billion after taxes and minority interest. This transaction will allow MMC to significantly reduce debt and fund share repurchases. Putnam's results are reported as discontinued operations for the periods presented.

How did the different business segments perform?

The Consulting segment was the primary driver of revenue growth, with a 16% increase in Q2 2007 due to strong performance in both Mercer Human Resource Consulting and Oliver Wyman Group. Risk and Insurance Services saw a 2% revenue increase in Q2, but underlying revenue slightly declined when excluding prior-year market services revenue. The Risk Consulting & Technology segment experienced a revenue decrease of 6% in Q2.

What is the outlook for operating expenses and restructuring costs?

Operating expenses increased by 7% in Q2 and 6% for the six months, largely due to higher compensation and benefits costs, especially in the Consulting segment, and foreign exchange impacts. Restructuring initiatives are ongoing, aiming for annualized savings of approximately $350 million by the end of 2008, with some charges related to these plans continuing to be incurred.

What are the significant legal and regulatory matters facing the company?

MMC is involved in numerous ongoing lawsuits and regulatory proceedings, primarily related to past brokerage compensation practices and market-timing activities at Putnam. While the company has established reserves for some matters, the ultimate financial impact and timing of resolution for many of these cases remain uncertain and could materially affect future results.

MRSH/MMC 10-Q Quarterly Report Q2 FY2007 — Revenue, Net Income, EPS

Summary

Marsh & McLennan Companies, Inc. (MMC) reported its financial results for the second quarter and first six months ended June 30, 2007. The company demonstrated revenue growth driven primarily by its Consulting segment, which saw a significant increase due to both underlying business expansion and foreign exchange translation effects. The Risk and Insurance Services segment experienced modest revenue growth, with underlying revenue showing a slight decline when excluding certain market services revenue from the prior year. Operationally, while overall revenue increased, operating expenses also rose, particularly in compensation and benefits, impacting operating income. A significant strategic event during this period was the sale of Putnam Investments, MMC's investment management segment, which closed on August 3, 2007. The proceeds from this sale are expected to provide a substantial cash infusion, with plans to use it for debt reduction and share repurchases. The company continues to navigate substantial legal and regulatory matters, which are ongoing and add a layer of uncertainty to future financial performance.

Key Highlights

1Consolidated revenue increased 7% in Q2 2007 and 6% for the first six months of 2007, driven by strong performance in the Consulting segment.
2The sale of Putnam Investments to Great-West Lifeco Inc. closed on August 3, 2007, for $3.9 billion, with expected net proceeds of approximately $2.5 billion.
3Operating income for the first six months of 2007 increased 10% to $660 million, despite a 6% increase in operating expenses.
4The Consulting segment revenue grew 16% in Q2 2007 and 15% for the first six months, with underlying revenue up 11% and 9% respectively.
5Risk and Insurance Services revenue grew 2% in Q2 2007 and 1% for the first six months. Underlying revenue for this segment declined 1% and 2% respectively, excluding market services revenue.
6The company utilized $164 million of cash for operations in the first six months of 2007, compared to using $375 million in the prior year period.
7MMC announced a $1.5 billion share repurchase program following the Putnam sale, in addition to an ongoing $500 million accelerated share repurchase program.

MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2007

Summary

Key Highlights

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