MARSH & MCLENNAN COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2008

Summary

Marsh & McLennan Companies (MMC) reported a net loss of $8 million for the third quarter of 2008, a significant decline from the $1.945 billion net income in the prior year's quarter. This downturn was heavily influenced by the absence of a large gain from the sale of Putnam Investments in the prior year and the inclusion of a $540 million goodwill impairment charge in the year-to-date results, primarily impacting the Risk Consulting & Technology segment. Revenue for the third quarter showed modest growth of 5% to $2.8 billion, with underlying revenue up 2%, driven by the Consulting and Risk & Insurance Services segments. However, operating income decreased to $70 million from $116 million year-over-year, impacted by higher restructuring charges and a professional liability claim. The company's balance sheet shows a decrease in cash and cash equivalents to $1.46 billion from $2.13 billion at the start of the year, alongside a reduction in total assets and equity, reflecting the challenging economic environment. Investors should note the significant year-over-year net income drop and the impact of the goodwill impairment. While revenue showed growth, the decline in operating income and the increase in restructuring costs are key concerns. The company's liquidity remains adequate, with a substantial revolving credit facility, but the overall financial performance in this quarter is overshadowed by the prior year's sale gain and current economic pressures. The ongoing legal proceedings and potential liabilities remain a significant factor to monitor.

Key Highlights

• 1Reported a net loss of $8 million for Q3 2008, compared to a net income of $1.945 billion in Q3 2007.
• 2Consolidated revenue for Q3 2008 increased 5% to $2.8 billion, with underlying revenue up 2%.
• 3Operating income for Q3 2008 decreased to $70 million from $116 million in the prior year, impacted by higher restructuring charges and a professional liability claim.
• 4Included a $540 million goodwill impairment charge in the nine-month results, primarily affecting the Risk Consulting & Technology segment.
• 5Cash and cash equivalents decreased to $1.46 billion as of September 30, 2008, from $2.13 billion as of December 31, 2007.
• 6Consulting segment revenue grew 9% in Q3, driven by Mercer's strong performance, while Risk & Insurance Services revenue saw a 1% increase.
• 7The company faces significant ongoing legal proceedings and contingencies that could materially impact future financial results.

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