NEW YORK, NEW YORK, May 8, 2007 — Marsh & McLennan Companies, Inc. (MMC) today reported financial results for the first quarter ended March 31, 2007. Consolidated revenues in the first quarter were $2.8 billion, an increase of 5 percent from the first quarter of 2006, or 1 percent on an underlying basis. Income from continuing operations rose 14 percent to $228 million, or $.41 per share, from $200 million, or $.36 per share last year.
"The first quarter demonstrated the strength of MMC as a diversified company," said Michael G. Cherkasky, president and chief executive officer of MMC. "We met our overall corporate performance expectations while we continued to position Marsh for success in the future. The consulting segment continued to perform very well, growing revenues 13 percent and operating income 22 percent on a business with annual revenues approaching $4.5 billion. Kroll performed as expected, with strong growth in its largest operation, technology-enabled solutions. Guy Carpenter produced solid results, driven by continued strong new business. Marsh made significant strides in executing the realignment of its operations, repositioning the business for long-term growth. Change always has a short-term cost, but we are confident we are making the right trade-offs in Marsh. Also in the first quarter, we announced that Great-West Lifeco, a subsidiary of Power Financial Corporation, agreed to purchase Putnam for $3.9 billion in cash. This transaction is expected to close in the second quarter. In recognition of MMC's improving operating performance and greatly strengthened financial position, MMC's Board of Directors has approved a $500 million share repurchase program, which we expect to execute promptly."
Risk and Insurance Services
Marsh's revenues were $1.1 billion, unchanged from the first quarter of 2006. Geographically, Marsh revenues included $540 million in the Americas, a decline of 5 percent from the prior year's quarter; $524 million in EMEA, an increase of 3 percent; and $78 million in Asia Pacific, an increase of 12 percent. New business increased 7 percent in the first quarter, reflecting growth of 5 percent in the Americas, 8 percent in EMEA, and 17 percent in Asia Pacific. Premium rate declines in the commercial insurance marketplace continued through the first quarter. Underlying revenues declined 3 percent in the quarter, primarily due to lower retention rates in the United States.
Guy Carpenter's revenues increased 4 percent in the first quarter to $292 million, driven by 11 percent growth in new business. These results were achieved despite the decline in U.S. property catastrophe rates from the peak levels seen in the mid-year 2006 renewal season and higher risk retention by clients. Underlying revenues increased 2 percent in the quarter.
Risk Capital Holdings recognized revenues of $49 million in the first quarter, compared with $46 million in the same period of 2006. Revenues in the quarter were derived from MMC's private equity fund investments.
Risk Consulting and Technology
Mercer Human Resource Consulting increased revenues 8 percent to $800 million in the first quarter, with a 4 percent increase on an underlying basis. This growth was achieved throughout Mercer HR's operations: retirement and investment produced $319 million in revenues, an increase of 11 percent; health and benefits, $183 million, the same level as last year; outsourcing, $176 million, an increase of 13 percent; and talent, $99 million, an increase of 6 percent.
Mercer Specialty Consulting's revenues grew 25 percent to $329 million in the first quarter, with a 15 percent increase on an underlying basis, continuing the strong growth this group has achieved over the last four years. Each of the Mercer Specialty companies contributed to this exceptional performance.
In the first quarter, Putnam had revenues of $356 million, an increase of 3 percent from the first quarter of 2006. Putnam's assets under management on March 31, 2007 were $188 billion, comprising $119 billion in mutual fund assets and $69 billion in institutional assets. Average assets under management were $189 billion, compared with $190 billion for the first quarter of 2006.
MMC Share Repurchase
MMC is a global professional services firm. It is the parent company of Marsh, the world's leading risk and insurance services firm; Guy Carpenter, the world's leading risk and reinsurance specialist; Kroll, the world's leading risk consulting company; Mercer, a major global provider of human resource and specialty consulting services; and Putnam Investments, one of the largest investment management companies in the United States. More than 55,000 employees provide analysis, advice, and transactional capabilities to clients in over 100 countries. Its stock (ticker symbol: MMC) is listed on the New York, Chicago, and London stock exchanges. MMC's website address is www.mmc.com.
This press release contains "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management's current views concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "intend," "plan," "project" and similar terms, and future or conditional tense verbs like "could," "should," "will" and "would." For example, we may use forward-looking statements when addressing topics such as: the timing and expected impact of acquisitions and dispositions; future actions by regulators; the outcome of contingencies; changes in our business strategy; changes in our business practices and methods of generating revenue; the development and performance of our services and products; market and industry conditions, including competitive and pricing trends; changes in the composition or level of MMC's revenues; our cost structure and the outcome of restructuring and other cost-saving initiatives; share repurchase programs; and MMC's cash flow and liquidity.
Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include:
The factors identified above are not exhaustive. MMC and its subsidiaries operate in a dynamic business environment in which new risks may emerge frequently. Accordingly, MMC cautions readers not to place undue reliance on its forward-looking statements, which speak only as of the dates on which they are made.
MMC undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made. Further information concerning MMC and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in MMC's filings with the Securities and Exchange Commission.