PDF of Press Release

NEW YORK, NEW YORK, February 14, 2006 - Marsh & McLennan Companies, Inc. (MMC) today reported financial results for the quarter and year ended December 31, 2005. Marsh's U.S. wholesale broking operations and Sedgwick Claims Management Services, sold in October 2005 and January 2006, respectively, are shown in MMC's financial results as discontinued operations.

In the fourth quarter, consolidated revenues were $2.8 billion, a 2 percent decline from the fourth quarter of 2004. Net income was $35 million, or $.06 per share, compared with a net loss of $680 million, or $1.29 per share, in the fourth quarter of 2004. Income from continuing operations was $17 million, or $.03 per share, compared with a net loss of $683 million, or $1.29 per share, in the fourth quarter of 2004. Excluding noteworthy items and stock option expense described in the attached supplemental schedules, earnings per share from net income in the fourth quarter of 2005 was $.28, compared with $.26 in the same period of 2004.

Full-year consolidated revenues were $11.7 billion, compared with $11.8 billion in 2004. Net income for the full year was $404 million, or $.74 per share, compared with $176 million, or $.33 per share, in 2004. Income from continuing operations was $369 million, or $.67 per share, compared with $154 million, or $.29 per share, in 2004. Excluding noteworthy items and stock option expense, earnings per share for the full year from net income was $1.57, compared with $2.38 in 2004. The accompanying supplemental schedules give effect to discontinued operations and segment reclassifications. Quarterly trends are shown on pages 13, 15, and 16.

Michael G. Cherkasky, president and chief executive officer of MMC, said: "Two thousand five was a challenging year for MMC. We did what we critically needed to do. We stabilized MMC; we preserved our great brands — Marsh, Mercer, Putnam, Kroll, and Guy Carpenter; and we overwhelmingly retained our clients and employees. MMC is a much stronger company today than it was a year ago. Marsh had better client and staff retention and better profitability in the fourth quarter than in the previous quarters of 2005. We expect those trends to continue in 2006. Mercer Human Resource Consulting, Mercer Specialty Consulting, and Kroll grew revenues and are positioned for increased profitability in 2006, as is Guy Carpenter. Putnam continues to reduce its net outflows as it slowly but steadily completes its turnaround. MMC is headed in the right direction."

Risk and Insurance Services
The improved business tone at Marsh is apparent in fourth quarter results. Both worldwide and North American client retention rates improved meaningfully from what has been reported throughout the year. Underlying revenues, excluding market services revenues, declined 2 percent, also a marked improvement from previous quarters. These results were achieved despite continued premium rate declines in the commercial insurance marketplace, particularly in Europe.

Guy Carpenter's revenues in the fourth quarter were $155 million, unchanged from the same period of 2004. While not reflected in 2005 results, January 2006 renewals showed premium rate increases in property catastrophe coverage.

Revenues from Marsh & McLennan Risk Capital Holdings were $27 million, reflecting lower sales of equity investments. This was a marked decline not only from the $58 million of revenues in the fourth quarter of 2004 but also from the first three quarters of 2005.

Total risk and insurance services revenues declined 7 percent to $1.3 billion in the fourth quarter. The decline was primarily due to the year-over-year effect of market services revenues, the reduced sales of equity investments, and foreign currency translation. These results exclude strong revenue growth by Sedgwick Claims Management Services, which previously had been included in related insurance services but is now reflected in discontinued operations.

Risk Consulting and Technology
Kroll continued to produce strong revenue growth in the fourth quarter. Revenues increased 14 percent to $230 million from $201 million, or 18 percent on an underlying basis, led by strong growth in corporate advisory and restructuring, background screening, and technology services. In Kroll's first full year of operations as part of MMC, revenues were $946 million, and operating income was $124 million.

Consulting
Mercer's total revenues increased 6 percent in the fourth quarter to $966 million. Specialty consulting produced excellent results, with revenues increasing 16 percent to $248 million, compared with the fourth quarter of 2004. Mercer Oliver Wyman and Mercer's strategy and operations consulting businesses fueled this performance, continuing a pattern of strong growth throughout 2005. Mercer Human Resource Consulting reported a 2 percent increase in quarterly revenues to $664 million. Underlying growth of 3 percent reflected solid results in retirement and human capital consulting and overall strength in international operations.

Investment Management
Putnam's revenues in the fourth quarter declined 12 percent to $360 million, in line with the year-over-year decline in average assets under management, which were $188 billion, compared with $211 billion in the fourth quarter of 2004. Net redemptions in the quarter were $6.4 billion. Total assets under management on December 31, 2005 were $189 billion, comprising $126 billion of mutual fund assets and $63 billion of institutional assets.

Other Items
The 2005 restructuring program resulted in savings of $160 million in the year, with the remaining $215 million of the total annualized savings of $375 million to occur in 2006, all in risk and insurance services. Restructuring-related costs totaled $320 million in 2005, and the remaining $50 million is anticipated in the first half of 2006.

Fourth quarter results also include expenses of $40 million in connection with certain litigation and related matters.

MMC's net debt (total debt less cash and cash equivalents) was $3.5 billion at year-end, reflecting a decline of approximately $250 million in the fourth quarter and $430 million for the full year, driven primarily by strong operating cash flows. In addition, the company made discretionary cash contributions of $235 million to its U.K. pension plans, bringing aggregate discretionary pension contributions in the United States and the United Kingdom to $440 million for the full year.

In the fourth quarter of 2005, MMC entered into a new five-year revolving credit agreement in the amount of $1.2 billion. MMC also repatriated $585 million of accumulated international earnings at a favorable tax rate pursuant to the American Jobs Creation Act of 2004. To fund the repatriation, certain MMC international subsidiaries incurred borrowings under the new credit facility, which increased both cash and debt levels at the end of 2005.

The combined annualized revenues from Marsh's U.S. wholesale broking operations, Crump Group, and Sedgwick Claims Management Services were approximately $470 million in 2005 and $400 million in 2004. The results of these operations, including the after-tax net gain on the sale of Crump, have been reflected as discontinued operations. The gain on the sale of Sedgwick Claims Management Services will be reflected in the first quarter of 2006.

Conference Call
A conference call to discuss fourth quarter and year-end 2005 results will be held today at 10:00 a.m. Eastern Standard Time. To participate in the teleconference, please dial (888) 208-1812 or (719) 457-2654 (international). The access code for both numbers is 4446190. The audio webcast (which will be listen-only) may be accessed at www.mmc.com. A replay of the webcast will be available beginning approximately two hours after the event at the same web address.

MMC is a global professional services firm with annual revenues of approximately $12 billion. 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. Approximately 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, Pacific, 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 use words like "anticipate," "believe," "estimate," "expect," "intend," "plan," "project" and similar terms, express management's current views concerning future events or results. For example, we may use forward-looking statements when addressing topics such as: future actions by our management or 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; the impact of acquisitions and dispositions; 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 economic and reputational impact of: litigation and regulatory proceedings brought by federal and state regulators and law enforcement authorities concerning our insurance and reinsurance brokerage operations and our investment management operations (including the complaint filed in October 2004 by the New York Attorney General's office relating to market service agreements and other matters, and proceedings relating to market-timing matters at Putnam); and class actions, derivative actions and individual suits filed by policyholders and shareholders in connection with the foregoing;
  
  
• the extent to which we are able to replace the revenues we previously derived from contingent commissions, which we eliminated in late 2004;
  
  
• our ability to retain existing clients and attract new business, particularly in our risk and insurance services segment, and our ability to continue employment of key revenue producers and managers;
  
  
• period-to-period revenue fluctuations relating to the net effect of new and lost business production and the timing of policy inception dates;
  
  
• the impact on our commission revenues of changes in the availability of, and the premiums insurance carriers charge for, insurance products;
  
  
• the actual and relative investment performance of Putnam's mutual funds and institutional and other advisory accounts, and the extent to which Putnam reverses its recent net redemption experience, increases assets under management and maintains management and administrative fees at historical levels;
  
  
• our ability to implement our restructuring initiatives and otherwise reduce expenses;
  
  
• our ability to execute our strategy of operating as "one company," which includes employing technology-based business processes across our organization, creating proprietary processes based on enterprise-wide intellectual capital, and cross-selling to clients throughout MMC's businesses;
  
  
• the impact of competition, including with respect to pricing and the emergence of new competitors;
  
  
• the impact of increasing focus by regulators, clients and others on potential conflicts of interest;
  
  
• changes in the value of MMC's investments in individual companies and investment funds;
  
  
• our ability to make strategic acquisitions and to integrate, and realize expected synergies, savings or strategic benefits from, acquired businesses;
  
  
• our ability to meet our financing needs by generating cash from operations and accessing external financing sources, including the potential impact of rating agency actions on our cost of financing or ability to borrow;
  
  
• the impact on our operating results of foreign exchange fluctuations; and
  
  
• changes in the tax or accounting treatment of our operations, and the impact of other legislation and regulation in the jurisdictions in which we operate.
  
  

Forward-looking statements speak only as of the date on which they are made, and MMC undertakes no obligation to update any such statement to reflect events or circumstances 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 position, is contained in MMC's filings with the Securities and Exchange Commission.

MMC and its operating companies use their websites to convey meaningful information about their businesses, including the anticipated release of quarterly financial results and the posting of updates of assets under management at Putnam. Monthly updates of total assets under management at Putnam will be posted to the MMC website the first business day following the end of each month. Putnam posts mutual fund and performance data to its website regularly. Assets for most Putnam retail mutual funds are posted approximately two weeks after each month-end. Mutual fund net asset value (NAV) is posted daily. Historical performance and Lipper rankings are also provided. Investors can link to MMC and its operating company websites through www.mmc.com.