SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2009~~March 31, 2010

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, New York 10036

(212) 345-5000

Commission file number 1-5998

State of Incorporation: Delaware

I.R.S. Employer Identification No. 36-2668272

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer x	Accelerated Filer ¨

	Non-Accelerated Filer ¨ ~~(Do~~(Do not check if a smaller reporting company)	Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~October 31, 2009,~~April 30, 2010, there were outstanding ~~527,513,131~~541,237,396 shares of common stock, par value $1.00 per share, of the registrant.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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,” “may,” “might,” “should,” “will” and “would.” For example, we may use forward-looking statements when addressing topics such as: the outcome of contingencies; market and industry ~~conditions, including competitive and pricing trends;~~conditions; changes in our business strategies and methods of generating revenue; the development and performance of our services and products; changes in the composition or level of MMC’s revenues; our cost structure and the outcome of cost-saving or restructuring initiatives; ~~the outcome of contingencies;~~ dividend policy; the expected impact of acquisitions and dispositions; pension obligations; cash flow and liquidity; future actions by regulators; and the impact of changes in accounting rules.

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:

our exposure to potential liabilities arising ~~from errors and omissions claims~~out of a civil lawsuit against ~~us, including claims of professional negligence in providing actuarial services, such as those alleged~~Mercer filed by the Alaska Retirement Management Board in ~~a pending lawsuit against Mercer~~Alaska state court that is scheduled for trial in ~~the spring~~July 2010 in Juneau, which alleges professional negligence and malpractice, breach of ~~2010;~~contract, breach of implied covenant of good faith and fair dealing, negligent misrepresentation, unfair trade practices and fraud and misrepresentation related to actuarial services provided by Mercer;

the potential impact of ~~an adverse ruling in, or the settlement~~rating agency actions on our cost of ~~the purported securities class action against MMC, Marsh~~financing and ~~certain of their former officers concerning the late 2004 decline in MMC’s share price~~ability to borrow, as well as on our operating costs and the purported ERISA class action pending against MMC and various current and former employees, officers and directors on behalf of participants and beneficiaries of an MMC retirement plan, both of which are currently expected to go to trial in 2010;competitive position;

the impact of current economic and financial market conditions on our results of operations and financial ~~condition;~~

~~the impact on~~condition, particularly with respect to our consulting ~~segment of pricing trends, utilization rates, the general economic environment and legislative changes affecting client demand;~~businesses;

the potential impact of legislative, regulatory, accounting and other initiatives which may be taken in response to the current financial crisis;

our ability to make strategic acquisitions and dispositions and to integrate, and realize expected synergies, savings or strategic benefits from the businesses we acquire;

changes in the funded status of our global defined benefit pension plans and the impact of any increased pension funding resulting from those changes;

our exposure to potential liabilities arising from errors and omissions claims against us;

our exposure to potential criminal sanctions or civil remedies if we fail to comply with foreign and U.S. laws and regulations that are applicable to our international operations, including import and export requirements, U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to government officials;

the ~~potential impact of rating agency actions on our cost of financing and ability to borrow, as well as on our operating costs and competitive position;~~

~~the~~ impact on our net income caused by fluctuations in foreign currency exchange rates;

~~changes in the funded status of our global defined benefit pension plans and the impact of any increased pension funding resulting from those changes;~~

the extent to which we retain existing clients and attract new business, and our ability to incentivize and retain key employees;

the impact of competition, including with respect to pricing, and the emergence of new ~~competitors, and the fact that many of Marsh’s competitors are not constrained in their ability to receive contingent commissions;~~competitors;

our ability to successfully obtain payment from our clients of the amounts they owe us for work performed;

¡
~~our ability to make strategic acquisitions and dispositions and to integrate, and realize expected synergies, savings or strategic benefits from, the businesses we acquire;~~

our ability to successfully recover should we experience a disaster or other business continuity problem;

changes in applicable tax or accounting requirements; and

potential income statement effects from the application of FASB’s ASC Topic No. 740 (“Income Taxes”) regarding accounting treatment of ~~uncertainties in income taxes~~uncertain tax benefits and valuation allowances and ASC Topic No. 350 (“Intangibles – Goodwill and Other”), including the effect of any subsequent adjustments to the estimates MMC uses in applying these accounting standards.

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, including the “Risk Factors” section of MMC’s most recently filed Annual Report on Form 10-K.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		5

ITEM 1.	FINANCIAL STATEMENTS	5

	CONSOLIDATED STATEMENTS OF INCOME	5

	CONSOLIDATED BALANCE SHEETS	6

	CONSOLIDATED BALANCE SHEETS ~~(Continued)~~(CONTINUED)	7

	CONSOLIDATED STATEMENTS OF CASH FLOWS	8

	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME	9

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	10

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3531

ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	4841

ITEM 4.	CONTROLS & PROCEDURES	4942

PART II. OTHER INFORMATION		5043

ITEM 1.	LEGAL PROCEEDINGS	5043

ITEM 1A.	RISK FACTORS	5043

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	5043

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	5144

ITEM 4.	~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS~~	51[REMOVED AND RESERVED]

ITEM 5.	OTHER INFORMATION	5144

ITEM 6.	~~EXHIBITS~~	51EXHIBITS	44

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share figures)	2009		2008		2009		2008
For the Three Months Ended March 31, (In millions, except per share figures)									2010		2009
Revenue	$2,523		$ 2,819		$7,761		$8,876		$2,795		$2,609
Expense:
Compensation and benefits	1,606		1,805		4,781		5,506		1,650		1,571
Other operating expenses	701		950		2,146		2,676		706		714
Goodwill impairment charge	—		—		315		540
Operating expenses	2,307		2,755		7,242		8,722		2,356		2,285
Operating income	216		64		519		154		439		324
Interest income	3		10		13		40		4		6
Interest expense	(59	)	(54	)	(180	)	(165	)	(60	)	(56	)
Investment income (loss)	21		(23	)	(25	)	(31	)	8		(15	)
Income (loss) before income taxes	181		(3	)	327		(2	)
Income tax provision (benefit)	(40	)	(20	)	89		139
Income (loss) from continuing operations	221		17		238		(141	)
Income before income taxes									391		259
Income taxes									117		80
Income from continuing operations									274		179
Discontinued operations, net of tax	4		(22	)	(21	)	(4	)	(22	)	1
Net income (loss)	225		(5	)	217		(145	)
Less: Net income attributable to non-controlling interest	4		3		13		8
Net income (loss) attributable to MMC	$ 221		$ (8	)	$ 204		$ (153	)
Basic net income (loss) per share – Continuing operations	$ 0.41		$ 0.03		$ 0.42		$(0.28	)
– Net income (loss) attributable to MMC	$ 0.41		$ (0.02	)	$ 0.38		$(0.29	)
Diluted net income (loss) per share – Continuing operations	$ 0.40		$ 0.03		$ 0.42		$(0.29	)
– Net income (loss) attributable to MMC	$ 0.41		$ (0.02	)	$ 0.38		$(0.30	)
Net income before non-controlling interests									252		180
Less: Net income attributable to non-controlling interests									4		4
Net income attributable to MMC									$ 248		$ 176
Basic net income per share – Continuing operations									$ 0.50		$ 0.33
– Net income									$ 0.46		$ 0.33
Diluted net income per share – Continuing operations									$ 0.49		$ 0.33
– Net income									$ 0.45		$ 0.33
Weighted average number of shares outstanding – Basic	524		513		521		514		533		515
– Diluted	526		516		522		514		536		515
Shares outstanding at September 30,	526		514		526		514
Shares outstanding at March 31,									541		517
Dividends declared per share	$ 0.20		$ 0.20		$ 0.80		$ 0.80		$ 0.40		$ 0.40

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions of dollars)	September 30, 2009		December 31, 2008		March 31, 2010		December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$ 1,813		$ 1,685		$ 1,167		$ 1,777
Receivables
Commissions and fees	2,460		2,418		2,538		2,429
Advanced premiums and claims	73		86		63		86
Other	304		354		447		457
	2,837		2,858		3,048		2,972
Less-allowance for doubtful accounts and cancellations	(123	)	(103	)	(113	)	(117	)
Net receivables	2,714		2,755		2,935		2,855
Other current assets	349		344		490		299
Total current assets	4,876		4,784		4,592		4,931
Goodwill and intangible assets	7,047		7,163		7,250		7,173
Fixed assets (net of accumulated depreciation and amortization of $1,468 at September 30, 2009 and $1,301 at December 31, 2008)	964		969
Fixed assets (net of accumulated depreciation and amortization of $1,477 at March 31, 2010 and $1,465 at December 31, 2009)					920		952
Pension related assets	459		150		140		94
Deferred tax assets	1,126		1,146		1,096		1,242
Other assets	869		994		964		945
	$15,341		$15,206		$14,962		$15,337

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(Unaudited)


(In millions of dollars)	September 30, 2009		December 31, 2008		March 31, 2010		December 31, 2009
LIABILITIES AND EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$ 558		$ 408		$ 558		$ 558
Accounts payable and accrued liabilities	1,699		1,688		1,870		1,826
Accrued compensation and employee benefits	1,038		1,224		637		1,319
Accrued income taxes	—		66
Dividends payable	106		—		109		—
Total current liabilities	3,401		3,386		3,174		3,703
Fiduciary liabilities	3,881		3,297		3,909		3,559
Less – cash and investments held in a fiduciary capacity	(3,881	)	(3,297	)	(3,909	)	(3,559	)
	—		—		—		—
Long-term debt	3,037		3,194		3,032		3,034
Retirement and post-employment benefits	1,176		1,217
Retirement and post employment benefits					1,163		1,184
Liabilities for errors and omissions	530		512		517		518
Other liabilities	1,158		1,137		1,062		1,035
Commitments and contingencies
Equity:
Stockholder’s Equity:
Preferred stock, $1 par value, authorized 6,000,000 shares, none issued	—		—		—		—
Common stock, $1 par value, authorized 1,600,000,000 shares, issued 560,641,640 shares at September 30, 2009 and December 31, 2008	561		561
Common stock, $1 par value, authorized 1,600,000,000 shares, issued 560,641,640 shares at March 31, 2010 and December 31, 2009					561		561
Additional paid-in capital	1,181		1,245		1,109		1,211
Retained earnings	7,013		7,237		7,062		7,033
Accumulated other comprehensive loss	(1,836	)	(2,098	)	(2,246	)	(2,171	)
Non-controlling interests	35		38		37		35
	6,954		6,983		6,523		6,669
Less – treasury shares, at cost, 35,125,850 shares at September 30, 2009 and 46,375,622 shares at December 31, 2008	(915	)	(1,223	)
Total equity	6,039		5,760
Less – treasury shares, at cost, 19,825,614 shares at March 31, 2010 and 30,967,116 shares at December 31, 2009					(509	)	(806	)
Total stockholders’ equity					6,014		5,863
	$15,341		$15,206		$14,962		$15,337

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


For the Nine Months Ended September 30, (In millions of dollars)	2009			2008
For the Three Months Ended March 31, (In millions of dollars)							2010		2009
Operating cash flows:
Net income (loss)	$	217		$	(145	)
Adjustments to reconcile net income (loss) to cash provided by operations:
Goodwill impairment charge		315			540
Net income before non-controlling interests							$ 252		$ 180
Adjustments to reconcile net income to cash used for operations:
Depreciation and amortization of fixed assets and capitalized software		229			249		80		74
Amortization of intangible assets		48			53		17		16
Provision for deferred income taxes		25			56		100		16
Loss on investments		30			37
(Gain) loss on investments							(8	)	16
Loss on disposition of assets		46			21		26		12
Stock option expense		8			28
Accrual of stock based compensation							6		—
Changes in assets and liabilities:
Net receivables		46			(19	)	(73	)	9
Other current assets		(8	)		(9	)	(7	)	(8	)
Other assets		(253	)		(67	)	(63	)	(36	)
Accounts payable and accrued liabilities		1			(177	)	64		(18	)
Accrued compensation and employee benefits		(186	)		(184	)	(682	)	(629	)
Accrued income taxes		(96	)		(66	)	(37	)	19
Other liabilities		63			78		15		(113	)
Effect of exchange rate changes		(80	)		(92	)	59		12
Net cash provided by operations		405			303
Net cash used for operations							(251	)	(450	)
Financing cash flows:
Proceeds from issuance of debt		398			—		—		397
Repayments of debt		(406	)		(258	)	(2	)	(2	)
Purchase of non-controlling interests		(24	)		—		(15	)	(24	)
Purchase of treasury shares		(32	)		(38	)
Shares withheld for taxes on vested units							(40	)	(20	)
Issuance of common stock		28			55		10		11
Dividends paid		(322	)		(308	)	(109	)	(102	)
Net cash used for financing activities		(358	)		(549	)
Net cash (used for) provided by financing activities							(156	)	260
Investing cash flows:
Capital expenditures		(209	)		(334	)	(80	)	(69	)
Net sales of long-term investments		17			33		19		6
Proceeds from sales related to fixed assets		7			11
Proceeds from sales of fixed assets							1		1
Dispositions		75			56		110		—
Acquisitions		(7	)		(114	)
Acquisitions (including amounts paid into escrow)							(197	)	(2	)
Other, net		3			(2	)	5		2
Net cash used for investing activities		(114	)		(350	)	(142	)	(62	)
Effect of exchange rate changes on cash and cash equivalents		195			(76	)	(61	)	(19	)
Increase (decrease) in cash and cash equivalents		128			(672	)
Decrease in cash and cash equivalents							(610	)	(271	)
Cash and cash equivalents at beginning of period		1,685			2,133		1,777		1,685
Cash and cash equivalents at end of period	$	1,813		$	1,461		$1,167		$1,414

The accompanying notes are an integral part of these consolidated statements.

MARSH & ~~McLENNAN~~MCLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(Unaudited)


For the Nine Months Ended September 30, (In millions, except per share figures)	2009			2008
Common Stock
Balance, beginning and end of period	$	561		$	561
For the Three Months Ended March 31, (In millions, except per share figures)								2010		2009
COMMON STOCK
Balance, beginning and end of year								$ 561		$ 561

Additional Paid-In Capital
ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year	$	1,245		$	1,242			$ 1,211		$ 1,246
Change in accrued stock compensation costs		11			(37	)	��	(71	)	(31	)
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax benefits		2			(9	)
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax deficiency								(16	)	4
Purchase of subsidiary shares from non-controlling interests		(38	)		—			—		(36	)
Issuance of shares for acquisitions		(39	)		—			(15	)	—
Balance, end of period	$	1,181		$	1,196			$ 1,109		$ 1,183

Retained Earnings
RETAINED EARNINGS
Balance, beginning of year	$	7,237		$	7,732			$ 7,033		$ 7,237
Net income (loss) attributable to MMC (a)		204			(153	)
Net income attributable to MMC^(a)								248		176
Dividend equivalents paid		(10	)		(10	)		(4	)	(3	)
Dividends declared – (per share amounts: $.80)		(418	)		(412	)
Dividends declared – (per share amounts: $0.40 in 2010 and 2009)								(215	)	(208	)
Balance, end of period	$	7,013		$	7,157			$ 7,062		$ 7,202

Accumulated Other Comprehensive Loss
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance, beginning of year	$	(2,098	)	$	(351	)		$(2,171	)	$(2,098	)
Foreign currency translation adjustments (b)		393			(245	)		(185	)	(43	)
Unrealized investment holding gains, net of reclassification adjustments (c)		—			3
Net changes under ASC Topic No. 960, net of tax (d)		(131	)		(169	)
Unrealized investment holding losses, net of reclassification adjustments^(c)								(8	)	(4	)
Net changes under benefit plans, net of tax^(d)								118		13
Balance, end of period	$	(1,836	)	$	(762	)		$(2,246	)	$(2,132	)

Treasury Shares
TREASURY SHARES
Balance, beginning of year	$	(1,223	)	$	(1,362	)		$ (806	)	$(1,223	)
Issuance of shares under stock compensation plans and employee stock purchase plans		127			126			105		69
Issuance of shares for acquisitions		181			—			192		—
Balance, end of period	$	(915	)	$	(1,236	)		$ (509	)	$(1,154	)

Non-Controlling Interests
NON-CONTROLLING INTERESTS
Balance, beginning of year	$	38		$	33			$ 35		$ 38
Net Income attributable to non-controlling interests (e)		13			8
Net Income attributable to non-controlling interests, net of discontinued operations^(e)								4		4
Purchase of subsidiary shares from non-controlling interests		(9	)		—			—		(8	)
Other changes		(7	)		(3	)		(2	)	—
Balance, end of period	$	35		$	38			$ 37		$ 34
Total Equity	$	6,039		$	6,954
Total Comprehensive Income (Loss) (a+b+c+d+e)	$	479		$	(556	)
TOTAL STOCKHOLDERS’ EQUITY								$ 6,014		$ 5,694
TOTAL COMPREHENSIVE INCOME (LOSS)^(a+b+c+d+e)								$ 177		$ 146

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Operations

1.	~~Nature of Operations~~

Marsh & McLennan Companies, Inc. (“MMC”), a global professional services firm, is organized based on the different services that it offers. Under this organizational structure, MMC’s three business segments are: Risk and Insurance Services; Consulting; and Risk Consulting & Technology.

The Risk and Insurance Services segment provides risk management and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. MMC conducts business in this segment through Marsh and Guy Carpenter.

In ~~September 2009,~~February 2010, Marsh acquired ~~International Advisory Services, Ltd.~~Haake Companies, Inc., one of the largest ~~independent manager~~insurance agencies in the Midwest. In March 2010, Marsh acquired Thomas Rutherfoord, Inc., one of ~~captives~~the largest insurance broking firms in the Southeast and ~~third-party insurance companies in Bermuda. In~~mid-Atlantic regions of the U.S. On April ~~2009, Guy Carpenter~~1, 2010, Marsh completed the acquisition of ~~John B. Collins Associates, Inc.~~HSBC Insurance Brokers Ltd., ~~previously the fifth-largest reinsurance~~an international provider of risk intermediary ~~in the U.S.~~ and seventh-largest in the world. The acquisition of Collins further strengthens Guy Carpenter’s capabilities in medical professional liability, agriculture, Florida property, Program, and regional specialty lines of business. Also, in October 2009, Guy Carpenterrisk advisory services. On April 30, 2010, Marsh completed the acquisition of ~~London-based specialty reinsurance broker Rattner Mackenzie Limited from HCC~~the Bostonian Group Insurance ~~Holdings,~~Agency, Inc. and Bostonian Solutions, Inc. (collectively the “Bostonian Group”), one of the largest regional insurance brokerages in New England.

The Consulting segment provides advice and services to the managements of organizations in the area of human resource consulting, comprising retirement and investments, health and benefits, outsourcing and talent; and strategy and risk management consulting, comprising management, economic and brand consulting. MMC conducts business in this segment through Mercer and Oliver Wyman Group.

The Risk Consulting & Technology segment provides various risk consulting and related risk mitigation services to corporate, government, institutional and individual clients, including consulting services and security services; and technology-enabled services. MMC conducts business in this segment through Kroll. ~~During the second quarter of 2009, Kroll sold Kroll Government Services (“KGS”), which has been classified as a discontinued operation.~~ In ~~the fourth quarter of 2008, the principal operations within the corporate advisory and restructuring business were divested. Additionally, two small residual businesses were exited in~~ the first quarter of ~~2009. Based~~2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”). The after-tax loss on ~~the terms and conditions of the divestitures, MMC determined it has “continuing involvement”~~this disposal is included in ~~the divested businesses, as that term is used in SEC Staff Accounting Bulletin Topic 5e. Therefore, classification of the corporate advisory and restructuring businesses as~~ discontinued operations isin 2010. The operating results of KLS have not ~~appropriate~~been reclassified into discontinued operations, since the amounts are insignificant to MMC.

2. Principles of Consolidation and ~~their financial results in the current and prior periods are included in operating income.~~Other Matters

2.	~~Principles of Consolidation~~ ~~and Other Matters~~

The consolidated financial statements included herein have been prepared by MMC pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to such rules and regulations for interim filings, although MMC believes that the information and disclosures presented are adequate to make such information and disclosure not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in MMC’s Annual Report

on Form 10-K for the year ended December 31, ~~2008~~2009 (the ~~“2008~~“2009 10-K”) ~~and the amended financial information filed in MMC’s Current Report on Form 8-K dated August 28, 2009.~~.

The financial information contained herein reflects all adjustments consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of MMC’s results of operations for the ~~three and nine-month~~three-month periods ended ~~September 30, 2009~~March 31, 2010 and ~~2008. Management has evaluated subsequent events through November 5, 2009, the date the financial statements were issued.~~2009.

Effective January 1, 2009, the Company adopted retrospectively the new standards issued by the Financial Accounting Standards Board (“FASB”) affecting the calculation of earnings per share, Financial Accounting Standards Codification (“ASC”) Topic No. 260 (“Earnings per Share”) and the presentation of non-controlling interests (previously referred to as minority interests), ASC Topic No. 160 (“Non-controlling Interests”), which are described more fully in Notes 4 and 18 to the Consolidated Financial Statements. ~~Also, see Note 5 with respect to a correction in our Statements of Cash Flows.~~

The caption “Investment income (loss)” in the consolidated statements of income comprises realized and unrealized gains and losses from investments recognized in current earnings. It includes, when applicable, other than temporary declines in the value of available for sale securities and the change in value of MMC’s holdings in certain private equity funds. MMC’s investments may include direct investments in insurance or consulting companies and investments in private equity funds. Equity method ~~gains~~losses of ~~$22~~$1 million and ~~losses of $19~~$18 million are included in this line ~~for~~in 2010 and 2009, respectively.

MMC has an investment in Trident II limited partnership, a private equity investment fund. At March 31, 2010, MMC’s investment in Trident II was approximately $160 million, reflected in Other assets in the ~~three month periods ended September 30, 2009 and 2008, respectively. Equity method losses~~consolidated balance sheet. MMC’s maximum exposure to loss is equal to its investment plus any calls on its remaining capital commitment of ~~$29 million and $31 million are included in~~$81 million. Since this ~~line for~~fund is closed to new investments, none of the ~~nine month periods ended September 30, 2009 and 2008, respectively. During the third quarter of 2009, MMC recorded an other-than-temporary impairment charge of $4 million, related~~remaining capital commitment is expected to ~~a long-term investment that is carried on the cost basis.~~be called.

The ~~balance in~~Company reports a liability for unrecognized tax benefits resulting from uncertain tax ~~benefits declined~~positions taken or expected to $219 million at the end of the third quarter of 2009 compared with $293 million at the end of 2008. This decline reflects the net impact of expiring statutes of limitations, settlements, and changes in estimates with respect to uncertain tax benefits of prior years, as well as accruals for uncertain tax benefits arising in 2009. The net adjustments with respect to benefits of prior years reduced income tax expense of continuing operationsbe taken in the ~~third quarter of 2009 by $95 million, including the impact of interest and related~~ tax benefits. Of the balance of uncertain tax benefits remaining at the end of the third quarter of 2009, $145 million would reduce the effective tax rate if realized. The liability for interest at the end of the third quarter 2009 was $37 million.return. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and ~~$16~~approximately $80 million within the next 12twelve months due to settlement of audits and expiration of statutes of limitation. The 27% effective tax rate of the first nine months of 2009 reflects a nondeductible, $315 million non-cash goodwill impairment charge in the second quarter, largely offset by the benefit from reducing unrecognized tax benefits discussed above.

3. Fiduciary Assets and Liabilities

3.	~~Fiduciary Assets and Liabilities~~

In its capacity as an insurance broker or agent, MMC collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. MMC also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held by MMC in a fiduciary capacity. Risk and Insurance Services revenue includes interest on fiduciary funds of ~~$42~~$11 million and ~~$114~~$15 million for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ respectively. The Consulting segment recorded fiduciary interest income of $3$1 million in each of 2010 and ~~$8 million for the comparable periods in 2009 and 2008, respectively.~~2009. Since fiduciary assets are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities.

Fiduciary assets include approximately ~~$675~~$449 million of fixed income securities classified as available for sale. Unrealized gains or losses from available for sale securities are recorded in other comprehensive income until the securities are disposed of, or mature. Unrealized gains, net of tax, at ~~September 30, 2009~~March 31, 2010 were ~~$15~~$10 million.

Net uncollected premiums and claims and the related payables amounted to $9.5 billion at ~~September 30, 2009~~March 31, 2010 and ~~$8.6~~$9.9 billion at December 31, ~~2008.~~2009. MMC is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Net uncollected premiums and claims and the related payables are, therefore, not assets and liabilities of MMC and are not included in the accompanying consolidated balance sheets.

In certain instances, MMC advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. These advances are made from corporate funds and are reflected in the accompanying consolidated balance sheets as receivables.

4. Per Share Data

4.	~~Per Share Data~~

Effective January 1, 2009, MMC adopted the guidance in ASC Topic No. 260 – 10 – 45 (“Earnings Per Share”) which applies to the calculation of earnings per share (“EPS”) for ~~share-based~~share-

based payment awards with rights to dividends or dividend equivalents. The guidance indicates that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of basic and dilutive EPS using the two-class method. The adoption of this new guidance did not have an impact on the fiscal year 2008 for EPS from continuing operations, discontinued operations and net income because the treasury stock method was more dilutive. The impact of the adoption was a decrease in EPS of $.01, $.07, and $.08 for the fiscal year 2007, for EPS from continuing operations, discontinued operations, and net income, respectively, and a decrease in EPS of $.02, $.01, and $.03 for the fiscal year 2006, for EPS from continuing operations, discontinued operations and net income, respectively.

Basic net income per share attributable to MMC and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of MMC’s common stock.

Diluted net income per share attributable to MMC and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of MMC’s common stock, which have been adjusted for the dilutive effect of potentially issuable common shares (excluding those that are considered participating securities). The diluted earnings per share calculation reflects the more dilutive effect of either (a) the two-class method that assumes that the participating securities have not been exercised or (b) the treasury stock method. Reconciliation of the applicable income components used for diluted earnings per share and basic weighted average common shares outstanding to diluted weighted average common shares outstanding is presented below. ~~Prior period information has been adjusted to conform with the current year presentation in accordance with the retrospective adoption requirements of ASC Topic No. 260 – 10 – 45.~~

Basic EPS Calculation
Continuing Operations
   Three Months Ended
September 30,    Nine Months Ended
September 30,
(In millions, except per share figures)    2009    2008    2009    2008
Income (loss) from continuing operations
   $221    $17    $238    $(141 )
Less: Non-controlling interests
   4    3    13    8
Income (loss) from continuing operations attributable to MMC
   $217    $14    $225    $(149 )
Less: Portion attributable to participating securities
   4    1    5    (6 )
Income (loss) attributable to common shares for basic earnings per share
   $213    $13    $220    $(143 )
Basic weighted average common shares outstanding
   524    513    521    514

Basic EPS Calculation
Net Income
   Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions, except per share figures)    2009    2008 2009    2008
Net income (loss) attributable to MMC
   $   221    $      (8 ) $   204    $  (153 )
Less: Portion attributable to participating securities
   4    —    5    (6 )
Net income (loss) attributable to common shares for basic earnings per share
   $   217    $      (8 ) $   199    $  (147 )
Basic weighted average common shares outstanding
   524    513    521    514

Diluted EPS Calculation
Continuing Operations
   Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions, except per share figures)    2009    2008 2009    2008
Income (loss) from continuing operations
   $   221    $     17    $   238    $  (141 )
Less: Non-controlling interests
   4    3    13    8
Income (loss) from continuing operations attributable to MMC
   $   217    $     14    $   225    $  (149 )
Less: Portion attributable to participating securities⁽¹⁾
   4    1    5    —
Income (loss) attributable to common shares for diluted earnings per share
   $   213    $     13    $   220    $  (149 )
Basic weighted average common shares outstanding
   524    513    521    514
Dilutive effect of potentially issuable common shares
   2    3    1    —
Diluted weighted average common shares outstanding
   526    516    522    514
Average stock price used to calculate common stock equivalents
   $21.99    $30.45    $20.82    $27.84
Basic EPS Calculation
Continuing Operations

For the Three Months Ended March 31,
(In millions)
   2010    2009
Net income from continuing operations
   $ 274    $ 179
Less: Net income attributable to non-controlling interests
   4    4
Net income from continuing operations attributable to MMC
   270    175
Less: Portion attributable to participating securities
   6    5
Net income attributable to common shares for basic earnings per share
   $ 264    $ 170
Basic weighted average common shares outstanding
   533    515

⁽¹⁾	~~For the nine months ended September 30, 2008, earnings per share was more dilutive under the treasury stock method. Therefore, no amounts are allocated to participating securities in this period.~~


Basic EPS Calculation Net Income
For the Three Months Ended March 31, (In millions)	2010		2009
Net income attributable to MMC	$	248	$	176
Less: Portion attributable to participating securities		5		5
Net income attributable to common shares for basic earnings per share	$	243	$	171
Basic weighted average common shares outstanding		533		515

Diluted EPS Calculation
Net Income
   Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions, except per share figures)    2009    2008 2009    2008
Net income (loss) attributable to MMC
   $   221    $      (8 ) $   204    $  (153 )
Less: Portion attributable to participating securities⁽²⁾
   4    —    5    —
Net income (loss) attributable to common shares for diluted earnings per share
   $   217    $      (8 ) $   199    $  (153 )
Basic weighted average common shares outstanding
   524    513    521    514
Dilutive effect of potentially issuable common shares
   2    —    1    —
Diluted weighted average common shares outstanding
   526    513    522    514
Average stock price used to calculate common stock equivalents
   $21.99    $30.45    $20.82    $27.84


Diluted EPS Calculation Continuing Operations
For the Three Months Ended March 31, (In millions, except per share figures)	2010	2009
Net income from continuing operations	$ 274	$ 179
Less: Net income attributable to non-controlling interests	4	4
Net income from continuing operations attributable to MMC	270	175
Less: Portion attributable to participating securities	6	5
Net income attributable to common shares	$ 264	$ 170
Basic weighted average common shares outstanding	533	515
Dilutive effect of potentially issuable common shares	3	—
Diluted weighted average common shares outstanding	536	515
Average stock price used to calculate common stock equivalents	$22.83	$20.34

⁽²⁾	For the three and nine months ended September 30, 2008, earnings per share was more dilutive under the treasury stock method. Therefore, no amounts are allocated to participating securities in these periods.


Diluted EPS Calculation Net Income
For the Three Months Ended March 31, (In millions, except per share figures)	2010	2009
Net income attributable to MMC	$ 248	$ 176
Less: Portion attributable to participating securities	5	5
Net income attributable to common shares	$ 243	$ 171
Basic weighted average common shares outstanding	533	515
Dilutive effect of potentially issuable common shares	3	—
Diluted weighted average common shares outstanding	536	515
Average stock price used to calculate common stock equivalents	$22.83	$20.34

There were ~~46.9~~47.2 million and ~~52.5~~48.1 million stock options outstanding as of ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ respectively. ~~There were 10 million and 7 million common stock equivalents for~~

5. Supplemental Disclosures to the three and nine month periods ended September 30, 2008, respectively, that would have increased weighted average common shares outstanding; however, they have not been included in the calculation since their impact would be anti-dilutive.Consolidated Statements of Cash Flows

5. ~~Supplemental Disclosures to the Consolidated Statements of Cash Flows~~

The following schedule provides additional information concerning acquisitions, interest and income taxes paid for the ~~nine-month~~three-month periods ended ~~September 30, 2009~~March 31, 2010 and ~~2008.~~2009.

(In millions of dollars)    2009 2008
Assets acquired, excluding cash acquired
   $ 239    $ 237
Liabilities assumed
   (13 ) (78 )
Shares issued (6.8 million shares)
   (142 ) —
Issuance of debt and other liabilities
   (77 ) (45 )
Net cash outflow for acquisitions
   $ 7    $ 114

(In millions of dollars)    2009 2008
Interest paid
   $ 192    $ 194
Income taxes paid
   $ 148    $ 191


(In millions of dollars)	2010		2009
Assets acquired, excluding cash	$260		$2
Liabilities assumed	(36	)	—
Shares issued (7.4 million shares)	(178	)	—
Contingent purchase consideration	(55	)	—
Deferred purchase consideration	12		—
Subtotal	3		2
Cash paid into escrow for future acquisition	194		—
Net cash outflow for acquisitions	$197		$2



(In millions of dollars)	2010	2009
Interest paid	$86	$85
Income taxes paid	$69	$60

MMC had non-cash issuances of common stock under its share-based payment plan of ~~$122~~$119 million and ~~$103~~$75 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2010 and 2009, ~~and 2008,~~ respectively.

~~The~~On March 31, 2010, MMC paid $194 million into an escrow fund for an acquisition that closed on April 1, 2010. This amount is included in other current assets in the consolidated ~~statements of cash flows include the~~balance sheet and is reported as an investing cash flow impact of discontinued operations in each cash flow category. Discontinued operations provided cash from operations of $20 million and $15 million for the nine months ended September 30, 2009 and 2008, respectively. Discontinued operations had no impact on cash flows from investing or financing activities for 2009 and 2008. The cash flow information for discontinued operations excludes the cash flow impacts of the actual disposal transaction related to discontinued operations because MMC believes the disposal transaction to be cash flows attributable to the parent company, arising from its decision to dispose of the discontinued operation. Cash provided by investing activities include $75 million from the disposal of Government Services (“KGS”) and Background Screening in 2009, and $56 million from the disposal of Mediservice and Crucible in 2008.

In the first quarter of 2009, MMC changed the presentation in its statements of cash flows for the issuance of certain equity shares related to employee stock compensation plans. Previously, such issuances were shown in the statements of cash flows as a reduction of cash from operating activities and a source of cash from financing activities. In 2009, MMC determined that these issuances should be presented as non-cash items and that the presentation in the prior periods was not correct. The presentation in theconsolidated statement of cash flows for 2008 has been corrected to conform with the current presentation, resulting in an increase in cash provided by operations and an increase in cash used for financing activities of $103 million. With respect to the periods previously reported, but not contained herein, the corresponding correction in the statements of cash flows results in an increase in cash generated from operations (or a decrease in cash used by operations in periods where there is a net cash use) and an increase in cash used for financing activities compared with the information presented previously as follows: year ended December 31, 2008- $103 million; year ended December 31, 2007- $82 million; and year ended December 31, 2006- $59 million.flows.

6. ~~Comprehensive Income (Loss)~~

6. Comprehensive Income (Loss)

The components of comprehensive income (loss) for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~ are as follows:

(In millions of dollars)    2009 2008
Foreign currency translation adjustments
   $ 393    $ (245 )
Unrealized investment holding losses, net of income taxes
   —    3
Adjustments related to pension/retiree plans
   (131 ) (169 )
Other comprehensive income (loss)
   262    (411 )
Net income (loss)
   217    (145 )
Comprehensive income (loss)
   479    (556 )
Less: Comprehensive (loss) attributable to non-controlling interests
   (13 ) (8 )
Comprehensive income (loss) attributable to MMC
   $ 466    $ (564 )


(In millions of dollars)	2010		2009
Foreign currency translation adjustments	$(185	)	$ (43	)
Unrealized investment holding losses, net of income taxes	(8	)	(4	)
Gains related to pension/retiree plans	118		13
Other comprehensive (loss)	(75	)	(34	)
Net income	252		180
Comprehensive income before non-controlling interests	177		146
Less: Comprehensive (loss) attributable to non-controlling interests	(4	)	(4	)
Comprehensive income attributable to MMC	$ 173		$142

7. Acquisitions

7.	~~Acquisitions~~

During the ~~nine months ended September 30, 2009,~~first quarter of 2010, MMC made ~~three~~two acquisitions ~~for total~~in its Risk and Insurance Services segment. In February 2010, Marsh acquired Haake Companies, Inc., one of the largest independent insurance broking firms in the Midwest. In March 2010, Marsh acquired Thomas Rutherfoord, Inc., one of the largest insurance agencies in the Southeast and mid-Atlantic regions in the U.S. These acquisitions were made to expand Marsh’s share in the middle-market through Marsh & McLennan Agency.

Total purchase consideration for these two acquisitions was $253 million which consisted of ~~$240 million. The allocation~~cash paid of ~~purchase consideration resulted in acquired goodwill and other intangible assets amounting to $155~~$20 million, the issuance of 7.4 million shares with a fair value of $178 million, and ~~$64 million, respectively. MMC also paid $3 million~~estimated contingent consideration of $55 million. Contingent consideration ~~in 2009 related~~arrangements are primarily based on EBITDA and revenue targets over two to ~~earn-out provisions in prior acquisitions.~~four years. The fair value of the contingent consideration was based on earnings projections of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized.

The following table presents the preliminary allocation of the acquisition cost for Haake Companies, Inc. and Thomas Rutherfoord, Inc. to the assets acquired and liabilities assumed, based on their fair values (amounts in millions):


Cash		$ 20
MMC common shares		178
Contingent consideration		55
Total Consideration		$ 253
Allocation of purchase price:
Cash and cash equivalents		$ 29
Accounts receivable, net		8
Property, plant, and equipment		3
Other assets		9
Intangible assets		83
Goodwill		157
Total assets acquired		289
Current liabilities		7
Other liabilities		29
Total liabilities assumed		36
Net assets acquired		$253

Acquisitions Subsequent to the Balance Sheet Date

On April 1, 2010, Marsh completed the acquisition of HSBC Insurance Brokers Ltd. This transaction will deepen Marsh’s presence in the U.K., Hong Kong, Singapore, China and the Middle East. As part of that agreement, Marsh also entered into a strategic partnership with HSBC Bank, that gives MMC preferred access to provide insurance broking and risk management services to HSBC and their corporate and private clients. MMC paid $194 million into an escrow account on March 31, 2010 related to this acquisition, which is included in other current assets in the consolidated balance sheets. The funds were released from the escrow account on April 1, 2010 to complete the acquisition.

On April 30, 2010, Marsh & McLennan Agency acquired the Bostonian Group, one of the largest regional insurance brokerages in New England. This transaction will deepen Marsh’s middle market presence in the North East. MMC paid approximately $230 million for these two acquisitions.

In the first quarter of 2010, MMC paid deferred purchase consideration of $15 million related to the purchase in 2009 of the minority interest of a previously controlled entity.

Prior Year Acquisitions

In the first quarter of 2009, ~~MMC~~MMC’s Risk & Insurance Services segment acquired the remaining minority interest of a previously majority owned entity for total purchase consideration of $47 million. ~~MMC accounted for this acquisition under ASC Topic No. 810 (“Consolidation – Non-controlling Interests”), which is discussed further in Note 18. This~~The accounting guidance requires that changes in a parent’s ownership interest while retaining financial controlling interest in a subsidiary be accounted for as an equity transaction. Stepping up the acquired assets to fair value or the recording of goodwill is ~~not~~no longer permitted. Therefore, MMC recorded a decrease to additional paid in capital in the first quarter of 2009 of ~~$38~~$36 million related to this transaction. MMC also paid $2 million of contingent consideration in the first quarter of 2009 related to prior acquisitions.

8. Dispositions

In the first quarter of 2010, Kroll completed the sale of KLS. The ~~aforementioned acquisitions relate~~after-tax loss on this disposal is included in discontinued operations in 2010. The operating results of KLS have not been reclassified into discontinued operations, since the amounts are immaterial to ~~the Risk & Insurance Services segment.~~MMC.

8.	~~Discontinued Operations~~

In the second quarter of 2009, Kroll completed the sale of Kroll Government Services (“KGS”). The ~~after-tax loss on the disposal~~financial results of KGS ~~and its financial results~~ for the first quarter of 2009 ~~and 2008~~ are included in discontinued operations.

Discontinued operations in the ~~third~~first quarter of ~~2009~~2010 and ~~2008~~2009 also includes the accretion of interest related to an indemnity for uncertain tax positions provided as part of the purchase ofby Great West Lifeco Inc. of Putnam Investments Trust from MMC in August 2007. Discontinued operations for the nine months of 2008 includes the gain on the sale of a claims administration operation in Brazil (“Mediservice”). The operating results of Mediservice were immaterial to MMC’s results, therefore, its operating results for 2008 were not reclassified to discontinued operations.

Summarized Statements of Income data for discontinued operations is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In millions of dollars)	2009		2008		2009		2008		2010		2009
Revenue	$—		$ 19		$ 32		$ 49		$ —		$20
Income before provision for income tax	$—		$ 6		$ 11		$ 10		$ —		$ 6
Provision for income tax	1		1		4		2		—		2
Income (loss) from discontinued operations	(1	)	5		7		8
(Loss) gain on disposal of discontinued operations	13		(4	)	4		28
Income from discontinued operations									—		4
Gain on disposal of discontinued operations									16		—
Provision for income tax	8		23		32		40		38		3
(Loss) gain on disposal of discontinued operations, net of tax	5		(27	)	(28	)	(12	)
Net loss on disposal of discontinued operations, net of tax									(22	)	(3	)
Discontinued operations, net of tax	$ 4		$(22	)	$(21	)	$ (4	)	$(22	)	$ 1

~~The balance sheet data for KGS has not been reclassified~~9. Goodwill and ~~is included in MMC’s consolidated balance sheet at December 31, 2008 in the following categories:~~Other Intangibles

(In millions of dollars)
Assets of discontinued operations:

Current assets
   $ 18
Fixed assets, net
   2
Goodwill and intangible assets
   62
Total assets of discontinued operations
   $ 82
Liabilities of discontinued operations:

Accounts payable and accrued liabilities
   $ 7
Total liabilities of discontinued operations
   $ 7

9.	~~Goodwill and Other Intangibles~~

MMC is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. MMC performs the annual impairment test for each of its reporting units during the third quarter of each year. Fair values of the reporting units are estimated using a market approach or a discounted cash flow model. ~~This fair value determination was categorized as level 3 in the fair value hierarchy.~~ Carrying values for the reporting units are based on balances at the prior quarter end and include directly identified assets and liabilities as well as an allocation of those assets and liabilities not recorded at the reporting unit level. ~~MMC completed its 2009 annual review in the third quarter of 2009 and concluded goodwill was not impaired.~~

As previously reported, in the second quarter of 2009, Kroll completed the sale of KGS, its U.S. government security clearance screening business. As a result of the sale, MMC allocated goodwill between KGS (the portion of the reporting unit sold) and Kroll (the portion of the reporting unit retained), based on the relative fair value of the two ~~units.~~portions. In addition, as required under GAAP, MMC evaluated the portion of the reporting unit retained for potential impairment. Fair value was estimated using a market approach, based on management’s latest projections and outlook for the businesses in the current environment. This fair value determination was categorized as level 3 in the fair value hierarchy. On the basis of the step one impairment test, MMC concluded that goodwill in the reporting unit was impaired. Due to the timing of the trigger event and subsequent completion of the step one test, MMC was unable to fully complete the required step two portion of the impairment assessment prior to

the issuance of its second quarter 2009 financial statements. A step two impairment test, which under ASC Topic No. 350 (“Intangibles – Goodwill and Other”) is required to be completed after an impairment is indicated in a step one test, requires a complete re-valuation of all assets and liabilities of the reporting units in the same manner as a business combination. Based on a preliminary estimate of the step two assessment, MMC recorded a non-cash charge of $315 million in the second quarter of 2009 which represented management’s best estimate of the goodwill impairment at June 30, 2009. MMC finalized the second step of the goodwill assessment during the third quarter of 2009 and determined that no adjustment to the charge was required.

In March 2008, MMC announced a management reorganization within the Risk Consulting & Technology segment, whereby two separate units were formed, each reporting directly to MMC’s chief executive officer. These units are: (i) Kroll, which includes litigation support and data recovery, background screening, and risk mitigation and response; and (ii) Corporate Advisory and Restructuring. As a result of the management reorganization, MMC conducted an interim goodwill assessment for the new reporting units within the Risk Consulting & Technology segment in the first quarter of 2008. Fair value was estimated using a market approach, based on management’s latest projections and outlook for the businesses in the current environment at that time. In particular, events impacting the mortgage markets negatively impacted Kroll Factual Data, and the environment for Corporate Advisory and Restructuring was difficult. On the basis of the step one impairment test, MMC concluded that goodwill in the segment was impaired, and recorded a non-cash charge of $425 million in the first quarter of 2008 to reflect the estimated amount of the impairment. Due to the timing of the trigger event and subsequent completion of the step one test, MMC was unable to complete the required step two portion of the impairment assessment prior to the issuance of its first quarter 2008 financial statements. MMC recorded an additional non-cash impairment charge of $115 million in the second quarter of 2008.

Other intangible assets that are not deemed to have an indefinite life are amortized over their estimated lives and reviewed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature.

Changes in the carrying amount of goodwill are as follows:


(In millions of dollars)	2009			2008			2010		2009
Goodwill recorded	$	7,365		$	7,388		$7,636		$7,365
Accumulated impairment losses		(540	)		—		(855	)	(540	)
Balance as of January 1,		6,825			7,388		$6,781		$6,825
Goodwill acquired		158			118		157		2
Goodwill impairment		(315	)		(540	)
Disposals		(62	)		(22	)	(72	)	—
Other adjustments^(a)		97			25		(65	)	(1	)
Balance as of September 30,
Goodwill		7,018			7,509
Impairment losses (Nine months)		(315	)		(540	)
	$	6,703		$	6,969
Balance as of March 31,
Goodwill recorded							7,656		7,366
Accumulated Impairment losses							(855	)	(540	)
Balance at March 31							$6,801		$6,826

^(a)	Primarily foreign ~~exchange and purchase accounting adjustments and transfers.~~exchange.

Goodwill allocable to each of MMC’s reportable segments is as follows: Risk & Insurance Services, ~~$3.9~~$4.1 billion; Consulting, $2.0 billion; and Risk Consulting & Technology, ~~$0.8~~$0.7 billion.

Amortized intangible assets consist of the cost of client lists, client relationships and trade names acquired. The gross cost and accumulated amortization is as follows:


	September 30, 2009			December 31, 2008			March 31, 2010			December 31, 2009
(In millions of dollars)	Gross Cost	Accumulated Amortization	Net Carrying Amount	Gross Cost	Accumulated Amortization	Net Carrying Amount	Gross Cost	Accumulated Amortization	Net Carrying Amount	Gross Cost	Accumulated Amortization	Net Carrying Amount
Amortized intangibles	$692	$348	$344	$681	$343	$338	$810	$361	$449	$749	$357	$392

Aggregate amortization expense for the ~~nine~~three months ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~ was ~~$48~~$17 million and ~~$53~~$16 million, respectively, and the estimated future aggregate amortization expense is as follows:

For the Years Ending December 31,
(In millions of dollars)
   Estimated Expense
2009 (including amounts incurred through September 30)
   $  63
2010
   60
2011
   55
2012
   51
2013
   43
Subsequent years
   120
   $392

~~10.~~

~~Fair Value Measurements~~


For the Years Ending December 31, (In millions of dollars)		Estimated Expense
2010		$ 55
2011		69
2012		65
2013		55
2014		44
Subsequent years		161
		$449

10. Fair Value Measurements

Fair Value Hierarchy

MMC has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by the FASB in ASC Topic No. 820 (“Fair Value Measurements and Disclosures”). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on the inputs in the valuation techniques as follows:


~~Level~~Level 1.		Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market (examples include active exchange-traded equity securities, ~~listed derivatives,~~ most U.S. Government and agency securities, money market mutual funds and certain other sovereign government obligations).

Level 2.

Assets and liabilities whose values are based on the following:


		a)		Quoted prices for similar assets or liabilities in active ~~markets (for example, restricted stock);~~markets;


		b)		Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);

c) Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and


		d)		Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full asset or liability (for example, certain mortgage loans).

Level 3.3.

Assets and liabilities whose values are based on prices, or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability (examples include private equity investments, certain commercial mortgage whole loans, and long-dated or complex derivatives including certain foreign exchange options and long-dated options on gas and power).

Valuation Techniques

Equity Securities & Mutual Funds

Investments for which market quotations are readily available are valued at the sale price on their principal exchange, or official closing bid price for certain markets. If no sales are reported, the security is valued at its last reported bid price.

Other Sovereign Government Obligations, Municipal Bonds and Corporate Bonds

The investments listed in the caption above are valued on the basis of valuations furnished by an independent pricing service approved by the trustees or dealers selected by Putnam Investment Management LLC (“Putnam Management”), manager of the Putnam mutual funds, a wholly owned subsidiary of Putnam LLC. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities.

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008.~~2009.


(In millions of dollars)									Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total
	Identical Assets (Level 1)		Inputs (Level 2)		Unobservable Inputs (Level 3)		Total		3/31/10	12/31/09	3/31/10	12/31/09	3/31/10	12/31/09	3/31/10	12/31/09
(In millions of dollars)	9/30/09	12/31/08	9/30/09	12/31/08	9/30/09	12/31/08	9/30/09	12/31/08
Assets:
Financial instruments owned:
Exchange traded equity securities^(a)	$ 11	$ 11	$ —	$ —	$ —	$ —	$ 11	$ 11	$ 1	$ 10	$ —	$ —	$—	$—	$ 1	$ 10
Mutual funds^(a)	137	126	—	—	—	—	137	126	135	141	—	—	—	—	135	141
Medium term bond funds and fixed income securities^(a)	—	—	9	8	—	—	9	8	—	—	—	6	—	—	—	6
Money market funds^(b)	429	689	—	—	—	—	429	689	34	448	—	—	—	—	34	448
Total assets measured at fair value	$577	$826	$ 9	$ 8	$ —	$ —	$586	$ 834	$170	$599	$ —	$ 6	$—	$—	$170	$605
Fiduciary Assets:
State and local obligations (including non U.S. locales)	$ —	$ —	$184	$234	$ —	$ —	$184	$ 234	$ —	$ —	$120	$161	$—	$—	$120	$161
Other sovereign government obligations and supranational agencies	—	—	418	531	—	—	418	531	—	—	288	370	—	—	288	370
Corporate and other debt	—	—	73	122	—	—	73	122	—	—	41	46	—	—	41	46
Money market funds	319	141	—	—	—	—	319	141	253	235	—	—	—	—	253	235
Total fiduciary assets measured at fair value	$319	$141	$675	$887	$ —	$ —	$994	$1,028	$253	$235	$449	$577	$—	$—	$702	$812

^(a)	Included in other assets in the consolidated balance sheets.

^(b)	Included in cash and cash equivalents in the consolidated balance sheets.

~~Additional Fair Value Information regarding non-recurring~~At March 31, 2010, there were no assets that transferred between Level 1 and ~~liabilities:~~Level 2 from December 31, 2009.

11. Retirement Benefits

MMC recorded a goodwill impairment charge of $315 million in the second quarter of 2009. Note 9 to the consolidated financial statements discusses fair value measurements related to goodwill impairment, which was categorized as a Level 3 fair value measurement.

~~11.~~

~~Retirement Benefits~~

MMC maintains qualified and non-qualified defined benefit pension plans for its U.S. and non-U.S. eligible employees. MMC’s policy for funding its tax qualified defined benefit retirement plans is to contribute amounts at least sufficient to meet the funding requirements set forth by U.S. law and the laws of the non-U.S. jurisdictions in which MMC offers defined benefit plans.

The target asset allocation for the U.S. Plan is 65% equities and 35% fixed income. At the end of the ~~third~~first quarter of ~~2009,~~2010, the actual allocation for the U.S. Plan was ~~67%~~69% equities and ~~33%~~31% fixed income. The target asset allocation for the U.K. Plan, which comprises approximately ~~79%~~83% of non-U.S. Plan assets, is 58% equities and 42% fixed income. At the end of the ~~third~~first quarter of ~~2009,~~2010, the actual allocation of assets for the U.K. Plan was ~~57%~~58% equities and ~~43%~~42% fixed income.

The components of the net periodic benefit cost for defined benefit and other postretirement plans are as follows:


Combined U.S. and significant non-U.S. Plans
For the Three Months Ended September 30,		Pension Benefits				Postretirement Benefits
(In millions of dollars)		2009		2008		2009		2008
Service cost		$ 48		$ 52		$ 1		$ 1
Interest cost		141		152		4		5
Expected return on plan assets		(204	)	(214	)	—		—
Amortization of prior service credit		(12	)	(13	)	(3	)	(3	)
Recognized actuarial loss		18		15		—		—
Net periodic benefit (credit) cost		$ (9	)	$ (8	)	$ 2		$ 3

Combined U.S. and significant non-U.S. Plans
For the Nine Months Ended September 30,		Pension Benefits				Postretirement Benefits
(In millions of dollars)		2009		2008		2009		2008
Service cost		$ 139		$ 160		$ 4		$ 4
Interest cost		409		451		12		13
Expected return on plan assets	��	(585	)	(648	)	—		—
Amortization of prior service credit		(37	)	(41	)	(10	)	(10	)
Recognized actuarial loss		52		52		1		1
Net periodic benefit (credit) cost		$ (22	)	$ (26	)	$ 7		$ 8

U.S. Plans only
For the Three Months Ended September 30,		Pension Benefits				Postretirement Benefits
Combined U.S. and significant non-U.S. Plans For the Three Months Ended March 31,										Pension Benefits				Postretirement Benefits
(In millions of dollars)		2009		2008		2009		2008		2010		2009		2010		2009
Service cost		$ 19		$ 18		$ 1		$ 1		$ 50		$ 46		$ 1		$ 1
Interest cost		54		53		3		3		145		130		3		4
Expected return on plan assets		(73	)	(72	)	—		—		(204	)	(187	)	—		—
Amortization of prior service credit		(12	)	(13	)	(3	)	(3	)	(5	)	(12	)	(3	)	(3	)
Recognized actuarial loss		13		5		—		—		35		17		—		—
Net periodic benefit cost (credit)		$ 1		$ (9	)	$ 1		$ 1		$ 21		$ (6	)	$ 1		$ 2

U.S. Plans only
For the Nine Months Ended September 30,		Pension Benefits				Postretirement Benefits
U.S. Plans only For the Three Months Ended March 31,										Pension Benefits				Postretirement Benefits
(In millions of dollars)		2009		2008		2009		2008		2010		2009		2010		2009
Service cost		$ 57		$ 55		$ 3		$ 3		$ 19		$ 20		$ 1		$ 1
Interest cost		164		158		9		9		56		54		2		3
Expected return on plan assets		(219	)	(217	)	—		—		(73	)	(73	)	—		—
Amortization of prior service credit		(36	)	(40	)	(10	)	(10	)	(4	)	(12	)	(3	)	(3	)
Recognized actuarial loss		39		16		1		—		17		13		—		—
Net periodic benefit cost										$ 15		$ 2		$—		$ 1

Significant non-U.S. Plans only For the Three Months Ended March 31,										Pension Benefits				Postretirement Benefits
(In millions of dollars)										2010		2009		2010		2009
Service cost										$ 31		$ 26		$—		$—
Interest cost										89		76		1		1
Expected return on plan assets										(131	)	(114	)	—		—
Amortization of prior service cost										(1	)	—		—		—
Recognized actuarial loss										18		4		—		—
Net periodic benefit cost (credit)		$ 5		$ (28	)	$ 3		$ 2		$ 6		$ (8	)	$ 1		$ 1

The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:

Significant non-U.S. Plans only


For the Three Months Ended September 30,    Pension
Benefits Postretirement
Benefits
(In millions of dollars)    2009 2008 2009 2008
Service cost
   $   29    $   34    $ —    $ —
Interest cost
   87    99    1    2
Expected return on plan assets
   (131 ) (142 ) —    —
Amortization of prior service cost
   —    —    —    —
Recognized actuarial loss
   5    10    —    —
Net periodic benefit (credit) cost
   $  (10 ) $     1    $  1    $  2

Significant non-U.S. Plans only


For the Nine Months Ended September 30,    Pension
Benefits Postretirement
Benefits
(In millions of dollars)    2009 2008 2009 2008
Service cost
   $   82    $ 105    $  1    $  1
Interest cost
   245    293    3    4
Expected return on plan assets
   (366 ) (431 ) —    —
Amortization of prior service cost
   (1 ) (1 ) —    —
Recognized actuarial loss
   13    36    —    1
Net periodic benefit (credit) cost
   $  (27 ) $     2    $  4    $  6

The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:


Combined U.S. and significant non-U.S. Plans


      Pension
Benefits Postretirement
Benefits
      2009 2008 2009 2008
Weighted average assumptions:

Expected return on plan assets
   8.2 % 8.2 % —    —
Discount rate
   6.5 % 6.1 % 6.7 % 6.5 %
Rate of compensation increase
   3.7 % 3.8 % —    —


Combined U.S. and significant non-U.S. Plans	Pension Benefits				Postretirement Benefits
	2010		2009		2010		2009
Weighted average assumptions:
Expected return on plan assets	8.1	%	8.2	%	—		—
Discount rate	6.0	%	6.5	%	6.3	%	6.7	%
Rate of compensation increase	4.2	%	3.7	%	—		—

MMC made $59 million of contributions to its U.S. non-qualified and non-U.S. pension plans in the first quarter of 2010 and expects to contribute approximately $216 million for the remainder of 2010 for these plans.

~~12.~~ ~~Debt~~

12. Debt

MMC’s outstanding debt is as follows:

(In millions of dollars)
September 30,
2009

December 31,
2008
Short-term:

Current portion of long-term debt
   $   558    $   408
Long-term:

Senior notes – 7.125% due 2009
   $      —    $   400
Senior notes – 6.25% due 2012 (5.1% effective interest rate)
   256    257
Senior notes – 4.850% due 2013
   250    249
Senior notes – 5.875% due 2033
   296    296
Senior notes – 5.375% due 2014
   648    648
Senior notes – 5.15% due 2010
   549    549
Senior notes – 5.75% due 2015
   747    747
Senior notes – 9.25% due 2019
   397    —
Mortgage – 5.70% due 2035
   449    454
Other
   3    2
   $3,595    $3,602
Less current portion
   558    408
   $3,037    $3,194

During the second quarter of 2009, MMC’s 7.125% ten-year $400 million senior notes matured. MMC used cash on hand as well as the proceeds from the issuance of 9.25% ten-year $400 million senior notes in the first quarter to manage liquidity, including the funding of the maturing notes. There were no commercial paper borrowings outstanding at September 30, 2009.


(In millions of dollars)	March 31, 2010	December 31, 2009
Short-term:
Current portion of long-term debt	$ 558	$ 558

Long-term:
Senior notes – 6.25% due 2012 (5.1% effective interest rate)	$ 255	$ 255
Senior notes – 4.850% due 2013	250	249
Senior notes – 5.875% due 2033	296	296
Senior notes – 5.375% due 2014	648	648
Senior notes – 5.15% due 2010	549	549
Senior notes – 5.75% due 2015	746	747
Senior notes – 9.25% due 2019	398	398
Mortgage – 5.70% due 2035	445	447
Other	3	3
	3,590	3,592
Less current portion	558	558
	$3,032	$3,034

On October 23, 2009, MMC and certain of its foreign subsidiaries entered into a new $1.0 billion multi-currency three-year unsecured revolving credit facility, which replaced the $1.2 billion facility discussed ~~below, which was in effect as of September 30, 2009.~~below. The interest rate on this facility varies based upon MMC’s credit ratings and MMC’s credit default swap levels subject to floors and caps. The facility requires MMC to maintain certain coverage and leverage ratios which are tested quarterly. There were no borrowings outstanding under this facility at March 31, 2010.

MMC and certain of its foreign subsidiaries previously maintained a $1.2 billion multi-currency five-year revolving credit facility. The facility was previously due to expire in December ~~2010.~~2010 and was in effect until October 2009. There were no borrowings outstanding under this facility at ~~September 30, 2009.~~

the time it was terminated.

~~13.~~ 13. Restructuring Costs

~~Actions Initiated in 2009~~

~~In the third quarter of 2009,~~ MMC implemented restructuring activities resulting in charges totaling $54 million, primarily related to severance and related benefits and costs for future rent and other real estate costs as follows: Marsh – $26 million, Mercer – $26 million, Kroll – $1 million and Corporate – $1 million. These activities resulted in the elimination of approximately 200 positions at Marsh, 200 positions at Mercer, 5 positions at Kroll and 10 positions at Corporate.

For the first nine months of 2009, MMC implemented restructuring actions which resulted in costs totaling $146 million, primarily related to severance and benefits and costs for future rent and other real estate costs. These costs were incurred as follows: Marsh – $97 million, Guy Carpenter – $7 million, Mercer – $34 million, Kroll – $7 million and Corporate – $1 million. These activities resulted in the elimination of approximately 1,100 positions at Marsh, 75 positions at Guy Carpenter, 430 positions at Mercer, 210 positions at Kroll and 25 positions at Corporate.

~~Actions Initiated Prior to 2009~~

Prior to 2009, MMC implemented several restructuring and cost-saving initiatives related to firm-wide infrastructure, organization structure and operating company business processes. These initiatives resulted in staff reductions and consolidations of facilities. MMC incurredrecorded total restructuring costs of ~~$16~~$9 million ~~for~~in the ~~nine months ended September 30, 2009~~first quarter of 2010, that are primarily in connection with actions initiated in prior years, ~~primarily~~ due to adjustments to the estimated future rent and real estate costs related to previously vacated ~~space in MMC’s New York headquarters building.~~space. During the first quarter of 2010, MMC made $53 million of payments related to its restructuring plans. As of ~~September 30, 2009,~~March 31, 2010, the remaining liability for these initiatives was ~~$242~~$215 million, primarily related to future severance and benefit payments ($45 million) and future lease ~~agreements.~~agreements ($133 million).

The expenses associated with the above initiatives are included in ~~Compensation~~compensation and benefits and ~~Other~~other operating expenses in the consolidated statements of income. The liabilities associated with these initiatives are classified on the consolidated balance sheets as Accounts payable, Other liabilities, or Accrued compensation, depending on the nature of the items.

14. Financial Instruments

~~14.~~

~~Financial Instruments~~

The estimated fair value of MMC’s significant financial instruments is provided below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that MMC would realize

upon disposition, nor do they indicate MMC’s intent or need to dispose of the financial instrument.

September 30,
2009

December 31,
2008
(In millions of dollars)
Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value
Cash and cash equivalents
   $1,813    $1,813    $1,685    $1,685
Long-term investments
   $   147    $   138    $   137    $   137
Short-term debt
   $   558    $   570    $   408    $   407
Long-term debt
   $3,037    $3,196    $3,194    $2,959

      March 31, 2010    December 31,
2009
(In millions of dollars)    Carrying
Amount    Fair
Value
Carrying
Amount
   Fair
Value
Cash and cash equivalents
   $1,167    $1,167    $1,777    $1,777
Long-term investments
   $     92    $     87    $   109    $   102
Short-term debt
   $   558    $   566    $   558    $   572
Long-term debt
   $3,032    $3,169    $3,034    $3,174

Cash and Cash Equivalents: The estimated fair value of MMC’s cash and cash equivalents approximates their carrying value.

Long-term Investments: Long-term investments include available for sale securities recorded at quoted market prices, certain investments carried at cost and unrealized gains related to available for sale investments in insurance fiduciary funds as discussed below.

MMC ~~also~~ has certain ~~additional~~ long-term investments, for which there are no readily available market prices, amounting to ~~$84~~$54 million and ~~$88~~$53 million at ~~September 30,~~March 31, 2010 and December 31, 2009, ~~and 2008,~~ respectively, which are carried on a cost basis. These investments are included in Other assets in the consolidated balance sheets. MMC monitors these investments for impairment and makes appropriate reductions in carrying values when necessary.

MMC had available for sale securities with an aggregate fair value of ~~$42~~$24 million and ~~$69~~$38 million at ~~September 30,~~March 31, 2010 and December 31, 2009, ~~and 2008,~~ respectively, which are carried at market value under ASC Topic No. 320. ~~Gross~~MMC had gross unrealized gains (pre-tax) on these securities of $8 million and $15 million included in accumulated other comprehensive income ~~on these securities was $16 million~~ at ~~September 30, 2009~~March 31, 2010 and ~~$13 million at~~ December 31, ~~2008. The~~2009, respectively. MMC recorded the following ~~provides activity~~net unrealized gains and (losses) related to its available for sale ~~securities:~~securities for the three-month periods ended March 31, 2010 and 2009.


	Three Months Ended September 30,		Nine Months Ended September 30,
(In millions of dollars)	2009	2008	2009	2008	2010	2009
Net unrealized gains (pre-tax)	$4	$(2)	$5	$(8)
Net unrealized gains (losses) pre-tax					$—	$(2	)

These amounts have been excluded from earnings and reported, net of deferred income taxes, in accumulated other comprehensive income (loss), which is a component of stockholders’ equity.

~~For the three and nine months ended September 30, 2009,~~ MMC ~~also recorded unrealized losses of $1 million and $3 million, respectively, related to the~~has a portion of insurance fiduciary funds described in Note 1,3, that are invested in high quality debt securities and classified as available for sale. Gross unrealized gains (pre-tax) on these securities that are included in other assets and accumulated other comprehensive income in the consolidated balance sheets was $14 million and $17 million at March 31, 2010 and December 31, 2009, respectively. MMC had no gross unrealized gains on these securities for the three months ended March 31, 2010 and 2009, respectively. For the three months ended March 31, 2010 and 2009, MMC recorded net unrealized losses (pre-tax) of $3 million and $1 million, respectively, related to these investments. These amounts have been excluded from earnings and reported, net of deferred income taxes, in accumulated other comprehensive income (loss), which is a component of stockholders’ equity. ~~Gross unrealized gains on these securities that are included in accumulated other comprehensive income were $21 million and $24 million at September 30, 2009 and December 31, 2008, respectively.~~

Proceeds and realized gains from the sale of available for sale investments were as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,
(In millions of dollars)	2009	2008	2009	2008	Three Months Ended March 31,
					2010	2009
Proceeds from the sale of available for sale securities	$3	$—	$9	$—	$14	$ 3
Realized gains on available for sale securities	$2	$—	$2	$—
Realized gains on the sale of available for sale securities					$ 8	$—

The cost of securities sold is determined using the average cost method for equity securities.

MMC also holds investments in certain private equity fund partnerships which are accounted for using the equity method and other investments that are held at cost. MMC recorded the following gains (losses) related to these investments:

      Three Months Ended
September 30, Nine Months Ended
September 30,
(In millions of dollars)    2009 2008 2009 2008
Equity method gains (losses)
   $22    $(19 ) $(29 ) $(31 )
Cost method gains (losses)
   1    2    6    6
Other-than-temporary impairments
   (4 ) (6 ) (4 ) (6 )
   $19    $(23 ) $(27 ) $(31 )

In the third quarter of 2009, MMC identified certain cost basis investments whose estimated market value was less than the cost carried on the balance sheet. The market value was based on quotes obtained from external investment valuation professionals based on valuation techniques consistent with industry practice. Although MMC does not intend to sell these securities, it has recorded an other-than-temporary impairment charge of $4 million in the third quarter of 2009 on a debt security, which reflects the estimated portion of the carrying value MMC may not recover during the holding period. The gains and losses described above are included in investment income (loss) in the consolidated statements of income.


(In millions of dollars)	Three Months Ended March 31,
	2010		2009
Equity method (losses)	$(1	)	$(18	)
Gains on cost method investments	1		3
Gains (losses) from equity and cost method investments	—		(15	)
Realized gains on available for sale securities	8		—
Investment income (loss)	$ 8		$(15	)

Short-term and Long-term Debt: The fair value of MMC’s short-term debt, which consists primarily of term debt maturing within the next year, approximates its carrying value. The estimated fair value of MMC’s long-term debt is based on discounted future cash flows using current interest rates available for debt with similar terms and remaining maturities.

15. Common Stock

~~15.~~

~~Common Stock~~

~~In August 2007,~~ MMC ~~entered into an $800 million accelerated share repurchase agreement with a financial institution counterparty. Under the terms of the agreement, MMC paid the full $800 million~~did not purchase price and took delivery from the counterparty of an initial tranche of 21,320,530 shares of MMC common stock. This number of shares was the quotient of the $800 million purchase price divided by a contractual “cap” price of $37.5225 per share. Based on the market price of MMC’s common stock over the subsequent settlement period, in March 2008 the counterparty delivered to MMC an additional 10,751,100 shares for no additional payment and the transaction was concluded. MMC thus repurchased a total of 32,071,630 shares at an average price per share to MMC of $24.9442. The repurchased shares were reflected as an increase toany treasury shares ~~(a decrease~~ in shares outstanding) on the respective delivery dates. This transaction was effected under a $1.5 billion share repurchase authorization granted by MMC’s Board of Directors in August 2007. MMC remains authorized to repurchase additional shares of its common stock up to a value of $700 million. There is no time limit on this authorization.2010 or 2009.

~~16.~~

16. Claims, Lawsuits and Other Contingencies

~~Brokerage Compensation Practices Settlement and Related Matters~~

In January 2005, MMC and its subsidiary Marsh Inc. entered into an agreement with the New York State Attorney General (“NYAG”) and the New York State Insurance Department to settle a civil complaint filed in New York State court by NYAG in October 2004 (the “NYAG Lawsuit”) and a related citation issued by the Insurance Department. Among other things, the NYAG Lawsuit and the citation alleged that Marsh’s use of market service agreements with various insurance companies entailed fraudulent business practices, bid-rigging, illegal restraint of trade and other statutory violations.

Following the filing of the NYAG Lawsuit, various state regulators and attorneys general initiated investigations relating to the conduct alleged in the NYAG Lawsuit. Over the past year, MMC and Marsh entered into settlements with attorneys general or state regulators in ten states. One action filed by the Attorney General of the State of Ohio against MMC, Marsh and certain Marsh subsidiaries remains pending.

Numerous private party lawsuits were also commenced against MMC, one or more of its subsidiaries, and their current and former directors and officers, relating to matters alleged in the NYAG Lawsuit. These lawsuits include the following:

~~Policyholder Claims~~

Various putative class actions that were consolidated into two actions in the U.S. District Court for the District of New Jersey (one on behalf of a purported class of “commercial” policyholders and the second on behalf of a purported class of “employee benefit” policyholders) included claims against MMC, Marsh and certain Marsh subsidiaries. In February 2009, the trial court approved a settlement of the claims against MMC, Marsh and certain Marsh subsidiaries in both actions. The court’s approval of the settlement has been appealed.

~~Sixteen actions instituted by individual policyholders are pending in federal and state courts relating to matters alleged in the NYAG Lawsuit. One putative class action is pending in Canada.~~

~~Shareholder Claims~~

Following the announcement of the NYAG Lawsuit and related actions taken by MMC, MMC’s stock price dropped from approximately $45 per share to a low of approximately $22.75 per share. The number of shares outstanding at the time was approximately 526 million. The plaintiffs in the securities claims described below have asserted damages in the billions of dollars.

A purported securities class action against MMC, Marsh and certain of their former officers is pending in the U.S. District Court for the Southern District of New York. Plaintiffs make factual allegations similar to those asserted in the NYAG Lawsuit, including that MMC artificially inflated its share price by making misrepresentations and omissions relating to Marsh’s market service agreements and business practices. Plaintiffs also allege that MMC failed to disclose alleged anti-competitive and illegal practices at Marsh, such as “bid-rigging” and soliciting fictitious quotes. Plaintiffs allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933 and seek unspecified damages. The parties have been engaged in a mediation process; however, no agreement has been reached to settle this case. At this time, MMC is unable to determine if a settlement is likely to occur. Discovery in this matter is near conclusion and trial is expected to commence in 2010.

A purported ERISA class action is pending against MMC and various current and former employees, officers and directors in the U.S. District Court for the Southern District of New York on behalf of participants and beneficiaries of an MMC retirement plan. The complaint alleges, among other things, that in light of the alleged misconduct described in the NYAG Lawsuit, the defendants knew or should have known that the investment of the plan’s assets in MMC stock was imprudent, that certain defendants failed to provide plan participants with complete and accurate information about MMC stock, that certain defendants responsible for selecting, removing and monitoring other

fiduciaries did not comply with ERISA, and that MMC knowingly participated in other defendants’ breaches of fiduciary duties. The complaint seeks, among other things, unspecified compensatory damages, injunctive relief and attorneys’ fees and costs. Discovery in this matter is near conclusion and trial is expected to commence in 2010.

Several shareholder derivative actions are pending against MMC’s current and former directors and officers. Most of these actions have been consolidated into two proceedings, one in the Court of Chancery of the State of Delaware, and one in the U.S. District Court for the Southern District of New York. These actions allege, among other things, breach of fiduciary duties with respect to the alleged misconduct described in the NYAG Lawsuit, and that the defendants are liable for and must contribute to or indemnify MMC for any related damages MMC has suffered. The consolidated action in federal court in New York has been stayed in favor of the consolidated action in Delaware. In June 2009, the Delaware court denied a motion to dismiss filed by MMC, Marsh and certain other defendants.

~~Other Claims~~

A shareholder derivative suit in the Delaware Court of Chancery against the directors and officers of American International Group, Inc. (“AIG”) and other parties also named as additional defendants MMC, Marsh and certain Marsh subsidiaries. The suit alleged that MMC, Marsh and the Marsh subsidiaries engaged in conspiracy and fraud with respect to the alleged misconduct described in the NYAG Lawsuit, and that they aided and abetted current and former directors and officers of AIG in breaching their fiduciary duties to AIG with respect to AIG’s participation in the alleged misconduct. The complaint sought damages including the return of all contingent commissions paid by AIG to MMC and Marsh. In June 2009, the Delaware court granted a motion to dismiss all claims against MMC and the Marsh defendants. The dismissal has been appealed and is currently pending in the Delaware Supreme Court.

~~Other~~ Governmental Inquiries and Claims ~~Relating to MMC and its Subsidiaries~~

In December 2007, the Alaska Retirement Management Board filed a civil lawsuit against Mercer (US) Inc. in Alaska state court. AnPlaintiff, represented by the Alaska Law Department (through the Alaska Attorney General) and the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, filed an amended complaint ~~was filed~~ in May 2009. The amended complaint alleges professional negligence and malpractice, breach of contract, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, unfair trade practices and fraud and misrepresentation related to actuarial services that Mercer provided to the Alaska Division of Retirement and Benefits relating to two State pension and benefit plans, the Alaska Public Employees Retirement System and the Alaska Teachers Retirement System. The amended complaint seeks damages of “at least $2.8 billion”, plus treble damages related to the unfair trade practices claim, punitive damages, attorneys’ fees, costs and interest. Mercer ~~has~~ filed a motion to dismiss the amended ~~complaint. Discovery~~complaint, which was denied in December 2009. Mercer has filed other pre-trial motions that are pending. Trial is ~~ongoing in this matter and trial is currently~~ scheduled for ~~March 2010.~~July 2010 in Juneau, Alaska.

In October 2007, the State of Connecticut brought a civil action against Guy Carpenter in Connecticut state court alleging that Guy Carpenter violated the state’s antitrust and

unfair trade practices laws by engaging in allocation of markets, price-fixing and other allegedly improper conduct by taking part in the operation of several reinsurance facilities over a period of decades. An amended complaint was filed in October 2009. The amended complaint alleges damages to Guy Carpenter’s insurance company clients and their customers, as well as to the general economy of Connecticut, and seeks monetary damages, civil penalties, attorneys’ fees, costs and injunctive and other equitable relief. Discovery is underway in this matter.

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Our activities are regulated ~~extensively~~ under the laws of the United States and its various states, the European Union and its member states, and the other jurisdictions in which we operate. ~~Therefore, in~~In the ordinary course of business, in addition to private party lawsuits, we may be subject to investigations, lawsuits and/or other regulatory actions undertaken by governmental authorities.

~~Other Contingencies Relating to MMC and its Subsidiaries~~

Errors and Omissions Claims

MMC and its subsidiaries are subject to a significant number of other claims, lawsuits and proceedings in the ordinary course of business. Such claims and lawsuits consist principally of alleged errors and omissions in connection with the performance of professional services. Certain of these claims, including the action filed against Mercer by the Alaska Retirement Management Board, seek damages, including punitive damages, in amounts that could, if awarded, be significant. In establishing liabilities for errors and omissions claims in accordance with FASB ASC Topic No. 450 (“Contingencies”)MMC and its subsidiaries are subject to a significant number of other claims, lawsuits and proceedings in the ordinary course of business. Such claims and lawsuits consist principally of alleged errors and omissions in connection with the performance of professional services. Certain of these claims, including the action filed against Mercer by the Alaska Retirement Management Board described above, seek damages, including punitive and treble damages, in amounts that could, if awarded, be significant. In establishing liabilities for errors and omissions claims in accordance with FASB ASC Subtopic No. 450-20 (Contingencies—Loss Contingencies), MMC utilizes internal actuarial and other estimates, and case level reviews by inside and outside counsel. A liability is established when a loss is both probable and reasonably estimable. The liability is reviewed quarterly and adjusted as developments warrant. In many cases, including the lawsuit brought by the Alaska Retirement Management Board against Mercer, MMC has not recorded a liability, other than for legal fees to defend the claim, because MMC is unable, at the present time, to make a determination that a loss is both probable and reasonably estimable.

To the extent that expected losses exceed MMC’s deductible in any policy year, MMC also records an asset for the amount that MMC expects to recover under any available third-party insurance programs. MMC has varying levels of third-party insurance coverage, with policy limits and coverage terms varying significantly by policy year. MMC is not aware of coverage defenses or other obstacles to coverage that would limit recoveries through policy year 2001-2002 in a material amount. ~~In policy years subsequent~~From 2002 to ~~2001-2002,~~2008, the availability of third-party insurance ~~has~~ declined significantly, such that the Company has, for example, only limited third-party insurance for the lawsuit brought by the Alaska Retirement Management Board against Mercer.

Brokerage Compensation Practices Settlement and Related Actions

In January 2005, MMC and its subsidiary Marsh Inc. entered into a settlement agreement with the New York State Attorney General (“NYAG”) and the New York State Insurance Department to settle a civil complaint and related citation alleging that Marsh’s use of market service agreements with various insurance companies entailed fraudulent business practices, bid-rigging, illegal restraint of trade and other statutory violations. The parties subsequently entered into an amended and restated settlement agreement in February 2010. The new agreement helps restore a level playing field for Marsh, allowing Marsh to compete on the same terms as other intermediaries in the insurance industry.

Following the filing of the NYAG complaint in October 2004, various state regulators and

attorneys general initiated investigations relating to the conduct alleged in that complaint. MMC and Marsh have entered into settlements with authorities in ten of those states. One action filed in August 2007 by the Attorney General of the State of Ohio against MMC, Marsh, certain Marsh subsidiaries and other parties remains pending.

Numerous private party lawsuits based on similar allegations to those made in the NYAG complaint were commenced against MMC, one or more of its subsidiaries, and their current and former directors and officers. The status of the lawsuits that remain outstanding is as follows:

In February 2009, the trial court approved a settlement of the claims against MMC, Marsh and certain Marsh subsidiaries in two consolidated putative class actions that were pending in the U.S. District Court for the District of New Jersey (one on behalf of a purported class of “commercial” policyholders and the second on behalf of a purported class of “employee benefit” policyholders). The court’s approval of the settlement has been appealed. In addition, ten actions instituted by individual policyholders against MMC, Marsh and certain Marsh subsidiaries are pending in federal and state courts; and one putative class action against these parties is pending in Canada.

On December 22, 2009, an agreement was reached to settle shareholder derivative actions that were pending against certain of MMC’s current and former directors and officers in the Court of Chancery of the State of Delaware and the U.S. District Court for the Southern District of New York. These actions alleged, among other things, breach of fiduciary duties with respect to the alleged misconduct described in the NYAG complaint, and that the defendants were liable for and must contribute to or indemnify MMC for any related damages suffered by MMC. On March 25, 2010, the Delaware Court of Chancery approved the settlement and related award of attorneys’ fees.

MMC, Marsh and certain Marsh subsidiaries were named as additional defendants in a shareholder derivative suit pending in the Delaware Court of Chancery against the directors and officers of American International Group, Inc. (“AIG”) and others. The suit alleged that MMC, Marsh and the Marsh subsidiaries engaged in conspiracy and fraud with respect to the alleged misconduct described in the NYAG complaint, and that they aided and abetted current and former directors and officers of AIG in breaching their fiduciary duties to AIG with respect to AIG’s participation in the alleged misconduct. In June 2009, the Delaware court granted a motion to dismiss all claims against MMC and the Marsh defendants. An appeal of this dismissal is currently pending in the Delaware Supreme Court.

Other Contingencies—Guarantees

In connection with its acquisition of U.K.-based Sedgwick Group in 1998, MMC acquired several insurance underwriting businesses that were already in run-off, including River Thames Insurance Company Limited (“River Thames”), which MMC sold in 2001. Sedgwick guaranteed payment of claims on certain policies underwritten through the Institute of London Underwriters (the “ILU”) by River Thames. The policies covered by this guarantee are reinsured up to £40 million by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by segregated assets held in a trust. As of ~~September 30, 2009,~~March 31, 2010, the reinsurance coverage exceeded the best estimate of the projected liability of the policies covered by the guarantee. To the extent River Thames or the reinsurer is unable to meet its obligations under those policies, a claimant may seek to recover from MMC under the guarantee.

From 1980 to 1983, MMC owned indirectly the English & American Insurance Company (“E&A”), which was a member of the ILU. The ILU required MMC to guarantee a portion of E&A’s obligations. After E&A became insolvent in 1993, the ILU agreed to

discharge the guarantee in exchange for MMC’s agreement to post an evergreen letter of credit that is available to pay claims by policyholders on certain E&A policies issued through the ILU and incepting between July 3, 1980 and October 6, 1983. Certain claims have been paid under the letter of credit and MMC anticipates that additional claimants may seek to recover against the letter of credit.

Putnam-related Matters

~~On August 3, 2007,~~Under the terms of a stock purchase agreement with Great-West Lifeco Inc. (“GWL”) ~~completed its~~related to GWL’s purchase of Putnam Investments Trust from ~~MMC. Under the terms of the stock purchase agreement with GWL,~~MMC in August 2007, a copy of which was included as an exhibit to MMC’s Current Report on Form 8-K filed on February 1, 2007, MMC agreed to indemnify GWL ~~in the future~~ with respect to certain Putnam-related litigation and regulatory matters. The ~~matters~~consolidated federal actions pending in the District of Maryland, described below, ~~directly involve MMC and/or may be subject to these indemnification obligations.~~

Inare based on similar allegations as those at issue in Putnam’s 2003 and 2004 ~~Putnam entered into~~ settlements with the SEC and the Commonwealth of Massachusetts ~~with respect to~~regarding excessive short-term trading by ~~among others,~~ certain former Putnam employees in shares of the Putnam mutual funds (the “Putnam Funds”)., and directly involve MMC and Putnam were named in a substantial number of civil complaints, filed in various state and federal courts, alleging “market-timing” and, in some cases, “late trading” activities. The actions filed in and/or ~~removed~~may be subject to federal court have been transferred, along with actions against other mutual fund complexes, to the U.S. District Court for the District of Maryland. The following summarizes the consolidated matters pending in the District of Maryland:MMC’s indemnification obligations.

Two putative class actions by investors in certain Putnam Funds are pending against Putnam. ~~One~~The first action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Section 36(b) of the Investment Company Act of 1940. The ~~other~~second action purports to assert derivative claims on behalf of all Putnam Funds under Section 36(b) of the Investment Company Act. Both suits seek to recover unspecified damages allegedly suffered by the Putnam Funds and their investors as a result of purported market-timing and late trading activity in certain Putnam Funds. In ~~December 2008 and April 2009,~~ the ~~court granted Putnam’s motion for summary judgment in~~first action, the ~~action relating~~parties entered into a settlement agreement. The agreement is subject to ~~securities claims, and~~approval by the ~~plaintiffs have filed an appeal.~~district court. In the derivative action, the court denied Putnam’s motion for summary judgment.

A complaint asserting shareholder derivative claims, purportedly on behalf of MMC, was filed against current and former members of MMC’s Board of Directors, two of Putnam’s former officers, and MMC as a nominal defendant. This action alleges violation of fiduciary duties in failing to provide oversight regarding market-timing in the Putnam Funds. This action has been stayed pursuant to an agreement of the parties.

MMC, Putnam and certain of their current and former officers, directors and employees ~~are~~were defendants in two purported ERISA class actions, one brought by participants in an MMC retirement plan and the other brought by participants in a Putnam retirement plan. The actions ~~allege,~~alleged, among other things, that, in view of the market-timing that was allegedly allowed to occur at Putnam, the investment of the plans’ funds in MMC stock and the Putnam Funds was imprudent and constituted a breach of fiduciary duties to plan participants. Both actions ~~seek~~sought unspecified damages and equitable relief. ~~Following~~The parties settled both matters in March 2010 for a ~~September 2006 dismissal~~nominal amount, and the Court dismissed the actions on April 14, 2010. The settlement resolves all of the ~~action regarding~~claims in both actions against MMC, Putnam, and the ~~Putnam plan, the plaintiff appealed the decision to the Fourth Circuit Court of Appeals. In June 2008, the appellate court reversed the dismissal and remanded the case for further proceedings.~~named individuals.

The pending proceedings and other matters described in this Note 16 on Claims, Lawsuits and Other Contingencies may expose MMC or its subsidiaries to liability for significant monetary damages and other forms

of relief. Where a loss is both probable and reasonably estimable, MMC establishes liabilities in accordance with FASB ASC ~~Topic~~Subtopic No. ~~450 (“Contingencies”)~~450-20 (Contingencies – Loss Contingencies). Except as ~~specifically set forth~~described above, MMC is ~~unable,~~not able at ~~the present~~this time to provide a reasonable estimate of the range of possible loss attributable to these matters or the impact they may have on MMC’s consolidated results of operations, or financial position or ~~MMC’s~~ cash flows. This is primarily because ~~many of~~ these matters are ~~in early stages of litigation in which discovery is ongoing or are~~ still ~~developing.~~developing and involve complex issues subject to inherent uncertainty. Adverse determinations in one or more of these matters, particularly the ~~matters discussed above~~action filed against Mercer by the Alaska Retirement Management Board, could have a material impact on MMC’s ~~financial condition,~~consolidated results of ~~MMC’s~~ operations, financial condition or cash flows in a future period.

17. Segment Information

~~17.~~

~~Segment Information~~

MMC is organized based on the types of services provided. Under this organizational structure, MMC’s business segments are:

Risk and Insurance Services, comprising insurance services (Marsh) and reinsurance services (Guy Carpenter);

Consulting, comprising Mercer and Oliver Wyman Group; and

Risk Consulting & Technology, ~~comprising Kroll and Corporate Advisory and Restructuring.~~which is comprised of Kroll.

The accounting policies of the segments are the same as those used for the consolidated financial statements described in Note 1 to MMC’s ~~Current Report~~2009 10-K. Segment performance is evaluated based on ~~Form 8-K dated August 28, 2009.~~segment operating income, which includes directly related expenses, and charges or credits related to integration and restructuring but not MMC corporate-level expenses. Revenues are attributed to geographic areas on the basis of where the services are performed. Segment performance is evaluated based on segment operating income, which includes directly related expense and charges or credits related to integration and restructuring but not MMC corporate-level expenses.

Selected information about MMC’s operating segments for the ~~three and nine-month~~three-month periods ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~ follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In millions of dollars)	Revenue		Operating Income (Loss)		Revenue		Operating Income (Loss)		Revenue		Operating Income (Loss)
2010 –
Risk and Insurance Services									$1,492	^(a)	$ 347
Consulting									1,155	^(b)	116
Risk Consulting & Technology									162	^(c)	16
Total Operating Segments									2,809		479
Corporate Eliminations									(14	)	(40	)
Total Consolidated									$2,795		$439
2009 –
Risk and Insurance Services	$1,226	^(a)	$127		$3,941	^(d)	$ 669		$1,372	^(a)	$ 297
Consulting	1,144	^(b)	105		3,370	^(e)	274		1,083	^(b)	73
Risk Consulting & Technology	170	^(c)	20		498	^(f)	(292	)^(g)	167	^(c)	4
Total Operating Segments	2,540		252		7,809		651		2,622		374
Corporate / Eliminations	(17	)	(36	)	(48	)	(132	)
Corporate Eliminations									(13	)	(50	)
Total Consolidated	$2,523		$216		$7,761		$ 519		$2,609		$ 324
2008 –
Risk and Insurance Services	$1,275	^(a)	$(28)		$4,190	^(d)	$ 356
Consulting	1,328	^(b)	157		3,997	^(e)	473
Risk Consulting & Technology	235	^(c)	22		743	^(f)	(480	)^(g)
Total Operating Segments	2,838		151		8,930		349
Corporate / Eliminations	(19	)	(87	)	(54	)	(195	)
Total Consolidated	$2,819		$ 64		$8,876		$ 154

^(a)

Includes inter-segment revenue of ~~$3 million and $1~~$2 million in ~~2009~~each of 2010 and ~~2008, respectively,~~2009, interest income on fiduciary funds of ~~$14~~$11 million and ~~$38~~$15 million in ~~2009~~2010 and ~~2008,~~2009, respectively, and equity method income of $4$1 million ~~both~~and $2 million in 2010 and 2009, ~~and 2008,~~ respectively.

^(b)	Includes inter-segment revenue of ~~$12~~$11 million and ~~$14~~$10 million in ~~2009~~2010 and ~~2008,~~2009, respectively, and interest income on fiduciary funds of $1 million in each of 2010 and ~~$2 million in 2009 and 2008, respectively.~~

^(c)2009.
~~Includes inter-segment revenue of $2 million in 2009 and $5 million in 2008.~~

^(d)(c)

Includes inter-segment revenue of ~~$10 million and $6~~$1 million in ~~2009~~each of 2010 and ~~2008, respectively, interest income on fiduciary funds of $42 million and $114 million in 2009 and 2008, respectively, and equity method income of $12 million both in 2009 and 2008, respectively.~~2009.

^(e⁾	~~Includes inter-segment revenue of $34 million and $40 million in 2009 and 2008, respectively, and interest income on fiduciary funds of $3 million and $8 million in 2009 and 2008, respectively.~~

^(f⁾	~~Includes inter-segment revenue of $4 million in 2009 and $9 million in 2008.~~

^(g⁾	~~Includes goodwill impairment charges of $315 million and $540 million in 2009 and 2008, respectively.~~

Details of operating segment revenue for the ~~three and nine-month~~three-month periods ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~ is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In millions of dollars)	2009		2008		2009		2008		2010		2009
Risk and Insurance Services
Marsh	$1,000		$1,070		$3,202		$3,508		$1,175		$1,088
Guy Carpenter	226		205		739		682		317		284
Total Risk and Insurance Services	1,226		1,275		3,941		4,190		1,492		1,372
Consulting
Mercer	831		951		2,466		2,835		849		803
Oliver Wyman Group	313		377		904		1,162		306		280
Total Consulting	1,144		1,328		3,370		3,997		1,155		1,083
Risk Consulting & Technology
Kroll	170		199		498		629		162		167
Corporate Advisory and Restructuring	—		36		—		114		—		—
Total Risk Consulting & Technology	170		235		498		743		162		167
Total Operating Segments	2,540		2,838		7,809		8,930		2,809		2,622
Corporate Eliminations	(17	)	(19	)	(48	)	(54	)	(14	)	(13	)
Total	$2,523		$2,819		$7,761		$8,876		$2,795		$2,609

18. New Accounting Pronouncements

~~18.~~

~~New Accounting Pronouncements~~

Effective January 1, 2009, MMC adopted the guidance for calculating EPS using the two-class method with retroactive application to prior periods. The impact of adopting the guidance is discussed in Note 4 to the consolidated financial statements.

Effective January 1, 2009, the Company adopted the new guidance ~~included in ASC Topic No. 805 (“~~issued by the FASB for Business ~~Combinations”).~~Combinations. The guidance requires entities in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose all information needed by investors and other users to evaluate and understand the nature and financial effect of the business combination. ~~MMC made several acquisitions in 2009 that were accounted for under the new Business Combination guidance.~~

Effective January 1, 2009, the Company adopted the new guidance ~~included in ASC Topic No. 810 (“~~issued by the FASB for Consolidation – Non-controlling ~~Interests”),~~Interests, which did not have a material impact on our financial condition, results of operations or cash flows. However, it did impact the presentation and disclosure of non-controlling (minority) interests in our consolidated financial statements. ~~As a result of the retrospective presentation and disclosure requirements, the Company is required to reflect the change in presentation and disclosure for all periods presented in future filings.~~ The effects of this change are reflected ~~herein, and in the amended financial information filed on the Company’s current report on Form 8-K dated August 28, 2009.~~herein.

The ~~principal effect on the prior year balance sheets related to the adoption of the~~ new guidance ~~related to Non-controlling Interests is summarized as follows:~~

      December 31,
(In millions of dollars)    2008    2007
Balance Sheets

Equity, as previously reported
   $5,722    $7,822
Increase for reclassification of non-controlling interests
   38    31
Equity, as adjusted
   $5,760    $7,853

~~ASC Topic No. 810~~ also requires adjustment of net income to include the net income attributable to the non-controlling interests and a new separate caption for net income attributable to MMC to be presented in the consolidated statement of earnings. The adoption of the guidance in ASC Topic No. 810 increased net income by $11 million, $14 million, and $8 million for the fiscal years 2008, 2007, and 2006, respectively. Net income attributable to MMC equals net income as previously reported prior to the adoption of ASC Topic No. 810.

In February 2008, the FASB issued guidance ~~codified in ASC Topic No. 820 (“~~related to Fair Value Measurements ~~and Disclosures”)~~ which delayed until the second quarter of 2009, fair value measurement for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company has applied the provision of ~~ASC Topic No. 820~~this new guidance to its financial statement disclosures beginning in the second quarter of 2009.

On April 1, 2009, the FASB issued guidance for “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”, ~~codified in ASC Topic No. 805 – 10 – 30 (“Business Combinations”) (“ASC Topic No. 805”)~~ to address application issues raised by preparers, auditors and attorneys. The guidance requires recognition of

contingent assets or liabilities (arising from a business combination contingency) at fair value, at the acquisition date if the acquisition-date fair value of the asset or liability can be determined during the measurement ~~period;~~period, or if ~~the following~~certain criteria are ~~met:~~

~~(a)~~

~~Information available before the end of the measurement period indicates that it is probable that an asset existed or that a liability had been incurred at the acquisition date and~~

~~(b)~~

~~The amount of the asset or liability can be reasonably estimated.~~

met. Otherwise, the acquirer should not recognize an asset or liability as of the acquisition date. The guidance is effective for business combinations occurring on or after January 1, 2009. ~~ASC Topic No. 805~~This new guidance did not have a material impact on MMC’s financial condition or reported results.

In the second quarter of 2009, MMC adopted the guidance issued by the FASB for interim disclosures about fair value of financial ~~instruments, codified in ASC Topic No. 825 (“Financial Instruments”).~~instruments. The guidance, which is effective for interim periods ending after June 15, 2009, requires disclosures about the fair values of financial instruments in interim period reports of publicly traded companies as well as in annual financial statements. ~~The guidance was designed to provide more timely disclosure about current financial instrument valuations and is effective for interim periods ending after June 15, 2009.~~ The adoption of this guidance did not have a material impact on MMC’s financial condition or reported results.

In the second quarter of 2009, MMC adopted the guidance issued by the FASB for ~~recognition~~Recognition and ~~presentation~~Presentation of ~~other-than-temporary impairments, which is codified in ASC Topic No. 320 (“Investments – Debt and Equity Securities”).~~Other-Than-Temporary Impairments. It amends GAAP guidance including SEC SAB Topic 5M and other authoritative literature that allow the holders of debt securities not to recognize other than temporary impairments based on their intent and ability to hold a security until recovery in fair value to its amortized cost. The other-than-temporary impairment model ~~in ASC Topic No. 320~~

applies only to debt securities and not equity securities. The new requirements are (a) whether an entity has the intent to sell the debt security or (b) whether an entity will more likely than not be required to sell the debt security before its anticipated recovery. The guidance requires recognition of a credit loss (the difference between the present value of cash flows expected to be collected and the amortized cost basis) through earnings. The guidance is effective for interim and annual periods ending after June 15, 2009. The adoption of this guidance did not have a material impact on MMC’s financial condition or reported results.

In May 2009, the FASB issued Statement of Accounting Standards No. 165 “Subsequent Events” (“SFAS No. 165”) to provide guidance for accounting and disclosure of subsequent events not addressed elsewhere in GAAP and is codified in ASC Topic No. 855 (“Subsequent Events”). ASC Topic No. 855 requires disclosure of the date through which subsequent events have been evaluated. MMC implemented ASC Topic No. 855 in the second quarter of 2009. The adoption of this guidance did not have a material impact on the Company’s financial statements.

Effective January 1, 2009, MMC adopted the guidance codified in ASC Topic No. 260 (“Earnings Per Share”), which provides guidance for calculating EPS using the two-class method with retroactive application to prior periods. The impact of adopting the guidance is discussed in Note 4 to the consolidated financial statements.

~~Future Adoption of New Accounting Pronouncements~~

In December 2008, the FASB issued guidance for ~~“Employers’~~Employers’ Disclosures About Pension and Other Post Retirement Benefit Plan ~~Assets”, codified in ASC Topic No. 960 (“Plan Accounting – Defined Benefit Pension Plans”) and ASC Topic No. 715 (“Compensation – Retirement Benefits”).~~Assets. The guidance requires ~~disclosures about~~ fair value ~~measurements of~~ plan asset disclosures for an employer’s assets in defined benefit pension and postretirement plans similar to ~~those required by ASC Topic No. 820~~the guidance on Fair Value Measurements, as well as (a) how investment allocation decisions are made, (b) the major categories of plan assets, and (c) significant concentrations of risk within plan assets. The guidance is effective for fiscal years ending after December 15, 2009. ~~Comparative information for earlier periods is not required at initial adoption.~~The Company has applied the provision of this new guidance to its financial statement disclosures beginning December 31, 2009.

In ~~June~~December 2009, the FASB issued ~~Statement of Financial Accounting Standards No. 167, “An Amendment of FASB Interpretation No. 46(R)~~new guidance related to the Consolidation of Variable Interest ~~Entities”~~Entities (“~~SFAS No. 167”~~VIE”).

and transfer of assets. The new guidance focuses on ‘controlling financial interests’ and requires companies to perform qualitative analysis to determine whether they must consolidate a VIE by assessing whether the variable interests give them controlling financial interests in the VIE. ~~SFAS No. 167~~This guidance is effective for transfers occurring on or after November 15, 2009. Provisions must be applied in annual reporting periods beginning after November 15, 2009 and interim periods within that annual period. ~~Earlier application~~The adoption of the guidance did not have a material impact on the Company’s financial statements. Also effective January 1, 2010, the Company adopted new guidance that indefinitely defers the above changes relating to the Company’s interests in entities that have all the attributes of an investment company or for which it is ~~prohibited.~~industry practice to apply measurement principles for financial reporting that are consistent with those applied by an investment company. As a result of the deferral, the above guidance did not apply to certain investment management trusts managed by Mercer.

~~MMC~~In January 2010, the FASB issued new guidance that adds additional disclosures about transfers into and out of Levels 1 and 2 items and separate disclosures about purchases, sales, issuances, and settlements related to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. Further, the new guidance amends the requirements on employer’s disclosures about postretirement benefit plan assets to require disclosures be provided by classes of assets instead of by major categories of assets. This guidance is effective for the first reporting period beginning after December 31, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010. The adoption of the guidance did not have a material impact on the Company’s financial statements.

In October 2009, the FASB amended its guidance on revenue recognition regarding multiple-deliverable revenue arrangements. The guidance is effective prospectively for arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is evaluating the impact of adopting ~~the provisions of the aforementioned~~this new ~~accounting pronouncements.~~guidance.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Marsh & McLennan Companies, Inc. and Subsidiaries (“MMC”) is a global professional services firm providing advice and solutions in the areas of risk, strategy, and human capital. MMC’s subsidiaries include Marsh, which provides risk and insurance services; Guy Carpenter, which provides reinsurance services; Mercer, which provides human resource and related financial advice and services; Oliver Wyman Group, which provides management consulting and other services; and Kroll, which provides ~~Risk Consulting & Technology~~risk consulting and technology services. MMC’s approximately 52,000 employees worldwide provide analysis, advice and transactional capabilities to clients in over 100 countries.

MMC’s business segments are based on the services provided. Risk and Insurance Services includes risk management and insurance and reinsurance broking and services, provided primarily by Marsh and Guy Carpenter. Consulting, which comprises the activities of Mercer and Oliver Wyman Group, includes human resource consulting and related investment and outsourcing services, and specialized management, economic and brand consulting services. Risk Consulting & Technology, conducted through Kroll, includes risk consulting and related investigative, intelligence, financial, security and technology services.

In February 2010, Marsh acquired Haake Companies, Inc., one of the largest independent insurance agencies in the Midwest. In March 2010, Marsh completed the acquisition of Thomas Rutherfoord, Inc., one of the largest insurance broking firms in the Southeast and mid-Atlantic regions of the U.S. In the first quarter of 2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”). The net after-tax loss on this disposal is included in discontinued operations in 2010. KLS’s operating results have not been reclassified to discontinued operations, since the amounts are immaterial to MMC. During the second quarter of 2009, Kroll sold ~~KGS, which has been classified as a~~KGS. KGS’s results of operations for 2009 are included in discontinued operation. The principal operations within the corporate advisory and restructuring business were divested in the fourth quarter of 2008 and two small residual businesses were exited in the first quarter of 2009.operations.

In April 2009, Guy Carpenter completed the acquisition of John B. Collins Associates, Inc., previously the fifth-largest reinsurance intermediary in the U.S. and seventh-largest in the world. The acquisition of 100% of Collins further strengthens Guy Carpenter’s capabilities in medical professional liability, agriculture, Florida property, Program, and regional specialty lines of business. In September 2009, Marsh acquired International Advisory Services Ltd., the largest independent manager of captives and third-party insurance companies in Bermuda. In December 2009, Marsh acquired the NIA Group, LLC, one of the largest, independent insurance agencies in the Northeast and the 34^th largest agency in the U.S. In October 2009, Guy Carpenter completed the acquisition of London-based specialty reinsurance broker Rattner Mackenzie Limited from HCC Insurance Holdings, Inc.

A reconciliation of segment operating income to total operating income is included in Note 17 to the consolidated financial statements included elsewhere in this report. The accounting policies used for each segment are the same as those used for the consolidated financial statements.

This MD&A contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See “Information Concerning Forward-Looking Statements” at the outset of this report.

Consolidated Results of Operations


	Third Quarter					Nine Months
(In millions, except per share figures)	2009		2008			2009			2008			2010		2009
Revenue	$	2,523	$	2,819		$	7,761		$	8,876		$2,795		$2,609
Expense:
Compensation and Benefits		1,606		1,805			4,781			5,506		1,650		1,571
Other Operating Expenses		701		950			2,146			2,676		706		714
Goodwill Impairment Charge		—		—			315			540
Operating Expenses		2,307		2,755			7,242			8,722
Operating Income (Loss)	$	216	$	64		$	519		$	154
Income (Loss) From Continuing Operations	$	221	$	17		$	238		$	(141	)
Operating Expense												2,356		2,285
Operating Income												$ 439		$ 324
Income from Continuing Operations												$ 274		$ 179
Discontinued Operations, net of tax		4		(22	)		(21	)		(4	)	(22	)	1
Net Income (Loss) Before Non-Controlling Interests	$	225	$	(5	)	$	217		$	(145	)
Net Income (Loss) Attributable to MMC	$	221	$	(8	)	$	204		$	(153	)
Income (Loss) From Continuing Operations Per Share:
Net Income before Non-controlling Interests												$ 252		$ 180
Net Income Attributable to MMC												$ 248		$ 176
Income from Continuing Operations Per Share:
Basic	$	0.41	$	0.03		$	0.42		$	(0.28	)	$ 0.50		$ 0.33
Diluted	$	0.40	$	0.03		$	0.42		$	(0.29	)	$ 0.46		$ 0.33
Net Income (Loss) Per Share Attributable to MMC:
Net Income Per Share:
Basic	$	0.41	$	(0.02	)	$	0.38		$	(0.29	)	$ 0.49		$ 0.33
Diluted	$	0.41	$	(0.02	)	$	0.38		$	(0.30	)	$ 0.45		$ 0.33
Average Number of Shares Outstanding:
Weighted Average Number of Shares Outstanding:
Basic		524		513			521			514		533		515
Diluted		526		516			522			514		536		515
Shares Outstanding at September 30,		526		514			526			514
Shares outstanding at March 31,												541		517

MMC reported consolidated operating income of ~~$216~~$439 million in the ~~third~~first quarter of ~~2009~~2010 compared with operating income of ~~$64~~$324 million in the prior year. ~~A $155~~The results include a $50 million increase in Risk and Insurance Services’ operating income, ~~was partially offset by~~ a ~~$52~~$43 million ~~decrease~~increase in the Consulting ~~segment. Corporate expenses were $51~~segment and a $12 million ~~less than prior year, primarily due to restructuring costs recorded~~increase in ~~2008.~~

~~MMC reported consolidated operating income of $519 million for the first nine months of 2009 compared with $154 million in the prior year. These results include goodwill impairment charges related to~~ the Risk Consulting & Technology ~~segment of $315 million~~segment. The operating results were also impacted by lower restructuring and related charges in 2009 and $540 million in 2008. Excluding these charges, consolidated operating income was $834 million for the first nine months of 2009 compared with $694 million for the first nine months of 2008. This reflects increased operating income2010, primarily in the ~~risk & insurance services~~Risk and Insurance Services segment ~~partly offset by decreases~~and Corporate.

The devaluation of Venezuela’s bolivar currency in ~~the consulting and Risk Consulting & Technology segments and~~January of 2010 did not have a ~~$63 million decrease in corporate expenses.~~material impact on MMC’s results of operations or financial position.

Consolidated Revenue and Expense

MMC conducts business in many countries, as a result of which the impact of foreign exchange rate movements may distort period-to-period comparisons of revenue. Similarly, the revenue impact of acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to another by isolating these impacts. The impact of foreign currency exchange fluctuations and acquisitions and dispositions, including transfers among businesses, on MMC’s operating revenues by segment is as follows:


	Three Months Ended September 30,				% Change GAAP Revenue			Components of Revenue Change*									Three Months Ended March 31,								Components of Revenue Change*
	Three Months Ended September 30,						Currency Impact			Acquisitions/ Dispositions Impact			Underlying Revenue				Three Months Ended March 31,				% Change GAAP Revenue			Currency Impact			Acquisitions/ Dispositions Impact			Underlying Revenue
(In millions of dollars)	2009		2008							Acquisitions/ Dispositions Impact		2010	Underlying Revenue				2009							Currency Impact			Acquisitions/ Dispositions Impact			Underlying Revenue

Risk and Insurance Services																					% Change GAAP Revenue
Marsh	$ 989		$1,040				Currency Impact	(5	)%		(3	)%		—			(2	)%	$ 1,166			$ 1,076			8	%		6	%		2	%		0	%
Guy Carpenter	223		197			13	%		(3	)%		10	%		6	%		315		281			12	%		3	%		9	%		1	%
Subtotal	1,212		1,237		(2	)%		(3	)%		2	%		(1	)%		1,481		1,357			9	%		5	%		4	%		0	%
Fiduciary Interest Income	14		38		(64	)%		(2	)%		1	%		(63	)%		11		15			(28	)%		7	%		—			(35	)%
Total Risk and Insurance Services	1,226		1,275		(4	)%		(3	)%		2	%		(3	)%		1,492		1,372			9	%		5	%		4	%		0	%
Consulting
Mercer	831		951		(12	)%		(4	)%		—			(8	)%		849		803			6	%		7	%		—			(1	)%
Oliver Wyman Group	313		377		(17	)%		(4	)%		—			(14	)%		306		280			10	%		4	%		—			6	%
Total Consulting	1,144		1,328		(14	)%		(4	)%		—			(10	)%		1,155		1,083			7	%		6	%		—			1	%
Risk Consulting & Technology
Kroll	170		199		(14	)%		(2	)%		(3	)%		(9	)%		162		167			(3	)%		2	%		(3	)%		(2	)%
Corporate Advisory and Restructuring	—		36		(100	)%		—			(100	)%		—			—		—			—			—			—			—
Total Risk Consulting & Technology	170		235		(27	)%		(2	)%		(18	)%		(8	)%		162		167			(3	)%		2	%		(3	)%		(2	)%
Corporate Eliminations	(17	)	(19	)													(14	)	(13	)
Total Revenue	$2,523		$2,819		(11	)%		(3	)%		(1	)%		(7	)%		$ 2,795		$ 2,609			7	%		5	%		2	%		0	%

*	Components of revenue change may not add across due to rounding.

The following table provides more detailed revenue information for certain of the components presented above:

      Three Months Ended
September 30,    % Components of Revenue Change*

Change
GAAP
Revenue
Currency
Impact Acquisitions/
Dispositions
Impact Underlying
Revenue
(In millions of dollars)    2009    2008
Marsh:

EMEA
   $317    $   353    (10 )% (7 )% (1 )% (3 )%
Asia Pacific
   109    105    4 % (3 )% —    7 %
Latin America
   68    64    5 % (6 )% 3 % 8 %
Total International
   494    522    (6 )% (6 )% —    —
U.S. and Canada
   495    518    (4 )% (1 )% 1 % (5 )%
Total Marsh
   $989    $1,040    (5 )% (3 )% —    (2 )%
Mercer:

Retirement
   $264    $   299    (12 )% (5 )% —    (7 )%
Health and Benefits
   212    238    (11 )% (2 )% (1 )% (7 )%
Other Consulting Lines
   121    154    (21 )% (2 )% 1 % (21 )%
Mercer Consulting
   597    691    (14 )% (3 )% —    (10 )%
Outsourcing
   157    183    (14 )% (5 )% —    (9 )%
Investment Consulting & Management
   77    77    1 % (8 )% —    8 %
Total Mercer
   $831    $   951    (12 )% (4 )% —    (8 )%
Kroll:

Litigation Support and Data Recovery
   $  79    $     82    (2 )% (2 )% —    1 %
Background Screening
   58    65    (11 )% (1 )% (2 )% (8 )%
Risk Mitigation and Response
   33    52    (38 )% (4 )% (9 )% (25 )%
Total Kroll
   $170    $   199    (14 )% (2 )% (3 )% (9 )%

*	~~Components of revenue change may not add across due to rounding.~~

      Nine Months Ended
September 30, % Components of Revenue Change*
   Change
GAAP
Revenue Currency
Impact Acquisitions/
Dispositions
Impact Underlying
Revenue
(In millions of dollars)    2009 2008
Risk and Insurance Services

Marsh
   $3,168    $3,419    (7 )% (6 )% —    (1 )%
Guy Carpenter
   731    657    11 % (5 )% 8 % 9 %
Subtotal
   3,899    4,076    (4 )% (6 )% 1 % 1 %
Fiduciary Interest Income
   42    114    (63 )% (4 )% —    (60 )%
Total Risk and Insurance Services
   3,941    4,190    (6 )% (6 )% 1 % (1 )%
Consulting

Mercer
   2,466    2,835    (13 )% (8 )% —    (5 )%
Oliver Wyman Group
   904    1,162    (22 )% (6 )% 1 % (17 )%
Total Consulting
   3,370    3,997    (16 )% (8 )% —    (9 )%
Risk Consulting & Technology

Kroll
   498    629    (21 )% (4 )% (2 )% (15 )%
Corporate Advisory and Restructuring
   —    114    (100 )% —    (100 )% —
Total Risk Consulting & Technology
   498    743    (33 )% (3 )% (17 )% (13 )%
Corporate Eliminations
   (48 ) (54 )
Total Revenue
   $7,761    $8,876    (13 )% (7 )% (1 )% (5 )%

*	~~Components of revenue change may not add across due to rounding.~~

~~The following table provides more detailed revenue information for certain of the components presented above:~~


	Nine Months Ended September 30,		%		Components of Revenue Change*									Three Months Ended March 31,					Components of Revenue Change*
	Nine Months Ended September 30,		Change GAAP Revenue		Currency Impact			Acquisitions/ Dispositions Impact			Underlying Revenue			Three Months Ended March 31,		% Change GAAP Revenue			Currency Impact			Acquisitions/ Dispositions Impact			Underlying Revenue
(In millions of dollars)	2009	2008	Change GAAP Revenue					Acquisitions/ Dispositions Impact		2010	Underlying Revenue			2009					Currency Impact			Acquisitions/ Dispositions Impact			Underlying Revenue
																% Change GAAP Revenue
Marsh:
EMEA	$1,182	$1,348	(12	)%	Currency Impact		(11	)%		(1	)%		—		$ 527	$ 500		5	%		7	%		(1	)%		(1	)%
Asia Pacific	304	316	(3	)%	(9	)%		—			5	%		99	86	14	%		14	%		(2	)%		2	%
Latin America	172	172	—		(13	)%		2	%		10	%		52	47	10	%		9	%		(2	)%		3	%
Total International	1,658	1,836	(10	)%	(11	)%		(1	)%		2	%		678	633	7	%		8	%		(1	)%		0	%
U.S. and Canada	1,510	1,583	(5	)%	(1	)%		1	%		(4	)%
U.S. / Canada														488	443	10	%		2	%		7	%		1	%
Total Marsh	$3,168	$3,419	(7	)%	(6	)%		—			(1	)%		$1,166	$1,076	8	%		6	%		2	%		0	%
Mercer:
Retirement	$ 811	$ 922	(12	)%	(10	)%		—			(2	)%		$ 280	$ 276	1	%		7	%		—			(5	)%
Health and Benefits	648	700	(7	)%	(5	)%		(1	)%		(2	)%		225	212	6	%		4	%		—			2	%
Other Consulting Lines	336	420	(20	)%	(4	)%		1	%		(17	)%
Mercer Consulting	1,795	2,042	(12	)%	(7	)%		—			(5	)%
Rewards, Talent & Communications														93	105	(11	)%		4	%		—			(15	)%
Total Mercer Consulting														598	593	1	%		5	%		—			(4	)%
Outsourcing	453	553	(18	)%	(9	)%		—			(9	)%		162	142	14	%		11	%		—			3	%
Investment Consulting & Management	218	240	(9	)%	(14	)%		—			5	%		89	68	32	%		15	%		—			17	%
Total Mercer	$2,466	$2,835	(13	)%	(8	)%		—			(5	)%		$ 849	$ 803	6	%		7	%		—			(1	)%
Kroll:
Litigation Support and Data Recovery	$ 216	$ 257	(16	)%	(4	)%		—			(12	)%		$ 78	$ 71	11	%		2	%		—			8	%
Background Screening	182	206	(12	)%	(1	)%		(1	)%		(10	)%		52	62	(17	)%		1	%		(9	)%		(9	)%
Risk Mitigation and Response	100	166	(40	)%	(6	)%		(8	)%		(27	)%		32	34	(7	)%		5	%		—			(11	)%
Total Kroll	$ 498	$ 629	(21	)%	(4	)%		(2	)%		(15	)%		$ 162	$ 167	(3	)%		2	%		(3	)%		(2	)%

*	Components of revenue change may not add across due to rounding.

Revenue

Consolidated revenue for the ~~third~~first quarter of ~~2009~~2010 was ~~$2.5~~$2.8 billion, ~~a decrease~~an increase of ~~11%~~7% compared with the same period in the prior year, ~~or 7%~~and was flat on an underlying basis.

Revenue in the Risk and Insurance Services segment for the ~~third~~first quarter of ~~2009 decreased 4%~~2010 increased 9% from the same period in ~~2008, or 3%~~2009, and was flat on an underlying basis. Within the Risk and Insurance Services segment, a 6%1% increase in underlying revenue at Guy Carpenter was ~~more than~~ offset by a ~~63%~~35% decline in fiduciary interest ~~income and a 2% decrease at Marsh.~~income. Consulting revenue ~~decreased 14%~~increased 7%, resulting from ~~decreases~~increases of ~~12%~~6% in Mercer and ~~17%~~10% in Oliver Wyman. On an underlying basis, Consulting revenue ~~decreased 8% in Mercer, 14%~~increased 1% reflecting an increase of 6% in Oliver Wyman, ~~and 10% for the Consulting segment in total.~~partly offset by a 1% decline at Mercer. Revenue decreased ~~27%~~3% in Risk Consulting & Technology or 8%2% on an underlying basis, reflecting decreases in background screening and risk mitigation and response of 9% and ~~the impact of disposals of the corporate advisory and restructuring businesses,~~11%, respectively, partly offset by ~~a 1%~~an 8% increase for litigation support and data recovery. As previously noted, the principal operations of the corporate advisory and restructuring businesses were divested in the fourth quarter of 2008, while a small residual business in the United States was divested

Operating Expense

Consolidated operating expense in the first quarter of ~~2009.~~

~~For the first nine months of 2009, Risk and Insurance Services revenue decreased 6%~~2010 increased 3% from the same period in 2008, or 1% on an underlying basis. Excluding fiduciary interest income, Risk and Insurance Services revenue increased 1% on an underlying basis, reflecting a 9% increase in Guy Carpenter, offset by a 1% decrease at Marsh. Consulting revenue decreased 16%, resulting from a 13% decrease in Mercer and 22% decrease in Oliver Wyman. On an underlying basis, revenue decreased 5% in Mercer, 17% in Oliver Wyman and 9% for the Consulting segment in total. Revenue decreased 33% in Risk Consulting & Technology, or 13% on an underlying basis.

~~Operating Expenses~~

~~Consolidated operating expenses in the third quarter of 2009 decreased 16% from the same period in 2008.~~2009. This reflects a ~~12% decline in underlying expense, a 3% decline~~5% increase due to the impact of foreign exchange and ~~the remaining~~a 1% ~~decline~~increase due to the impact of ~~dispositions.~~acquisitions, partly offset by a 4% decline in underlying expense. The decrease in underlying expense reflects lower legal and regulatory expenses reflects generally lower expenses, primarily in base salary, employee benefits, travel & entertainment, outside services, facilities, equipment and recoverable expenses from clients. This reflects the Company’s continued effort to monitor and control expenses.

For the nine months ended September 30, 2009, operating expenses decreased 17% compared with the same period in 2008. MMC recorded goodwill impairment charges of $315 million and $540 million in 2009 and 2008, respectively. Excluding the goodwill impairment charges, expenses decreased 15%. The change reflectsas well as a ~~6% decline due to the impact of foreign exchange, an 8%~~ decline in ~~underlying~~restructuring expenses, ~~and a 1% decline due to the impact of dispositions. These decreases were~~ partly offset by approximately $12 million of accelerated amortization of compensation expense due to the modification of vesting and delivery terms of certain share based awards to ensure compliance with Section 409A of the Internal Revenue Code.higher pension related expenses.

Restructuring

~~Actions Initiated in 2009~~

~~For the first nine months of 2009,~~ MMC implemented restructuring actions which resulted in costs totaling $146 million primarily related to severance and benefits and costs for future rent and other real estate costs. These costs were incurred as follows: Risk and Insurance

Services—$104 million, Consulting—$34 million, Risk Consulting & Technology—$7 million and Corporate—$1 million. These activities resulted in the elimination of approximately 1,100 positions at Marsh, 75 positions at Guy Carpenter, 430 positions at Mercer, 210 positions at Kroll and 25 positions at corporate. The annualized cost savings from these actions are expected to be approximately $150 million.

~~Actions Initiated Prior to 2009~~

Prior to 2009, MMC implemented several restructuring and cost-savings initiatives related to firm-wide infrastructure, organization structure and operating company business processes. During the nine months of 2009, MMC incurredrecorded total restructuring costs of ~~$16~~$9 million in the first quarter of 2010 in connection with actions initiated in prior years, primarily due to adjustments to the estimated future rent and real estate costs related to previously vacated ~~space in MMC’s New York headquarters building.~~space.

Risk and Insurance Services

The results of operations for the Risk and Insurance Services segment are presented below:


	Third Quarter						Nine Months
(In millions of dollars)	2009			2008			2009			2008			2010		2009
Revenue	$	1,226		$	1,275		$	3,941		$	4,190		$1,492		$1,372
Compensation and Benefits		741			847			2,225			2,543		781		722
Other Expenses		358			456			1,047			1,291		364		353
Expense		1,099			1,303			3,272			3,834		1,145		1,075
Operating Income	$	127		$	(28	)	$	669		$	356		$ 347		$ 297
Operating Income Margin		10.4	%		N/A			17.0	%		8.5	%	23.3	%	21.6	%

Revenue

Revenue in the Risk and Insurance Services segment in the ~~third~~first quarter of ~~2009 decreased 4%~~2010 increased 9%, ~~or 3%~~and was flat on an underlying basis compared with the same period in ~~2008.~~

In2009. This performance was achieved in continued soft market conditions for commercial property-casualty insurance and a decline in the ~~third quarter, insurance~~volume of net written premiums in the ~~property and casualty marketplace continued to decline – continuing a trend seen throughout this year. Additionally, as a result of the global economic recession, demand for commercial insurance~~property-casualty industry, which has ~~moderated~~been adversely affected by recessionary conditions over the past ~~year.~~ two years.

In Marsh, revenue in the ~~third~~first quarter of ~~2009~~2010 was ~~$989 million, a decrease~~$1.2 billion, an increase of 5%8% from the same quarter of the prior year ~~or 2%~~resulting from the impact of foreign currency translation and acquisitions. Revenue was flat on an underlying ~~basis.~~basis, reflecting the economic environment and the downward pressure on commercial insurance premium rates. Despite these difficult market conditions, Marsh increased revenues in many areas of the world. Underlying revenue ~~decreased 3% in EMEA and 5%~~increases of 1% in the U.S. / Canada, 3% in Latin America, and ~~Canada, respectively, partly offset by increases of 7%~~2% in Asia Pacific were offset by a 1% decrease in EMEA.

In February 2010, Marsh acquired Haake Companies, Inc., one of the largest insurance agencies in the Midwest. In March 2010, Marsh acquired Thomas Rutherfoord, Inc., one of the largest insurance broking firms in the Southeast and 8%mid-Atlantic regions of the U.S. On April 30, 2010, Marsh acquired the Bostonian Group, one of the largest regional insurance brokerages in ~~Latin America.~~New England. On April 1, 2010, Marsh completed the acquisition of HSBC Insurance Brokers Ltd., an international provider of risk intermediary and risk advisory services.

Guy Carpenter’s revenue increased ~~13%~~12% to ~~$223~~$315 million in the ~~third~~first quarter of ~~2009~~2010 compared with ~~prior year,~~the same period in 2009, or 6%1% on an underlying basis. The increase in underlying revenue was primarily due to ~~higher client revenue retention and an increase in~~continued strong new business. ~~Increased rates were evident in U.S. property catastrophe reinsurance in the third quarter while rates in casualty reinsurance were stable to down.~~ In April 2009, Guy Carpenter ~~completed the acquisition of 100% of~~acquired John B. Collins Associates, Inc., previously the fifth-largest reinsurance intermediary in the U.S. and seventh-largest in the world. ~~The acquisition of Collins further strengthens Guy Carpenter’s capabilities in medical professional liability, agriculture, Florida property, Program, and regional specialty lines of business.~~ In October 2009, Guy Carpenter completed the acquisition of London-based specialty reinsurance broker Rattner Mackenzie Limited from HCC Insurance Holdings, Inc.

Fiduciary interest income was ~~$14~~$11 million in the ~~third~~first quarter of ~~2009,~~2010, a decrease of ~~64%~~28% compared with the same period of ~~2008,~~2009, driven by lower interest ~~rates.~~

~~Revenue in the Risk and Insurance Services segment decreased 6% for the first nine months of 2009 compared with the same period of 2008, resulting primarily from~~rates, partly offset by the impact of foreign ~~exchange. Revenue decreased 1% on an underlying basis, as a 9% increase in underlying revenue at Guy Carpenter was offset by a 1% decrease in Marsh and lower fiduciary interest income.~~exchange rates.

Expense

Expenses in the Risk and Insurance Services segment ~~decreased 16%~~increased 6% in the ~~third~~first quarter of ~~2009,~~2010, compared with the same period in the prior ~~year. Underlying expenses decreased 13% with the remaining reduction due~~year reflecting a 5% increase related to the impact of foreign currency ~~exchange of 4%~~and a 3% increase from acquisitions, partly offset by ~~an increase of 1% due to the impact of acquisitions.~~a 2% decline in underlying expenses. The decline in underlying expenses reflects lower compensation and benefit costs and a decrease in other operating cost categories as the Company continues its efforts to monitor and control expenses. The decrease in compensation and benefits reflects lower salary due to the reduction in the number of employees as a result ofseverance related restructuring activities. The decrease in other expense includes a reduction in professional liability costs reflecting the impact of a $33 million charge recorded in the third quarter of 2008 and a $12 million credit in 2009 related to insurance recoveries of previously expensed legal fees. The period-over-period expense decrease also reflects lower restructuring and related costs in 2009 as compared with 2008.

Expenses for the nine-month period in 2009 decreased 15% compared with prior year. This reflects a decrease of 9% on an underlying basis reflecting a decrease in all expense categories and lower restructuring and related charges, including a credit of $50 million recorded in 2009 related to insurance recoveries of previously expensed legal fees, and a 7% reduction due to the impact of foreign exchange,activities partly offset by ~~a 1% increase due to acquisitions.~~higher pension related expenses.

Consulting

The results of operations for the Consulting segment are presented below:


	Third Quarter						Nine Months
(In millions of dollars)	2009			2008			2009			2008			2010		2009
Revenue	$	1,144		$	1,328		$	3,370		$	3,997		$1,155		$1,083
Compensation and Benefits		739			803			2,161			2,430		737		712
Other Expenses		300			368			935			1,094		302		298
Expense		1,039			1,171			3,096			3,524		1,039		1,010
Operating Income	$	105		$	157		$	274		$	473		$ 116		$ 73
Operating Income Margin		9.2	%		11.8	%		8.1	%		11.8	%	10.0	%	6.7	%

Revenue

Consulting revenue in the ~~third~~first quarter of ~~2009 decreased 14%~~2010 increased 7% compared with the same period in ~~2008,~~2009, or ~~10%~~1% on an underlying basis. Mercer’s revenue was $849 million in the first quarter of 2010, an increase of 6%. On an underlying basis, Mercer’s revenue decreased 1%. Within Mercer’s consulting lines, revenue decreased 4% on an underlying basis compared with the

first quarter of 2009, reflecting a decrease of 15% in Rewards, Talent and Communications and a 5% decline in retirement, partly offset by an increase of 2% in health and benefits. The growth in health and benefits resulted from increases in Canada, EMEA and Asia Pacific, partly offset by a reduction in the U.S. due to a near-term disruption in demand as Congress debated significant legislation changes to the U.S. healthcare system. Outsourcing revenue increased 3% on an underlying basis, driven by growth in Asia Pacific and the U.S. Investment consulting & management revenue increased 17% on an underlying basis, due to strong growth in the ~~effect of the continued difficult market environment. Foreign exchange rates for consulting had a negative impact on~~U.S., EMEA and Asia Pacific, primarily reflecting an increase in assets under management and advisory assets. Oliver Wyman’s revenue ~~of 4% in 2009 compared with 2008. Mercer’s revenue was $831~~increased 10% to $306 million in the ~~third~~first quarter of ~~2009, a decline of 12%,~~2010, or ~~8% on an underlying basis. Within Mercer’s consulting lines, revenue decreased 10%~~6% on an underlying basis, ~~compared with the third quarter of 2008; outsourcing declined 9%, partly offset~~driven by an 8% increase in investment consulting and management. The decrease at Mercer reflects a reduction in discretionary consulting assignments and a decrease in payroll levels that affected Health and Benefits and Outsourcing. Oliver Wyman’sdouble-digit revenue ~~declined 17% to $313 million in the third quarter of 2009, or 14% on an underlying basis, due to a decline in demand for~~growth within its financial services ~~largely resulting from adverse global economic and financial market conditions.~~

practice.

Expense

Consulting ~~revenue~~expenses increased 3% in the first ~~nine months~~quarter of ~~2009 decreased 16%~~2010 compared with the same period in 2008, or 9% on an underlying basis. Mercer’s revenue decreased 13% or 5% on an underlying basis; reflecting an underlying revenue decrease in consulting of 5% and outsourcing of 9%, partly offset by an increase in investment consulting and management of 5%. Within Mercer’s consulting lines, underlying revenue in retirement decreased 2% versus prior year, health and benefits decreased 2% and other consulting lines decreased 17%. Oliver Wyman’s revenue decreased 22%, or 17% on an underlying basis, compared with the same period last year.

~~Expense~~

~~Consulting expenses decreased 11% in the third quarter of~~ 2009, ~~compared with the same period in 2008,~~ reflecting a ~~3% decrease~~6% increase from the impact of foreign exchange rates, partly offset by a 3% decrease of underlying expenses. Management continues to monitor and ~~an 8% decrease on an underlying basis.~~manage expenses closely. The decline in underlying expenses ~~reflects~~is driven primarily by a decrease in base salaries ~~and employee benefits~~ due to decreased staff levels along with ~~cost reductions in all discretionary expense categories and~~ lower recoverable expenses from clients. ~~These decreases were partly~~The reduction in recoverable expenses has no impact on net operating income, since it is offset by ~~an increase in restructuring costs in 2009 compared with 2008.~~

~~For the nine months ended September 30, 2009, expenses decreased 12% reflecting a 7% decrease from the impact of foreign exchange rates, an increase of 1% due~~lower revenue billed to ~~acquisitions, and a decrease of 6% in underlying~~clients for those expenses.

Risk Consulting & Technology

The results of operations for the Risk Consulting & Technology segment are presented below:


	Third Quarter						Nine Months
(In millions of dollars)	2009			2008			2009			2008			2010			2009
Revenue	$	170		$	235		$	498		$	743		$	162		$	167
Compensation and Benefits		73			107			229			358			74			80
Other Expenses		77			106			246			325			72			83
Goodwill Impairment Charge		—			—			315			540
Expense		150			213			790			1,223			146			163
Operating Income (Loss)	$	20		$	22		$	(292	)	$	(480	)
Operating Income													$	16		$	4
Operating Income Margin		11.8	%		9.4	%		N/A			N/A			9.9	%		2.4	%

Revenue

Risk Consulting & Technology revenues in the ~~third~~first quarter of ~~2009~~2010 decreased ~~27%~~3% compared with ~~2008 primarily~~2009, reflecting ~~the divestiture of corporate advisory and restructuring and~~ a 2% decrease in underlying ~~revenue at Kroll. Kroll’s revenue was $170 million in the third quarter,~~revenues, and a 3% decrease ~~of 14% from the year-ago quarter, or 9% on an underlying basis.~~related to dispositions, partly offset by a 2% increase related to foreign exchange translation. The underlying revenue decrease was driven by declines in background screening of ~~8%;~~9% and risk mitigation and response of ~~25%~~11%, partly offset by an increase of 1%8% in litigation support and data recovery. In ~~May 2009,~~February 2010, Kroll ~~sold its government services business, which has~~completed the sale of KLS. Due to the immaterial impact on MMC’s overall results, KLS’s operating results have not been reclassified into discontinued ~~operations for both 2009 and 2008.~~

For the first nine months of 2009, Risk Consulting & Technology revenues decreased 33%, reflecting the divestiture of corporate advisory and restructuring and decreases in each of Kroll’s businesses. Kroll’s revenue decreased 21% or 15% on an underlying basis.

The majority of the operations within the corporate advisory and restructuring business were disposed of in the fourth quarter of 2008. Additionally, two small residual businesses were exited in the first quarter of 2009.operations.

Expense

Risk Consulting & Technology expenses decreased ~~29%~~11% in the ~~third~~first quarter of ~~2009~~2010 compared with ~~2008.~~2009. Underlying expenses decreased 10% with the remaining reduction due to the impact of dispositions of ~~17% and~~3%, partly offset by the impact of foreign exchange translation of 2%. The decrease in expenses reflects lower salaries due to decreased headcount ~~lower recoverable expenses from Kroll clients~~ and ~~the favorable impact on the year-over-year~~reductions in most other expense ~~comparison due to the divestiture of the corporate advisory and restructuring businesses in 2008.~~categories.

For the first nine months of 2009, expenses were $790 million compared to $1.2 billion in 2008. Goodwill impairment charges of $315 million and $540 million were recorded in the nine month periods of 2009 and 2008, respectively. Excluding the goodwill impairment charges, Risk Consulting & Technology expenses for the nine months of 2009 decreased 30% compared with the same periods in the prior year. On an underlying basis, expenses decreased 10% for the nine month period ended September 30, 2009 as compared to prior year.

Corporate Expenses

Corporate expenses in the ~~third~~first quarter of ~~2009~~2010 were ~~$36~~$40 million compared with ~~$87~~$50 million in the prior year. The ~~2008~~decrease is due to lower consulting fees and restructuring charges in 2010 compared with 2009. The 2009 expense includes restructuring charges of ~~$49~~$11 million, primarily related to vacated leased space in MMC’s New York headquarters.

For the first nine months of 2009, corporate expenses of $132 million were 32% lower than the same period in the prior year. The decrease is due to lower consulting fees, legal fees and restructuring charges in 2009 compared with 2008.

Interest

Interest income earned on corporate funds amounted to $3$4 million in the ~~third~~first quarter of ~~2009,~~2010, compared with ~~$10~~$6 million in the ~~third~~first quarter of ~~2008.~~2009. The decrease in interest income is due to lower average interest rates in ~~2009~~2010 compared with the prior year. Interest ~~income was $13~~expense of $60 million ~~for~~in the first ~~nine months~~quarter of ~~2009, a decrease of $27~~2010 increased $4 million ~~versus~~from the same period in ~~the prior year. Interest expense of $59 million in the third quarter of 2009 increased $5 million from~~ the prior year. This increase is primarily due to the higher interest rate on new debt issued in 2009, compared with notes that matured, as well as higher interest expense associated with acquisition related liabilities and the impact of higher interest rates from the issuance of $400 million of senior notes in the first quarter of 2009. MMC used the proceeds of these senior notes to fund the maturity of $400 million of senior notes in June 2009. Year-to-date interest expense was $180 million versus $165 for the same period in 2008.liabilities.

Investment Income (Loss)

Net investment income in the ~~third~~first quarter of ~~2009~~2010 was ~~$21~~$8 million ~~primarily~~ due to ~~mark-to-market increases~~realized gains on ~~private equity fund investments, partly offset by an other-than-temporary impairment charge~~the sale of ~~$4 million on a cost basis investment.~~securities. This compares with investment losses of ~~$23~~$15 million in the ~~third~~first quarter of ~~2008. For the first nine months of~~ 2009 ~~investment losses were $25 million compared with $31 million of losses in the prior year period.~~primarily due to mark-to-market decreases on private equity fund investments.

Income Taxes

MMC reported ~~net income~~a 29.9% effective tax ~~benefits of $40 million~~rate in the ~~third~~first quarter of ~~2009 on pretax income~~2010. The effective rate reflects the impact of ~~$181 million. This includes a net benefit~~the release of ~~$95 million~~valuation allowances in continuing operations resulting from a decrease in the liability for unrecognized tax benefits and accrued interest related to prior tax years as a result of expiring statutes of limitations, audit settlements, and changes in estimates. The 27% effective tax rate

~~for the first nine months of 2009 reflects a nondeductible, $315 million non-cash goodwill impairment charge in the second quarter,~~international jurisdictions largely offset by ~~the benefit from the decrease in the liability~~a provision for ~~unrecognized~~uncertain tax ~~benefits discussed above.~~positions.

MMC reported a ~~net income~~30.9% effective tax benefit of $20 million for the third quarter of 2008 on a pretax loss of $3 million. The tax benefit primarily reflected the favorable impact of a change in the estimated geographic mix of earnings and an adjustment to reflect tax return estimates to tax returns filed in 2008. For the first nine months of 2008, MMC reported tax expense of $139 million on a pretax loss of $2 million. The expense primarily reflected nondeductible goodwill impairment chargesrate in the first ~~six months~~quarter of 2008, partially offset by the favorable impact of the adjustment to the tax return estimate. Excluding the impact of the nondeductible goodwill impairment charges, MMC’s consolidated effective tax rate for the first nine months of 2008 was 25.6%.2009.

The combination of ordinary income and related tax, which MMC is able to reasonably estimate, with certain items which cannot be estimated and therefore are reported in the interim period in which they occur, results in highly variable effective tax rates that do not represent long term operating trends. The items which cannot be estimated include non-deductible goodwill impairments and accruals for severance, restructuring, and professional liability. We expect the effective tax rate to continue to be ~~highly~~ variable over the short term as items that cannot be estimated continue, and then to moderate.

~~Nevertheless, we expect the~~The effective ~~tax rate to remain significantly variable for the foreseeable future. The~~ rate is sensitive to the geographic mix and repatriation of MMC’s earnings, which may have a favorable or unfavorable impact on the rate. Losses in certain jurisdictions cannot be offset by earnings from other operations, and may require valuation allowances affecting the rate, depending on estimates of the realizability of associated deferred tax assets. The tax rate is also sensitive to changes in unrecognized tax benefits, including the impact of settled tax audits and expired statutes of limitation.

Changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate. For example, proposals for fundamental U.S. international tax reform, such as the recent proposal by President Obama’s Administration, if enacted, could have a significant adverse impact on the effective tax rate.

~~Discontinued Operations~~Dispositions

In the first quarter of 2010, Kroll completed the sale of KLS. The after-tax loss on this disposal is included in discontinued operations in 2010. The operating results of KLS have not been reclassified to discontinued operations, since the amounts are immaterial to MMC.

In the second quarter of 2009, Kroll completed the sale of KGS. The loss on the disposal of KGS and its financial results for 2009 ~~and 2008~~ are included in discontinued operations.

Discontinued operations in the ~~third~~first quarter of ~~2009~~2010 and ~~2008~~2009 also includes the accretion of interest related to an indemnity for uncertain tax positions provided as part of the purchase ofby Great West Lifeco Inc. of Putnam Investments Trust from MMC in August 2007. ~~Discontinued operations for the nine months of 2008 also includes the gain on the sale of a claims administration operation in Brazil.~~

The table below depicts the results of discontinued operations:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(In millions of dollars)	2009		2008		2009		2008		2010		2009
Revenue	$—		$ 19		$ 32		$ 49		$ —		$20
Income before provision for income tax	$—		$ 6		$ 11		$ 10		$ —		$ 6
Provision for income tax	1		1		4		2		—		2
Income from discontinued operations	(1	)	5		7		8
Income from discontinued operations, net of tax									—		4

(Loss) gain on disposal of discontinued operations	13		(4	)	4		28
Provision (credit) for income tax	8		23		32		40
(Loss) gain on disposal of discontinued operations, net of tax	5		(27	)	(28	)	(12	)
Gain on disposal of discontinued operations									16		—
Provision for income tax									38		3
Loss on disposal of discontinued operations, net of tax									(22	)	(3	)
Discontinued operations, net of tax	$ 4		$(22	)	$(21	)	$ (4	)	$(22	)	$ 1

Liquidity and Capital Resources

Operating Cash Flows

MMC ~~generated $405~~used $251 million of cash from operations for the ~~nine~~three months ended ~~September 30, 2009,~~March 31, 2010, compared with ~~$303~~$450 million ~~provided~~used for the same period in ~~2008.~~2009. These amounts reflect the net income ~~(loss)~~ of MMC during those periods, excluding gains or losses from investments and from the disposition of businesses, adjusted for non-cash ~~charges, including goodwill impairment~~ charges, and changes in working capital which relate primarily to the timing of payments of accrued liabilities or receipts of assets. Cash generated from the disposition of businesses is included in investing cash flows.

~~For~~ MMC’s cash flow from operations is typically negative in the first ~~nine months~~quarter of 2009, MMC made pension plan contributions of $334 million ($317 million – foreign plans, $17 million – U.S. plans) as compared to $200 million ($185 million – foreign plans, $15 million – U.S. plans) duringeach year, resulting from the ~~first nine months of 2008.~~

As discussed in Note 16 to the consolidated financial statements, in January 2005 MMC reached a settlement with the NYAG and NYSID that resolved the actions they had commenced against MMC and Marsh in October 2004. As a result of this agreement, MMC recorded a charge in 2004 of $850 million to compensate policyholder clients. The final compensation fund payment of ~~$170 million was made in June 2008.~~accrued incentive compensation.

Financing Cash Flows

Net cash used for financing activities was ~~$358~~$156 million for the period ended ~~September 30, 2009~~March 31, 2010, compared with ~~$549~~$260 million provided for the same period in ~~2008.~~

~~During the second quarter of 2009, MMC’s 7.125% ten-year $400 million bond matured. MMC used cash on hand as well as the proceeds from~~2009. The change primarily reflects the issuance of ~~9.25% ten-year $400 million senior notes~~debt in the first quarter ~~to manage liquidity, including the funding~~ of ~~the maturing notes.~~

~~During the first quarter of 2008, MMC’s 3.625% five-year fixed rate $250 million senior notes matured. MMC used cash on hand to fund the maturing notes.~~2009.

MMC paid dividends on its common shares of ~~approximately $322~~$109 million ($~~0.60~~0.20 per share) during the first ~~nine~~three months of ~~2009, which includes dividend equivalent payments of $10 million,~~2010, as compared with ~~$308~~$102 million ($~~0.60~~0.20 per share) during the first ~~nine~~three months of ~~2008.~~2009.

In the first quarter of 2009, ~~Marsh acquired~~MMC issued $400 million of 9.25% ten-year fixed rate senior notes to refinance the ~~remaining minority interest of a previously majority owned entity for total purchase consideration of $47 million reflecting cash paid of $24 million and future consideration of $23 million.~~senior notes that matured in June 2009.

On October 23, 2009, MMC and certain of its foreign subsidiaries entered into a new $1.0 billion multi-currency three-year unsecured revolving credit facility, which replaced the $1.2 billion facility that was previously in place. The interest rate on this facility varies based upon MMC’s credit ratings and MMC’s credit default swap levels subject to floors and caps. The facility requires MMC to maintain certain coverage and leverage ratios which are tested quarterly. There were no borrowings outstanding under this facility at March 31, 2010.

In the first quarter of 2010, MMC paid deferred purchase consideration of $15 million related to the purchase in 2009 of the minority interest of a previously controlled entity.

MMC’s senior debt is currently rated Baa2 by Moody’s and BBB- by Standard & Poor’s. MMC’s short-term debt is currently rated P-2 by Moody’s and A-3 by Standard & Poor’s. MMC carries a stable outlook from both Moody’s and Standard & Poor’s.

Investing Cash Flows

Cash used for investing activities amounted to ~~$114~~$142 million in the first ~~nine~~three months of ~~2009,~~2010, compared with ~~$350~~$62 million for the same period in ~~2008.~~2009 reflecting cash outflows for acquisitions partly offset by proceeds from the disposal of KLS.

MMC made two acquisitions in the first quarter of 2010 and paid $194 million in cash into an escrow account for an acquisition that closed on April 1, 2010. Cash used for these acquisitions, net of cash acquired, was $7approximately $197 million ~~during the first nine months of 2009~~ compared with ~~$114~~$2 million in ~~2008. During 2009,~~2009. In addition, MMC ~~made three acquisitions that were funded through the issuance of~~issued approximately ~~6.8~~7.4 million shares of ~~MMC~~ common stock ~~, future payments~~with an acquisition date value of ~~$77~~$178 million, and $4recorded a liability of $55 million for estimated contingent purchase consideration related to the acquisitions completed in ~~cash, net~~the first quarter of ~~cash acquired.~~2010. In the first quarter of 2010, MMC also paid $3$12 million of ~~contingent~~deferred purchase consideration related to acquisitions made in prior ~~acquisitions.~~years. Remaining deferred cash payments of ~~$148~~$206 million for acquisitions completed in the ~~third~~first quarter of ~~2009~~2010 and in prior years are recorded in accounts payable and accrued liabilities or other liabilities in the consolidated balance sheet at ~~September 30, 2009.~~March 31, 2010. Cash generated ~~by dispositions amounted to $75~~from the disposition of KLS was $110 million in the first ~~nine months~~quarter of ~~2009 compared to $56 million~~2010. There were no dispositions in ~~2008.~~the comparable period of 2009.

MMC’s additions to fixed assets and capitalized software, which amounted to ~~$209~~$80 million in the first ~~nine~~three months of ~~2009 and $334~~2010 compared with $69 million in the first ~~nine~~three months of ~~2008,~~2009, primarily related to computer equipment purchases, the refurbishing and modernizing of office facilities and software development costs.

MMC has committed to potential future investments of approximately $81 million in connection with its investments in Trident II and other funds managed by Stone Point Capital. The majority of MMC’s investment commitments for funds managed by Stone Point are related to Trident II, the investment period for which is now closed for new investments and follow-on investments. Any remaining capital calls for Trident II would relate to management fees or other partnership expenses, if necessary. Significant future capital calls related to Trident II are not expected. Although it is anticipated that Trident II will be harvesting its remaining portfolio, the timing of any portfolio company sales and capital distributions is unknown and not controlled by MMC.

Commitments and Obligations

MMC’s contractual obligations of the types identified in the table below were of the following amounts as of ~~September 30, 2009~~March 31, 2010 (dollars in millions):


	Payment due by Period					Payment due by Period
Contractual Obligations	Total	Within 1 Year	1-3 Years	4-5 Years	After 5 Years	Total	Within 1 Year	1-3 Years	4-5 Years	After 5 Years
Current portion of long-term debt	$ 558	$ 558	$ —	$ —	$ —	$ 558	$ 558	$ —	$ —	$ —
Long-term debt	3,046	—	271	1,670	1,105	3,040	—	520	669	1,851
Interest on long-term debt	1,751	214	363	319	855	1,645	200	354	295	796
Net operating leases	2,648	370	624	501	1,153	2,323	354	589	425	955
Service agreements	105	32	41	25	7	406	103	127	86	90
Other long-term obligations	148	37	111	—	—	206	75	117	14	—
Total	$8,256	$1,211	$1,410	$2,515	$3,120	$8,178	$1,290	$1,707	$1,489	$3,692

The above does not include unrecognized tax benefits of ~~$219~~$213 million, accounted for under ASC Topic No. 740, as MMC is unable to reasonably predict the timing of settlement of these liabilities, other than approximately ~~$16~~$14 million that may become payable within one year. The above does not include liabilities established under ASC Topic No. 460 as MMC is unable to reasonably predict the timing of settlement of these ~~liabilities, other than approximately $1 million that may become payable within one year.~~liabilities. The above does not include pension liabilities of ~~$907~~$914 million because the timing and amount of ultimate payment of such liability is dependent upon future events, including, but not limited to, future returns on plan assets, and changes in the discount rate used to measure the liabilities.

New Accounting Pronouncements

Note 18 to the consolidated financial statements contains a discussion of recently issued accounting pronouncements and their impact or potential future impact on MMC’s financial results, if determinable.

Item 3. Qualitative and Quantitative Disclosures About Market Risk

Market Risk and Credit Risk

Certain of MMC’s revenues, expenses, assets and liabilities are exposed to the impact of interest rate changes and fluctuations in foreign currency exchange rates and equity markets.

Interest Rate Risk and Credit Risk

MMC has historically managed its ~~net exposure to~~ interest rate ~~changes~~exposures by utilizing ~~a mixture of~~both variable and fixed rate borrowings to finance MMC’s asset base. ~~During 2007,~~In past years, MMC has had some variable rate borrowings in its debt portfolio and has also utilized interest rate swaps to convert a portion of its fixed rate borrowings to variable rate. Currently, virtually all of MMC’s ~~variable~~borrowings are fixed rate ~~borrowings were repaid.~~borrowings.

Interest income generated from MMC’s cash investments as well as invested fiduciary funds will vary with the general level of interest rates.

In addition to interest rate risk, our cash investments and fiduciary fund investments are subject to potential loss of value due to counterparty credit risk. To minimize this risk, MMC and its subsidiaries invest pursuant to a Board approved investment policy. The policy mandates the preservation of principal and liquidity and requires broad diversification with counterparty limits assigned based primarily on credit rating and type of investment. MMC carefully monitors its cash and fiduciary fund investments and will further restrict the portfolio as appropriate to market conditions. The majority of cash and fiduciary fund investments are invested in short-term bank deposits and liquid money market funds.

Foreign Currency Risk

The translated values of revenue and expense from MMC’s international operations are subject to fluctuations due to changes in currency exchange rates. Forward contracts and options are periodically utilized by MMC to limit foreign currency exchange rate exposure on net income and cash flows for specific, clearly defined transactions arising in the ordinary course of its business.

Equity Price Risk

MMC holds investments in both public and private companies as well as certain private equity funds managed by Stone Point Capital. Publicly traded investments of ~~$42~~$24 million are classified as available for sale under ASC Topic No. 320 (“Investments – Debt and Equity Securities”). Non-publicly traded investments of ~~$84~~$54 million are accounted for using the cost method and ~~$172~~$185 million are accounted for under ASC Topic No. 323 (“Investments – Equity Method and Joint Ventures”). The investments that are classified as available for sale or that are not publicly traded are subject to risk of changes in market value, which if determined to be other than temporary, could result in realized impairment losses. MMC periodically reviews the carrying value of such investments to determine if any valuation adjustments are appropriate under the applicable accounting pronouncements.

Other

A significant number of lawsuits and regulatory proceedings are pending. See Note 16 to the consolidated financial statements included elsewhere in this report.

Part I – Item 4. Controls & Procedures

a. Evaluation of Disclosure Controls and Procedures

a.	~~Evaluation of Disclosure Controls and Procedures~~

Based on their evaluation, as of the end of the period of this report, the Company’s Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective.

b. Changes in Internal Controls

b.	~~Changes in Internal Controls~~

There were no changes in MMC’s internal controls over financial reporting that were identified in connection with the evaluation referred to under Part I – Item 4a above that occurred during MMC’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, MMC’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

The information set forth in Note 16 to the consolidated financial statements provided in Part I of this report is incorporated herein by reference.

Item 1A.

Risk Factors.

MMC and its subsidiaries face a number of risks and uncertainties. In addition to the other information in this report and our other filings with the SEC, readers should consider carefully the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2008.~~2009. If any of the risks described in our Annual Report on Form 10-K or such other risks actually occur, our business, results of operations or financial condition could be materially adversely affected.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Repurchases of Equity Securities

MMC did not repurchase any shares of its common stock during the ~~third~~first quarter of ~~2009.~~2010. Pursuant to an August 2007 authorization by MMC’s Board of Directors, MMC remains authorized to repurchase shares of its common stock up to a dollar value of $700 million. There is no time limit on this authorization.


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
~~July~~Jan 1-31, ~~2009~~2010	—	—	—	$700 million
~~Aug 1-31, 2009~~Feb 1-28, 2010	—	—	—	$700 million
~~Sept 1-30, 2009~~March 1-31, 2010	—	—	—	$700 million
Total ~~Q3 2009~~Q1 2010	—	—	—	$700 million

Item 3. Defaults Upon Senior Securities.

None.

Item 4.

~~Submission of Matters to a Vote of Security Holders.~~[Removed and Reserved]

~~None.~~

Item 5.

Other Information.

None.

Item 6.

Exhibits.

See the Exhibit Index immediately following the signature page of this report, which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date: ~~November 5, 2009~~May 7, 2010		/s/ Vanessa A. Wittman
		Vanessa A. Wittman
		Executive Vice President & Chief Financial Officer

Date: ~~November 5, 2009~~May 7, 2010		/s/ Robert J. Rapport
		Robert J. Rapport
		Senior Vice President & Controller
		(Chief Accounting ~~Officer)~~Officer

EXHIBIT INDEX*INDEX


Exhibit No.		Exhibit Name

~~3.1~~10.1		Amended and Restated ~~By-laws~~Agreement between the Attorney General of the State of New York and the Superintendent of Insurance of the State of New York, and Marsh & McLennan Companies, Inc., Marsh Inc., and their subsidiaries and affiliates (incorporated by reference to MMC’s Current Report on Form 8-K dated ~~September 17, 2009)~~February 11, 2010)

~~10.1~~10.2		~~Employment~~ Form of 2010 Long-term Incentive Award under the 2000 Senior Executive Incentive and Stock Award Plan and the 2000 Employee Incentive and Stock Award Plan

10.3		Letter Agreement, effective as of ~~September 17, 2009 and January 30, 2011,~~March 31, 2010, between Marsh & McLennan Companies, Inc. and ~~Brian Duperreault (incorporated by reference to MMC’s Current Report on Form 8-K dated September 16, 2009)~~M. Michele Burns

10.4		Letter Agreement, effective as of March 31, 2010, between Marsh & McLennan Companies, Inc. and Peter J. Beshar

12.1		Statement Re: Computation of Ratio of Earnings to Fixed Charges

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1		Section 1350 Certifications

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, MMC has not filed with this Form 10-Q certain instruments defining the rights of holders of long-term debt of MMC and its subsidiaries because the total amount authorized under any of such instruments does not exceed 10% of the total assets of MMC and its subsidiaries on a consolidated basis. MMC agrees to furnish a copy of any such agreement to the Commission upon request.


(In millions of dollars)
Assets of discontinued operations:
Current assets	$	18
Fixed assets, net		2
Goodwill and intangible assets		62
Total assets of discontinued operations	$	82
Liabilities of discontinued operations:
Accounts payable and accrued liabilities	$	7
Total liabilities of discontinued operations	$	7


For the Years Ending December 31, (In millions of dollars)		Estimated Expense
2009 (including amounts incurred through September 30)		$ 63
2010		60
2011		55
2012		51
2013		43
Subsequent years		120
		$392



		c)		Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and


Significant non-U.S. Plans only
For the Three Months Ended September 30,	Pension Benefits				Postretirement Benefits
(In millions of dollars)	2009		2008		2009		2008
Service cost	$ 29		$ 34		$ —		$ —
Interest cost	87		99		1		2
Expected return on plan assets	(131	)	(142	)	—		—
Amortization of prior service cost	—		—		—		—
Recognized actuarial loss	5		10		—		—
Net periodic benefit (credit) cost	$ (10	)	$ 1		$ 1		$ 2

Significant non-U.S. Plans only
For the Nine Months Ended September 30,	Pension Benefits				Postretirement Benefits
(In millions of dollars)	2009		2008		2009		2008
Service cost	$ 82		$ 105		$ 1		$ 1
Interest cost	245		293		3		4
Expected return on plan assets	(366	)	(431	)	—		—
Amortization of prior service cost	(1	)	(1	)	—		—
Recognized actuarial loss	13		36		—		1
Net periodic benefit (credit) cost	$ (27	)	$ 2		$ 4		$ 6
The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:
Combined U.S. and significant non-U.S. Plans
	Pension Benefits				Postretirement Benefits
	2009		2008		2009		2008
Weighted average assumptions:
Expected return on plan assets	8.2	%	8.2	%	—		—
Discount rate	6.5	%	6.1	%	6.7	%	6.5	%
Rate of compensation increase	3.7	%	3.8	%	—		—


	December 31,
(In millions of dollars)	2008	2007
Balance Sheets
Equity, as previously reported	$5,722	$7,822
Increase for reclassification of non-controlling interests	38	31
Equity, as adjusted	$5,760	$7,853