Exhibit 99.1
MMC REPORTS SECOND QUARTER RESULTS
Revenues and Earnings Per Share Rise 10 Percent
Marsh Delivers Strong Results
NEW YORK, NEW YORK, July 22, 2003--Marsh & McLennan Companies, Inc. (MMC) today
reported financial results for the quarter and six months ended June 30, 2003.
Consolidated revenues for the quarter increased 10 percent to $2.9 billion from
$2.6 billion in the second quarter of 2002. Net income grew to $365 million from
$336 million and earnings per share rose 10 percent to $.66 from $.60. For the
six months, consolidated revenues rose to $5.7 billion from $5.2 billion. Net
income grew to $808 million from $754 million and earnings per share increased
11 percent to $1.47 from $1.33.
Jeffrey W. Greenberg, chairman, said: "MMC's results continue to reflect the
strengths of the company. Marsh was the biggest contributor to our growth in the
quarter, once again generating strong revenues and increased profitability.
Putnam's average assets under management increased during the quarter. Mercer's
consulting business showed gains, reflecting careful expense management."
Risk and insurance services revenues in the second quarter rose 17 percent to
$1.7 billion. On a constant currency basis, revenues grew 14 percent. Operating
income increased 23 percent to
$403 million and margins expanded to 24 percent from 22.9 percent. Marsh's
expertise in analyzing and transferring risk, its ability to create global risk
management programs, and its knowledge and relationships with global markets
will continue to be of great value to clients. Risk management and insurance
broking revenues grew 17 percent, reinsurance broking and services grew 27
percent, and related insurance services increased 8 percent. On a constant
currency basis, these revenues grew 13 percent, 24 percent, and 7 percent,
respectively.
Putnam's revenues in the second quarter were $495 million, 15 percent lower
than the prior year, and operating income declined to $125 million from $169
million. Putnam's operating environment, however, has improved recently. Assets
under management of $267 billion on June 30, 2003 were 11 percent higher than
the $241 billion on March 31, 2003. Average assets under management during the
second quarter were $260 billion, 14 percent below the $301 billion in the
second quarter of 2002, but 7 percent higher than the $244 billion in the first
quarter of 2003. Mutual fund sales continued at the same pace and redemptions
slowed. Institutional assets ended the quarter at $96 billion, an increase of 12
percent during the second quarter and 3 percent from the end of the second
quarter last year. International flows have been strong this year. International
assets ended the quarter at $37 billion, an increase from $33 billion at the end
of the first quarter of 2003 and up 23 percent over last year.
Mercer's revenues in the second quarter increased 16 percent to $690 million
and operating income rose 10 percent to $99 million. The retirement services and
health care and group benefits practices, which represent two thirds of Mercer's
revenues, continued to show growth. Second quarter results also reflect the
acquisition of Oliver, Wyman & Company, which is included in the management
consulting practice. On a constant currency basis, which also excludes
acquisitions, Mercer's revenues grew 2 percent.
In the first half of the year, MMC paid $301 million in dividends to
shareholders and increased its quarterly dividend 11 percent to $.31, effective
in the third quarter. MMC also repurchased 3.7 million shares of common stock in
the second quarter, bringing its total repurchases for the year to 11.5 million
shares for $503 million.
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MMC is a global professional services firm with annual revenues exceeding $10
billion. It is the parent company of Marsh Inc., the world's leading risk and
insurance services firm; Putnam Investments, one of the largest investment
management companies in the United States; and Mercer Inc., a major global
provider of consulting services. Approximately 60,000 employees provide
analysis, advice and transactional capabilities to clients in over 100
countries. Its stock (ticker symbol: MMC) is listed on the New York, Chicago,
Pacific, and London stock exchanges. MMC's website address is www.mmc.com.
This press release contains certain statements relating to future results,
which are forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such statements may include, without
limitation, discussions concerning revenues, expenses, earnings, cash flow,
capital structure, pension funding, financial losses and expected insurance
recoveries resulting from the September 11, 2001 attack on the World Trade
Center in New York City, as well as market and industry conditions, premium
rates, financial markets, interest rates, foreign exchange rates, contingencies
and matters relating to MMC's operations and income taxes. Such forward-looking
statements are based on available current market and industry materials,
experts' reports and opinions and long-term trends, as well as management's
expectations concerning future events impacting MMC. Forward-looking statements
by their very nature involve risks and uncertainties. Factors that may cause
actual results to differ materially from those contemplated by any
forward-looking statements contained herein include, in the case of MMC's risk
and insurance services and consulting businesses, the amount of actual insurance
recoveries and financial losses from the September 11 attack on the World Trade
Center, or other adverse consequences from that incident. Other factors that
should be considered in the case of MMC's risk and insurance services business
are changes in competitive conditions, movements in premium rate levels, the
continuation of difficult conditions for the transfer of commercial risk and
other changes in the global property and casualty insurance markets, the impact
of terrorist attacks, natural catastrophes, mergers between client
organizations, and insurance or reinsurance company insolvencies. Factors to be
considered in the case of MMC's investment management business include changes
in worldwide and national equity and fixed income markets, actual and relative
investment performance, the level of sales and redemptions, and the ability to
maintain investment management and administrative fees at appropriate levels;
and with respect to all of MMC's activities, changes in general worldwide and
national economic conditions, changes in the value of investments made in
individual companies and investment funds, fluctuations in foreign currencies,
actions of competitors or regulators, changes in interest rates or in the
ability to access financial markets, developments relating to claims, lawsuits
and contingencies, prospective and retrospective changes in the tax or
accounting treatment of MMC's operations, and the impact of tax and other
legislation and regulation in the jurisdictions in which MMC operates.
Forward-looking statements speak only as of the date on which they are made,
and MMC undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date on which it is made or to reflect
the occurrence of unanticipated events. Please refer to Marsh & McLennan
Companies' 2002 Annual Report on Form 10-K for "Information Concerning
Forward-Looking Statements," its reports on Form 8-K, and quarterly reports on
Form 10-Q.
MMC is committed to providing timely and materially accurate information to the
investing public, consistent with our legal and regulatory obligations. To that
end, MMC and its operating companies use
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their websites to convey meaningful information about their businesses,
including the anticipated release of quarterly financial results, and the
posting of updates of assets under management at Putnam. Monthly updates of
total assets under management at Putnam will be posted to the MMC website the
first business day following the end of each month, except at the end of March,
June, September, and December, when such information will be released with MMC's
quarterly earnings announcement. Putnam posts mutual fund and performance data
to its website regularly. Assets for most Putnam retail mutual funds are posted
approximately two weeks after each month-end. Mutual fund net asset value (NAV)
is posted daily. Historical performance and Lipper rankings are also provided.
Investors can link to MMC and its operating company websites through
www.mmc.com.
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Marsh & McLennan Companies, Inc.
Consolidated Statements of Income
(In millions, except per share figures)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
Revenue:
Risk and Insurance Services $ 1,680 $ 1,436 $ 3,453 $ 2,912
Investment Management 495 581 940 1,175
Consulting 690 595 1,324 1,160
----- ----- ----- -----
Total Revenue 2,865 2,612 5,717 5,247
----- ----- ----- -----
Expense:
Compensation and Benefits 1,475 1,281 2,853 2,530
Other Operating Expenses 791 766 1,548 1,465
----- ----- ----- -----
Total Expense 2,266 2,047 4,401 3,995
----- ----- ----- -----
Operating Income 599 565 1,316 1,252
Interest Income 7 4 13 9
Interest Expense (46) (38) (89) (75)
----- ----- ----- -----
Income Before Income Taxes and Minority Interest Expense 560 531 1,240 1,186
Income Taxes 189 189 421 421
Minority Interest Expense, Net of Tax 6 6 11 11
----- ----- ----- -----
Net Income $ 365 $ 336 $ 808 $ 754
===== ===== ===== =====
Basic Net Income Per Share $0.68 $0.62 $1.51 $1.38
===== ===== ===== =====
Diluted Net Income Per Share $0.66 $0.60 $1.47 $1.33
===== ===== ===== =====
Average Number of
Shares Outstanding - Basic 534 545 535 546
=== === === ===
Average Number of
Shares Outstanding - Diluted 552 562 550 565
=== === === ===
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Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Second Quarter
(In millions) (Unaudited)
Three Months Ended % Change Currency/
---------------------------
June 30, GAAP Constant Acquisitions
--------------------
2003 2002 Revenue Currency Impact
-------- -------- ----------- ------------ --------------
Risk and Insurance Services
Risk Management and Insurance Broking $1,270 $1,082 17% 13% 4%
Reinsurance Broking and Services 189 149 27% 24% 3%
Related Insurance Services 221 205 8% 7% 1%
----- -----
Total Risk and Insurance Services 1,680 1,436 17% 14% 3%
----- -----
Investment Management 495 581 (15)% (15)% -
----- -----
Consulting
Retirement Services 312 279 12% 3% 9%
Health Care and Group Benefits 103 92 12% 6% 6%
Human Capital 89 85 5% 2% 3%
Management and Organizational Change 117 71 65% (1)% 66%
Economic 34 32 6% (1)% 7%
----- -----
655 559 17% 2% 15%
Reimbursed Expenses 35 36 (3)% (3)% -
----- -----
Total Consulting 690 595 16% 2% 14%
----- -----
Total Revenue $2,865 $2,612 10% 5% 5%
====== ======
Investment Income/(Loss) Included Above $ 25 $ 5
Constant currency measures the change in revenue using consistent currency exchange rates, before the impact of acquisitions and
dispositions.
Related insurance services includes U.S. affinity, claims management, underwriting management and MMC Capital businesses.
Related insurance services revenue reflects strong growth in claims management and underwriting management, partially offset by
declines in U.S. affinity business and MMC Capital.
Interest income on fiduciary funds amounted to $30 million and $61 million for the three months and six months ended June 30, 2003,
respectively, compared with $29 million and $56 million for the same periods of 2002.
Investment income/(loss) includes realized and unrealized gains and losses from investments recognized in the income statement,
as well as other than temporary declines in the value of available for sale securities. MMC's investments may include seed
shares for mutual funds, direct investments in insurance, consulting or investment management companies and investments in
private equity funds.
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Marsh & McLennan Companies, Inc.
Supplemental Information - Revenue Analysis
Year-to-Date
(In millions) (Unaudited)
Six Months Ended % Change Currency/
---------------------------
June 30, GAAP Constant Acquisitions
--------------------
2003 2002 Revenue Currency Impact
-------- -------- ----------- ------------ --------------
Risk and Insurance Services
Risk Management and Insurance Broking $2,593 $2,158 20% 15% 5%
Reinsurance Broking and Services 423 334 27% 23% 4%
Related Insurance Services 437 420 4% 4% -
----- -----
Total Risk and Insurance Services 3,453 2,912 19% 15% 4%
----- -----
Investment Management 940 1,175 (20)% (20)% -
----- -----
Consulting
Retirement Services 612 549 11% 3% 8%
Health Care and Group Benefits 201 176 14% 9% 5%
Human Capital 175 163 7% 3% 4%
Management and Organizational Change 198 139 42% (3)% 45%
Economic 71 65 9% 5% 4%
----- -----
1,257 1,092 15% 3% 12%
Reimbursed Expenses 67 68 (1)% (1)% -
----- -----
Total Consulting 1,324 1,160 14% 3% 11%
----- -----
Total Revenue $5,717 $5,247 9% 4% 5%
====== ======
Investment Income/(Loss) Included Above $ 36 $ 37
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Marsh & McLennan Companies, Inc.
Supplemental Information
(In millions) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2003 2002 2003 2002
-------- -------- -------- --------
Operating Income Including Minority Interest Expense:
Risk and Insurance Services $ 403 $ 329 $ 963 $ 791
Investment Management 125 169 228 344
Consulting 99 90 182 164
Corporate (34) (29) (68) (58)
----- ----- ----- -----
593 559 1,305 1,241
----- ----- ----- -----
Minority Interest Expense, Net of Tax, Included Above:
Risk and Insurance Services 3 2 6 3
Investment Management 3 4 5 8
----- ----- ----- -----
6 6 11 11
----- ----- ----- -----
Operating Income $ 599 $ 565 $1,316 $1,252
===== ===== ====== ======
Segment Operating Margins:
Risk and Insurance Services 24.0% 22.9% 27.9% 27.2%
Investment Management 25.3% 29.1% 24.3% 29.3%
Consulting 14.3% 15.1% 13.7% 14.1%
Consolidated Operating Margin 20.9% 21.6% 23.0% 23.9%
Pretax Margin 19.5% 20.3% 21.7% 22.6%
Effective Tax Rate 34.0% 35.5% 34.0% 35.5%
Shares Outstanding at End of Period 534 539
Potential Minority Interest Associated with the Putnam
Equity Partnership Plan Net of Dividend Equivalent
Expense Related to MMC Common Stock Equivalents $ - $ - $ - $ 1
MMC's consolidated effective tax rate was 35% for the year ended December 31, 2002. As a result of the geographic mix of
MMC's businesses, the effective tax rate in 2003 should approximate 34%.
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Marsh & McLennan Companies, Inc.
Supplemental Information - Putnam Assets Under Management
(In billions) (Unaudited)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2003 2003 2002 2002 2002
------------ ------------- ------------ ------------ ------------
Mutual Funds:
Growth Equity $ 48 $ 43 $ 45 $ 45 $ 58
Value Equity 42 36 40 38 49
Blend Equity 35 30 33 32 40
Fixed Income 46 46 46 46 44
---- ---- ---- ---- ----
Total Mutual Fund Assets 171 155 164 161 191
---- ---- ---- ---- ---
Institutional:
Equity 72 64 66 59 74
Fixed Income 24 22 21 18 19
---- ---- ---- ---- ----
Total Institutional Assets 96 86 87 77 93
---- ---- ---- ---- ----
Total Ending Assets $267 $241 $251 $238 $284
==== ==== ==== ==== ====
Assets from Non-US Investors $ 37 $ 33 $ 33 $ 27 $ 30
==== ==== ==== ==== ====
Average Assets Under Management:
Quarter-to-Date $260 $244 $249 $257 $301
==== ==== ==== ==== ====
Year-to-Date $252 $244 $279 $289 $305
==== ==== ==== ==== ====
Net New Sales/(Redemptions) including
Dividends Reinvested:
Quarter-to-Date $(3.0) $(1.3) $ 0.4 $(7.1) $(3.2)
===== ===== ===== ===== =====
Year-to-Date $(4.3) $(1.3) $(10.3) $(10.7) $(3.6)
===== ===== ====== ====== =====
Categories of mutual fund assets reflect style designations aligned with Putnam's various prospectuses. All quarter-end assets
conform with the current investment mandate for each product.
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