Marsh & McLennan Companies, Inc. (MMC) 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 Greenberg, chairman, noted, “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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