Online Journal for the Moose Pond Investors Club

Marsh & McLennan Cos.

MMC Founders

Initial Position in Marsh & McLennan. On November 10, Moosepond Investors bought took an initial position in MMC. The stock selection guide assumes a 9% earnings growth rate and an average high PE of 18. MMC has been in the news recently. The current investigation by the New York State Attorney General into commission practices by the insurance industry and an allegation of bid rigging has caused the MMC’s stock price to drop from $46 per share to its current levels in the high $20s. This presents an excellent buying opportunity, but not one without risk. The October 26 press releases and webcasts on the MMC website give some assurance that management is aggressively working to resolve the issues raised by current investigation. By all traditional measures, MMC remains a high quality company. It remains to be seen whether the investigation will result in a loss of revenue to MMC be customer defection or a reduction in earnings as a result of changed commission practices.

Company Description. Marsh & McLennan Companies, Inc. (MMC) is a global professional services firm with annual revenues exceeding $11 billion. MMC subsidiaries include Marsh Inc. (“Marsh”), the world’s leading risk and insurance services firm; Putnam Investments (“Putnam”), one of the largest investment management companies in the United States; and Mercer Inc. (“Mercer”), a major global provider of consulting services. Over 60,000 employees worldwide provide analysis, advice and transactional capabilities to clients in over 100 countries. MMC operates in three principal business segments, risk and insurance servvies, investment management, and consulting. In 2003, revenues from MMC’s risk and insurance services businesses totaled $6.9 billion. MARSH INC. is the world leader in delivering risk and insurance services and solutions to clients. It has approximately 38,000 employees, more than 400 offices, and serves clients in over 100 countries.

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