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Marsh & McLennan Swings to Profit

But sales and adjusted earnings miss estimates.
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Marsh & McLennan


swung to a profit in the fourth quarter, helped by cost cuts created by its restructuring program.

The financial services company, which was whacked over the last two years by separate investigations into mutual fund trading and insurance brokerage, earned $35 million, or 6 cents a share, compared with a loss of $680 million, or 29 cents a share, last year. The year-ago quarter had a $702 million charge for legal settlements.

Excluding one-time items and stock-options expenses, Marsh earned 28 cents a share in the latest quarter, missing the Thomson First Call estimate of 31 cents a share. Sales fell 2% from a year ago to $2.83 billion, missing the Thomson First Call estimate of $2.98 billion.

The company said total risk and insurance services revenue declined 7% to $1.3 billion in the fourth quarter, reflecting the year-over-year effect of market services revenue, the reduced sales of equity investments and foreign currency translation.

Revenue in Marsh's Kroll unit rose 14% to $230 million, while total revenue at its Mercer consulting unit rose 6% to $966 million. At the Putnam asset-management group, revenue fell 12% to $360 million, as average assets under management fell to $188 billion from $211 billion.

"Two thousand five was a challenging year for MMC," Marsh said in a release. "We did what we critically needed to do. We stabilized MMC; we preserved our great brands -- Marsh, Mercer, Putnam, Kroll, and Guy Carpenter; and we overwhelmingly retained our clients and employees. MMC is a much stronger company today than it was a year ago.

"Marsh had better client and staff retention and better profitability in the fourth quarter than in the previous quarters of 2005. We expect those trends to continue in 2006. Mercer Human Resource Consulting, Mercer Specialty Consulting and Kroll grew revenues and are positioned for increased profitability in 2006, as is Guy Carpenter. Putnam continues to reduce its net outflows as it slowly but steadily completes its turnaround. MMC is headed in the right direction," the company said.