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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
MARSH & MCLENNAN COMPANIES, INC.
1166 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036-2774
(212) 345-5000
COMMISSION FILE NUMBER 1-5998
STATE OF INCORPORATION: DELAWARE
I.R.S. EMPLOYER IDENTIFICATION NO. 36-2668272
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock New York Stock Exchange
(par value $1.00 per share) Chicago Stock Exchange
Preferred Stock Purchase Rights Pacific Stock Exchange
The London Stock Exchange
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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K ____.
As of February 28, 1995, the aggregate market value of the voting stock held
by non-affiliates of the registrant was approximately $5,962,000,000.
As of February 28, 1995, there were outstanding 73,026,687 shares of common
stock, par value $1.00 per share, of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
(ONLY TO THE EXTENT SET FORTH IN THE PART INDICATED)
Parts I, II and
Annual Report to Stockholders for the year ended December 31, 1994....... IV
Notice of Annual Meeting of Stockholders and Proxy Statement
dated March 30, 1995................................................... Parts I and III
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MARSH & McLENNAN COMPANIES, INC.
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ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1994
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PART I
ITEM 1. BUSINESS.
Marsh & McLennan Companies, Inc. (the "registrant"), a professional
services organization with origins dating from 1871 in the United States,
through its subsidiaries and affiliates, provides clients with professional
advice and related services in the fields of insurance and reinsurance broking,
consulting and investment management.
INSURANCE SERVICES. Subsidiaries and affiliates of the registrant provide
insurance (including reinsurance) services on a worldwide basis, as broker,
agent or consultant for insureds, insurance underwriters and other brokers.
They also provide insurance program management services involving a wide range
of insurance and related products for individuals and others through both
sponsored and non-sponsored affinity group programs in the United States, the
United Kingdom and Canada, and other services in connection with originating,
structuring and managing investments in both new and existing insurers.
Insurance broking services, carried on throughout the world primarily under
the "Marsh & McLennan" name, are provided for a predominantly corporate
clientele engaged in a broad range of commercial activities. Clients also
include various government and related agencies, non-profit organizations and
individuals. Such services are provided primarily in connection with the risk
management and the insurance placement processes, and involve various types of
property and liability loss exposures and developing alternatives to deal
effectively with these exposures. Services include traditional insurance
broking activities and, both as part of broking and agency activities and on a
fee basis, professional counseling services on risk management issues, including
risk analysis, coverage requirements, self-insurance, alternative insurance and
funding methods, claims collection, injury management, loss prevention, and
other insurance related matters. They also include organization and
administrative services for special purpose insurance companies and other risk
assumption alternatives. Insurance coverage is placed on behalf of clients with
insurers directly or through wholesale brokers. Correspondent relationships are
maintained with unaffiliated firms in certain countries.
Reinsurance services are provided to insurance and reinsurance risk takers
worldwide, principally by Guy Carpenter & Company, Inc. and its subsidiaries and
affiliates, including Carpenter Bowring (UK). Essentially such services involve
acting as an intermediary for insurance and reinsurance organizations on all
classes of reinsurance. The intermediary assists the insurance underwriter by
providing advice, placing reinsurance coverage with reinsurance organizations
located around the world, and furnishing related services. The insurance
underwriting organization may seek reinsurance on all or a portion of the risks
it insures. Intermediary services are also provided to reinsurance
underwriters, who may also seek reinsurance on the risks they have underwritten.
Seabury & Smith, Inc. and its subsidiaries provide insurance program
management services (including the design, placement and administration of life,
health, accident, disability, automobile, homeowners, professional liability and
other insurance and related products) on a group marketing basis to individuals,
businesses and their employees, and organizations and their members in the
United States, Canada and the United Kingdom. It also provides underwriting
management services to insurers in these countries. The Frizzell Group Limited,
the holding company of Frizzell Financial Services Ltd. and its subsidiaries,
provides motor and general insurances, life assurance and personal financial
planning, and consumer finance services, including insurance premium financing
programs, personal and secured loans, mortgage loans and credit cards, to
members of affinity groups in the United Kingdom.
Marsh & McLennan Risk Capital Corp. and its predecessor operations have
been instrumental in the formation of several substantial insurance and
reinsurance entities, including ACE Insurance Company Ltd., XL Insurance Company
Ltd., Centre Reinsurance Holdings Ltd. and Mid Ocean Reinsurance Company Ltd.,
to alleviate, in part, capacity shortages in critical segments of the insurance
and reinsurance business. Risk Capital Corp. also advises Marsh & McLennan Risk
Capital Holdings, Ltd. regarding insurance and reinsurance interests, and is an
advisor to The Trident Partnership, L.P., an independent investment partnership
established in 1994 to invest selectively in the global insurance and
reinsurance underwriting industry.
The revenue attributable to the registrant's insurance services consists
primarily of commissions and fees paid by insurance and reinsurance
underwriters; fees paid directly by clients; interest income on premiums
collected and not yet remitted to insurers or reinsurers and, in certain cases,
on claims or refunds collected from underwriters to be remitted to clients, such
funds being held in a fiduciary capacity; and compensation for services provided
in connection with the formation and capitalization of various insurers and
reinsurers, including
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gains from sales of interests in such entities. The investment of fiduciary
funds is governed by the applicable regulatory laws of the states in the United
States and laws or regulations of insurance supervisory authorities in other
jurisdictions in which the registrant's subsidiaries do business. These
regulations typically limit the investments that may be made with such funds.
Commission rates vary in amount depending upon the type of insurance
coverage provided, the particular underwriter, the capacity in which the
registrant acts and the volume and profitability to the underwriter of the
business placed with it by the registrant during specific periods, in addition
to negotiations with clients. Claims services may be performed for policies
placed in prior years.
The insurance broking industry is affected by premium rate levels in the
property and casualty insurance industry and available insurance capacity, as
compensation is frequently related to the premiums paid by insureds. Revenue is
also affected by fluctuations in retained limits, insured values and interest
rates, the development of new products, markets and services, and the volume of
business from new and existing clients.
CONSULTING. Subsidiaries and affiliates of the registrant provide
consulting services to a predominantly corporate clientele through the Mercer
Consulting Group, Inc. which comprises the following:
The William M. Mercer group of companies provides professional advice and
services to corporate, government and institutional clients worldwide.
Companies in the William M. Mercer group assist clients with the design,
implementation, administration and communication of employee benefit,
compensation and other human resource programs, including retirement, group
life, health and disability. William M. Mercer also advises health care
provider organizations regarding capitation, cost control and quality
improvement.
Mercer Management Consulting, Inc. provides advice and assistance to
clients, primarily in North America and Europe, regarding strategy,
organization, marketing, manufacturing and distribution by combining functional
knowledge with an understanding of the subject industry. Working with client
teams, it seeks to facilitate growth and sustainable profits for such clients,
often using proprietary techniques. In addition, sometimes under the Lippincott
& Margulies name, Mercer Management Consulting, Inc. provides expanded marketing
services relating to brand and corporate identity, as well as image.
National Economic Research Associates, Inc. ("NERA"), a firm of consulting
economists, provides advice to law firms, corporations, trade associations and
governmental agencies, from
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offices principally in the United States and England. NERA's research and
analysis addresses a broad range of micro-economic issues in areas of business
and public policy.
The revenue attributable to the registrant's consulting services consists
primarily of consulting fees paid by clients, but also includes commissions paid
by insurance underwriters for the placement of individual and group insurance
contracts, and asset planning and plan administration services fees paid by
investment managers for monies invested through defined contribution plans.
Revenue in the consulting business is a function of new products and
services, the impact of technology upon certain consulting services, the degree
of regulatory change and change in the industries of clients, and the demand for
consulting services.
INVESTMENT MANAGEMENT. Investment management and related services are
provided by Putnam Investments, Inc. and its subsidiaries.
Putnam provides individual and institutional investors with a broad range
of equity and fixed income investment products and services designed to meet
varying investment objectives. Putnam's investment management services, which
are provided primarily in the United States, include securities investment
advisory and management services consisting of investment research and
management, accounting and related services for a group of publicly-held
investment companies registered under the Investment Company Act of 1940,
including several closed-end investment companies whose shares are traded on
various stock exchanges (the "Putnam Funds"). Investment management services
are also provided to profit sharing and pension funds, state retirement systems,
university endowment funds, charitable foundations and other domestic and
foreign institutional accounts. A Putnam subsidiary also serves as transfer
agent, dividend disbursing agent, registrar and custodian for the Putnam Funds
and provides one or more of such services to several external clients. A Putnam
subsidiary also acts as principal underwriter of the shares of the open-end
Putnam Funds, selling primarily through independent broker/dealers and financial
institutions, including banks, and also directly to certain large 401(k) plans
and other institutional accounts. A Putnam subsidiary also provides trustee
services for IRA's, corporate retirement plans and other clients.
Revenue attributable to Putnam is derived primarily from investment
management fees. The investment management services provided to the Putnam
Funds and institutional accounts are performed pursuant to advisory contracts
which provide for a fee payable to the Putnam company that manages the account.
The amount of the fee depends on the individual mutual fund or account and the
level of assets under management and, in the case of certain institutional
accounts, is also based on investment performance.
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Such contracts may not be assigned by the Putnam company managing the account,
generally may be terminated without penalty and, as to contracts with the Putnam
Funds, continue in effect only so long as approved, at least annually, by their
shareholders or by the Putnam Funds' trustees, including a majority who are not
affiliated with Putnam.
A Putnam subsidiary also receives compensation from the Putnam Funds for
providing shareholder services pursuant to written agreements which may be
terminated by either party on 90 days notice, and for providing custody services
pursuant to a written agreement which may be terminated by either party on 30
days notice. These contracts generally provide for compensation on the basis of
several factors which varies with the type of service being provided.
Shares of the open-end funds are generally sold at their respective net
asset value per share plus a sales charge which varies depending on the
individual fund and the amount purchased. Commissions paid to broker/dealers are
typically paid at the time of the purchase as a percentage of the amount
invested. Certain Putnam Funds are available with a deferred sales charge. The
related commissions initially paid by Putnam to broker/dealers are recovered
through charges and fees received over a number of years.
Nearly all of the Putnam Funds have adopted distribution plans pursuant to
Rule 12b-1 under the Investment Company Act of 1940 under which the Putnam Funds
make payments to a Putnam subsidiary to cover costs relating to distribution of
the Putnam Funds and services provided to shareholders. These payments either
are paid by the Putnam subsidiary directly to firms that distribute shares of
the Putnam Funds for the costs of providing services to shareholders, or
retained by the Putnam subsidiary as compensation for the costs of services
provided by Putnam to shareholders and for commissions advanced by Putnam at the
point of sale (and recovered through fees received over time) to firms that
distribute shares of the Putnam Funds. These distribution plans, and payments
made by the Putnam Funds thereunder, are subject to annual renewal by the
trustees of the Putnam Funds and termination by vote of the shareholders of the
Putnam Funds, or by vote of a majority of the Putnam Funds' trustees who are not
affiliated with Putnam.
Assets managed by Putnam, on which management fees are based, were
approximately $95.3 billion and $90.9 billion as of December 31, 1994 and 1993,
respectively. Mutual fund assets aggregated $67.2 billion at December 31, 1994
and $64.3 billion at December 31, 1993. Assets under management at December 31,
1994 consisted of approximately sixty percent fixed income and forty percent
equity securities, invested both domestically and globally. Assets under
management are affected by fluctuations in domestic and international bond and
stock market prices, by the level of investments and withdrawals for current and
new fund shareholders and clients, by the development and marketing of new
investment products, and by investment performance and service to clients.
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REGULATION. The activities of the registrant are subject to licensing
requirements and extensive regulation under the laws of the United States and
its various states, territories and possessions, as well as laws of other
countries in which the registrant's subsidiaries operate.
While these laws and regulations vary among jurisdictions, every state of
the United States and most foreign jurisdictions require an insurance broker or
agent (and in some cases a reinsurance broker or intermediary) to have a license
from a governmental agency or self-regulatory organization. In addition,
certain of the registrant's insurance activities are governed by the rules of
the Lloyd's insurance market in London and self-regulatory organizations in
other jurisdictions. A few jurisdictions issue licenses only to individual
residents or locally-owned business entities. In some of these jurisdictions,
if the registrant has no licensed subsidiary, the registrant may maintain
arrangements with residents or business entities licensed to act in such
jurisdiction. In some jurisdictions, various insurance related taxes may also
be due either by clients directly or from the broker. In the latter case, the
broker customarily looks to the client for payment.
No licensing or other regulatory requirements material to the consulting
activities of the registrant apply to that activity in general; however, the
subject matter of certain consulting services may result in regulation. For
example, employee benefit plans are subject to various governmental regulations
and services on insurance or investment matters may subject the registrant to
insurance or securities regulations.
Putnam's securities investment management activities are subject to
regulation in the United States by the Securities and Exchange Commission, and
other federal, state and self regulatory authorities, as well as in certain
other countries in which it does business.
The registrant's business depends on the validity of, and its continued
good standing under, the licenses and approvals pursuant to which it operates,
as well as compliance with pertinent regulations. The registrant therefore
devotes significant effort toward maintaining its licenses and to ensuring
compliance with a diverse and complex regulatory structure. However, in all
jurisdictions the applicable laws and regulations are subject to amendment or
interpretation by regulatory authorities. Generally, such authorities are
vested with relatively broad discretion to grant, renew and revoke licenses and
approvals, and to implement regulations, and licenses may be denied or revoked
for various reasons, including the violation of such regulations, conviction of
crimes and the like. In some instances, the registrant follows practices based
on its interpretations, or those generally followed by the industry, of laws or
regulations, which may prove to be different from those of regulatory
authorities. Accordingly, the
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possibility exists that the registrant may be precluded or temporarily suspended
from carrying on some or all of its activities or otherwise penalized in a given
jurisdiction.
No assurances can be given that the registrant's insurance, consulting or
investment management activities can continue to be conducted in any given
jurisdiction as in the past.
COMPETITIVE CONDITIONS. The insurance and reinsurance broking services
provided by the registrant are believed to be the largest of their type in the
world. Mercer Consulting Group, one of a few large global consulting firms in
the world, is a market leader in human resources, employee benefits,
compensation and general management consulting services. Putnam Investments is
one of the largest investment management firms in the United States.
The registrant encounters strong competition in the insurance and
consulting businesses from other companies which also operate on a nationwide or
worldwide basis and from a large number of regional and local firms. Some
insurance and reinsurance underwriters market and service their insurance
products without the assistance of brokers, agents or program managers.
The investment management business is also highly competitive. In addition
to competition from firms already in the investment management business, there
is competition from other firms offering financial services, such as commercial
banks and insurance companies, as well as other investment alternatives. Many
securities dealers and commercial banks also sponsor competing proprietary
mutual funds.
Principal methods of competition in these businesses include the services
and the quality thereof that a broker, consultant or investment manager provides
its clients and the cost thereof. These businesses also encounter strong
competition from both public corporations and private firms in attracting and
retaining qualified employees.
SEGMENTATION. Financial information relating to the types of services
provided by the registrant and the geographic areas of its operations is
incorporated herein by reference to Note 14 of the Notes to Consolidated
Financial Statements on page 45 of the Annual Report to Stockholders for the
year ended December 31, 1994 (the "1994 Annual Report"). The registrant's
non-U.S. operations are subject to the customary risks involved in doing
business in other countries, such as currency fluctuations and exchange
controls.
EMPLOYEES. As of December 31, 1994, the registrant and its consolidated
subsidiaries employed about 26,000 people worldwide, of whom approximately
14,800 were employed by subsidiaries providing insurance services, approximately
8,200 were employed by subsidiaries providing consulting services,
approximately 2,700 were employed by subsidiaries providing investment
management services and approximately 300 were employed by the registrant.
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EXECUTIVE OFFICERS OF THE REGISTRANT. The executive officers of the
registrant as of December 31, 1994 are Messrs. Blum, Borelli, Coster, Holbrook,
Lasser, Sinnott, Smith and Wroughton, with respect to whom information is
incorporated herein by reference to the Notice of Annual Meeting of Stockholders
and Proxy Statement dated March 30, 1995 (the "1995 Proxy Statement"), and:
Francis N. Bonsignore, age 48, who was elected Senior Vice
President-Human Resources & Administration of the registrant in 1990.
Immediately prior thereto, he was partner and National Director-Human
Resources for Price Waterhouse.
Gregory F. Van Gundy, age 49, who is Secretary and General Counsel of
the registrant. He joined the registrant in 1974.
ITEM 2. PROPERTIES.
The registrant and three of its subsidiaries, as tenants in common, own a
56% condominium interest in a 44-story building in New York City which serves as
their worldwide headquarters. The principal offices of the registrant's Bowring
subsidiaries in London are located in two adjoining buildings under a lease
which expires in 2077.
The remaining business activities of the registrant and its subsidiaries
are conducted principally in leased office space in cities throughout the world.
No difficulty is anticipated in negotiating renewals as leases expire or in
finding other satisfactory space if the premises become unavailable. From time
to time, the registrant may seek to sublet unused space to third parties,
depending upon the demands for office space in the locations involved.
ITEM 3. LEGAL PROCEEDINGS.
The registrant and its subsidiaries are subject to claims and lawsuits that
arise in the ordinary course of business, consisting principally of alleged
errors and omissions in connection with the placement of insurance or
reinsurance and in rendering consulting and investment services. Some of these
claims and lawsuits seek damages, including punitive damages, in amounts which
could, if assessed, be significant. Information regarding disputes involving
run-off reinsurance placements primarily in the Lloyd's market and relating to
advice with respect to client purchases of guaranteed investment contracts and
annuities issued by Executive Life Insurance Company are incorporated herein by
reference to Note 13 of the Notes to Consolidated Financial Statements on page
44 of the 1994 Annual Report.
On the basis of present information, available insurance coverage and
advice received from counsel, it is the opinion of the registrant's management
that the disposition or ultimate determination of these claims and lawsuits will
not have a material adverse effect on the registrant's consolidated results of
operations or its consolidated financial position.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market and dividend information regarding the registrant's common stock on
page 47 of the 1994 Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data on pages 48 and 49 of the 1994 Annual Report
are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Information on pages 23 through 29 of the 1994 Annual Report is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements and the Report of Independent
Auditors thereto on pages 30 through 46 of the 1994 Annual Report and Selected
Quarterly Financial Data (Unaudited) on page 47 of the 1994 Annual Report are
incorporated herein by reference. Supplemental Notes to Consolidated Financial
Statements are included on pages 16 and 17 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information as to the directors of the registrant is incorporated herein by
reference to the material under the heading
"Directors" in the 1995 Proxy Statement. Information as to the executive
officers of the registrant is set forth in Item 1 above.
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ITEM 11. EXECUTIVE COMPENSATION.
Information under the headings "Executive Compensation", "Compensation
Committee Report" and "Comparison of Cumulative Total Stockholder Return" in the
1995 Proxy Statement are incorporated herein by reference.
Information required pursuant to Item 405 of Regulation S-K is incorporated
herein by reference to the material under the heading "Transactions with
Management and Others; Other Information" in the 1995 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information under the heading "Security Ownership" in the 1995 Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information under the heading "Transactions with Management and Others;
Other Information" in the 1995 Proxy Statement is incorporated herein by
reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
1. Consolidated Financial Statements (incorporated herein by
reference to pages 30 through 46 of the 1994 Annual Report):
Consolidated Statements of Income for the three years ended
December 31, 1994
Consolidated Balance Sheets as of
December 31, 1994 and 1993
Consolidated Statements of Cash Flows for the three years
ended December 31, 1994
Consolidated Statements of Stockholders' Equity for the
three years ended
December 31, 1994
Notes to Consolidated Financial Statements
Report of Independent Auditors
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Supplemental Notes to Consolidated Financial Statements
Report of Independent Auditors
Other:
Selected Quarterly Financial Data and Supplemental
Information (Unaudited) for the three years ended December
31, 1994 (incorporated herein by reference to page 47 of
the 1994 Annual Report)
Ten-Year Statistical Summary of Operations (incorporated
herein by reference to pages 48 and 49 of the 1994 Annual
Report)
2. All required Financial Statement Schedules are included in the
Consolidated Financial Statements, the Notes to Consolidated
Financial Statements or the Supplemental Notes to Consolidated
Financial Statements.
3. The following exhibits are filed as a part of this report:
(3) -the registrant's restated certificate of
incorporation
-the registrant's by-laws
(10)*-Marsh & McLennan Companies 1992 Incentive and
Stock Award Plan
-Marsh & McLennan Companies Stock Investment
Supplemental Plan
-Marsh & McLennan Companies Special Severance Pay
Plan
-Putnam Investments, Inc. Executive Deferred
Compensation Plan
-Marsh & McLennan Companies Supplemental Retirement
Plan
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* All items in this Exhibit 10 are either management contracts or
compensatory plans or arrangements required to be filed pursuant to Item
14(c) of Form 10-K.
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-Marsh & McLennan Companies Senior Management
Incentive Compensation Plan
-Restated Employment Agreement between Robert
Clements and Marsh & McLennan Risk Capital Corp.
and related Guaranty of the registrant.
(13) -Annual Report to Stockholders for the year
ended December 31, 1994, to be deemed filed
only with respect to those portions which
are expressly incorporated by reference
(21) -list of subsidiaries of the registrant
(23) -consent of independent auditors
(24) -powers of attorney
(27) -Financial Data Schedule (filed only with SEC
for EDGAR purposes)
(b) No reports on Form 8-K were filed by the registrant in the fiscal
quarter ended December 31, 1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
this 28th day of March, 1995 on its behalf by the undersigned, thereunto duly
authorized.
MARSH & McLENNAN COMPANIES, INC.
By /s/ A.J.C. SMITH
------------------------------
A.J.C. SMITH
Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated this 28th day of March, 1995:
/s/A.J.C. SMITH LEWIS W. BERNARD*
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A.J.C. SMITH LEWIS W. BERNARD
Director, Chairman of the Board Director
and Chief Executive Officer
/s/FRANK J. BORELLI RICHARD H. BLUM*
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FRANK J. BORELLI RICHARD H. BLUM
Senior Vice President and Director
Chief Financial Officer,
Director
/s/DOUGLAS C. DAVIS ROBERT CLEMENTS*
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DOUGLAS C. DAVIS ROBERT CLEMENTS
Vice President and Controller Director
(Chief Accounting Officer)
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PETER COSTER* RICHARD M. MORROW*
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PETER COSTER RICHARD M. MORROW
Director Director
RAY J. GROVES* GEORGE PUTNAM*
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RAY J. GROVES GEORGE PUTNAM
Director Director
RICHARD E. HECKERT* ADELE SMITH SIMMONS*
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RICHARD E. HECKERT ADELE SMITH SIMMONS
Director Director
RICHARD S. HICKOK* JOHN T. SINNOTT*
- ---------------------------- ------------------------------
RICHARD S. HICKOK JOHN T. SINNOTT
Director Director
DAVID D. HOLBROOK* FRANK J. TASCO*
- ---------------------------- ------------------------------
DAVID D. HOLBROOK FRANK J. TASCO
Director Director
ROBERT M.G. HUSSON* R. J. VENTRES*
- ---------------------------- ------------------------------
ROBERT M.G. HUSSON R. J. VENTRES
Director Director
LAWRENCE J. LASSER* PHILIP L. WROUGHTON*
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LAWRENCE J. LASSER PHILIP L. WROUGHTON
Director Director
- ----------------------------
*Gregory F. Van Gundy, pursuant to Powers of Attorney executed by each of
the individuals whose name is followed by an (*) and filed herewith, by signing
his name hereto does hereby sign and execute this Form l0-K of Marsh & McLennan
Companies, Inc. on behalf of such individual in the capacities in which the
names of each appear above.
/s/GREGORY F. VAN GUNDY
-----------------------------
GREGORY F. VAN GUNDY
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REPORT OF INDEPENDENT AUDITORS
Marsh & McLennan Companies, Inc.:
We have audited the consolidated balance sheets of Marsh & McLennan Companies,
Inc. as of December 31, 1994 and 1993, and the related consolidated statements
of income, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1994, and have issued our report thereon dated
February 28, 1995, which report expresses an unqualified opinion and includes an
explanatory paragraph referring to the adoption of Statements of Financial
Accounting Standards No. 112 in 1994, No. 115 in 1993, and Nos. 109 and 106 in
1992; such financial statements and report are included in your 1994 Annual
Report to Stockholders and are incorporated herein by reference. Our audits
also included the amounts included in the supplemental notes to the consolidated
financial statements (the "Notes") included herein. These Notes are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such Notes, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
New York, New York
February 28, 1995
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MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Information concerning the Company's valuation accounts follows.
An analysis of the allowance for doubtful accounts for the three years ended
December 31, 1994 follows (in millions of dollars):
1994 1993 1992
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Balance at beginning of year........... $50.9 $50.9 $40.4
Provision charged to operations........ 11.6 8.8 8.5
Accounts written-off, net of
recoveries........................... (11.3) (7.7) (6.4)
Effect of exchange rate changes........ 1.2 (.6) (4.7)
Other (A).............................. ( .2) (.5) 13.1
----- ----- -----
Balance at end of year (B)............. $52.2 $50.9 $50.9
----- ----- -----
----- ----- -----
(A) Primarily balances of acquired companies in 1992.
(B) Includes allowance for doubtful accounts related to long-term consumer
finance receivables amounting to $7.3 million in 1994, $8.0 million in
1993 and $9.8 million in 1992.
An analysis of the valuation allowance for certain foreign deferred tax assets
as of December 31, 1994, 1993 and 1992 follows (in millions of dollars):
1994 1993 1992
----- ----- -----
Balance at beginning of year........... $23.6 $21.6 $ --
Valuation allowance upon adoption of
SFAS No. 109 "Accounting for Income
Taxes" effective January 1, 1992..... -- -- 25.5
Provision.............................. .5 1.7 5.4
Effect of exchange rate changes........ .6 .3 (9.3)
----- ----- -----
Balance at end of year (A)............. $24.7 $23.6 $21.6
----- ----- -----
----- ----- -----
(A) Included in other liabilities in the Consolidated Balance Sheets.
16. An analysis of intangible assets at December 31, 1994 and 1993 follows (in
millions of dollars):
1994 1993
------ ------
Goodwill .............................. $736.9 $668.9
Other intangible assets................ 87.4 88.7
------ ------
Subtotal............................. 824.3 757.6
Less - accumulated amortization ....... (123.3) (97.5)
------ ------
Total............................. $701.0 $660.1
------ ------
------ ------
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MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Per share data, as presented in the Consolidated Statements of Income, is
computed by using the average number of shares of the Company's common
stock outstanding. Common stock equivalents (relating principally to stock
options), which have been excluded from the calculation because their
dilutive effect is immaterial, are shown below for the three years ended
December 31, 1994 (in millions of shares).
1994 1993 1992
---- ---- ----
Primary .7 1.0 1.1
---- ---- ----
---- ---- ----
Fully Diluted .7 1.0 1.5
---- ---- ----
---- ---- ----
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EXHIBIT INDEX
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(3) -the registrant's restated
certificate of incorporation
(incorporated by reference to
the registrant's Annual Report
on Form 10-K for the year ended
December 31, 1987)
-the registrant's by-laws
(10) -Marsh & McLennan Companies 1992
Incentive and Stock Award Plan
(incorporated by reference to
Registration Statement No. 33-48804)
-Marsh & McLennan Companies Stock
Investment Supplemental Plan
-Marsh & McLennan Companies Special
Severance Pay Plan (incorporated by
reference to the registrant's Annual
Report on Form 10-K for the year ended
December 31, 1992)
-Putnam Investments, Inc. Executive
Deferred Compensation Plan
-Marsh & McLennan Companies
Supplemental Retirement Plan
(incorporated by reference to
the registrant's Annual Report on
Form 10-K for the year ended
December 31, 1992)
-Restated Employment Agreement between
Robert Clements and Marsh & McLennan
Risk Capital Corp. and related
Guaranty of the registrant
-Marsh & McLennan Companies Senior
Management Incentive Compensation Plan
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EXHIBIT INDEX (cont'd)
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sequential
numbering system
----------------
(13) -Annual Report to Stockholders for the
year ended December 31, 1994, to be
deemed filed only with respect to
those portions which are expressly
incorporated by reference
(21) -list of subsidiaries of the
registrant
(23) -consent of independent auditors
(24) -powers of attorney
(27) -Financial Data Schedule (filed only
with SEC for EDGAR purposes)
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