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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, 1998
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 Exchange
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 26, 1999, the aggregate market value of the voting stock held
by non-affiliates of the registrant was approximately $17,772,000,000.
As of February 26, 1999, there were outstanding 257,382,716 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, 1998........ IV
Notice of Annual Meeting of Stockholders and Proxy Statement dated
March 29, 1999.......................................................... Part 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, 1998
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PART I
ITEM 1. BUSINESS.
Marsh & McLennan Companies, Inc. ("MMC"), a professional services
organization with origins dating from 1871 in the United States, is a holding
company which, through its subsidiaries and affiliates, provides clients with
analysis, advice and transactional capabilities in the fields of risk and
insurance services, investment management and consulting. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 27 through 35 of the Annual Report to Stockholders for the year ended
December 31, 1998 (the "1998 Annual Report"), which is incorporated herein by
reference, for a discussion of MMC's revenues and operating income by industry
segment for each of the last three fiscal years.
On September 4, 1998, MMC commenced a cash tender offer to acquire all of
the capital stock of Sedgwick Group plc ("Sedgwick") for a total cash
consideration of approximately $2.2 billion. The offer was declared
unconditional on November 3, 1998 and the compulsory acquisition of all
previously untendered Sedgwick shares was completed in February 1999. Sedgwick,
through its subsidiaries and affiliates, was one of the world's leading
insurance, reinsurance and consulting groups. It is anticipated that during 1999
the risk and insurance services business of Sedgwick will be combined with J&H
Marsh & McLennan and the employee benefits consulting business of Sedgwick Noble
Lowndes will be combined with that of William M. Mercer Companies LLC.
RISK AND INSURANCE SERVICES. MMC's risk and insurance services are provided
by its subsidiaries and their affiliates on a worldwide basis, as broker, agent
or consultant for insureds, insurance underwriters and other brokers. These
services are provided by Marsh Inc. through its subsidiaries and affiliates
which include J&H Marsh & McLennan, Inc. and Sedgwick, each providing risk
management and insurance broking services, Guy Carpenter & Company, Inc., a
reinsurance intermediary, and Seabury & Smith, Inc., an insurance program
manager. In addition, Marsh & McLennan Capital, Inc. provides services
principally in connection with originating, structuring and managing insurance
and related industry investments.
MARSH INC. Marsh Inc., formed in connection with the planned integration of
J&H Marsh & McLennan, Inc. and Sedgwick, is a world leader in providing risk
management and insurance broking services. These services, carried on throughout
the world, are provided for a predominantly corporate clientele located in more
than 100 countries, primarily in North and South America, Europe and Asia
Pacific. Client companies are engaged in a broad range of commercial activities,
including general industries, financial and professional services, aviation,
marine, energy, construction, land transportation, healthcare and utility
concerns. Clients also include professional, institutional and public entities
and individuals.
Such risk management and insurance broking services relate to various types
of property and liability loss exposures, including large and complex risks that
require access to world insurance markets. Services provided to clients include
insurance broking and risk transfer activities and professional counseling
services on risk management issues, including risk analysis, coverage
requirements, self-insurance (in which the insured retains a portion of its
insurance risks), and alternative insurance and risk financing methods, as well
as claims collection, injury management, loss prevention and other insurance
related services. Services also include organization and administrative services
for special purpose insurance companies and other risk assumption alternatives.
Insurance placement services include the placement of insurance coverages with
insurers worldwide, sometimes involving other intermediaries. Correspondent
relationships are maintained with unaffiliated firms in certain countries.
Reinsurance broking services are provided to insurance and reinsurance risk
takers worldwide, principally by Guy Carpenter & Company, Inc. and its
subsidiaries and affiliates, from offices principally in North America and
Europe. Such services primarily involve acting as an intermediary for insurance
and reinsurance organizations on all classes of reinsurance, including specialty
lines such as professional liability, medical malpractice, accident, life and
health. The intermediary assists the insurer by providing advice, placing
reinsurance coverage with reinsurance organizations located around the world,
placing risk-transfer financing with capital markets, and furnishing related
services such as actuarial, financial and regulatory consulting, portfolio
analysis and catastrophe modeling. Claims services are often performed for
policies placed a number of years ago. The insurance company may seek
reinsurance or other risk-transfer financing on all or a portion of the risks it
insures. Intermediary services are also provided to reinsurance companies, which
may also seek reinsurance on the risks they have reinsured.
Seabury & Smith, Inc. and its subsidiaries and affiliates 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) primarily on a group
marketing basis to individuals, businesses and their employees, and associations
and other affinity groups (both sponsored and non-sponsored) and their members,
principally in the United States and Canada. It provides underwriting management
services to insurers in the United States, Canada and the United Kingdom,
primarily for professional liability coverages and wholesale broking services in
the United States and the United Kingdom for a broad range of products.
As part of the acquisition of Sedgwick, MMC acquired several insurance
companies that were in run-off and a Lloyd's members' agency.
MARSH & MCLENNAN CAPITAL, INC. Marsh & McLennan Capital, Inc. ("MMCAP")
provides services in connection with originating, structuring and managing
insurance and related industry investments. It is an advisor to The Trident
Partnership L.P., an independent private investment partnership formed in 1993
to make private equity investments in the global insurance and reinsurance
industry. MMCAP is also an advisor to Risk Capital Reinsurance Company, which
was formed in 1995 to provide reinsurance, both on a stand-alone basis and as
part of integrated capital solutions for insurance companies. MMCAP and its
predecessor operations were instrumental in the formation of several substantial
insurance and reinsurance entities, including A.C.E. Insurance Company, Ltd.,
X.L. Insurance Company, Ltd., and Risk Capital Reinsurance Company. MMCAP also
advises its immediate parent company, Marsh & McLennan Risk Capital Holdings,
Ltd., regarding the latter's ownership holdings in certain insurance and
reinsurance entities and funds, primarily ones initiated by MMCAP. As a result
of the foregoing activities, subsidiaries and affiliates of MMC may have direct
or indirect investments in insurance and reinsurance companies, including
entities at Lloyd's, which are considered for client placements by MMC's
insurance and reinsurance brokerage businesses.
COMPENSATION FOR SERVICES. The revenue attributable to MMC's risk and
insurance services consists primarily of fees paid by clients; commissions and
fees paid by insurance and reinsurance companies; interest income on funds held
in a fiduciary capacity for others, such as premiums and claims proceeds;
placement services revenues or contingent fees earned from insurers; and
compensation for services provided in connection with the organization,
structuring and management of insurance and related industry investments,
including fees and dividends, as well as appreciation that has been realized on
sales of holdings in such entities.
Revenue generated by risk and insurance services is fundamentally derived
from the value of the service provided to clients and insurance markets, and is
affected by premium rate levels in the property and casualty insurance markets
and available insurance capacity, because compensation is frequently related to
the premiums paid by insureds. In many cases compensation may be negotiated in
advance based upon the estimated value of the services to be performed. Revenue
is also affected by fluctuations in the amount of risk retained by insurance and
reinsurance clients themselves and by insured values, the
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development of new products, markets and services, new and lost business,
merging of clients (including insurance companies that are clients in the
reinsurance intermediary business) and the volume of business from new and
existing clients, as well as by interest rates for fiduciary funds.
Revenue and fees also may be received from originating, structuring and
managing investments in insurers and related industry investments, and income
and proceeds also may be derived from investments made by MMC. Placement
services revenue and contingent fees includes payments or allowances by
insurance companies based upon such factors as the overall volume of business
placed by the broker with that insurer, the aggregate commissions paid by the
insurer for that business during specific periods, or the loss performance to
the insurer of that business.
Revenues vary from quarter to quarter as a result of the timing of policy
renewals, the net effect of new and lost business production and realizing on
investments, whereas expenses tend to be more uniform throughout the year.
Commission rates vary in amount depending upon the type of insurance or
reinsurance coverage provided, the particular insurer or reinsurer, and the
capacity in which the broker acts, in addition to negotiations with clients. In
some cases, compensation for brokerage or advisory services is paid directly as
a fee by the client. Occasionally, commissions are shared with other brokers
that have participated in placing insurance or servicing insureds.
The investment of fiduciary funds is governed by the applicable laws or
regulations of insurance authorities of the states in the United States and in
other jurisdictions in which MMC's subsidiaries do business. These laws and
regulations typically limit the type of investments that may be made with such
funds. The general amount of funds invested and interest rates vary from time to
time.
INVESTMENT MANAGEMENT. Investment management and related services are
provided by Putnam Investments, Inc. and its subsidiaries ("Putnam"). Putnam has
been engaged in the investment management business since 1937, with its
principal offices in Boston, Massachusetts. Putnam also has offices in London
and Tokyo. 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 and which afford its clients the opportunity
to allocate their investment resources among various alternative investment
products as changing worldwide economic and market conditions warrant.
INVESTMENT MANAGEMENT SERVICES. Putnam's investment management services,
which are performed principally in the United States, include securities
investment advisory and management services consisting of investment research
and management, and accounting and related services for a group of publicly-held
investment companies. As of December 31, 1998, there were 113 such funds (the
"Putnam Funds") registered under the Investment Company Act of 1940, including
16 closed-end investment companies whose shares are traded on various major
domestic stock exchanges. A number of the open-end funds serve as funding
vehicles for variable insurance contracts. Investment management services are
also provided to corporate profit sharing and pension funds, state and other
governmental and public employee retirement funds, university endowment funds,
charitable foundations, collective investment vehicles (both U.S. and non-U.S.)
and other domestic and foreign institutional accounts.
Substantially all of Putnam's assets under management are derived from U.S.
individuals and institutions. In recent years Putnam has been expanding its
international client base on a selective basis through joint ventures and the
development of products such as offshore funds. Many international markets are
well developed with many established investment management firms. It may be
difficult for Putnam to establish businesses whose profitability equals that of
its business in the U.S. where it is one of the market leaders. Putnam seeks to
manage the risks of international expansion by using joint ventures with
established firms in selected countries and otherwise carefully choosing which
markets to enter.
Assets managed by Putnam, on which management fees are based, were
approximately $294.4 billion and $235.1 billion as of December 31, 1998 and
1997, respectively. Mutual fund assets aggregated
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$221.5 billion at December 31, 1998 and $182.0 billion at December 31, 1997.
Assets under management at December 31, 1998 consisted of approximately 73%
equity securities and 27% fixed income products, invested both domestically and
globally.
Putnam's revenues are derived primarily from its investment management fees
received from the Putnam Funds and institutional accounts. Assets under
management and revenue levels are particularly affected by fluctuations in
domestic and international bond and stock market prices, and by the level of
investments and withdrawals for current and new fund shareholders and clients.
They are also affected by investment performance, service to clients, the
development and marketing of new investment products, the relative
attractiveness of the investment style under prevailing market conditions and
changes in the investment patterns of clients. Fluctuations in the prices of
stocks will have an effect on equity assets under management and may influence
the flow of monies to and from equity funds and accounts. Fluctuations in
interest rates and in the yield curve have a similar effect on fixed income
assets under management and may influence the flow of monies to and from
fixed-income funds and accounts. Putnam offers investment products that allow
investors to diversify between stocks and bonds, domestically and
internationally.
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 varies depending on the individual mutual fund or account and
is usually based upon a sliding scale in relation to the level of assets under
management and, in certain instances, is also based on investment performance.
Such contracts automatically terminate in the event of their "assignment",
generally may be terminated by either party 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. "Assignment" includes any direct or
indirect transfer of a controlling block of voting stock in Putnam or MMC. The
management of Putnam and the trustees of the funds regularly review the fund fee
structure in light of fund performance, the level and range of services
provided, industry conditions and other relevant factors.
In recent years U.S. securities markets, especially equity markets, have
risen substantially, in many cases to historical highs. This increase has
contributed significantly to the assets under management and, accordingly, to
increases in revenues. A substantial slowdown in the rise of markets or an
actual decrease in general market levels will reduce revenue growth or, in some
circumstances, could lead to a decline in revenue.
PUTNAM FIDUCIARY TRUST COMPANY. A Putnam subsidiary, Putnam Fiduciary Trust
Company, a Massachusetts trust company, serves as transfer agent, dividend
disbursing agent, registrar and custodian for the Putnam Funds and provides
custody services to several external clients. Putnam Fiduciary Trust Company
receives compensation from the Putnam Funds for such services pursuant to
written agreements which may be terminated by either party on 90 days' notice,
and for providing custody services pursuant to written agreements which may be
terminated by either party on 30 days' notice. These contracts generally provide
for compensation on the basis of several factors which vary with the type of
service being provided. In addition, Putnam Fiduciary Trust Company provides
administrative and trustee (or custodian) services for employee benefit plans
(in particular 401(k) plans), IRA's and other clients for which it receives
compensation pursuant to service and trust or custodian contracts. In the case
of employee benefit plans, investment options are usually selected by the plan
sponsors and may include Putnam mutual funds and other Putnam managed products,
as well as employer stock and other non-Putnam investments.
PUTNAM MUTUAL FUNDS CORP. Putnam Mutual Funds Corp., a Putnam subsidiary,
acts as principal underwriter of the shares of the open-end Putnam Funds,
selling primarily through independent broker/ dealers, financial planners and
financial institutions, including banks, and directly to certain large 401(k)
plans and other institutional accounts. 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.
In some cases the sales charge is assessed only if the shares are redeemed
within a
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stated time period. In accordance with certain terms and conditions described in
the prospectuses for such funds, certain investors are eligible to purchase
shares at net asset value or at reduced sales charges, and investors may
generally exchange their shares of a fund at net asset value for shares of
another Putnam Fund without the payment of additional sales charges.
Commissions to selling dealers are typically paid at the time of the
purchase as a percentage of the amount invested. Essentially all Putnam Funds
are available with a contingent deferred sales charge in lieu of a front-end
load. The related prepaid dealer commissions initially paid by Putnam to
broker/dealers for distributing such funds are recovered through charges and
fees received over a number of years.
Nearly all of the open-end 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 Putnam Mutual Funds Corp., a Putnam subsidiary, to
cover costs relating to distribution of the Putnam Funds and services provided
to shareholders. These payments enable the Putnam subsidiary to pay service fees
and other continuing compensation to firms that provide services to Putnam Fund
shareholders and distribute shares of the Putnam Funds. Some Rule 12b-1 fees are
retained by the Putnam Mutual Funds Corp. as compensation for the costs of
distribution and other 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 to 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. Failure of the
Trustees to approve continuation of the Rule 12b-1 plans for Class B (deferred
sales charge) shares would have a material adverse effect on Putnam. The
Trustees also have the ability to reduce the level of 12b-1 fees paid by a fund
or to make other changes that would reduce the amount of 12b-1 fees received by
Putnam. Such changes could have a material adverse effect on Putnam.
Putnam provides investor services through three separate facilities in the
Boston area and has one of the largest image processing facilities in the world.
CONSULTING. Through Mercer Consulting Group, Inc., subsidiaries and
affiliates of MMC, separately and in collaboration, provide consulting services
to a predominantly corporate clientele from locations around the world, in the
areas of human resources and employee benefit programs, including retirement,
health care and compensation; and general management consulting, which comprises
strategy, operations and marketing. Mercer Consulting Group, Inc. also provides
economic consulting and analysis.
William M. Mercer Companies LLC ("William M. Mercer"), through its
subsidiaries and affiliates including Sedgwick Noble Lowndes, provides
professional advice and services to corporate, government and institutional
clients from offices in more than 30 countries and territories, primarily in
North and South America, Western Europe, Asia, Australia and New Zealand.
Consultants help organizations design, implement, administer and communicate
retirement, compensation and other human resource programs, and provide other
types of actuarial advice. In addition, William M. Mercer advises the management
of health care providers on various business issues. Through its investment
consultants, the firm assists trustees of pension funds and others in the
selection of investment managers and investment strategies. William M. Mercer
also advises investment managers on fund design and positioning. In certain
locations outside the United States, William M. Mercer advises individuals in
the investment and disposition of lump sum retirement benefits and other
retirement savings and provides related trustee services.
Mercer Management Consulting, Inc. provides advice and assistance on issues
of business strategy, primarily to large corporations in North America, Europe
and Asia. Consultants help senior executives more fully understand the behavior
of their customers, optimize the economics of their business, and structure
their organizations, processes and systems to achieve their strategic goals. In
addition, under the Lippincott & Margulies name, Mercer Management Consulting,
Inc. advises leading corporations on issues relating to brand, corporate
identity and image.
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National Economic Research Associates, Inc. ("NERA"), a firm of consulting
economists, serves law firms, corporations, trade associations and governmental
agencies, from offices in the United States, Australia, England and Spain. NERA
provides research and analysis of economic and financial issues arising in
litigation, regulation, public policy and management.
The major component of Mercer Consulting Group's revenue is fees paid by
clients for advice and services. In addition, commission revenue is received
from insurance companies for the placement of individual and group insurance
contracts, primarily life, health and accident coverages. A relatively small
amount of revenue is derived from brokerage commissions in connection with a
registered securities broker dealer.
Revenue in the consulting business is fundamentally derived from the value
of the advice and services provided to clients. It is affected by changes in
clients' industries, including government regulation, as well as new products
and services, the stage of the economic cycle and broad trends in employee
demographics and in the management of large organizations.
REGULATION. The activities of MMC 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 MMC's
subsidiaries operate. These laws and regulations are primarily intended to
benefit clients.
MMC's three business segments depend on the validity of, and continued good
standing under, the licenses and approvals pursuant to which they operate, as
well as compliance with pertinent regulations. MMC therefore devotes significant
effort toward maintaining its licenses and to ensuring compliance with a diverse
and complex regulatory structure.
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. Licenses may be
denied or revoked for various reasons, including the violation of such
regulations, conviction of crimes and the like. Possible sanctions which may be
imposed include the suspension of individual employees, limitations on engaging
in a particular business for specified periods of time, revocation of licenses,
censures and fines. In some instances, MMC 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 possibility exists that MMC may be precluded or
temporarily suspended from carrying on some or all of its activities or
otherwise fined or penalized in a given jurisdiction.
No assurances can be given that MMC's risk and insurance services,
investment management or consulting activities can continue to be conducted in
any given jurisdiction as in the past.
RISK AND INSURANCE SERVICES. While the 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) or insurance consultant, managing general agent or third party
administrator to have an individual and/or company license from a governmental
agency or self-regulatory organization. In addition, certain of MMC's risk and
insurance activities are governed by the rules of the Lloyd's insurance market
in London and self-regulatory organizations in the United Kingdom and in other
jurisdictions, as well as securities and futures licensing authorities. A few
jurisdictions issue licenses only to individual residents or locally-owned
business entities. In some of these jurisdictions, if MMC has no licensed
subsidiary, MMC may maintain arrangements with residents or business entities
licensed to act in such jurisdiction. Also, 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.
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INVESTMENT MANAGEMENT. 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. Putnam's officers,
directors and employees may from time to time own securities which are also held
by the Putnam Funds or institutional accounts. Putnam's internal policies with
respect to individual investments require prior clearance and reporting of
transactions and restrict certain transactions so as to reduce the possibility
of conflicts of interest.
To the extent that existing or future regulations affecting the sale of
Putnam fund shares or other investment products or their investment strategies,
cause or contribute to reduced sales of Putnam fund shares or investment
products or impair the investment performance of the Putnam Funds or such other
investment products, Putnam's aggregate assets under management and its revenues
might be adversely affected. Changes in regulations affecting the free movement
of international currencies might also adversely affect Putnam.
CONSULTING. No licensing or other regulatory requirements are material to
the consulting activities of MMC's subsidiaries in the aggregate nor apply to
that activity in general; however, the subject matter of certain consulting
services is subject to regulation. For example, employee benefit plans are
subject to various governmental regulations, and services related to brokerage
activities, trustee services, investment matters (including advice to
individuals on the investment of personal pension assets) and the placing of
individual and group insurance contracts subject MMC's subsidiaries to
insurance, investment or securities regulations and licensing in various
jurisdictions.
COMPETITIVE CONDITIONS. Principal methods of competition in risk and
insurance services and consulting include the quality and types of services and
products that a broker or consultant provides its clients and their cost. Putnam
competes with other providers of investment products and services primarily on
the basis of the range of investment products offered, the investment
performance of such products, as well as the manner in which such products are
distributed, and the scope and quality of the shareholder and other services
provided. Sales of Putnam fund shares are also influenced by general securities
market conditions, government regulations, global economic conditions and
advertising and sales promotional efforts.
All these businesses also encounter strong competition from both public
corporations and private firms in attracting and retaining qualified employees.
RISK AND INSURANCE SERVICES. The insurance and reinsurance broking services
business of MMC is believed to be among the largest of its type in the world.
MMC encounters strong competition in the risk and insurance services
business from other insurance brokerage firms which also operate on a nationwide
or worldwide basis, from a large number of regional and local firms in the
United States, the European Union and in other countries and regions, from
insurance and reinsurance companies that market and service their insurance
products without the assistance of brokers or agents and from other businesses,
including commercial and investment banks, accounting firms and consultants that
provide risk-related services and products.
Certain insureds and groups of insureds have established programs of self
insurance (including captive insurance companies), as a supplement or
alternative to third-party insurance, thereby reducing in some cases the need
for insurance placements. There are also many other providers of insurance
program management services, including many insurance companies, and many other
organizations seeking to structure and manage investments in the insurance
industry.
INVESTMENT MANAGEMENT. Putnam Investments is one of the largest investment
management firms in the United States. The investment management business is
highly competitive. In addition to competition from firms already in the
investment management business, including commercial banks, stock brokerage
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and investment banking firms, and insurance companies, there is competition from
other firms offering financial services and other investment alternatives.
Many securities dealers, whose large retail distribution systems play an
important role in the sale of shares in the Putnam Funds, also sponsor competing
proprietary mutual funds. To the extent that such securities dealers value the
ability to offer customers a broad selection of investment alternatives, they
will continue to sell independent funds, notwithstanding the availability of
proprietary products. However, to the extent that these firms limit or restrict
the sale of Putnam fund shares through their brokerage systems in favor of their
proprietary mutual funds, assets under management might decline and Putnam's
revenues might be adversely affected. In addition, a number of mutual fund
sponsors presently market their funds to the general public without sales
charges. Certain firms also offer passively managed funds such as index funds to
the general public.
CONSULTING. Mercer Consulting Group, one of the largest global consulting
firms, is a leader in many of its businesses. William M. Mercer is the world's
largest human resources consulting organization. Mercer Management Consulting is
a leader in strategy consulting. NERA is a leading firm of consulting
economists.
William M. Mercer, Mercer Management Consulting and NERA compete with other
privately held and publicly held worldwide and national consulting companies, as
well as regional and local firms. Competitors include independent consulting
firms as well as consulting organizations affiliated with accounting firms,
information systems providers, and financial services firms, some of which
provide administrative or consulting services as an adjunct to other primary
services.
SEGMENTATION OF ACTIVITY BY TYPE OF SERVICE AND GEOGRAPHIC AREA OF
OPERATION. Financial information relating to the types of services provided by
MMC and the geographic areas of its operations is incorporated herein by
reference to Note 16 of the Notes to Consolidated Financial Statements on pages
53 and 54 of the 1998 Annual Report. MMC's non-U.S. operations are subject to
the customary risks involved in doing business in other countries, including
currency fluctuations and exchange controls.
EMPLOYEES. As of December 31, 1998, MMC and its consolidated subsidiaries
employed about 54,300 people worldwide, of whom approximately 34,900 were
employed by subsidiaries providing risk and insurance services, approximately
5,300 were employed by subsidiaries providing investment management services,
approximately 13,700 were employed by subsidiaries providing consulting
services, and approximately 400 were employed by MMC.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS. This report and MMC's
financial statements and other documents incorporated herein by reference
contain 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 revenue and expense growth, cost savings and efficiencies expected
from the integration of Johnson & Higgins and Sedgwick Group plc, year 2000
remediation and testing of computer systems, market and industry conditions,
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, expert's reports and opinions,
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 or incorporated herein
include, in the case of MMC's risk and insurance services and consulting
businesses, the failure to successfully integrate the business of Johnson &
Higgins and Sedgwick Group plc (including the achievement of synergies and cost
reductions) or other adverse consequences from those transactions in the case of
MMC's risk and insurance service business, changes in competitive conditions, a
decrease in the premium rate levels in the global property and casualty
insurance markets, the impact of changes in insurance markets and natural
catastrophes; in the
8
case of MMC's investment management business, changes in worldwide and national
equity and fixed income markets; and with respect to all of MMC's activities,
the failure of MMC and/or its significant business partners to be year 2000
compliant on a timely basis, changes in general worldwide and national economic
conditions, fluctuations in foreign currencies, actions of competitors or
regulators, changes in interest rates, developments relating to claims and
lawsuits, 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. A description of certain of these factors is included elsewhere in
this Annual Report and are incorporated herein by reference.
ITEM 2. PROPERTIES.
MMC and four 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 and have entered into a contract to purchase an
additional six floors, subject to certain regulatory and other conditions. If
there is a failure of any condition, seller has agreed to lease the space to
MMC.
The principal offices of MMC's risk and insurance services subsidiaries in
the UK are located on the eastern side of the City of London in The Sedgwick
Centre. This freehold building, owned by a subsidiary of MMC, comprises 360,000
square feet containing offices located around a central atrium, and ancillary
facilities including a shopping mall.
The remaining business activities of MMC and its subsidiaries are conducted
principally in leased office space in cities throughout the world. In general,
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, MMC may have unused space and may seek to sublet such space to third
parties, depending upon the demands for office space in the locations involved.
On June 30, 1998, MMC sold a 37.58% condominium interest in a 40 story
building in New York City, which it had acquired in the business combination
with Johnson & Higgins.
ITEM 3. LEGAL PROCEEDINGS.
MMC and its subsidiaries are subject to various claims and lawsuits
consisting principally of alleged errors and omissions in connection with the
placement of insurance or reinsurance and in rendering investment and consulting
services. Some of these claims and lawsuits seek damages, including punitive
damages, in amounts which could, if assessed, be significant.
On November 24, 1997, an action captioned "AIENA, ET AL. V. OLSEN, ET AL."
("Aiena") was brought in the United States District Court for the Southern
District of New York by certain former directors of Johnson & Higgins ("J&H"),
which was acquired by MMC in March 1997, against twenty-four selling
shareholders of J&H, as well as J&H itself and MMC. The action essentially
challenges the allocation of the consideration paid in connection with MMC's
combination with J&H as between the defendants who were directors and
shareholders of J&H at the time of the transaction and the plaintiffs who were
former directors and shareholders of J&H. The complaint asserts, among others,
claims for breach of fiduciary duty, federal securities law violations, breach
of contract, and ERISA violations. Plaintiffs seek compensatory and punitive
damages. Two other former directors of J&H have commenced similar actions
(SEMPIER V. OLSEN ET AL.; and CLEMENTS V. OLSEN ET AL.), which are also pending
before the United States District Court for the Southern District of New York
and are contemplated to be heard together with the Aiena action.
In 1993, several years prior to the acquisition of J&H, the Equal Employment
Opportunity Commission ("EEOC") commenced a lawsuit against J&H in the United
States District Court for the Southern District of New York. The action alleges
that a mandatory retirement policy for directors then in effect at J&H violated
the federal Age Discrimination in Employment Act ("ADEA"). In 1995, the District
Court ruled in the EEOC's favor that the J&H mandatory retirement policy
violated the ADEA. The Court of
9
Appeals for the Second Circuit affirmed that ruling in 1996. The EEOC seeks to
recover damages on behalf of certain former directors and a trial on the matter
of damages, unless the action is resolved, may be held later in 1999. Pursuant
to the Stock Purchase Agreement between MMC and J&H and the stockholders of J&H,
MMC will bear one-half of all damages and expenses in this action.
Sedgwick Group plc, since prior to its acquisition, has been engaged in a
review of previously undertaken personal pension plan business as required by
United Kingdom regulators to determine whether redress should be made to
customers. Settlements and related costs previously paid amount to $80 million
of which $30 million is due from insurers. The contingent exposure of Sedgwick
for pension redress and related costs as of Sedgwick's acquisition by MMC is
estimated to be $220 million. Sedgwick had recorded $150 million of reserves and
recognized approximately $70 million of insurance recoveries related to this
exposure.
Other present and former subsidiaries of MMC are engaged in a comparable
review of their personal pension plan businesses, although the extent of their
activity in this area, and consequently their financial exposure, was
proportionally much less than Sedgwick. The contingent exposure of the present
and former non-Sedgwick subsidiaries of MMC for pension redress and related
costs is estimated to be approximately $135 million. Approximately $100 million
of this amount is expected to be recovered from insurers and accounting reserves
have been provided for the remaining balance. Settlements and related costs
previously paid total approximately $15 million.
MMC's ultimate exposure from the United Kingdom's personal pension plan
review, as presently calculated and including Sedgwick, is subject to a number
of variable factors including, among others, equity markets, the rate of
response to the pension review mailings, the interest rate established quarterly
by the U.K. Pension Investment Authority for calculating compensation, and the
precise scope, duration, and methodology of the review as required by that
Authority.
On the basis of present information, anticipated insurance coverage and
advice received from counsel, it is the opinion of MMC's management that the
disposition or ultimate determination of these claims, lawsuits and proceedings
will not have a material adverse effect on MMC's consolidated results of
operations or its consolidated financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
10
PART II
ITEM 5. MARKET FOR MMC'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market and dividend information regarding MMC's common stock on page 56 of
the 1998 Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data on page 57 of the 1998 Annual Report are
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Information on pages 27 through 35 of the 1998 Annual Report is incorporated
herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information under the heading "Market Risk" on pages 33 and 34 of the 1998
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 36 through 55 of the 1998 Annual Report and Selected Quarterly
Financial Data (Unaudited) on page 56 of the 1998 Annual Report are incorporated
herein by reference. Supplemental Notes to Consolidated Financial Statements are
included on page 18 hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MMC.
Information as to the directors of MMC is incorporated herein by reference
to the material under the heading "Directors" in the Notice of Annual Meeting of
Stockholders and Proxy Statement dated March 29, 1999 (the "1999 Proxy
Statement").
The executive officers of MMC as of March 24, 1999 are Messrs. Barham,
Borelli, Coster, Greenberg, Lasser, Sinnott, Smith and White-Cooper, with
respect to whom information is incorporated herein by reference to the 1999
Proxy Statement, and:
Francis N. Bonsignore, age 52, has been Senior Vice President--Human
Resources & Administration of MMC since 1990. Immediately prior thereto, he
was partner and National Director-- Human Resources for Price Waterhouse.
Gregory F. Van Gundy, age 53, is Secretary and General Counsel of MMC.
He joined MMC in 1974.
ITEM 11. EXECUTIVE COMPENSATION.
Information under the headings "Executive Compensation", "Compensation
Committee Report" and "Comparison of Cumulative Total Stockholder Return" in the
1999 Proxy Statement is incorporated herein by reference.
11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information under the heading "Security Ownership" in the 1999 Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information under the headings "Employment Agreements" and "Transactions
with Management and Others; Other Information" in the 1999 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
36 through 54 of the 1998 Annual Report):
Consolidated Statements of Income for the three years ended December 31,
1998
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Cash Flows for the three years ended December
31, 1998
Consolidated Statements of Stockholders' Equity for the three years
ended December 31, 1998
Notes to Consolidated Financial Statements
Report of Independent Auditors
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, 1998 (incorporated
herein by reference to page 56 of the 1998 Annual Report)
Five-Year Statistical Summary of Operations (incorporated herein by
reference to page 57 of the 1998 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:
(3.1) --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, 1997)
(3.2) --the registrant's by-laws
(10.1) --Stock Purchase Agreement, dated as of March 12, 1997, by and among the
registrant, Johnson & Higgins and the stockholders of Johnson & Higgins
(incorporated by reference to the registrant's Current Report on Form 8-K
dated March 14, 1997)
12
(10.2) --First Amendment to the Stock Purchase Agreement, dated as of March 27,
1997 by and among the registrant, Johnson & Higgins and the stockholders
of Johnson & Higgins (incorporated by reference to the registrant's
Current Report on Form 8-K dated April 7, 1997)
(10.3)* --Marsh & McLennan Companies, Inc. 1997 Senior Executive Incentive and Stock
Award Plan (incorporated by reference to the registrant's Annual Report on
Form 10-K for the year ended December 31, 1996)
(10.4)* --Marsh & McLennan Companies, Inc. Restricted Shares Voluntary Deferral
Program for U.S. Employees (incorporated by reference to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1995)
(10.5)* --Marsh & McLennan Companies Stock Investment Supplemental Plan
(incorporated by reference to the registrant's Annual Report on Form 10-K
for the year ended December 31, 1994)
(10.6)* --Amendment to Marsh & McLennan Companies Stock Investment Supplemental Plan
dated June 16, 1997 (incorporated by reference to the registrant's Annual
Report on Form 10-K for the year ended December 31, 1997)
(10.7)* --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, 1996)
(10.8)* --Putnam Investments, Inc. Executive Deferred Compensation Plan
(incorporated by reference to the registrant's Annual Report on Form 10-K
for the year ended December 31, 1994)
(10.9)* --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)
(10.10)* --Marsh & McLennan Companies Senior Management Incentive Compensation Plan
(incorporated by reference to the registrant's Annual Report on Form 10-K
for the year ended December 31, 1994)
(10.11)* --Marsh & McLennan Companies, Inc. U.S. Employee 1998 Cash Bonus Award
Voluntary Deferral Plan
(10.12)* --Marsh & McLennan Companies, Inc. Canadian Employee 1998 Cash Bonus Award
Voluntary Deferral Plan
(10.13)* --Marsh & McLennan Companies, Inc. Directors Stock Compensation Plan (as
amended and restated 6/27/97) (incorporated by reference to the
registrant's Annual Report on Form 10-K for the year ended December 31,
1997)
(10.14)* --Employment Agreement between Jeffrey W. Greenberg and Marsh & McLennan
Capital, Inc. and related Guaranty of the registrant (incorporated by
reference to the registrant's Annual Report on Form 10-K for the year
ended December 31, 1995)
(10.15)* --Employment Agreement between Lawrence J. Lasser and Putnam Investments,
Inc. effective as of December 31, 1997 (incorporated by reference to the
registrant's Annual Report on Form 10-K for the year ended December 31,
1997)
(10.16)* --Marsh & McLennan Capital, Inc. Long Term Incentive Plan
13
(10.17)* --Letter Agreement with respect to the Employment Agreement between Jeffrey
W. Greenberg and Marsh & McLennan Capital, Inc. and related Guaranty of
the registrant
(13) --Annual Report to Stockholders for the year ended December 31, 1998, to be
deemed filed only with respect to those portions which are expressly
incorporated by reference
(21) --list of subsidiaries of the registrant (as of 2/28/99)
(23) --consent of independent auditors
(24) --powers of attorney
(27) --Financial Data Schedule (filed with SEC for EDGAR purposes only)
- ------------------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit pursuant to Item 14(c) of Form 10-K.
(b) Two reports on Form 8-K were filed by the registrant in the fiscal
quarter ended December 31, 1998. On November 12, 1998 and December 23,
1998, respectively, the registrant filed a report on Form 8-K (i)
announcing that the tender offer to acquire all of the issued and
unissued share capital of Sedgwick Group plc ("Sedgwick") was declared
unconditional in all respects on November 3, 1998 and (ii) disclosing
certain historical financial statements for Sedgwick and pro forma
financial information for the registrant giving effect to the Sedgwick
acquisition.
14
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 31st day of March, 1999 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 31st day of March, 1999.
/s/ A.J.C. SMITH *
- ------------------------------------------- -------------------------------------------
A.J.C. Smith Norman Barham
Director, Chairman of the Board and Director
Chief Executive Officer
/s/ FRANK J. BORELLI *
- ------------------------------------------- -------------------------------------------
Frank J. Borelli Lewis W. Bernard
Senior Vice President and Director
Chief Financial Officer, Director
/s/ DOUGLAS C. DAVIS *
- ------------------------------------------- -------------------------------------------
Douglas C. Davis Peter Coster
Vice President and Controller Director
(Chief Accounting Officer)
* *
- ------------------------------------------- -------------------------------------------
Robert F. Erburu David A. Olsen
Director Director
* *
- ------------------------------------------- -------------------------------------------
Jeffrey W. Greenberg John D. Ong
Director Director
* *
- ------------------------------------------- -------------------------------------------
Ray J. Groves George Putnam
Director Director
* *
- ------------------------------------------- -------------------------------------------
Stephen R. Hardis Saxon Riley
Director Director
15
* *
- ------------------------------------------- -------------------------------------------
Gwendolyn S. King Adele Smith Simmons
Director Director
* *
- ------------------------------------------- -------------------------------------------
The Rt. Hon. Lord Lang Of Monkton John T. Sinnott
Director Director
* *
- ------------------------------------------- -------------------------------------------
Lawrence J. Lasser Frank J. Tasco
Director Director
*
-------------------------------------------
W.R.P. White-Cooper
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 10-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
16
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders of
Marsh & McLennan Companies, Inc.:
We have audited the consolidated balance sheets of Marsh & McLennan
Companies, Inc. and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1998, and have
issued our report thereon dated March 5, 1999; such financial statements and
report are included in your 1998 Annual Report to Stockholders and are
incorporated herein by reference. Our audits also included the supplemental
notes to the consolidated financial statements (the "Supplemental Notes") listed
in Item 14. These Supplemental Notes are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such Supplemental 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.
DELOITTE & TOUCHE LLP
New York, New York
March 5, 1999
17
MARSH & MCLENNAN COMPANIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. INFORMATION CONCERNING MMC'S VALUATION ACCOUNTS FOLLOWS:
An analysis of the allowance for doubtful accounts for the three years ended
December 31, 1998 follows (in millions of dollars):
1998 1997 1996
----- --------- ---------
Balance at beginning of year.................................. $ 53 $ 43 $ 54
Provision charged to operations............................... 19 8 10
Accounts written-off, net of recoveries....................... (5) (4) (10)
Effect of exchange rate changes............................... 2 (1) 1
Other (A)..................................................... 29 7 (12)
--- --- ---
Balance at end of year........................................ $ 98 $ 53 $ 43
--- --- ---
--- --- ---
- ------------------------
(A) Relates primarily to the acquisitions of Sedgwick and Johnson & Higgins in
1998 and 1997, respectively and the sale of Frizzell in 1996.
An analysis of the valuation allowance for certain foreign deferred tax
assets as of December 31, 1998, 1997 and 1996 follows (in millions of dollars):
1998 1997 1996
---- ----- ------
Balance at beginning of year...................... -- $ 27 $ 25
Effect of exchange rate changes................... -- -- 2
Other............................................. -- (27)(A) --
---- ----- ------
Balance at end of year............................ $-- $-- $ 27(B)
---- ----- ------
---- ----- ------
- ------------------------
(A) Reflects the write-off of the underlying tax assets, since it was determined
that MMC will not realize any future tax benefit.
(B) Included in other liabilities in the Consolidated Balance Sheets.
17. AN ANALYSIS OF INTANGIBLE ASSETS AT DECEMBER 31, 1998 AND 1997 FOLLOWS (IN
MILLIONS OF DOLLARS):
1998 1997
---------- --------
Goodwill..................................... $ 4,965 $ 2,509
Other intangible assets...................... 141 105
---------- --------
Subtotal................................... 5,106 2,614
Less--accumulated amortization............... (280) (197)
---------- --------
Total.................................... $ 4,826(A) $ 2,417
---------- --------
---------- --------
- ------------------------
(A) The increase from December 31, 1997 is primarily due to the acquisition of
Sedgwick ($2.0 billion).
18
EXHIBIT INDEX
(3.1) --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,
1997)
(3.2) --the registrant's by-laws
(10.1) --Stock Purchase Agreement, dated as of March 12, 1997, by and among the registrant,
Johnson & Higgins and the stockholders of Johnson & Higgins (incorporated by
reference to the registrant's Current Report on Form 8-K dated March 14, 1997)
(10.2) --First Amendment to the Stock Purchase Agreement, dated as of March 27, 1997 by and
among the registrant, Johnson & Higgins and the stockholders of Johnson & Higgins
(incorporated by reference to the registrant's Current Report on Form 8-K dated
April 7, 1997)
(10.3)* --Marsh & McLennan Companies, Inc. 1997 Senior Executive Incentive and Stock Award
Plan (incorporated by reference to the registrant's Annual Report on Form 10-K for
the year ended December 31, 1996)
(10.4)* --Marsh & McLennan Companies, Inc. Restricted Shares Voluntary Deferral Program for
U.S. Employees (incorporated by reference to the registrant's Annual Report on
Form 10-K for the year ended December 31, 1995)
(10.5)* --Marsh & McLennan Companies Stock Investment Supplemental Plan(incorporated by
reference to the registrant's Annual Report on Form 10-K for the year ended
December 31, 1994)
(10.6)* --Amendment to the Marsh & McLennan Companies Stock Investment Supplemental Plan
dated June 16, 1997 (incorporated by reference to the registrant's Annual Report
on Form 10-K for the year ended December 31, 1997)
(10.7)* --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,
1996)
(10.8)* --Putnam Investments, Inc. Executive Deferred Compensation Plan (incorporated by
reference to the registrant's Annual Report on Form 10-K for the year ended
December 31, 1994)
(10.9)* --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)
(10.10)* --Marsh & McLennan Companies Senior Management Incentive Compensation Plan
(incorporated by reference to the registrant's Annual Report on Form 10-K for the
year ended December 31, 1994)
(10.11)* --Marsh & McLennan Companies, Inc. U.S. Employee 1998 Cash Bonus Award Voluntary
Deferral Plan
(10.12)* --Marsh & McLennan Companies, Inc. Canadian Employee 1998 Cash Bonus Award Voluntary
Deferral Plan
(10.13)* --Marsh & McLennan Companies, Inc. Directors Stock Compensation Plan (as amended and
restated 6/27/97) (incorporated by reference to the registrant's Annual Report on
Form 10-K for the year ended December 31, 1997)
(10.14)* --Employment Agreement between Jeffrey W. Greenberg and Marsh & McLennan Capital
Inc. and related Guaranty of the registrant (incorporated by reference to the
registrant's Annual Report on Form 10-K for the year ended December 31, 1995)
19
(10.15)* --Employment Agreement between Lawrence J. Lasser and Putnam Investments, Inc.
effective as of December 31, 1997 (incorporated by reference to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1997)
(10.16)* --Marsh & McLennan Capital, Inc. Long Term Incentive Plan
(10.17)* --Letter Agreement with respect to the Employment Agreement between Jeffrey W.
Greenberg and Marsh & McLennan Capital, Inc. and related Guaranty of the
registrant
(13) --Annual Report to Stockholders for the year ended December 31, 1998, to be deemed
filed only with respect to those portions which are expressly incorporated by
reference
(21) --list of subsidiaries of the registrant (as of 2/28/99)
(23) --consent of independent auditors
(24) --powers of attorney
(27) --Financial Data Schedule (filed with SEC for EDGAR purposes only)
- ------------------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit pursuant to Item 14(c) of Form 10-K.
20