MARSH & MCLENNAN COMPANIES, INC. (Form: 10-Q, Received: 05/07/2010 14:27:44)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2010

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, New York 10036

(212) 345-5000

Commission file number 1-5998

State of Incorporation: Delaware

I.R.S. Employer Identification No. 36-2668272

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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


		Large Accelerated Filer x		Accelerated Filer ¨

		Non-Accelerated Filer ¨ (Do not check if a smaller reporting company)		Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of April 30, 2010, there were outstanding 541,237,396 shares of common stock, par value $1.00 per share, of the registrant.

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future events or results, use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “intend,” “plan,” “project” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” For example, we may use forward-looking statements when addressing topics such as: the outcome of contingencies; market and industry conditions; changes in our business strategies and methods of generating revenue; the development and performance of our services and products; changes in the composition or level of MMC’s revenues; our cost structure and the outcome of cost-saving or restructuring initiatives; dividend policy; the expected impact of acquisitions and dispositions; pension obligations; cash flow and liquidity; future actions by regulators; and the impact of changes in accounting rules.

Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements include:

our exposure to potential liabilities arising out of a civil lawsuit against Mercer filed by the Alaska Retirement Management Board in Alaska state court that is scheduled for trial in July 2010 in Juneau, which alleges professional negligence and malpractice, breach of contract, breach of implied covenant of good faith and fair dealing, negligent misrepresentation, unfair trade practices and fraud and misrepresentation related to actuarial services provided by Mercer;

the potential impact of rating agency actions on our cost of financing and ability to borrow, as well as on our operating costs and competitive position;

the impact of current economic and financial market conditions on our results of operations and financial condition, particularly with respect to our consulting businesses;

the potential impact of legislative, regulatory, accounting and other initiatives which may be taken in response to the current financial crisis;

our ability to make strategic acquisitions and dispositions and to integrate, and realize expected synergies, savings or strategic benefits from the businesses we acquire;

changes in the funded status of our global defined benefit pension plans and the impact of any increased pension funding resulting from those changes;

our exposure to potential liabilities arising from errors and omissions claims against us;

our exposure to potential criminal sanctions or civil remedies if we fail to comply with foreign and U.S. laws and regulations that are applicable to our international operations, including import and export requirements, U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to government officials;

the impact on our net income caused by fluctuations in foreign currency exchange rates;

the extent to which we retain existing clients and attract new business, and our ability to incentivize and retain key employees;

the impact of competition, including with respect to pricing, and the emergence of new competitors;

our ability to successfully obtain payment from our clients of the amounts they owe us for work performed;

our ability to successfully recover should we experience a disaster or other business continuity problem;

changes in applicable tax or accounting requirements; and

potential income statement effects from the application of FASB’s ASC Topic No. 740 (“Income Taxes”) regarding accounting treatment of uncertain tax benefits and valuation allowances and ASC Topic No. 350 (“Intangibles – Goodwill and Other”), including the effect of any subsequent adjustments to the estimates MMC uses in applying these accounting standards.

The factors identified above are not exhaustive. MMC and its subsidiaries operate in a dynamic business environment in which new risks may emerge frequently. Accordingly, MMC cautions readers not to place undue reliance on its forward-looking statements, which speak only as of the dates on which they are made. MMC undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made. Further information concerning MMC and its businesses, including information about factors that could materially affect our results of operations and financial condition, is contained in MMC’s filings with the Securities and Exchange Commission, including the “Risk Factors” section of MMC’s most recently filed Annual Report on Form 10-K.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		5

ITEM 1.	FINANCIAL STATEMENTS	5

	CONSOLIDATED STATEMENTS OF INCOME	5

	CONSOLIDATED BALANCE SHEETS	6

	CONSOLIDATED BALANCE SHEETS (CONTINUED)	7

	CONSOLIDATED STATEMENTS OF CASH FLOWS	8

	CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME	9

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	10

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31

ITEM 3.	QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK	41

ITEM 4.	CONTROLS & PROCEDURES	42

PART II. OTHER INFORMATION		43

ITEM 1.	LEGAL PROCEEDINGS	43

ITEM 1A.	RISK FACTORS	43

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	44

ITEM 4.	[REMOVED AND RESERVED]

ITEM 5.	OTHER INFORMATION	44

ITEM 6.	EXHIBITS	44

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


For the Three Months Ended March 31, (In millions, except per share figures)	2010		2009
Revenue	$2,795		$2,609
Expense:
Compensation and benefits	1,650		1,571
Other operating expenses	706		714
Operating expenses	2,356		2,285
Operating income	439		324
Interest income	4		6
Interest expense	(60	)	(56	)
Investment income (loss)	8		(15	)
Income before income taxes	391		259
Income taxes	117		80
Income from continuing operations	274		179
Discontinued operations, net of tax	(22	)	1
Net income before non-controlling interests	252		180
Less: Net income attributable to non-controlling interests	4		4
Net income attributable to MMC	$ 248		$ 176
Basic net income per share – Continuing operations	$ 0.50		$ 0.33
– Net income	$ 0.46		$ 0.33
Diluted net income per share – Continuing operations	$ 0.49		$ 0.33
– Net income	$ 0.45		$ 0.33
Weighted average number of shares outstanding – Basic	533		515
– Diluted	536		515
Shares outstanding at March 31,	541		517
Dividends declared per share	$ 0.40		$ 0.40

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions of dollars)	March 31, 2010		December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$ 1,167		$ 1,777
Receivables
Commissions and fees	2,538		2,429
Advanced premiums and claims	63		86
Other	447		457
	3,048		2,972
Less-allowance for doubtful accounts and cancellations	(113	)	(117	)
Net receivables	2,935		2,855
Other current assets	490		299
Total current assets	4,592		4,931
Goodwill and intangible assets	7,250		7,173
Fixed assets (net of accumulated depreciation and amortization of $1,477 at March 31, 2010 and $1,465 at December 31, 2009)	920		952
Pension related assets	140		94
Deferred tax assets	1,096		1,242
Other assets	964		945
	$14,962		$15,337

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(Unaudited)


(In millions of dollars)	March 31, 2010		December 31, 2009
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$ 558		$ 558
Accounts payable and accrued liabilities	1,870		1,826
Accrued compensation and employee benefits	637		1,319
Dividends payable	109		—
Total current liabilities	3,174		3,703
Fiduciary liabilities	3,909		3,559
Less – cash and investments held in a fiduciary capacity	(3,909	)	(3,559	)
	—		—
Long-term debt	3,032		3,034
Retirement and post employment benefits	1,163		1,184
Liabilities for errors and omissions	517		518
Other liabilities	1,062		1,035
Commitments and contingencies
Stockholder’s Equity:
Preferred stock, $1 par value, authorized 6,000,000 shares, none issued	—		—
Common stock, $1 par value, authorized 1,600,000,000 shares, issued 560,641,640 shares at March 31, 2010 and December 31, 2009	561		561
Additional paid-in capital	1,109		1,211
Retained earnings	7,062		7,033
Accumulated other comprehensive loss	(2,246	)	(2,171	)
Non-controlling interests	37		35
	6,523		6,669
Less – treasury shares, at cost, 19,825,614 shares at March 31, 2010 and 30,967,116 shares at December 31, 2009	(509	)	(806	)
Total stockholders’ equity	6,014		5,863
	$14,962		$15,337

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


For the Three Months Ended March 31, (In millions of dollars)	2010		2009
Operating cash flows:
Net income before non-controlling interests	$ 252		$ 180
Adjustments to reconcile net income to cash used for operations:
Depreciation and amortization of fixed assets and capitalized software	80		74
Amortization of intangible assets	17		16
Provision for deferred income taxes	100		16
(Gain) loss on investments	(8	)	16
Loss on disposition of assets	26		12
Accrual of stock based compensation	6		—
Changes in assets and liabilities:
Net receivables	(73	)	9
Other current assets	(7	)	(8	)
Other assets	(63	)	(36	)
Accounts payable and accrued liabilities	64		(18	)
Accrued compensation and employee benefits	(682	)	(629	)
Accrued income taxes	(37	)	19
Other liabilities	15		(113	)
Effect of exchange rate changes	59		12
Net cash used for operations	(251	)	(450	)
Financing cash flows:
Proceeds from issuance of debt	—		397
Repayments of debt	(2	)	(2	)
Purchase of non-controlling interests	(15	)	(24	)
Shares withheld for taxes on vested units	(40	)	(20	)
Issuance of common stock	10		11
Dividends paid	(109	)	(102	)
Net cash (used for) provided by financing activities	(156	)	260
Investing cash flows:
Capital expenditures	(80	)	(69	)
Net sales of long-term investments	19		6
Proceeds from sales of fixed assets	1		1
Dispositions	110		—
Acquisitions (including amounts paid into escrow)	(197	)	(2	)
Other, net	5		2
Net cash used for investing activities	(142	)	(62	)
Effect of exchange rate changes on cash and cash equivalents	(61	)	(19	)
Decrease in cash and cash equivalents	(610	)	(271	)
Cash and cash equivalents at beginning of period	1,777		1,685
Cash and cash equivalents at end of period	$1,167		$1,414

The accompanying notes are an integral part of these consolidated statements.

MARSH & MCLENNAN COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(Unaudited)


For the Three Months Ended March 31, (In millions, except per share figures)	2010		2009
COMMON STOCK
Balance, beginning and end of year	$ 561		$ 561

ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year	$ 1,211		$ 1,246
Change in accrued stock compensation costs	(71	)	(31	)
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax deficiency	(16	)	4
Purchase of subsidiary shares from non-controlling interests	—		(36	)
Issuance of shares for acquisitions	(15	)	—
Balance, end of period	$ 1,109		$ 1,183

RETAINED EARNINGS
Balance, beginning of year	$ 7,033		$ 7,237
Net income attributable to MMC ^(a)	248		176
Dividend equivalents paid	(4	)	(3	)
Dividends declared – (per share amounts: $0.40 in 2010 and 2009)	(215	)	(208	)
Balance, end of period	$ 7,062		$ 7,202

ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance, beginning of year	$(2,171	)	$(2,098	)
Foreign currency translation adjustments ^(b)	(185	)	(43	)
Unrealized investment holding losses, net of reclassification adjustments ^(c)	(8	)	(4	)
Net changes under benefit plans, net of tax ^(d)	118		13
Balance, end of period	$(2,246	)	$(2,132	)

TREASURY SHARES
Balance, beginning of year	$ (806	)	$(1,223	)
Issuance of shares under stock compensation plans and employee stock purchase plans	105		69
Issuance of shares for acquisitions	192		—
Balance, end of period	$ (509	)	$(1,154	)

NON-CONTROLLING INTERESTS
Balance, beginning of year	$ 35		$ 38
Net Income attributable to non-controlling interests, net of discontinued operations ^(e)	4		4
Purchase of subsidiary shares from non-controlling interests	—		(8	)
Other changes	(2	)	—
Balance, end of period	$ 37		$ 34
TOTAL STOCKHOLDERS’ EQUITY	$ 6,014		$ 5,694
TOTAL COMPREHENSIVE INCOME (LOSS) ^(a+b+c+d+e)	$ 177		$ 146

The accompanying notes are an integral part of these consolidated statements.

MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Operations

Marsh & McLennan Companies, Inc. (“MMC”), a global professional services firm, is organized based on the different services that it offers. Under this organizational structure, MMC’s three business segments are: Risk and Insurance Services; Consulting; and Risk Consulting & Technology.

The Risk and Insurance Services segment provides risk management and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations, and private clients. MMC conducts business in this segment through Marsh and Guy Carpenter.

In February 2010, Marsh acquired Haake Companies, Inc., one of the largest insurance agencies in the Midwest. In March 2010, Marsh acquired Thomas Rutherfoord, Inc., one of the largest insurance broking firms in the Southeast and mid-Atlantic regions of the U.S. On April 1, 2010, Marsh completed the acquisition of HSBC Insurance Brokers Ltd., an international provider of risk intermediary and risk advisory services. On April 30, 2010, Marsh completed the acquisition of the Bostonian Group Insurance Agency, Inc. and Bostonian Solutions, Inc. (collectively the “Bostonian Group”), one of the largest regional insurance brokerages in New England.

The Consulting segment provides advice and services to the managements of organizations in the area of human resource consulting, comprising retirement and investments, health and benefits, outsourcing and talent; and strategy and risk management consulting, comprising management, economic and brand consulting. MMC conducts business in this segment through Mercer and Oliver Wyman Group.

The Risk Consulting & Technology segment provides various risk consulting and related risk mitigation services to corporate, government, institutional and individual clients, including consulting services and security services; and technology-enabled services. MMC conducts business in this segment through Kroll. In the first quarter of 2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”). The after-tax loss on this disposal is included in discontinued operations in 2010. The operating results of KLS have not been reclassified into discontinued operations, since the amounts are insignificant to MMC.

2. Principles of Consolidation and Other Matters

The consolidated financial statements included herein have been prepared by MMC pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to such rules and regulations for interim filings, although MMC believes that the information and disclosures presented are adequate to make such information and disclosure not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in MMC’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 10-K”).

The financial information contained herein reflects all adjustments consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of MMC’s results of operations for the three-month periods ended March 31, 2010 and 2009.

Effective January 1, 2009, the Company adopted retrospectively the new standards issued by the Financial Accounting Standards Board (“FASB”) affecting the calculation of earnings per share, Financial Accounting Standards Codification (“ASC”) Topic No. 260 (“Earnings per Share”) and the presentation of non-controlling interests (previously referred to as minority interests), ASC Topic No. 160 (“Non-controlling Interests”), which are described more fully in Notes 4 and 18 to the Consolidated Financial Statements.

The caption “Investment income (loss)” in the consolidated statements of income comprises realized and unrealized gains and losses from investments recognized in current earnings. It includes, when applicable, other than temporary declines in the value of available for sale securities and the change in value of MMC’s holdings in certain private equity funds. MMC’s investments may include direct investments in insurance or consulting companies and investments in private equity funds. Equity method losses of $1 million and $18 million are included in this line in 2010 and 2009, respectively.

MMC has an investment in Trident II limited partnership, a private equity investment fund. At March 31, 2010, MMC’s investment in Trident II was approximately $160 million, reflected in Other assets in the consolidated balance sheet. MMC’s maximum exposure to loss is equal to its investment plus any calls on its remaining capital commitment of $81 million. Since this fund is closed to new investments, none of the remaining capital commitment is expected to be called.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in the tax return. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and approximately $80 million within the next twelve months due to settlement of audits and expiration of statutes of limitation.

3. Fiduciary Assets and Liabilities

In its capacity as an insurance broker or agent, MMC collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. MMC also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims proceeds are held by MMC in a fiduciary capacity. Risk and Insurance Services revenue includes interest on fiduciary funds of $11 million and $15 million for the three-month periods ended March 31, 2010 and 2009, respectively. The Consulting segment recorded fiduciary interest income of $1 million in each of 2010 and 2009. Since fiduciary assets are not available for corporate use, they are shown in the consolidated balance sheets as an offset to fiduciary liabilities.

Fiduciary assets include approximately $449 million of fixed income securities classified as available for sale. Unrealized gains or losses from available for sale securities are recorded in other comprehensive income until the securities are disposed of, or mature. Unrealized gains, net of tax, at March 31, 2010 were $10 million.

Net uncollected premiums and claims and the related payables amounted to $9.5 billion at March 31, 2010 and $9.9 billion at December 31, 2009. MMC is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Net uncollected premiums and claims and the related payables are, therefore, not assets and liabilities of MMC and are not included in the accompanying consolidated balance sheets.

In certain instances, MMC advances premiums, refunds or claims to insurance underwriters or insureds prior to collection. These advances are made from corporate funds and are reflected in the accompanying consolidated balance sheets as receivables.

4. Per Share Data

Effective January 1, 2009, MMC adopted the guidance in ASC Topic No. 260 – 10 – 45 (“Earnings Per Share”) which applies to the calculation of earnings per share (“EPS”) for share-

based payment awards with rights to dividends or dividend equivalents. The guidance indicates that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of basic and dilutive EPS using the two-class method.

Basic net income per share attributable to MMC and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of MMC’s common stock.

Diluted net income per share attributable to MMC and income from continuing operations per share are calculated by dividing the respective after-tax income attributable to common shares by the weighted average number of outstanding shares of MMC’s common stock, which have been adjusted for the dilutive effect of potentially issuable common shares (excluding those that are considered participating securities). The diluted earnings per share calculation reflects the more dilutive effect of either (a) the two-class method that assumes that the participating securities have not been exercised or (b) the treasury stock method. Reconciliation of the applicable income components used for diluted earnings per share and basic weighted average common shares outstanding to diluted weighted average common shares outstanding is presented below.


Basic EPS Calculation Continuing Operations
For the Three Months Ended March 31, (In millions)	2010		2009
Net income from continuing operations	$	274	$	179
Less: Net income attributable to non-controlling interests		4		4
Net income from continuing operations attributable to MMC		270		175
Less: Portion attributable to participating securities		6		5
Net income attributable to common shares for basic earnings per share	$	264	$	170
Basic weighted average common shares outstanding		533		515


Basic EPS Calculation Net Income
For the Three Months Ended March 31, (In millions)	2010		2009
Net income attributable to MMC	$	248	$	176
Less: Portion attributable to participating securities		5		5
Net income attributable to common shares for basic earnings per share	$	243	$	171
Basic weighted average common shares outstanding		533		515


Diluted EPS Calculation Continuing Operations
For the Three Months Ended March 31, (In millions, except per share figures)	2010	2009
Net income from continuing operations	$ 274	$ 179
Less: Net income attributable to non-controlling interests	4	4
Net income from continuing operations attributable to MMC	270	175
Less: Portion attributable to participating securities	6	5
Net income attributable to common shares	$ 264	$ 170
Basic weighted average common shares outstanding	533	515
Dilutive effect of potentially issuable common shares	3	—
Diluted weighted average common shares outstanding	536	515
Average stock price used to calculate common stock equivalents	$22.83	$20.34


Diluted EPS Calculation Net Income
For the Three Months Ended March 31, (In millions, except per share figures)	2010	2009
Net income attributable to MMC	$ 248	$ 176
Less: Portion attributable to participating securities	5	5
Net income attributable to common shares	$ 243	$ 171
Basic weighted average common shares outstanding	533	515
Dilutive effect of potentially issuable common shares	3	—
Diluted weighted average common shares outstanding	536	515
Average stock price used to calculate common stock equivalents	$22.83	$20.34

There were 47.2 million and 48.1 million stock options outstanding as of March 31, 2010 and 2009, respectively.

5. Supplemental Disclosures to the Consolidated Statements of Cash Flows

The following schedule provides additional information concerning acquisitions, interest and income taxes paid for the three-month periods ended March 31, 2010 and 2009.


(In millions of dollars)	2010		2009
Assets acquired, excluding cash	$260		$2
Liabilities assumed	(36	)	—
Shares issued (7.4 million shares)	(178	)	—
Contingent purchase consideration	(55	)	—
Deferred purchase consideration	12		—
Subtotal	3		2
Cash paid into escrow for future acquisition	194		—
Net cash outflow for acquisitions	$197		$2



(In millions of dollars)	2010	2009
Interest paid	$86	$85
Income taxes paid	$69	$60

MMC had non-cash issuances of common stock under its share-based payment plan of $119 million and $75 million for the three months ended March 31, 2010 and 2009, respectively.

On March 31, 2010, MMC paid $194 million into an escrow fund for an acquisition that closed on April 1, 2010. This amount is included in other current assets in the consolidated balance sheet and is reported as an investing cash flow in the consolidated statement of cash flows.

6. Comprehensive Income (Loss)

The components of comprehensive income (loss) for the three-month periods ended March 31, 2010 and 2009 are as follows:


(In millions of dollars)	2010		2009
Foreign currency translation adjustments	$(185	)	$ (43	)
Unrealized investment holding losses, net of income taxes	(8	)	(4	)
Gains related to pension/retiree plans	118		13
Other comprehensive (loss)	(75	)	(34	)
Net income	252		180
Comprehensive income before non-controlling interests	177		146
Less: Comprehensive (loss) attributable to non-controlling interests	(4	)	(4	)
Comprehensive income attributable to MMC	$ 173		$142

7. Acquisitions

During the first quarter of 2010, MMC made two acquisitions in its Risk and Insurance Services segment. In February 2010, Marsh acquired Haake Companies, Inc., one of the largest independent insurance broking firms in the Midwest. In March 2010, Marsh acquired Thomas Rutherfoord, Inc., one of the largest insurance agencies in the Southeast and mid-Atlantic regions in the U.S. These acquisitions were made to expand Marsh’s share in the middle-market through Marsh & McLennan Agency.

Total purchase consideration for these two acquisitions was $253 million which consisted of cash paid of $20 million, the issuance of 7.4 million shares with a fair value of $178 million, and estimated contingent consideration of $55 million. Contingent consideration arrangements are primarily based on EBITDA and revenue targets over two to four years. The fair value of the contingent consideration was based on earnings projections of the acquired entities. Estimated fair values of assets acquired and liabilities assumed are subject to adjustment when purchase accounting is finalized.

The following table presents the preliminary allocation of the acquisition cost for Haake Companies, Inc. and Thomas Rutherfoord, Inc. to the assets acquired and liabilities assumed, based on their fair values (amounts in millions):


Cash		$ 20
MMC common shares		178
Contingent consideration		55
Total Consideration		$ 253
Allocation of purchase price:
Cash and cash equivalents		$ 29
Accounts receivable, net		8
Property, plant, and equipment		3
Other assets		9
Intangible assets		83
Goodwill		157
Total assets acquired		289
Current liabilities		7
Other liabilities		29
Total liabilities assumed		36
Net assets acquired		$253

Acquisitions Subsequent to the Balance Sheet Date

On April 1, 2010, Marsh completed the acquisition of HSBC Insurance Brokers Ltd. This transaction will deepen Marsh’s presence in the U.K., Hong Kong, Singapore, China and the Middle East. As part of that agreement, Marsh also entered into a strategic partnership with HSBC Bank, that gives MMC preferred access to provide insurance broking and risk management services to HSBC and their corporate and private clients. MMC paid $194 million into an escrow account on March 31, 2010 related to this acquisition, which is included in other current assets in the consolidated balance sheets. The funds were released from the escrow account on April 1, 2010 to complete the acquisition.

On April 30, 2010, Marsh & McLennan Agency acquired the Bostonian Group, one of the largest regional insurance brokerages in New England. This transaction will deepen Marsh’s middle market presence in the North East. MMC paid approximately $230 million for these two acquisitions.

In the first quarter of 2010, MMC paid deferred purchase consideration of $15 million related to the purchase in 2009 of the minority interest of a previously controlled entity.

Prior Year Acquisitions

In the first quarter of 2009, MMC’s Risk & Insurance Services segment acquired the remaining minority interest of a previously majority owned entity for total purchase consideration of $47 million. The accounting guidance requires that changes in a parent’s ownership interest while retaining financial controlling interest in a subsidiary be accounted for as an equity transaction. Stepping up the acquired assets to fair value or the recording of goodwill is no longer permitted. Therefore, MMC recorded a decrease to additional paid in capital in the first quarter of 2009 of $36 million related to this transaction. MMC also paid $2 million of contingent consideration in the first quarter of 2009 related to prior acquisitions.

8. Dispositions

In the first quarter of 2010, Kroll completed the sale of KLS. The after-tax loss on this disposal is included in discontinued operations in 2010. The operating results of KLS have not been reclassified into discontinued operations, since the amounts are immaterial to MMC.

In the second quarter of 2009, Kroll completed the sale of Kroll Government Services (“KGS”). The financial results of KGS for the first quarter of 2009 are included in discontinued operations. Discontinued operations in the first quarter of 2010 and 2009 also includes the accretion of interest related to an indemnity for uncertain tax positions provided as part of the purchase by Great West Lifeco Inc. of Putnam Investments Trust from MMC in August 2007.

Summarized Statements of Income data for discontinued operations is as follows:


	Three Months Ended March 31,
(In millions of dollars)	2010		2009
Revenue	$ —		$20
Income before provision for income tax	$ —		$ 6
Provision for income tax	—		2
Income from discontinued operations	—		4
Gain on disposal of discontinued operations	16		—
Provision for income tax	38		3
Net loss on disposal of discontinued operations, net of tax	(22	)	(3	)
Discontinued operations, net of tax	$(22	)	$ 1

9. Goodwill and Other Intangibles

MMC is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. MMC performs the annual impairment test for each of its reporting units during the third quarter of each year. Fair values of the reporting units are estimated using a market approach or a discounted cash flow model. Carrying values for the reporting units are based on balances at the prior quarter end and include directly identified assets and liabilities as well as an allocation of those assets and liabilities not recorded at the reporting unit level.

As previously reported, in the second quarter of 2009, Kroll completed the sale of KGS, its U.S. government security clearance screening business. As a result of the sale, MMC allocated goodwill between KGS (the portion of the reporting unit sold) and Kroll (the portion of the reporting unit retained), based on the relative fair value of the two portions. In addition, as required under GAAP, MMC evaluated the portion of the reporting unit retained for potential impairment. Fair value was estimated using a market approach, based on management’s latest projections and outlook for the businesses in the current environment. This fair value determination was categorized as level 3 in the fair value hierarchy. On the basis of the step one impairment test, MMC concluded that goodwill in the reporting unit was impaired. Due to the timing of the trigger event and subsequent completion of the step one test, MMC was unable to fully complete the required step two portion of the impairment assessment prior to the issuance of its second quarter 2009 financial statements. A step two impairment test, which under ASC Topic No. 350 (“Intangibles – Goodwill and Other”) is required to be completed after an impairment is indicated in a step one test, requires a complete re-valuation of all assets and liabilities of the reporting units in the same manner as a business combination. Based on a preliminary estimate of the step two assessment, MMC recorded a non-cash charge of $315 million in the second quarter of 2009 which represented management’s best estimate of the goodwill impairment at June 30, 2009. MMC finalized the second step of the goodwill assessment during the third quarter of 2009 and determined that no adjustment to the charge was required.

Other intangible assets that are not deemed to have an indefinite life are amortized over their estimated lives and reviewed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature.

Changes in the carrying amount of goodwill are as follows:


(In millions of dollars)	2010		2009
Goodwill recorded	$7,636		$7,365
Accumulated impairment losses	(855	)	(540	)
Balance as of January 1,	$6,781		$6,825
Goodwill acquired	157		2
Disposals	(72	)	—
Other adjustments ^(a)	(65	)	(1	)
Balance as of March 31,
Goodwill recorded	7,656		7,366
Accumulated Impairment losses	(855	)	(540	)
Balance at March 31	$6,801		$6,826

^(a)	Primarily foreign exchange.

Goodwill allocable to each of MMC’s reportable segments is as follows: Risk & Insurance Services, $4.1 billion; Consulting, $2.0 billion; and Risk Consulting & Technology, $0.7 billion.

Amortized intangible assets consist of the cost of client lists, client relationships and trade names acquired. The gross cost and accumulated amortization is as follows:

March 31, 2010

December 31, 2009

(In millions of dollars)

Gross

Cost

Accumulated

Amortization

Net

Carrying

Amount

Gross
Cost

Accumulated

Amortization

Net

Carrying

Amount

Amortized intangibles

$810

$361

$449

$749

$357

$392

Aggregate amortization expense for the three months ended March 31, 2010 and 2009 was $17 million and $16 million, respectively, and the estimated future aggregate amortization expense is as follows:


For the Years Ending December 31, (In millions of dollars)		Estimated Expense
2010		$ 55
2011		69
2012		65
2013		55
2014		44
Subsequent years		161
		$449

10. Fair Value Measurements

Fair Value Hierarchy

MMC has categorized its assets and liabilities that are valued at fair value on a recurring basis into a three-level fair value hierarchy as defined by the FASB in ASC Topic No. 820 (“Fair Value Measurements and Disclosures”). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Assets and liabilities recorded in the consolidated balance sheets at fair value are categorized based on the inputs in the valuation techniques as follows:

Lev e l 1.

Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market (examples include active exchange-traded equity securities, most U.S. Government and agency securities, money market mutual funds and certain other sovereign government obligations).

Level 2.

Assets and liabilities whose values are based on the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);

Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including interest rate and currency swaps); and

Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full asset or liability (for example, certain mortgage loans).

Level 3 .

Assets and liabilities whose values are based on prices, or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability (examples include private equity investments, certain commercial mortgage whole loans, and long-dated or complex derivatives including certain foreign exchange options and long-dated options on gas and power).

Valuation Techniques

Equity Securities & Mutual Funds

Investments for which market quotations are readily available are valued at the sale price on their principal exchange, or official closing bid price for certain markets. If no sales are reported, the security is valued at its last reported bid price.

Other Sovereign Government Obligations, Municipal Bonds and Corporate Bonds

The investments listed in the caption above are valued on the basis of valuations furnished by an independent pricing service approved by the trustees or dealers selected by Putnam Investment Management LLC (“Putnam Management”), manager of the Putnam mutual funds, a wholly owned subsidiary of Putnam LLC. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities.

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2010 and December 31, 2009.


(In millions of dollars)	Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total
	3/31/10	12/31/09	3/31/10	12/31/09	3/31/10	12/31/09	3/31/10	12/31/09
Assets:
Financial instruments owned:
Exchange traded equity securities ^(a)	$ 1	$ 10	$ —	$ —	$—	$—	$ 1	$ 10
Mutual funds ^(a)	135	141	—	—	—	—	135	141
Medium term bond funds and fixed income securities ^(a)	—	—	—	6	—	—	—	6
Money market funds ^(b)	34	448	—	—	—	—	34	448
Total assets measured at fair value	$170	$599	$ —	$ 6	$—	$—	$170	$605
Fiduciary Assets:
State and local obligations (including non U.S. locales)	$ —	$ —	$120	$161	$—	$—	$120	$161
Other sovereign government obligations and supranational agencies	—	—	288	370	—	—	288	370
Corporate and other debt	—	—	41	46	—	—	41	46
Money market funds	253	235	—	—	—	—	253	235
Total fiduciary assets measured at fair value	$253	$235	$449	$577	$—	$—	$702	$812

(a)	Included in other assets in the consolidated balance sheets.

(b)	Included in cash and cash equivalents in the consolidated balance sheets.

At March 31, 2010, there were no assets that transferred between Level 1 and Level 2 from December 31, 2009.

11. Retirement Benefits

MMC maintains qualified and non-qualified defined benefit pension plans for its U.S. and non-U.S. eligible employees. MMC’s policy for funding its tax qualified defined benefit retirement plans is to contribute amounts at least sufficient to meet the funding requirements set forth by U.S. law and the laws of the non-U.S. jurisdictions in which MMC offers defined benefit plans.

The target asset allocation for the U.S. Plan is 65% equities and 35% fixed income. At the end of the first quarter of 2010, the actual allocation for the U.S. Plan was 69% equities and 31% fixed income. The target asset allocation for the U.K. Plan, which comprises approximately 83% of non-U.S. Plan assets, is 58% equities and 42% fixed income. At the end of the first quarter of 2010, the actual allocation of assets for the U.K. Plan was 58% equities and 42% fixed income.

The components of the net periodic benefit cost for defined benefit and other postretirement plans are as follows:



Combined U.S. and significant non-U.S. Plans For the Three Months Ended March 31,	Pension Benefits				Postretirement Benefits
(In millions of dollars)	2010		2009		2010		2009
Service cost	$ 50		$ 46		$ 1		$ 1
Interest cost	145		130		3		4
Expected return on plan assets	(204	)	(187	)	—		—
Amortization of prior service credit	(5	)	(12	)	(3	)	(3	)
Recognized actuarial loss	35		17		—		—
Net periodic benefit cost (credit)	$ 21		$ (6	)	$ 1		$ 2

U.S. Plans only For the Three Months Ended March 31,	Pension Benefits				Postretirement Benefits
(In millions of dollars)	2010		2009		2010		2009
Service cost	$ 19		$ 20		$ 1		$ 1
Interest cost	56		54		2		3
Expected return on plan assets	(73	)	(73	)	—		—
Amortization of prior service credit	(4	)	(12	)	(3	)	(3	)
Recognized actuarial loss	17		13		—		—
Net periodic benefit cost	$ 15		$ 2		$—		$ 1

Significant non-U.S. Plans only For the Three Months Ended March 31,	Pension Benefits				Postretirement Benefits
(In millions of dollars)	2010		2009		2010		2009
Service cost	$ 31		$ 26		$—		$—
Interest cost	89		76		1		1
Expected return on plan assets	(131	)	(114	)	—		—
Amortization of prior service cost	(1	)	—		—		—
Recognized actuarial loss	18		4		—		—
Net periodic benefit cost (credit)	$ 6		$ (8	)	$ 1		$ 1

The weighted average actuarial assumptions utilized to calculate the net periodic benefit costs for the U.S. and significant non-U.S. defined benefit plans are as follows:


Combined U.S. and significant non-U.S. Plans	Pension Benefits				Postretirement Benefits
	2010		2009		2010		2009
Weighted average assumptions:
Expected return on plan assets	8.1	%	8.2	%	—		—
Discount rate	6.0	%	6.5	%	6.3	%	6.7	%
Rate of compensation increase	4.2	%	3.7	%	—		—

MMC made $59 million of contributions to its U.S. non-qualified and non-U.S. pension plans in the first quarter of 2010 and expects to contribute approximately $216 million for the remainder of 2010 for these plans.

12. Debt

MMC’s outstanding debt is as follows:


(In millions of dollars)	March 31, 2010	December 31, 2009
Short-term:
Current portion of long-term debt	$ 558	$ 558

Long-term:
Senior notes – 6.25% due 2012 (5.1% effective interest rate)	$ 255	$ 255
Senior notes – 4.850% due 2013	250	249
Senior notes – 5.875% due 2033	296	296
Senior notes – 5.375% due 2014	648	648
Senior notes – 5.15% due 2010	549	549
Senior notes – 5.75% due 2015	746	747
Senior notes – 9.25% due 2019	398	398
Mortgage – 5.70% due 2035	445	447
Other	3	3
	3,590	3,592
Less current portion	558	558
	$3,032	$3,034

On October 23, 2009, MMC and certain of its foreign subsidiaries entered into a new $1.0 billion multi-currency three-year unsecured revolving credit facility, which replaced the $1.2 billion facility discussed below. The interest rate on this facility varies based upon MMC’s credit ratings and MMC’s credit default swap levels subject to floors and caps. The facility requires MMC to maintain certain coverage and leverage ratios which are tested quarterly. There were no borrowings outstanding under this facility at March 31, 2010.

MMC and certain of its foreign subsidiaries previously maintained a $1.2 billion multi-currency five-year revolving credit facility. The facility was previously due to expire in December 2010 and was in effect until October 2009. There were no borrowings outstanding under this facility at the time it was terminated.

13. Restructuring Costs

MMC recorded total restructuring costs of $9 million in the first quarter of 2010, that are primarily in connection with actions initiated in prior years, due to adjustments to the estimated future rent and real estate costs related to previously vacated space. During the first quarter of 2010, MMC made $53 million of payments related to its restructuring plans. As of March 31, 2010, the remaining liability for these initiatives was $215 million, primarily related to future severance and benefit payments ($45 million) and future lease agreements ($133 million).

The expenses associated with the above initiatives are included in compensation and benefits and other operating expenses in the consolidated statements of income. The liabilities associated with these initiatives are classified on the consolidated balance sheets as Accounts payable, Other liabilities, or Accrued compensation, depending on the nature of the items.

14. Financial Instruments

The estimated fair value of MMC’s significant financial instruments is provided below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that MMC would realize

upon disposition, nor do they indicate MMC’s intent or need to dispose of the financial instrument.


	March 31, 2010		December 31, 2009
(In millions of dollars)	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Cash and cash equivalents	$1,167	$1,167	$1,777	$1,777
Long-term investments	$ 92	$ 87	$ 109	$ 102
Short-term debt	$ 558	$ 566	$ 558	$ 572
Long-term debt	$3,032	$3,169	$3,034	$3,174

Cash and Cash Equivalents : The estimated fair value of MMC’s cash and cash equivalents approximates their carrying value.

Long-term Investments : Long-term investments include available for sale securities recorded at quoted market prices, certain investments carried at cost and unrealized gains related to available for sale investments in insurance fiduciary funds as discussed below.

MMC has certain long-term investments, for which there are no readily available market prices, amounting to $54 million and $53 million at March 31, 2010 and December 31, 2009, respectively, which are carried on a cost basis. These investments are included in Other assets in the consolidated balance sheets. MMC monitors these investments for impairment and makes appropriate reductions in carrying values when necessary.

MMC had available for sale securities with an aggregate fair value of $24 million and $38 million at March 31, 2010 and December 31, 2009, respectively, which are carried at market value under ASC Topic No. 320. MMC had gross unrealized gains (pre-tax) on these securities of $8 million and $15 million included in accumulated other comprehensive income at March 31, 2010 and December 31, 2009, respectively. MMC recorded the following net unrealized gains and (losses) related to its available for sale securities for the three-month periods ended March 31, 2010 and 2009.


(In millions of dollars)	2010	2009
Net unrealized gains (losses) pre-tax	$—	$(2	)

These amounts have been excluded from earnings and reported, net of deferred income taxes, in accumulated other comprehensive income (loss), which is a component of stockholders’ equity.

MMC has a portion of insurance fiduciary funds described in Note 3, that are invested in high quality debt securities and classified as available for sale. Gross unrealized gains (pre-tax) on these securities that are included in other assets and accumulated other comprehensive income in the consolidated balance sheets was $14 million and $17 million at March 31, 2010 and December 31, 2009, respectively. MMC had no gross unrealized gains on these securities for the three months ended March 31, 2010 and 2009, respectively. For the three months ended March 31, 2010 and 2009, MMC recorded net unrealized losses (pre-tax) of $3 million and $1 million, respectively, related to these investments. These amounts have been excluded from earnings and reported, net of deferred income taxes, in accumulated other comprehensive income (loss), which is a component of stockholders’ equity.

Proceeds and realized gains from the sale of available for sale investments were as follows:


(In millions of dollars)	Three Months Ended March 31,
	2010	2009
Proceeds from the sale of available for sale securities	$14	$ 3
Realized gains on the sale of available for sale securities	$ 8	$—

The cost of securities sold is determined using the average cost method for equity securities.

MMC also holds investments in certain private equity fund partnerships which are accounted for using the equity method and other investments that are held at cost. MMC recorded the following gains (losses) related to these investments:


(In millions of dollars)	Three Months Ended March 31,
	2010		2009
Equity method (losses)	$(1	)	$(18	)
Gains on cost method investments	1		3
Gains (losses) from equity and cost method investments	—		(15	)
Realized gains on available for sale securities	8		—
Investment income (loss)	$ 8		$(15	)

Short-term and Long-term Debt : The fair value of MMC’s short-term debt, which consists primarily of term debt maturing within the next year, approximates its carrying value. The estimated fair value of MMC’s long-term debt is based on discounted future cash flows using current interest rates available for debt with similar terms and remaining maturities.

15. Common Stock

MMC did not purchase any treasury shares in 2010 or 2009.

16. Claims, Lawsuits and Other Contingencies

Governmental Inquiries and Claims

In December 2007, the Alaska Retirement Management Board filed a civil lawsuit against Mercer (US) Inc. in Alaska state court. Plaintiff, represented by the Alaska Law Department (through the Alaska Attorney General) and the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, filed an amended complaint in May 2009. The amended complaint alleges professional negligence and malpractice, breach of contract, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, unfair trade practices and fraud and misrepresentation related to actuarial services that Mercer provided to the Alaska Division of Retirement and Benefits relating to two State pension and benefit plans, the Alaska Public Employees Retirement System and the Alaska Teachers Retirement System. The amended complaint seeks damages of “at least $2.8 billion” plus treble damages related to the unfair trade practices claim, punitive damages, attorneys’ fees, costs and interest. Mercer filed a motion to dismiss the amended complaint, which was denied in December 2009. Mercer has filed other pre-trial motions that are pending. Trial is scheduled for July 2010 in Juneau, Alaska.

In October 2007, the State of Connecticut brought a civil action against Guy Carpenter in Connecticut state court alleging that Guy Carpenter violated the state’s antitrust and

unfair trade practices laws by engaging in allocation of markets, price-fixing and other allegedly improper conduct by taking part in the operation of several reinsurance facilities over a period of decades. An amended complaint was filed in October 2009. The amended complaint alleges damages to Guy Carpenter’s insurance company clients and their customers, as well as to the general economy of Connecticut, and seeks monetary damages, civil penalties, attorneys’ fees, costs and injunctive and other equitable relief. Discovery is underway in this matter.

Our activities are regulated under the laws of the United States and its various states, the European Union and its member states, and the other jurisdictions in which we operate. In the ordinary course of business, in addition to private party lawsuits, we may be subject to investigations, lawsuits and/or other regulatory actions undertaken by governmental authorities.

Errors and Omissions Claims

MMC and its subsidiaries are subject to a significant number of other claims, lawsuits and proceedings in the ordinary course of business. Such claims and lawsuits consist principally of alleged errors and omissions in connection with the performance of professional services. Certain of these claims, including the action filed against Mercer by the Alaska Retirement Management Board described above, seek damages, including punitive and treble damages, in amounts that could, if awarded, be significant. In establishing liabilities for errors and omissions claims in accordance with FASB ASC Subtopic No. 450-20 (Contingencies—Loss Contingencies), MMC utilizes internal actuarial and other estimates, and case level reviews by inside and outside counsel. A liability is established when a loss is both probable and reasonably estimable. The liability is reviewed quarterly and adjusted as developments warrant. In many cases, including the lawsuit brought by the Alaska Retirement Management Board against Mercer, MMC has not recorded a liability, other than for legal fees to defend the claim, because MMC is unable, at the present time, to make a determination that a loss is both probable and reasonably estimable.

To the extent that expected losses exceed MMC’s deductible in any policy year, MMC also records an asset for the amount that MMC expects to recover under any available third-party insurance programs. MMC has varying levels of third-party insurance coverage, with policy limits and coverage terms varying significantly by policy year. MMC is not aware of coverage defenses or other obstacles to coverage that would limit recoveries through policy year 2001-2002 in a material amount. From 2002 to 2008, the availability of third-party insurance declined significantly, such that the Company has, for example, only limited third-party insurance for the lawsuit brought by the Alaska Retirement Management Board against Mercer.

Brokerage Compensation Practices Settlement and Related Actions

In January 2005, MMC and its subsidiary Marsh Inc. entered into a settlement agreement with the New York State Attorney General (“NYAG”) and the New York State Insurance Department to settle a civil complaint and related citation alleging that Marsh’s use of market service agreements with various insurance companies entailed fraudulent business practices, bid-rigging, illegal restraint of trade and other statutory violations. The parties subsequently entered into an amended and restated settlement agreement in February 2010. The new agreement helps restore a level playing field for Marsh, allowing Marsh to compete on the same terms as other intermediaries in the insurance industry.

Following the filing of the NYAG complaint in October 2004, various state regulators and

attorneys general initiated investigations relating to the conduct alleged in that complaint. MMC and Marsh have entered into settlements with authorities in ten of those states. One action filed in August 2007 by the Attorney General of the State of Ohio against MMC, Marsh, certain Marsh subsidiaries and other parties remains pending.

Numerous private party lawsuits based on similar allegations to those made in the NYAG complaint were commenced against MMC, one or more of its subsidiaries, and their current and former directors and officers. The status of the lawsuits that remain outstanding is as follows:

In February 2009, the trial court approved a settlement of the claims against MMC, Marsh and certain Marsh subsidiaries in two consolidated putative class actions that were pending in the U.S. District Court for the District of New Jersey (one on behalf of a purported class of “commercial” policyholders and the second on behalf of a purported class of “employee benefit” policyholders). The court’s approval of the settlement has been appealed. In addition, ten actions instituted by individual policyholders against MMC, Marsh and certain Marsh subsidiaries are pending in federal and state courts; and one putative class action against these parties is pending in Canada.

On December 22, 2009, an agreement was reached to settle shareholder derivative actions that were pending against certain of MMC’s current and former directors and officers in the Court of Chancery of the State of Delaware and the U.S. District Court for the Southern District of New York. These actions alleged, among other things, breach of fiduciary duties with respect to the alleged misconduct described in the NYAG complaint, and that the defendants were liable for and must contribute to or indemnify MMC for any related damages suffered by MMC. On March 25, 2010, the Delaware Court of Chancery approved the settlement and related award of attorneys’ fees.

MMC, Marsh and certain Marsh subsidiaries were named as additional defendants in a shareholder derivative suit pending in the Delaware Court of Chancery against the directors and officers of American International Group, Inc. (“AIG”) and others. The suit alleged that MMC, Marsh and the Marsh subsidiaries engaged in conspiracy and fraud with respect to the alleged misconduct described in the NYAG complaint, and that they aided and abetted current and former directors and officers of AIG in breaching their fiduciary duties to AIG with respect to AIG’s participation in the alleged misconduct. In June 2009, the Delaware court granted a motion to dismiss all claims against MMC and the Marsh defendants. An appeal of this dismissal is currently pending in the Delaware Supreme Court.

Other Contingencies—Guarantees

In connection with its acquisition of U.K.-based Sedgwick Group in 1998, MMC acquired several insurance underwriting businesses that were already in run-off, including River Thames Insurance Company Limited (“River Thames”), which MMC sold in 2001. Sedgwick guaranteed payment of claims on certain policies underwritten through the Institute of London Underwriters (the “ILU”) by River Thames. The policies covered by this guarantee are reinsured up to £40 million by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by segregated assets held in a trust. As of March 31, 2010, the reinsurance coverage exceeded the best estimate of the projected liability of the policies covered by the guarantee. To the extent River Thames or the reinsurer is unable to meet its obligations under those policies, a claimant may seek to recover from MMC under the guarantee.

From 1980 to 1983, MMC owned indirectly the English & American Insurance Company (“E&A”), which was a member of the ILU. The ILU required MMC to guarantee a portion of E&A’s obligations. After E&A became insolvent in 1993, the ILU agreed to discharge the guarantee in exchange for MMC’s agreement to post an evergreen letter of credit that is available to pay claims by policyholders on certain E&A policies issued through the ILU and incepting between July 3, 1980 and October 6, 1983. Certain claims have been paid under the letter of credit and MMC anticipates that additional claimants may seek to recover against the letter of credit.

Putnam-related Matters

Under the terms of a stock purchase agreement with Great-West Lifeco Inc. (“GWL”) related to GWL’s purchase of Putnam Investments Trust from MMC in August 2007, a copy of which was included as an exhibit to MMC’s Current Report on Form 8-K filed on February 1, 2007, MMC agreed to indemnify GWL with respect to certain Putnam-related litigation and regulatory matters. The consolidated federal actions pending in the District of Maryland, described below, are based on similar allegations as those at issue in Putnam’s 2003 and 2004 settlements with the SEC and the Commonwealth of Massachusetts regarding excessive short-term trading by certain former Putnam employees in shares of the Putnam mutual funds (the “Putnam Funds”), and directly involve MMC and/or may be subject to MMC’s indemnification obligations.

Two putative class actions by investors in certain Putnam Funds are pending against Putnam. The first action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Section 36(b) of the Investment Company Act of 1940. The second action purports to assert derivative claims on behalf of all Putnam Funds under Section 36(b) of the Investment Company Act. Both suits seek to recover unspecified damages allegedly suffered by the Putnam Funds and their investors as a result of purported market-timing and late trading activity in certain Putnam Funds. In the first action, the parties entered into a settlement agreement. The agreement is subject to approval by the district court. In the derivative action, the court denied Putnam’s motion for summary judgment.

MMC, Putnam and certain of their current and former officers, directors and employees were defendants in two purported ERISA class actions, one brought by participants in an MMC retirement plan and the other brought by participants in a Putnam retirement plan. The actions alleged, among other things, that, in view of the market-timing that was allegedly allowed to occur at Putnam, the investment of the plans’ funds in MMC stock and the Putnam Funds was imprudent and constituted a breach of fiduciary duties to plan participants. Both actions sought unspecified damages and equitable relief. The parties settled both matters in March 2010 for a nominal amount, and the Court dismissed the actions on April 14, 2010. The settlement resolves all of the claims in both actions against MMC, Putnam, and the named individuals.

The pending proceedings and other matters described in this Note 16 on Claims, Lawsuits and Other Contingencies may expose MMC or its subsidiaries to liability for significant monetary damages and other forms of relief. Where a loss is both probable and reasonably estimable, MMC establishes liabilities in accordance with FASB ASC Subtopic No. 450-20 (Contingencies – Loss Contingencies). Except as described above, MMC is not able at this time to provide a reasonable estimate of the range of possible loss attributable to these matters or the impact they may have on MMC’s consolidated results of operations, financial position or cash flows. This is primarily because these matters are still developing and involve complex issues subject to inherent uncertainty. Adverse determinations in one or more of these matters, particularly the action filed against Mercer by the Alaska Retirement Management Board, could have a material impact on MMC’s consolidated results of operations, financial condition or cash flows in a future period.

17. Segment Information

MMC is organized based on the types of services provided. Under this organizational structure, MMC’s business segments are:

Risk and Insurance Services , comprising insurance services (Marsh) and reinsurance services (Guy Carpenter);

Consulting , comprising Mercer and Oliver Wyman Group; and

Risk Consulting & Technology , which is comprised of Kroll.

The accounting policies of the segments are the same as those used for the consolidated financial statements described in Note 1 to MMC’s 2009 10-K. Segment performance is evaluated based on segment operating income, which includes directly related expenses, and charges or credits related to integration and restructuring but not MMC corporate-level expenses. Revenues are attributed to geographic areas on the basis of where the services are performed.

Selected information about MMC’s operating segments for the three-month periods ended March 31, 2010 and 2009 follows:


	Three Months Ended March 31,
(In millions of dollars)	Revenue		Operating Income (Loss)
2010 –
Risk and Insurance Services	$1,492	^(a)	$ 347
Consulting	1,155	^(b)	116
Risk Consulting & Technology	162	^(c)	16
Total Operating Segments	2,809		479
Corporate Eliminations	(14	)	(40	)
Total Consolidated	$2,795		$439
2009 –
Risk and Insurance Services	$1,372	^(a)	$ 297
Consulting	1,083	^(b)	73
Risk Consulting & Technology	167	^(c)	4
Total Operating Segments	2,622		374
Corporate Eliminations	(13	)	(50	)
Total Consolidated	$2,609		$ 324

^(a)	Includes inter-segment revenue of $2 million in each of 2010 and 2009, interest income on fiduciary funds of $11 million and $15 million in 2010 and 2009, respectively, and equity method income of $1 million and $2 million in 2010 and 2009, respectively.

^(b)	Includes inter-segment revenue of $11 million and $10 million in 2010 and 2009, respectively, and interest income on fiduciary funds of $1 million in each of 2010 and 2009.

^(c)	Includes inter-segment revenue of $1 million in each of 2010 and 2009.

Details of operating segment revenue for the three-month periods ended March 31, 2010 and 2009 is as follows:


	Three Months Ended March 31,
(In millions of dollars)	2010		2009
Risk and Insurance Services
Marsh	$1,175		$1,088
Guy Carpenter	317		284
Total Risk and Insurance Services	1,492		1,372
Consulting
Mercer	849		803
Oliver Wyman Group	306		280
Total Consulting	1,155		1,083
Risk Consulting & Technology
Kroll	162		167
Corporate Advisory and Restructuring	—		—
Total Risk Consulting & Technology	162		167
Total Operating Segments	2,809		2,622
Corporate Eliminations	(14	)	(13	)
Total	$2,795		$2,609

18. New Accounting Pronouncements

Effective January 1, 2009, MMC adopted the guidance for calculating EPS using the two-class method with retroactive application to prior periods. The impact of adopting the guidance is discussed in Note 4 to the consolidated financial statements.

Effective January 1, 2009, the Company adopted the new guidance issued by the FASB for Business Combinations. The guidance requires entities in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose all information needed by investors and other users to evaluate and understand the nature and financial effect of the business combination.

Effective January 1, 2009, the Company adopted the new guidance issued by the FASB for Consolidation – Non-controlling Interests, which did not have a material impact on our financial condition, results of operations or cash flows. However, it did impact the presentation and disclosure of non-controlling (minority) interests in our consolidated financial statements. The effects of this change are reflected herein.

The new guidance also requires adjustment of net income to include the net income attributable to the non-controlling interests and a new separate caption for net income attributable to MMC to be presented in the consolidated statement of earnings.

In February 2008, the FASB issued guidance related to Fair Value Measurements which delayed until the second quarter of 2009, fair value measurement for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company has applied the provision of this new guidance to its financial statement disclosures beginning in the second quarter of 2009.

On April 1, 2009, the FASB issued guidance for “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”, to address application issues raised by preparers, auditors and attorneys. The guidance requires recognition of

contingent assets or liabilities (arising from a business combination contingency) at fair value, at the acquisition date if the acquisition-date fair value of the asset or liability can be determined during the measurement period, or if certain criteria are met. Otherwise, the acquirer should not recognize an asset or liability as of the acquisition date. The guidance is effective for business combinations occurring on or after January 1, 2009. This new guidance did not have a material impact on MMC’s financial condition or reported results.

In the second quarter of 2009, MMC adopted the guidance issued by the FASB for interim disclosures about fair value of financial instruments. The guidance, which is effective for interim periods ending after June 15, 2009, requires disclosures about the fair values of financial instruments in interim period reports of publicly traded companies as well as in annual financial statements. The adoption of this guidance did not have a material impact on MMC’s financial condition or reported results.

In the second quarter of 2009, MMC adopted the guidance issued by the FASB for Recognition and Presentation of Other-Than-Temporary Impairments. It amends GAAP guidance including SEC SAB Topic 5M and other authoritative literature that allow the holders of debt securities not to recognize other than temporary impairments based on their intent and ability to hold a security until recovery in fair value to its amortized cost. The other-than-temporary impairment model applies only to debt securities and not equity securities. The guidance requires recognition of a credit loss (the difference between the present value of cash flows expected to be collected and the amortized cost basis) through earnings. The guidance is effective for interim and annual periods ending after June 15, 2009. The adoption of this guidance did not have a material impact on MMC’s financial condition or reported results.

In December 2008, the FASB issued guidance for Employers’ Disclosures About Pension and Other Post Retirement Benefit Plan Assets. The guidance requires fair value plan asset disclosures for an employer’s assets in defined benefit pension and postretirement plans similar to the guidance on Fair Value Measurements, as well as (a) how investment allocation decisions are made, (b) the major categories of plan assets, and (c) significant concentrations of risk within plan assets. The guidance is effective for fiscal years ending after December 15, 2009. The Company has applied the provision of this new guidance to its financial statement disclosures beginning December 31, 2009.

In December 2009, the FASB issued new guidance related to the Consolidation of Variable Interest Entities (“VIE”) and transfer of assets. The new guidance focuses on ‘controlling financial interests’ and requires companies to perform qualitative analysis to determine whether they must consolidate a VIE by assessing whether the variable interests give them controlling financial interests in the VIE. This guidance is effective for transfers occurring on or after November 15, 2009. Provisions must be applied in annual reporting periods beginning after November 15, 2009 and interim periods within that annual period. The adoption of the guidance did not have a material impact on the Company’s financial statements. Also effective January 1, 2010, the Company adopted new guidance that indefinitely defers the above changes relating to the Company’s interests in entities that have all the attributes of an investment company or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those applied by an investment company. As a result of the deferral, the above guidance did not apply to certain investment management trusts managed by Mercer.

In January 2010, the FASB issued new guidance that adds additional disclosures about transfers into and out of Levels 1 and 2 items and separate disclosures about purchases, sales, issuances, and settlements related to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. Further, the new guidance amends the requirements on employer’s disclosures about postretirement benefit plan assets to require disclosures be provided by classes of assets instead of by major categories of assets. This guidance is effective for the first reporting period beginning after December 31, 2009, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010. The adoption of the guidance did not have a material impact on the Company’s financial statements.

In October 2009, the FASB amended its guidance on revenue recognition regarding multiple-deliverable revenue arrangements. The guidance is effective prospectively for arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is evaluating the impact of adopting this new guidance.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Marsh & McLennan Companies, Inc. and Subsidiaries (“MMC”) is a global professional services firm providing advice and solutions in the areas of risk, strategy, and human capital. MMC’s subsidiaries include Marsh, which provides risk and insurance services; Guy Carpenter, which provides reinsurance services; Mercer, which provides human resource and related financial advice and services; Oliver Wyman Group, which provides management consulting and other services; and Kroll, which provides risk consulting and technology services. MMC’s approximately 52,000 employees worldwide provide analysis, advice and transactional capabilities to clients in over 100 countries.

MMC’s business segments are based on the services provided. Risk and Insurance Services includes risk management and insurance and reinsurance broking and services, provided primarily by Marsh and Guy Carpenter. Consulting, which comprises the activities of Mercer and Oliver Wyman Group, includes human resource consulting and related investment and outsourcing services, and specialized management, economic and brand consulting services. Risk Consulting & Technology, conducted through Kroll, includes risk consulting and related investigative, intelligence, financial, security and technology services.

In February 2010, Marsh acquired Haake Companies, Inc., one of the largest independent insurance agencies in the Midwest. In March 2010, Marsh completed the acquisition of Thomas Rutherfoord, Inc., one of the largest insurance broking firms in the Southeast and mid-Atlantic regions of the U.S. In the first quarter of 2010, Kroll completed the sale of Kroll Laboratory Specialists (“KLS”). The net after-tax loss on this disposal is included in discontinued operations in 2010. KLS’s operating results have not been reclassified to discontinued operations, since the amounts are immaterial to MMC. During the second quarter of 2009, Kroll sold KGS. KGS’s results of operations for 2009 are included in discontinued operations.

In April 2009, Guy Carpenter completed the acquisition of John B. Collins Associates, Inc., previously the fifth-largest reinsurance intermediary in the U.S. and seventh-largest in the world. In September 2009, Marsh acquired International Advisory Services Ltd., the largest independent manager of captives and third-party insurance companies in Bermuda. In December 2009, Marsh acquired the NIA Group, LLC, one of the largest, independent insurance agencies in the Northeast and the 34 ^th largest agency in the U.S. In October 2009, Guy Carpenter completed the acquisition of London-based specialty reinsurance broker Rattner Mackenzie Limited from HCC Insurance Holdings, Inc.

A reconciliation of segment operating income to total operating income is included in Note 17 to the consolidated financial statements included elsewhere in this report. The accounting policies used for each segment are the same as those used for the consolidated financial statements.

This MD&A contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See “Information Concerning Forward-Looking Statements” at the outset of this report.

Consolidated Results of Operations


(In millions, except per share figures)	2010		2009
Revenue	$2,795		$2,609
Expense:
Compensation and Benefits	1,650		1,571
Other Operating Expenses	706		714
Operating Expense	2,356		2,285
Operating Income	$ 439		$ 324
Income from Continuing Operations	$ 274		$ 179
Discontinued Operations, net of tax	(22	)	1
Net Income before Non-controlling Interests	$ 252		$ 180
Net Income Attributable to MMC	$ 248		$ 176
Income from Continuing Operations Per Share:
Basic	$ 0.50		$ 0.33
Diluted	$ 0.46		$ 0.33
Net Income Per Share:
Basic	$ 0.49		$ 0.33
Diluted	$ 0.45		$ 0.33
Weighted Average Number of Shares Outstanding:
Basic	533		515
Diluted	536		515
Shares outstanding at March 31,	541		517

MMC reported consolidated operating income of $439 million in the first quarter of 2010 compared with operating income of $324 million in the prior year. The results include a $50 million increase in Risk and Insurance Services’ operating income, a $43 million increase in the Consulting segment and a $12 million increase in the Risk Consulting & Technology segment. The operating results were also impacted by lower restructuring and related charges in 2010, primarily in the Risk and Insurance Services segment and Corporate.

The devaluation of Venezuela’s bolivar currency in January of 2010 did not have a material impact on MMC’s results of operations or financial position.

Consolidated Revenue and Expense

MMC conducts business in many countries, as a result of which the impact of foreign exchange rate movements may distort period-to-period comparisons of revenue. Similarly, the revenue impact of acquisitions and dispositions, including transfers among businesses, may impact period-to-period comparisons of revenue. Underlying revenue measures the change in revenue from one period to another by isolating these impacts. The impact of foreign currency exchange fluctuations and acquisitions and dispositions, including transfers among businesses, on MMC’s operating revenues by segment is as follows:


	Three Months Ended March 31,						Components of Revenue Change*
	Three Months Ended March 31,				% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
(In millions of dollars)	2010		2009		% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue

Risk and Insurance Services
Marsh	$ 1,166		$ 1,076		8	%	6	%	2	%	0	%
Guy Carpenter	315		281		12	%	3	%	9	%	1	%
Subtotal	1,481		1,357		9	%	5	%	4	%	0	%
Fiduciary Interest Income	11		15		(28	)%	7	%	—		(35	)%
Total Risk and Insurance Services	1,492		1,372		9	%	5	%	4	%	0	%
Consulting
Mercer	849		803		6	%	7	%	—		(1	)%
Oliver Wyman Group	306		280		10	%	4	%	—		6	%
Total Consulting	1,155		1,083		7	%	6	%	—		1	%
Risk Consulting & Technology
Kroll	162		167		(3	)%	2	%	(3	)%	(2	)%
Corporate Advisory and Restructuring	—		—		—		—		—		—
Total Risk Consulting & Technology	162		167		(3	)%	2	%	(3	)%	(2	)%
Corporate Eliminations	(14	)	(13	)
Total Revenue	$ 2,795		$ 2,609		7	%	5	%	2	%	0	%

*	Components of revenue change may not add across due to rounding.

The following table provides more detailed revenue information for certain of the components presented above:


	Three Months Ended March 31,				Components of Revenue Change*
	Three Months Ended March 31,		% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue
(In millions of dollars)	2010	2009	% Change GAAP Revenue		Currency Impact		Acquisitions/ Dispositions Impact		Underlying Revenue

Marsh:
EMEA	$ 527	$ 500	5	%	7	%	(1	)%	(1	)%
Asia Pacific	99	86	14	%	14	%	(2	)%	2	%
Latin America	52	47	10	%	9	%	(2	)%	3	%
Total International	678	633	7	%	8	%	(1	)%	0	%
U.S. / Canada	488	443	10	%	2	%	7	%	1	%
Total Marsh	$1,166	$1,076	8	%	6	%	2	%	0	%
Mercer:
Retirement	$ 280	$ 276	1	%	7	%	—		(5	)%
Health and Benefits	225	212	6	%	4	%	—		2	%
Rewards, Talent & Communications	93	105	(11	)%	4	%	—		(15	)%
Total Mercer Consulting	598	593	1	%	5	%	—		(4	)%
Outsourcing	162	142	14	%	11	%	—		3	%
Investment Consulting & Management	89	68	32	%	15	%	—		17	%
Total Mercer	$ 849	$ 803	6	%	7	%	—		(1	)%
Kroll:
Litigation Support and Data Recovery	$ 78	$ 71	11	%	2	%	—		8	%
Background Screening	52	62	(17	)%	1	%	(9	)%	(9	)%
Risk Mitigation and Response	32	34	(7	)%	5	%	—		(11	)%
Total Kroll	$ 162	$ 167	(3	)%	2	%	(3	)%	(2	)%

*	Components of revenue change may not add across due to rounding.

Revenue

Consolidated revenue for the first quarter of 2010 was $2.8 billion, an increase of 7% compared with the same period in the prior year, and was flat on an underlying basis.

Revenue in the Risk and Insurance Services segment for the first quarter of 2010 increased 9% from the same period in 2009, and was flat on an underlying basis. Within the Risk and Insurance Services segment, a 1% increase in underlying revenue at Guy Carpenter was offset by a 35% decline in fiduciary interest income. Consulting revenue increased 7%, resulting from increases of 6% in Mercer and 10% in Oliver Wyman. On an underlying basis, Consulting revenue increased 1% reflecting an increase of 6% in Oliver Wyman, partly offset by a 1% decline at Mercer. Revenue decreased 3% in Risk Consulting & Technology or 2% on an underlying basis, reflecting decreases in background screening and risk mitigation and response of 9% and 11%, respectively, partly offset by an 8% increase for litigation support and data recovery.

Operating Expense

Consolidated operating expense in the first quarter of 2010 increased 3% from the same period in 2009. This reflects a 5% increase due to the impact of foreign exchange and a 1% increase due to the impact of acquisitions, partly offset by a 4% decline in underlying expense. The decrease in underlying expense reflects lower legal and regulatory expenses as well as a decline in restructuring expenses, partly offset by higher pension related expenses.

Restructuring

MMC recorded total restructuring costs of $9 million in the first quarter of 2010 in connection with actions initiated in prior years, primarily due to adjustments to the estimated future rent and real estate costs related to previously vacated space.

Risk and Insurance Services

The results of operations for the Risk and Insurance Services segment are presented below:


(In millions of dollars)	2010		2009
Revenue	$1,492		$1,372
Compensation and Benefits	781		722
Other Expenses	364		353
Expense	1,145		1,075
Operating Income	$ 347		$ 297
Operating Income Margin	23.3	%	21.6	%

Revenue

Revenue in the Risk and Insurance Services segment in the first quarter of 2010 increased 9%, and was flat on an underlying basis compared with the same period in 2009. This performance was achieved in continued soft market conditions for commercial property-casualty insurance and a decline in the volume of net written premiums in the property-casualty industry, which has been adversely affected by recessionary conditions over the past two years.

In Marsh, revenue in the first quarter of 2010 was $1.2 billion, an increase of 8% from the same quarter of the prior year resulting from the impact of foreign currency translation and acquisitions. Revenue was flat on an underlying basis, reflecting the economic environment and the downward pressure on commercial insurance premium rates. Despite these difficult market conditions, Marsh increased revenues in many areas of the world. Underlying revenue increases of 1% in the U.S. / Canada, 3% in Latin America, and 2% in Asia Pacific were offset by a 1% decrease in EMEA.

In February 2010, Marsh acquired Haake Companies, Inc., one of the largest insurance agencies in the Midwest. In March 2010, Marsh acquired Thomas Rutherfoord, Inc., one of the largest insurance broking firms in the Southeast and mid-Atlantic regions of the U.S. On April 30, 2010, Marsh acquired the Bostonian Group, one of the largest regional insurance brokerages in New England. On April 1, 2010, Marsh completed the acquisition of HSBC Insurance Brokers Ltd., an international provider of risk intermediary and risk advisory services.

Guy Carpenter’s revenue increased 12% to $315 million in the first quarter of 2010 compared with the same period in 2009, or 1% on an underlying basis. The increase in underlying revenue was primarily due to continued strong new business. In April 2009, Guy Carpenter acquired John B. Collins Associates, Inc., previously the fifth-largest reinsurance intermediary in the U.S. and seventh-largest in the world. In October 2009, Guy Carpenter completed the acquisition of London-based specialty reinsurance broker Rattner Mackenzie Limited from HCC Insurance Holdings, Inc.

Fiduciary interest income was $11 million in the first quarter of 2010, a decrease of 28% compared with the same period of 2009, driven by lower interest rates, partly offset by the impact of foreign exchange rates.

Expense

Expenses in the Risk and Insurance Services segment increased 6% in the first quarter of 2010, compared with the same period in the prior year reflecting a 5% increase related to the impact of foreign currency and a 3% increase from acquisitions, partly offset by a 2% decline in underlying expenses. The decline in underlying expenses reflects lower severance related restructuring activities partly offset by higher pension related expenses.

Consulting

The results of operations for the Consulting segment are presented below:


(In millions of dollars)	2010		2009
Revenue	$1,155		$1,083
Compensation and Benefits	737		712
Other Expenses	302		298
Expense	1,039		1,010
Operating Income	$ 116		$ 73
Operating Income Margin	10.0	%	6.7	%

Revenue

Consulting revenue in the first quarter of 2010 increased 7% compared with the same period in 2009, or 1% on an underlying basis. Mercer’s revenue was $849 million in the first quarter of 2010, an increase of 6%. On an underlying basis, Mercer’s revenue decreased 1%. Within Mercer’s consulting lines, revenue decreased 4% on an underlying basis compared with the

first quarter of 2009, reflecting a decrease of 15% in Rewards, Talent and Communications and a 5% decline in retirement, partly offset by an increase of 2% in health and benefits. The growth in health and benefits resulted from increases in Canada, EMEA and Asia Pacific, partly offset by a reduction in the U.S. due to a near-term disruption in demand as Congress debated significant legislation changes to the U.S. healthcare system. Outsourcing revenue increased 3% on an underlying basis, driven by growth in Asia Pacific and the U.S. Investment consulting & management revenue increased 17% on an underlying basis, due to strong growth in the U.S., EMEA and Asia Pacific, primarily reflecting an increase in assets under management and advisory assets. Oliver Wyman’s revenue increased 10% to $306 million in the first quarter of 2010, or 6% on an underlying basis, driven by double-digit revenue growth within its financial services practice.

Expense

Consulting expenses increased 3% in the first quarter of 2010 compared with the same period in 2009, reflecting a 6% increase from the impact of foreign exchange rates, partly offset by a 3% decrease of underlying expenses. Management continues to monitor and manage expenses closely. The decline in underlying expenses is driven primarily by a decrease in base salaries due to decreased staff levels along with lower recoverable expenses from clients. The reduction in recoverable expenses has no impact on net operating income, since it is offset by lower revenue billed to clients for those expenses.

Risk Consulting & Technology

The results of operations for the Risk Consulting & Technology segment are presented below:


(In millions of dollars)	2010			2009
Revenue	$	162		$	167
Compensation and Benefits		74			80
Other Expenses		72			83
Expense		146			163
Operating Income	$	16		$	4
Operating Income Margin		9.9	%		2.4	%

Revenue

Risk Consulting & Technology revenues in the first quarter of 2010 decreased 3% compared with 2009, reflecting a 2% decrease in underlying revenues, and a 3% decrease related to dispositions, partly offset by a 2% increase related to foreign exchange translation. The underlying revenue decrease was driven by declines in background screening of 9% and risk mitigation and response of 11%, partly offset by an increase of 8% in litigation support and data recovery. In February 2010, Kroll completed the sale of KLS. Due to the immaterial impact on MMC’s overall results, KLS’s operating results have not been reclassified into discontinued operations.

Expense

Risk Consulting & Technology expenses decreased 11% in the first quarter of 2010 compared with 2009. Underlying expenses decreased 10% with the remaining reduction due to the impact of dispositions of 3%, partly offset by the impact of foreign exchange translation of 2%. The decrease in expenses reflects lower salaries due to decreased headcount and reductions in most other expense categories.

Corporate Expenses

Corporate expenses in the first quarter of 2010 were $40 million compared with $50 million in the prior year. The decrease is due to lower consulting fees and restructuring charges in 2010 compared with 2009. The 2009 expense includes restructuring charges of $11 million, primarily related to vacated leased space in MMC’s New York headquarters.

Interest

Interest income earned on corporate funds amounted to $4 million in the first quarter of 2010, compared with $6 million in the first quarter of 2009. The decrease in interest income is due to lower average interest rates in 2010 compared with the prior year. Interest expense of $60 million in the first quarter of 2010 increased $4 million from the same period in the prior year. This increase is primarily due to the higher interest rate on new debt issued in 2009, compared with notes that matured, as well as higher interest expense associated with acquisition related liabilities.

Investment Income (Loss)

Net investment income in the first quarter of 2010 was $8 million due to realized gains on the sale of securities. This compares with investment losses of $15 million in the first quarter of 2009 primarily due to mark-to-market decreases on private equity fund investments.

Income Taxes

MMC reported a 29.9% effective tax rate in the first quarter of 2010. The effective rate reflects the impact of the release of valuation allowances in international jurisdictions largely offset by a provision for uncertain tax positions.

MMC reported a 30.9% effective tax rate in the first quarter of 2009.

The combination of ordinary income and related tax, which MMC is able to reasonably estimate, with certain items which cannot be estimated and therefore are reported in the interim period in which they occur, results in highly variable effective tax rates that do not represent long term operating trends. The items which cannot be estimated include non-deductible goodwill impairments and accruals for severance, restructuring, and professional liability. We expect the effective tax rate to continue to be variable over the short term as items that cannot be estimated continue, and then to moderate.

The effective rate is sensitive to the geographic mix and repatriation of MMC’s earnings, which may have a favorable or unfavorable impact on the rate. Losses in certain jurisdictions cannot be offset by earnings from other operations, and may require valuation allowances affecting the rate, depending on estimates of the realizability of associated deferred tax assets. The tax rate is also sensitive to changes in unrecognized tax benefits, including the impact of settled tax audits and expired statutes of limitation.

Changes in tax laws or tax rulings may have a significant adverse impact on our effective tax rate. For example, proposals for fundamental U.S. international tax reform, such as the recent proposal by President Obama’s Administration, if enacted, could have a significant adverse impact on the effective tax rate.

Dispositions

In the first quarter of 2010, Kroll completed the sale of KLS. The after-tax loss on this disposal is included in discontinued operations in 2010. The operating results of KLS have not been reclassified to discontinued operations, since the amounts are immaterial to MMC.

In the second quarter of 2009, Kroll completed the sale of KGS. The loss on the disposal of KGS and its financial results for 2009 are included in discontinued operations.

Discontinued operations in the first quarter of 2010 and 2009 also includes the accretion of interest related to an indemnity for uncertain tax positions provided as part of the purchase by Great West Lifeco Inc. of Putnam Investments Trust from MMC in August 2007.

The table below depicts the results of discontinued operations:


	Three Months Ended March 31,
(In millions of dollars)	2010		2009
Revenue	$ —		$20
Income before provision for income tax	$ —		$ 6
Provision for income tax	—		2
Income from discontinued operations, net of tax	—		4

Gain on disposal of discontinued operations	16		—
Provision for income tax	38		3
Loss on disposal of discontinued operations, net of tax	(22	)	(3	)
Discontinued operations, net of tax	$(22	)	$ 1

Liquidity and Capital Resources

Operating Cash Flows

MMC used $251 million of cash from operations for the three months ended March 31, 2010, compared with $450 million used for the same period in 2009. These amounts reflect the net income of MMC during those periods, excluding gains or losses from investments and from the disposition of businesses, adjusted for non-cash charges, and changes in working capital which relate primarily to the timing of payments of accrued liabilities or receipts of assets. Cash generated from the disposition of businesses is included in investing cash flows. MMC’s cash flow from operations is typically negative in the first quarter of each year, resulting from the payment of accrued incentive compensation.

Financing Cash Flows

Net cash used for financing activities was $156 million for the period ended March 31, 2010, compared with $260 million provided for the same period in 2009. The change primarily reflects the issuance of debt in the first quarter of 2009.

MMC paid dividends on its common shares of $109 million ($0.20 per share) during the first three months of 2010, as compared with $102 million ($0.20 per share) during the first three months of 2009.

In the first quarter of 2009, MMC issued $400 million of 9.25% ten-year fixed rate senior notes to refinance the senior notes that matured in June 2009.

On October 23, 2009, MMC and certain of its foreign subsidiaries entered into a new $1.0 billion multi-currency three-year unsecured revolving credit facility, which replaced the $1.2 billion facility that was previously in place. The interest rate on this facility varies based upon MMC’s credit ratings and MMC’s credit default swap levels subject to floors and caps. The facility requires MMC to maintain certain coverage and leverage ratios which are tested quarterly. There were no borrowings outstanding under this facility at March 31, 2010.

In the first quarter of 2010, MMC paid deferred purchase consideration of $15 million related to the purchase in 2009 of the minority interest of a previously controlled entity.

MMC’s senior debt is currently rated Baa2 by Moody’s and BBB- by Standard & Poor’s. MMC’s short-term debt is currently rated P-2 by Moody’s and A-3 by Standard & Poor’s. MMC carries a stable outlook from both Moody’s and Standard & Poor’s.

Investing Cash Flows

Cash used for investing activities amounted to $142 million in the first three months of 2010, compared with $62 million for the same period in 2009 reflecting cash outflows for acquisitions partly offset by proceeds from the disposal of KLS.

MMC made two acquisitions in the first quarter of 2010 and paid $194 million in cash into an escrow account for an acquisition that closed on April 1, 2010. Cash used for these acquisitions, net of cash acquired, was approximately $197 million compared with $2 million in 2009. In addition, MMC issued approximately 7.4 million shares of common stock with an acquisition date value of $178 million, and recorded a liability of $55 million for estimated contingent purchase consideration related to the acquisitions completed in the first quarter of 2010. In the first quarter of 2010, MMC also paid $12 million of deferred purchase consideration related to acquisitions made in prior years. Remaining deferred cash payments of $206 million for acquisitions completed in the first quarter of 2010 and in prior years are recorded in accounts payable and accrued liabilities or other liabilities in the consolidated balance sheet at March 31, 2010. Cash generated from the disposition of KLS was $110 million in the first quarter of 2010. There were no dispositions in the comparable period of 2009.

MMC’s additions to fixed assets and capitalized software, which amounted to $80 million in the first three months of 2010 compared with $69 million in the first three months of 2009, primarily related to computer equipment purchases, the refurbishing and modernizing of office facilities and software development costs.

MMC has committed to potential future investments of approximately $81 million in connection with its investments in Trident II and other funds managed by Stone Point Capital. The majority of MMC’s investment commitments for funds managed by Stone Point are related to Trident II, the investment period for which is now closed for new investments and follow-on investments. Any remaining capital calls for Trident II would relate to management fees or other partnership expenses, if necessary. Significant future capital calls related to Trident II are not expected. Although it is anticipated that Trident II will be harvesting its remaining portfolio, the timing of any portfolio company sales and capital distributions is unknown and not controlled by MMC.

Commitments and Obligations

MMC’s contractual obligations of the types identified in the table below were of the following amounts as of March 31, 2010 (dollars in millions):


	Payment due by Period
Contractual Obligations	Total	Within 1 Year	1-3 Years	4-5 Years	After 5 Years
Current portion of long-term debt	$ 558	$ 558	$ —	$ —	$ —
Long-term debt	3,040	—	520	669	1,851
Interest on long-term debt	1,645	200	354	295	796
Net operating leases	2,323	354	589	425	955
Service agreements	406	103	127	86	90
Other long-term obligations	206	75	117	14	—
Total	$8,178	$1,290	$1,707	$1,489	$3,692

The above does not include unrecognized tax benefits of $213 million, accounted for under ASC Topic No. 740, as MMC is unable to reasonably predict the timing of settlement of these liabilities, other than approximately $14 million that may become payable within one year. The above does not include liabilities established under ASC Topic No. 460 as MMC is unable to reasonably predict the timing of settlement of these liabilities. The above does not include pension liabilities of $914 million because the timing and amount of ultimate payment of such liability is dependent upon future events, including, but not limited to, future returns on plan assets, and changes in the discount rate used to measure the liabilities.

New Accounting Pronouncements

Note 18 to the consolidated financial statements contains a discussion of recently issued accounting pronouncements and their impact or potential future impact on MMC’s financial results, if determinable.

Item 3.

Qualitative and Quantitative Disclosures About Market Risk

Market Risk and Credit Risk

Certain of MMC’s revenues, expenses, assets and liabilities are exposed to the impact of interest rate changes and fluctuations in foreign currency exchange rates and equity markets.

Interest Rate Risk and Credit Risk

MMC has historically managed its interest rate exposures by utilizing both variable and fixed rate borrowings to finance MMC’s asset base. In past years, MMC has had some variable rate borrowings in its debt portfolio and has also utilized interest rate swaps to convert a portion of its fixed rate borrowings to variable rate. Currently, virtually all of MMC’s borrowings are fixed rate borrowings.

Interest income generated from MMC’s cash investments as well as invested fiduciary funds will vary with the general level of interest rates.

In addition to interest rate risk, our cash investments and fiduciary fund investments are subject to potential loss of value due to counterparty credit risk. To minimize this risk, MMC and its subsidiaries invest pursuant to a Board approved investment policy. The policy mandates the preservation of principal and liquidity and requires broad diversification with counterparty limits assigned based primarily on credit rating and type of investment. MMC carefully monitors its cash and fiduciary fund investments and will further restrict the portfolio as appropriate to market conditions. The majority of cash and fiduciary fund investments are invested in short-term bank deposits and liquid money market funds.

Foreign Currency Risk

The translated values of revenue and expense from MMC’s international operations are subject to fluctuations due to changes in currency exchange rates. Forward contracts and options are periodically utilized by MMC to limit foreign currency exchange rate exposure on net income and cash flows for specific, clearly defined transactions arising in the ordinary course of its business.

Equity Price Risk

MMC holds investments in both public and private companies as well as certain private equity funds managed by Stone Point Capital. Publicly traded investments of $24 million are classified as available for sale under ASC Topic No. 320 (“Investments – Debt and Equity Securities”). Non-publicly traded investments of $54 million are accounted for using the cost method and $185 million are accounted for under ASC Topic No. 323 (“Investments – Equity Method and Joint Ventures”). The investments that are classified as available for sale or that are not publicly traded are subject to risk of changes in market value, which if determined to be other than temporary, could result in realized impairment losses. MMC periodically reviews the carrying value of such investments to determine if any valuation adjustments are appropriate under the applicable accounting pronouncements.

Other

A significant number of lawsuits and regulatory proceedings are pending. See Note 16 to the consolidated financial statements included elsewhere in this report.

Part I – Item 4. Controls & Procedures

a. Evaluation of Disclosure Controls and Procedures

Based on their evaluation, as of the end of the period of this report, the Company’s Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective.

b. Changes in Internal Controls

There were no changes in MMC’s internal controls over financial reporting that were identified in connection with the evaluation referred to under Part I – Item 4a above that occurred during MMC’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, MMC’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

The information set forth in Note 16 to the consolidated financial statements provided in Part I of this report is incorporated herein by reference.

Item 1A.

Risk Factors.

MMC and its subsidiaries face a number of risks and uncertainties. In addition to the other information in this report and our other filings with the SEC, readers should consider carefully the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2009. If any of the risks described in our Annual Report on Form 10-K or such other risks actually occur, our business, results of operations or financial condition could be materially adversely affected.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Repurchases of Equity Securities

MMC did not repurchase any shares of its common stock during the first quarter of 2010. Pursuant to an August 2007 authorization by MMC’s Board of Directors, MMC remains authorized to repurchase shares of its common stock up to a dollar value of $700 million. There is no time limit on this authorization.


Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Jan 1-31, 2010	—	—	—	$700 million
Feb 1-28, 2010	—	—	—	$700 million
March 1-31, 2010	—	—	—	$700 million
Total Q1 2010	—	—	—	$700 million

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

[Removed and Reserved]

Item 5.

Other Information.

None.

Item 6.

Exhibits.

See the Exhibit Index immediately following the signature page of this report, which is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Date: May 7, 2010		/s/ Vanessa A. Wittman
		Vanessa A. Wittman
		Executive Vice President & Chief Financial Officer

Date: May 7, 2010		/s/ Robert J. Rapport
		Robert J. Rapport
		Senior Vice President & Controller
		Chief Accounting Officer

EXHIBIT INDEX


Exhibit No.		Exhibit Name

10.1		Amended and Restated Agreement between the Attorney General of the State of New York and the Superintendent of Insurance of the State of New York, and Marsh & McLennan Companies, Inc., Marsh Inc., and their subsidiaries and affiliates (incorporated by reference to MMC’s Current Report on Form 8-K dated February 11, 2010)

10.2		Form of 2010 Long-term Incentive Award under the 2000 Senior Executive Incentive and Stock Award Plan and the 2000 Employee Incentive and Stock Award Plan

10.3		Letter Agreement, effective as of March 31, 2010, between Marsh & McLennan Companies, Inc. and M. Michele Burns

10.4		Letter Agreement, effective as of March 31, 2010, between Marsh & McLennan Companies, Inc. and Peter J. Beshar

12.1		Statement Re: Computation of Ratio of Earnings to Fixed Charges

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1		Section 1350 Certifications

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Exhibit 10.2

MARSH & McLENNAN COMPANIES, INC.

2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN

AND

2000 EMPLOYEE INCENTIVE AND STOCK AWARD PLAN

TERMS AND CONDITIONS

[YEAR] LONG-TERM INCENTIVE AWARDS

GRANTED ON [DATE]

TABLE OF CONTENTS


I.	BACKGROUND				3
II.	AWARDS				3
	A.	General			3
		1.	Grant of Award and Award Types		3
		2.	Rights of Award Holders		3
		3.	Restrictive Covenants Agreement		3
	B.	Stock Units			4
		1.	General		4
		2.	Vesting		4
		3.	Accumulation of Dividend Equivalents		4
		4.	Delivery of Shares		4
	C.	Options			4
		1.	General		4
		2.	Vesting		4
		3.	Term		5
		4.	Exercisability		5
		5.	Method of Exercise of an Option		5
			a.	General Procedures	5
			b.	Payment of Exercise Price	5
			c.	Registration and Distribution of Option Shares	5
	D.	Cash Awards			6
		1.	General		6
		2.	Vesting		6
		3.	Payment of Award		6
		4.	Form of Payment		6
	E.	Satisfaction of Tax Obligations			6
		1.	U.S. Employees		6
		2.	Non-U.S. Employees		7
III.	EMPLOYMENT EVENTS				7
	A.	Death			7
	B.	Permanent Disability			8
	C.	Normal Retirement – Outside the European Union			8
	D.	Early Retirement – Outside the European Union			9
	E.	Retirement Treatment – Within the European Union			9
	F.	Termination by the Company Other Than for Cause			10
	G.	All Other Terminations			10
	H.	Condition to Vesting of Award Prior To a Scheduled Vesting Date			11
	I.	Determination of Pro Rata Vesting upon Termination of Employment			11
	J.	Section 409A of the Code			11
IV.	CHANGE IN CONTROL PROVISIONS				13
V.	DEFINITIONS				14
VI.	ADDITIONAL PROVISIONS				16
VII.	QUESTIONS AND ADDITIONAL INFORMATION				17

I.	BACKGROUND

An award (“ Award ”) has been granted to you under the Marsh & McLennan Companies, Inc. 2000 Senior Executive Incentive and Stock Award Plan or the Marsh & McLennan Companies, Inc. 2000 Employee Incentive and Stock Award Plan (as applicable to you, the “ Plan ”). The type of Award, the number of shares of Marsh & McLennan Companies, Inc. (“ MMC ”) common stock or the amount of cash covered by such Award, and the vesting schedule applicable to that Award are specified in materials provided to you by MMC Global & Executive Compensation (“ Grant Documentation ”). The Award is also subject to the terms and conditions set forth herein (the “ Terms and Conditions ”). For employees outside the United States, the awards are subject to additional terms and conditions as set forth in the country specific notices (the “ Country Specific Notices ”). The Prospectus dated [Date], also describes important information about the Plan. The Terms and Conditions, the Country Specific Notices (if applicable), and the Plan will be referred to herein as the “ Award Documentation .”

Capitalized terms in these Terms and Conditions are defined in Section V.

II.

AWARDS

General.

Grant of Award and Award Types. The types of awards that may have been granted to you under the Plan are described below. The description of a type of award in these Terms and Conditions that is not part of your Award does not give or imply any right to such type of award.

Rights of Award Holders. Unless and until the vesting conditions of an Award have been satisfied and cash or shares of MMC common stock, as applicable, have been delivered to you in accordance with the Award Documentation, you have only the rights of a general unsecured creditor. Unless and until shares of MMC Common Stock have been delivered to you, you have none of the attributes of ownership to such shares (e.g., units cannot be used as payment for stock option exercises; units may not be transferred or assigned; units have no voting rights).

Restrictive Covenants Agreement. A Restrictive Covenants Agreement in a form determined by MMC (“ Restrictive Covenants Agreement ”) must be in place in order to accept your Award and you must further reaffirm the Restrictive Covenants Agreement in order to exercise an Option and/or reaffirm your Award in order for it to vest as provided in Section III. Failure to timely execute or reaffirm and comply with the Restrictive Covenants Agreement by the date specified in the Grant Documentation will result in forfeiture of all of your rights, title and interest in and to the Award.

Stock Units.

General. A restricted stock unit (“ RSU ” or “ Stock Unit ”) represents an unfunded and unsecured promise to deliver (or cause to be delivered) to you, subject to the Award Documentation, one share of MMC common stock.

Vesting. Subject to your continued employment, 33 ¹ / 3 % of the Stock Units will vest on the 15 ^th of the month in which each of the first three anniversaries of the grant date of the Award occur. Any date on which a Stock Unit is scheduled to vest is a “ Scheduled Vesting Date .” If your employment terminates prior to a Scheduled Vesting Date, your right to the Stock Units will be determined in accordance with Section III below.

Accumulation of Dividend Equivalents. Dividend equivalents equal to the dividend payment that would have been made in respect of one share of MMC common stock for each outstanding Stock Unit covered by the Award will accrue in U.S. dollars on any dividend record date that occurs on or after the date of grant of the Award while the Award is outstanding. Dividend equivalents will be accrued only with respect to Stock Units that are outstanding on a dividend record date. Accrued dividend equivalents will vest when the corresponding Stock Units covered by the Award in respect of which such dividend equivalents were accrued vests. Such vested dividend equivalents will be delivered after the shares of MMC stock in respect of such vested Stock Units are delivered, subject to the satisfaction of any applicable tax obligations, as described in Section II.E. Dividend equivalents will not be paid on Stock Units that do not vest or are forfeited.

Delivery of Shares. Shares of MMC common stock in respect of the Stock Units covered by the Award shall be distributed to you as soon as practicable after vesting, and in no event later than 60 days after vesting. The delivery of shares in respect of the Stock Units is conditioned on the satisfaction of any applicable tax obligations, as described in Section II.E. Any shares that may be deliverable to you following your death shall be delivered to the person or persons to whom your rights pass by will or the law of descent and distribution, and such delivery shall completely discharge the Company’s obligations under the Award.

Options.

General. A stock option (“ Option ”) represents the right to purchase the number of shares of MMC common stock specified in the Grant Documentation (the “ Option Shares ”) at the exercise price specified in the Grant Documentation.

Vesting. Subject to your continued employment, 25% of the Option Shares covered by the Option will vest on each of the first four anniversaries of the grant date of the Award. If your employment

terminates prior to the fourth anniversary of the grant date of the Award, your right to the unvested portion of the Option will be determined in accordance with Section III below.

Term. Subject to your continued employment, the Option will expire on the day immediately preceding the tenth anniversary of the grant date of the Award. If your employment terminates prior to the date the Option is fully vested or prior to the date the Option expires, your right to exercise any remaining portion of the Option will be determined in accordance with Section III below.

Exercisability. The Option Shares covered by the Option will become exercisable when they vest.

Method of Exercise of an Option.

General Procedures. An Option may be exercised by written notice to MMC or an agent appointed by MMC, in form and substance satisfactory to MMC, which must state the election to exercise such Option, the number of Option Shares for which such Option is being exercised and such other representations and agreements as may be required pursuant to the provisions of the Award Documentation (the “ Exercise Notice ”). The Exercise Notice must be accompanied by (i) any required income tax forms and (ii) a reaffirmation of the Restrictive Covenants Agreement, unless the Option is being exercised after your death in accordance with Section III below.

Payment of Exercise Price. Payment of the aggregate exercise price may be made with U.S. dollars or by tendering shares of MMC common stock (including shares acquired from a stock option exercise or a stock unit award vesting).

Registration and Distribution of Option Shares.

The shares from your Option exercise will be registered as specified in the Exercise Notice. The shares may be registered only in (A) your name or (B) your name and your spouse’s name as joint tenants with rights of survivorship.

ii.

The shares from the Option exercise will be distributed as specified in the Exercise Notice, after you have satisfied applicable taxes and fees.

iii.

You will receive written confirmation of the Option exercise by mail at your home address on file, generally within a week following the exercise date.

Cash Awards.

General. An Award denominated in cash in the amount specified in the Grant Documentation (“ Cash Award ”) shall be credited to a bookkeeping account on the date the Award is granted (the “ Cash Account ”). A Cash Award represents an unfunded and unsecured promise to deliver (or cause to be delivered) to you, subject to the Award Documentation, the amount credited to the Cash Account.

Vesting. Subject to your continued employment, 33 ¹ / 3 % of the amount credited to the Cash Account will vest on the 15 ^th of the month in which each of the first three anniversaries of the grant date of the Award occur. Any date on which all or a portion of the amount credited to the Cash Account is scheduled to vest is a “ Scheduled Vesting Date .” If your employment terminates prior to a Scheduled Vesting Date, your right to the amount credited to the Cash Account will be determined in accordance with Section III below.

Payment of Award. Your Award shall be paid on, or as soon as practicable after, vesting, and in no event later than 60 days after vesting. The delivery of the amount credited to the Cash Account is conditioned on the satisfaction of any applicable tax obligations, as described in Section II.E. Any amount that may be deliverable to you following your death shall be delivered to the person or persons to whom your rights pass by will or the law of descent and distribution, and such delivery shall completely discharge the Company’s obligations under the Award.

Form of Payment. At the election of MMC, the amount credited to the Cash Account will be distributed in cash or in shares of MMC common stock under the Plan. If MMC elects to distribute shares of MMC common stock, the average of the high and low selling prices of the common stock of MMC on the New York Stock Exchange on the trading day immediately preceding the applicable Scheduled Vesting Date will be used to convert the value of the amount credited to the Cash Account, in U.S. Dollars, into shares of MMC common stock.

Satisfaction of Tax Obligations.

U.S. Employees.

Stock Units and Cash Awards. Applicable employment taxes are required by law to be withheld when a Stock Unit or the amount credited to a Cash Account vests. Applicable income taxes are required by law to be withheld when shares of MMC common stock (or cash, as applicable) in respect of Stock Units or the amount credited to a Cash Account is delivered to you. A sufficient number of shares of MMC common stock or portion of the Cash Account, as applicable, will be retained by MMC to satisfy the tax-withholding obligation.

Options. Applicable taxes (including employment taxes) are required by law to be withheld when a nonqualified Option is exercised. A sufficient number of shares of MMC common stock resulting from the Option exercise will be retained by MMC to satisfy the tax-withholding obligation unless you elect in the Exercise Notice to satisfy all applicable tax withholding by check.

Non-U.S. Employees.

Options. In most countries, the value of an Option is generally not taxable on the date of grant. If the value of the Option is not taxable on the date of grant, it will, in most countries, be taxed at a later time, for example, upon exercise of the Option and delivery of shares of MMC common stock in respect of the Option, and/or the subsequent sale of the shares.

Stock Units. In most countries, the value of a Stock Unit is generally not taxable on the date of grant. If the value of the Stock Unit is not taxable on the date of grant, it will, in most countries, be taxed at a later time, for example, upon delivery of shares of MMC common stock in respect of the Stock Unit, and/or the subsequent sale of the shares.

Recommendation. It is recommended that you consult with your personal tax advisor for more detailed information regarding the tax treatment of the Award.

Withholding. MMC and/or your local employer shall have the power and the right to deduct and withhold from your Award and other compensation, or require you to remit to MMC and to your local employer, an amount sufficient to satisfy any taxes that MMC considers are payable under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gain taxes, transfer taxes, social security contributions, and National Insurance Contributions with respect to the Award, including any and all associated tax events derived therefrom. If applicable, MMC and/or your local employer may retain and sell a sufficient number of shares of MMC common stock distributable in respect of the Award for this purpose.

III.

EMPLOYMENT EVENTS

Death.

Stock Units. In the event your employment is terminated because of your death, the Stock Units will vest at such termination of employment and will be distributed as described in Section II.B.4.

Options. In the event your employment is terminated because of your death, the Option will vest with respect to any unvested Option Shares and will become exercisable at such termination of employment. The person or persons to whom your rights under the Option shall pass by will or the laws of descent and distribution shall be entitled to exercise such Option with respect to newly vested Option Shares (and any Option Shares that were already vested at the time of your death) within two years after the date of death, but in no event shall the Option be exercised beyond the expiration date of the Award.

Cash Awards. In the event your employment is terminated because of your death, the amounts credited to your Cash Account will vest and will be distributed as described in Section II.D.3.

Permanent Disability.

Stock Units. Upon the occurrence of your Permanent Disability, the Stock Units will vest and will be distributed as described in Section II.B.4, provided that you satisfy the condition to vesting described in Section III.H.

Stock Options. Upon the occurrence of your Permanent Disability, the Option will vest with respect to any unvested Option Shares and will become exercisable, provided that you satisfy the condition to vesting described in Section III.H. Such newly vested Option Shares (and any Option Shares that were already vested at the time your Permanent Disability occurred) shall be exercisable for two years following the occurrence of your Permanent Disability, but in no event shall the Option be exercised beyond the expiration date of the Award.

Cash Awards. Upon the occurrence of your Permanent Disability, the amounts credited to your Cash Account will vest and will be distributed as described in Section II.D.3, provided that you satisfy the condition to vesting described in Section III.H.

Normal Retirement – Outside the European Union.

Stock Units. In the event you retire from the Company on or after your Normal Retirement Date, the Stock Units will vest at such termination of employment and will be distributed as described in Section II.B.4, provided that you satisfy the condition to vesting described in Section III.H.

Stock Options. In the event you retire from the Company on or after your Normal Retirement Date, the Option will vest with respect to any unvested Option Shares and will become exercisable at such termination of employment, provided that you satisfy the condition to vesting described in Section III.H. Such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of the fifth anniversary of your termination of employment and the expiration date of the Award.

Cash Awards. In the event you retire from the Company on or after your Normal Retirement Date, the amounts credited to your Cash Account will vest at such termination of employment and will be distributed as described in Section II.D.3, provided that you satisfy the condition to vesting described in Section III.H.

Early Retirement – Outside the European Union.

Stock Units. In the event you retire from the Company on or after your Early Retirement Date and before your Normal Retirement Date, the Stock Units will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.B.4, provided that you satisfy the condition to vesting described in Section III.H.

Stock Options. In the event you retire from the Company on or after your Early Retirement Date and before your Normal Retirement Date, the Option will vest with respect to any unvested Option Shares as provided in Section II.C.2 and will become exercisable as provided in Section II.C.4, provided that you satisfy the condition to vesting described in Section III.H. Such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of the fifth anniversary of your termination of employment and the expiration date of the Award.

Cash Awards. In the event you retire from the Company on or after your Early Retirement Date and before your Normal Retirement Date, the amounts credited to your Cash Account will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.D.3, provided that you satisfy the condition to vesting described in Section III.H.

Retirement Treatment – Within the European Union.

Stock Units. In the event you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, the Stock Units will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.B.4, provided that you satisfy the condition to vesting described in Section III.H.

Stock Options. In the event you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, the Option will vest with respect to any unvested Option Shares as provided in Section II.C.2 and will become exercisable as provided in Section II.C.4, provided that you satisfy the

condition to vesting described in Section III.H. Such newly vested Option Shares (and any Option Shares that were already vested at the time of your termination of employment) shall be exercisable until the earlier of the fifth anniversary of your termination of employment and the expiration date of the Award.

Cash Awards. In the event you are determined by the Retirement Treatment Committee to be eligible for retirement treatment upon your termination of employment, the amounts credited to your Cash Account will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.D.3, provided that you satisfy the condition to vesting described in Section III.H.

Termination by the Company Other Than for Cause.

Stock Units. In the event your employment is terminated by the Company other than for Cause, the Stock Units will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.B.4, provided that you satisfy the condition to vesting described in Section III.H.

Stock Options. In the event your employment is terminated by the Company other than for Cause, rights, title and interest in and to any unvested Option Shares will be forfeited upon such termination of employment. Any Option Shares that were vested at the time of your termination of employment shall be exercisable until the earlier of 90 days following your termination of employment and the expiration date of the Award.

Cash Awards. In the event your employment is terminated by the Company other than for Cause, the amounts credited to your Cash Account will vest at such termination of employment on a pro rata basis as described in Section III.I and will be distributed as described in Section II.D.3, provided that you satisfy the condition to vesting described in Section III.H.

Sale of Business Unit. For the avoidance of doubt, in the event of a sale or similar transaction involving the business unit for which you work (“ Employing Company ”) as a result of which the Employing Company ceases to be a subsidiary of MMC, your employment will be deemed terminated by the Company other than for Cause, even if your employment with the Employing Company continues after the sale.

All Other Terminations.

For all other terminations of employment not described in Sections III.A through F above (including but not limited to a termination by the Company for Cause), all of your rights, title and interest in and to the Award, whether

vested or unvested, shall be forfeited on the date of such termination of employment. For purposes of these Terms and Conditions, your employment will be treated as terminated when you are no longer employed by MMC or any affiliate or subsidiary of MMC.

Condition to Vesting of Award Prior To a Scheduled Vesting Date.

In the event of your Permanent Disability, termination of employment due to Normal Retirement or Early Retirement, the determination that you are eligible for retirement treatment upon your termination of employment, or your termination of employment other than for Cause as described in Sections III.B through F, any unvested portion of the Award will vest as provided in the applicable portion of Section III; provided that you execute and return to MMC (or an agent appointed by MMC) a Restrictive Covenants Agreement within 30 days following your termination of employment or the occurrence of your Permanent Disability. Failure to timely execute and comply with the Restrictive Covenants Agreement will result in forfeiture of all of your rights, title and interest in and to the Award, whether vested or unvested.

Determination of Pro Rata Vesting upon Termination of Employment.

The number of Stock Units or the portion of the amount credited to your Cash Account, as applicable, that vests pro-rata upon termination of employment is determined using the following formula:

LOGO

where


A	=	the number of Stock Units covered by the Award or the amount of cash covered by the Award, as applicable;

B	=	the number of days in the period beginning on the grant date of the Award and ending on the employment termination date;

C	=	the number of days in the period beginning on the grant date of the Award and ending on the last Scheduled Vesting Date; and

D	=	the number of Stock Units or the amounts credited to your Cash Account, as applicable, that have previously vested.

Section 409A of the Code.

Notwithstanding any other provision herein, your Award may be subject to additional restrictions to ensure compliance with the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder (regarding nonqualified deferred compensation) (“ Section 409A of the Code ”). The Compensation Committee of the MMC Board of Directors (the “ Committee ”) intends to administer the Awards in accordance with Section 409A of the Code and reserves the right to make changes in the terms or operations of the Awards (including changes that may have retroactive effect) deemed

necessary or desirable to comply with Section 409A of the Code. This means, for example, that the timing of distributions may be different from those described in this document or in other materials relating to the Award or the Plan that do not reflect Section 409A of the Code. If your Award is not in compliance with Section 409A of the Code, you may be subject to immediate taxation of all unpaid awards under the Plan that are subject to Section 409A of the Code at your regular income tax rate, plus a 20% penalty, plus interest at the underpayment rate plus 1%.

Notwithstanding any provision herein, if any portion of your Award is determined to be nonqualified deferred compensation subject to Section 409A of the Code, any references to “termination of employment,” or “when you are no longer employed” in these Terms and Conditions shall have the following meaning:

Your “termination of employment” (or similar terms) shall occur when you have incurred a “separation from service” within the meaning of Section 409A of the Code and as further defined herein. Specifically, you will have incurred a “separation from service” when the level of services you provide to MMC or any of its affiliates in any capacity, including as an employee, director, independent contractor or consultant, does not exceed 20% of the level of services that you provided to MMC and its affiliates in the preceding 36 months (or shorter period of service if, for example, your total service with MMC is less than 36 months), all as determined in accordance with Section 409A of the Code. In determining whether a “separation from service” has occurred, any period of up to six months during which you are on a bona fide leave of absence or up to 29 months during which you are absent from work due to a disability for which you are receiving MMC Long-Term Disability benefits will be ignored.

Notwithstanding any provision herein, if at the time of the termination of your employment you are a “specified employee” (as defined in Section 409A of the Code) no portion of your Award that is determined to be nonqualified deferred compensation subject to Section 409A of the Code shall be distributed until the first day of the seventh month after the termination of employment and any such distributions to which you would otherwise be entitled during the first six months following your termination of employment will be accumulated and paid without interest on the first day of the seventh month after the termination of employment. The provisions of this subparagraph will only apply if and to the extent required to avoid any “additional tax” under Section 409A of the Code. This subparagraph does not guarantee that your Award will not be subject to “additional tax” or other adverse tax consequences under Section 409A of the Code.

IV.

CHANGE IN CONTROL PROVISIONS

Treatment of Awards.

Upon the occurrence of a “ Change in Control ” of MMC, as defined in the Plan, the Award will continue to vest as specified in Section II or, if earlier, will become fully vested upon your termination of employment by the Company other than for Cause or by you for Good Reason during the 24-month period following such Change in Control, and any Option Shares that were vested at the time of such termination of employment shall be exercisable until the earlier of 90 days following your termination of employment and the expiration date of the Award.

Additional Payment for Grantees Subject to U.S. Income Tax.

The value of the accelerated vesting of the Award because of a Change in Control (the “ Accelerated Award ”) may be subject to a 20% federal excise tax under Section 4999 of the Code (the “ Excise Tax ”). The Excise Tax is imposed on a select group of highly-compensated employees when the value, as determined by applicable regulations, of payments in the nature of compensation contingent on a Change in Control (including an amount reflecting the value of the accelerated vesting of the Award) equals or exceeds three times the average of your last five years’ W-2 earnings.

If a Change in Control occurs and the vesting of the Award is accelerated, MMC will determine if the Excise Tax is payable by you. If the Excise Tax is payable by you, MMC will pay to you, within five business days of making the determination, an amount of money (the “ Additional Payment ”) such that after payment of applicable federal, state and local income taxes (other than any taxes arising under Section 409A of the Code), employment taxes and any Excise Tax imposed upon the Additional Payment, you will retain an amount of the Additional Payment equal to the Excise Tax imposed in respect of the Accelerated Award. If the Additional Payment, after payment of such taxes, is later determined to be less than the amount necessary to reimburse you for the Excise Tax you owe in respect of the Accelerated Award, a further payment will be made to you. If the Additional Payment, after payment of applicable taxes, is later determined to be more than the amount necessary to reimburse you for the Excise Tax you owe in respect of the Accelerated Award, you will be required to reimburse MMC for such excess. To the extent applicable under Section 409A of the Code, in all events, MMC will pay to you the Additional Payment no later than the end of the taxable year following the taxable year in which you pay the Excise Tax.

V.	DEFINITIONS

As used in these Terms and Conditions:

“Cause” shall mean:

willful failure to substantially perform the duties consistent with your position which is not remedied within 30 days after receipt of written notice from the Company specifying such failure;

willful violation of any written company policies including but not limited to, the Company’s Code of Business Conduct & Ethics;

commission at any time of any act or omission that results in a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude;

unlawful use (including being under the influence) or possession of illegal drugs;

any gross negligence or willful misconduct resulting in a material loss to the Company, or material damage to the reputation of the Company; or

any violation of any statutory or common law duty of loyalty to the Company, including the commission at any time of any act of fraud, embezzlement, or material breach of fiduciary duty against the Company.

“Company” shall mean MMC or any of its subsidiaries or affiliates.

“Good Reason” shall mean any of the following without your written consent:

a material reduction in your base salary;

a material reduction in your annual incentive opportunity (including a material adverse change in the method of calculating your annual incentive);

a material diminution of your duties, responsibilities or authority; or

a relocation of more than 50 miles from your office location in effect immediately prior to the Change in Control;

provided that you provide MMC with written notice of your intent to terminate your employment for Good Reason within 60 days of your becoming aware of any circumstances set forth above (with such notice indicating the specific termination provision above on which you are relying and describing in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the indicated provision) and that you provide MMC with at least 30 days following receipt of such notice to remedy such circumstances.

“Normal Retirement Date” and “Early Retirement Date” shall have the respective meanings given such terms (or any comparable substitute terms or concepts) set forth in the primary retirement plan or program applicable to you upon your termination of employment (whether sponsored by MMC, your employer or otherwise).

“Permanent Disability” will be deemed to occur when it is determined (by MMC’s disability carrier or the primary long-term disability plan or program applicable to you because of your employment with the Company) that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

“Retirement Treatment Committee” is comprised of MMC employees appointed by the Committee.

Additional Definitions.

The terms below are defined on the following pages


Accelerated Award		13
Additional Payment		13
Award		3
Award Documentation		3
Cash Account		6
Cash Award		6
Change in Control		13
Committee		11
Country Specific Notices		3
Employing Company		10
Excise Tax		13
Exercise Notice		5
Grant Documentation		3
MMC		3
Option		4
Option Shares		4
Plan		3
Restrictive Covenants Agreement		3
RSU		4
Scheduled Vesting Date		4, 6
Section 409A of the Code		11
Stock Unit		4
Terms and Conditions		3

VI.

ADDITIONAL PROVISIONS

Additional Provisions—General

Administrative Rules. The Award shall be subject to such additional administrative regulations as the Committee may, from time to time, adopt. All decisions of the Committee upon any questions arising under the Award Documentation shall be conclusive and binding. The Committee may delegate to any other individual or entity the authority to perform any or all of the functions of the Committee under the Award, and references to the Committee shall be deemed to include any such delegate.

Amendment. The Committee may, in its sole discretion, amend the terms of the Award; provided, however, that if the Committee, in its sole discretion, concludes that such amendment is likely to materially impair your rights with respect to the Award, such amendment shall not be implemented with respect to your Award without your consent.

Limitations. Payment of your Award is not secured by trust, insurance contract or other funding medium, and you do not have any interest in any fund or specific asset of the Company by reason of the Award. Your right to payment of your Award is the same as the right of an unsecured general creditor of the Company.

Additional Provisions—Outside the United States

Changes to Delivery. In the event that MMC considers that due to legal, regulatory or tax issues the normal delivery of an Award to a participant outside the United States would not be appropriate, then MMC may, in its sole discretion, determine how the value of the Award will be delivered. Without limitation, this may include making any payments due under the Award in cash instead of shares, or in shares instead of cash, in an amount equivalent to the value of the Award on the date of exercise (for Options) or vesting (for other equity-based awards) after payment of applicable taxes, fees and any exercise price. If the value of an Award is to be delivered in cash instead of shares, MMC may sell any shares distributable in respect of the Award on your behalf and use the proceeds (after payment of applicable taxes, fees and any exercise price) to satisfy the Award.

Amendment and Modification. The Committee may modify the terms of any Award under the Plan granted to you if you are, at the time of grant or during the term of the Award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the country in which you are then resident or primarily employed, or so that the value and other benefits of the Award to you, as affected by non-U.S. tax laws and other restrictions

applicable as a result of your residence or employment outside the United States, shall be comparable to the value of such an Award to an individual who is resident or primarily employed in the United States.

VII.

QUESTIONS AND ADDITIONAL INFORMATION

Please retain this document in your permanent records. If you have any questions regarding the Plan or your Award or would like an account statement detailing each type of equity-based award or cash award and the number of shares or cash value (as applicable) covered by such equity-based award or cash award that comprises your Award, and the exercise price, vesting date(s) and expiration date of such equity-based awards or cash awards that comprise your Award, or any other information please contact:

MMC Global & Executive Compensation

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas, 43 ^rd Floor

New York, New York l0036-2774

United States of America

Telephone Number: (212) 345-9722

Facsimile Number: (212) 948-8481

mmc.compensation@mmc.com

Exhibit 10.3

[MMC Letterhead]

February 8, 2010

M. Michele Burns

[Address]

[City, State Zip Code]


Subject:		Terms of Employment

Dear Michele:

This letter agreement is intended to set forth the terms of your continued employment by Mercer Inc. (“ Mercer ”) as its Chairman and Chief Executive Officer, Mercer Inc. This position reports to the Chief Executive Officer of Marsh & McLennan Companies, Inc. (“ MMC ”, and together with its subsidiaries and affiliates, the “ Company ”). Your current principal work location is in New York, NY. The terms of this letter agreement are effective upon the expiration of the term of the Employment Agreement dated as of March 1, 2006 between you and MMC, as amended (the “Prior Agreement”) on March 31, 2010.

1.	Duties and Responsibilities

You will continue to devote all of your attention and time during working hours to the affairs and business of Mercer and the Company and use your best efforts to perform such duties and responsibilities as are consistent with your position and as shall, from time to time, be reasonably assigned to you by the Chief Executive Officer of MMC. In addition, you agree to serve, without additional compensation, as an officer and director for any member of the Affiliated Group. For purposes of this letter agreement, the term “ Affiliated Group ” means MMC and any corporation, partnership, joint venture, limited liability company, or other entity in which MMC has a 10% or greater direct or indirect interest. Except for those boards or committees set forth on Exhibit A, if any, you may not serve on corporate, civic or charitable boards or committees without the prior written consent of MMC.

2.	Compensation and Benefits

Your compensation and benefits are as set forth below and in Exhibit A.

Annual base salary : You will receive an annual base salary of the amount set forth on Exhibit A, payable in installments in accordance with the Company’s payroll procedures in effect from time to time. Your base salary will be considered for adjustment in succeeding years as part of your normal performance management process.

Vacation : You are entitled to 5 weeks of vacation annually, in accordance with our Company policy.

February 8, 2010

M. Michele Burns

Page 2

Annual bonus : You are eligible for an annual bonus on the terms set forth on Exhibit A. Bonus awards are discretionary and may be paid in the form of cash, deferred cash or MMC stock units, or a combination thereof. To qualify for an annual bonus, you must remain continuously and actively employed by the Company through the date of the bonus payment. The annual bonus shall be paid no later than March 15 of the year following the year for which such bonus is earned. In the event of your Permanent Disability (as defined below) or death, the Company shall pay you (or your estate in the case of death) a prorated target annual bonus for the year in which your termination occurs based on the portion of the year elapsed as of the date of your termination. Any such bonus amount shall be paid within 30 days of your death. In the event of your Permanent Disability, your prorated annual bonus payment is conditioned upon, and subject to, your execution and delivery to the Company within 30 days of the date of such event a valid confidential waiver and release of claims agreement (including restrictive covenants) in a form satisfactory to the Company (the “Release”) and such Release has become irrevocable as provided therein (the “Release Date”). Payment of any such annual bonus amount shall then be paid within 30 days following the Release Effective Date.

As used in this letter agreement, “Permanent Disability” will be deemed to occur when it is determined (by MMC’s disability carrier or the primary long-term disability plan or program applicable to you because of your employment with the Company) that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

Annual Long-Term Incentive Compensation : You are eligible to participate in MMC’s long-term incentive program with a target long-term incentive compensation award as set forth on Exhibit A. Long-term incentive awards are discretionary and are governed by terms and conditions approved by the Compensation Committee as set forth in the award agreement and in MMC’s 2000 Senior Executive Incentive and Stock Award Plan (or other plan under which the long-term incentive award is granted). In accordance with Company practice, you will be required to enter into a “Restrictive Covenants Agreement” in connection with the grant.

Benefit Programs : You and your domestic partner and eligible family members are eligible for participation in employee benefit plans, policies and programs provided by the Company on such terms and conditions as are generally provided to similarly situated employees of the Company. Please be aware that nothing in this letter agreement shall limit the Company’s ability to change, modify, cancel or amend any such policies or plans. In addition, you will be eligible to participate in the MMC Financial Services Program, as in effect from time to time.

February 8, 2010

M. Michele Burns

Page 3

3.	Termination of Employment

Upon the termination of your employment for any reason, you shall immediately resign, as of your date of termination, from all positions that you then hold with any member of the Affiliated Group. You hereby agree to execute any and all documentation to effectuate such resignations upon request by the Company, but you shall be treated for all purposes as having so resigned upon your date of termination, regardless of when or whether you execute any such documentation.

During the term of this letter agreement, and, subject to any other business obligations that you may have, following your date of termination, you agree to assist the Affiliated Group in the investigation and/or defense of any claims or potential claims that may be made or threatened to be made against any member of the Affiliated Group, including any of their officers or directors (a “ Proceeding ”), and will assist the Affiliated Group in connection with any claims that may be made by any member of the Affiliated Group in any Proceeding. You agree, unless precluded by law, to promptly inform MMC if you are asked to participate in any Proceeding or to assist in any investigation of any member of the Affiliated Group. In addition, you agree to provide such services as are reasonably requested by the Company to assist any successor to you in the transition of duties and responsibilities to such successor. Following the receipt of reasonable documentation, the Company agrees to reimburse you for all of your reasonable out-of-pocket expenses associated with such assistance. Your request for any reimbursement, including reasonable documentation, must be submitted as soon as practicable and otherwise consistent with Company policy. In any event, your request for a taxable reimbursement, including reasonable documentation, must be submitted by the October 31st of the year following the year in which the expense is incurred. The Company will generally reimburse such expenses within 60 days of the date they are submitted, but in no event will they be reimbursed later than the December 31st of the year following the year in which the expense is incurred.

4.	Restrictive Covenants

You are subject to existing restrictions with respect to confidentiality, noncompetition or nonsolicitation under confidentiality, noncompetition, nonsolicitation, or other agreements. Such restrictions, including specifically the restrictions and provisions included in Section 4 of the Prior Agreement, shall remain in full force and effect and, by your execution of this letter agreement, you hereby reaffirm and ratify such restrictions.

February 8, 2010

M. Michele Burns

Page 4

5.	Miscellaneous

Notices . Notices given pursuant to this letter agreement shall be in writing and shall be deemed received when personally delivered, or on the date of written confirmation of receipt by (i) overnight carrier, (ii) telecopy, (iii) registered or certified mail, return receipt requested, postage prepaid, or (iv) such other method of delivery as provides a written confirmation of delivery. Notice to the Company shall be directed to:

Peter J. Beshar

Executive Vice President & General Counsel

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, NY 10036

Notices to or with respect to you will be directed to you, or in the event of your death, your executors, personal representatives or distributees, at your home address as set forth in the records of the Company.

Assignment of this Agreement . This letter agreement is personal to you and shall not be assignable by you without the prior written consent of MMC. This letter agreement shall inure to the benefit of and be binding upon the Company and its respective successors and assigns. MMC may assign this letter agreement, without your consent, to any member of the Affiliated Group or to any other respective successor (whether directly or indirectly, by agreement, purchase, merger, consolidation, operation of law or otherwise) to all, substantially all or a substantial portion of the business and/or assets of Mercer or the Company, as applicable. If and to the extent that this letter agreement is so assigned, references to “Mercer” or the “Company” throughout this letter agreement shall mean Mercer or the Company as hereinbefore defined and any successor to its business and/or assets as applicable.

Merger of Terms . Except as set forth in Section 4 above, this letter agreement supersedes all prior discussions and agreements between you and the Company with respect to the subject matters covered herein, including, without limitation, the Prior Agreement.

Indemnification . The Company shall indemnify you to the extent permitted by its bylaws with respect to the work you have performed for, or at the request of, the Company or any member of the Affiliated Group during the term of this letter agreement.

Governing Law; Amendments . This letter agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. The captions of this letter agreement are not part of the provisions hereof and shall have no force or effect. This letter agreement may not be amended or modified other than by a written agreement executed by you and an authorized employee of MMC.

February 8, 2010

M. Michele Burns

Page 5

Choice of Forum . The Company and you each hereby irrevocably and unconditionally submits to the exclusive jurisdiction of any New York state court or federal court of the United States of America sitting in the State of New York, and any appellate court thereof, in any action or proceeding arising out of or relating to this letter agreement or for recognition or enforcement of any judgment relating thereto, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York state court or, to the extent permitted by law, in such federal court. The Company and you agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

Severability; Captions . In the event that any provision of this letter agreement is determined to be invalid or unenforceable, in whole or in part, the remaining provisions of this letter agreement will be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. The captions in this letter agreement are not part of the provisions of this letter agreement and will have no force or effect.

Section 409A .

The provisions of this paragraph will only apply if and to the extent required to avoid the imposition of taxes, interest and penalties on you under Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). Section 409A applies to nonqualified deferred compensation which exists if an individual has a “legally binding right” to compensation that is or may be payable in a later year. In furtherance of the objective of this paragraph, to the extent that any regulations or other guidance issued under Section 409A would result in your being subject to payment of taxes, interest or penalties under Section 409A, you and the Company agree to use our best efforts to amend this letter agreement in order to avoid or limit the imposition of any such taxes, interest or penalties, while maintaining to the maximum extent practicable the original intent of the applicable provisions. This paragraph does not guarantee that you will not be subject to taxes, interest or penalties under Section 409A with respect to compensation or benefits described or referenced in this letter agreement.

Furthermore and notwithstanding any provision of this letter agreement to the contrary, to the extent necessary to avoid the imposition of taxes, interest and penalties on you under Section 409A, if at the time of the termination of your employment you are a “specified employee” (as defined in Section 409A), you will not be entitled to any payments upon termination of employment until the first day of the seventh month after the termination of employment and any such payments to which you would otherwise be entitled during the first six months following your termination of employment will be accumulated and paid without interest on the first day of the seventh month after the termination of employment.

February 8, 2010

M. Michele Burns

Page 6

Withholding Requirements . All amounts paid or provided to you under this Agreement shall be subject to any applicable income, payroll or other tax withholding requirements.

Please acknowledge your agreement with the terms of this letter agreement by signing and dating the enclosed copy and returning it to me on or before February 19, 2010.

Sincerely,

/s/ Brian Duperreault

Brian Duperreault

President and Chief Executive Officer

Marsh & McLennan Companies, Inc.

Accepted and Agreed:

/s/ M. Michele Burns

(Signature)

3/26/10

(Date)

February 8, 2010

M. Michele Burns

Page 7

Exhibit A


Board or Committee Membership		¡ Cisco Systems, Inc. ¡ Wal-Mart Stores, Inc. ¡ Elton John AIDS Foundation

Base Salary		$850,000

Target Bonus Opportunity		Bonus awards are discretionary. Anticipated target bonus of 150% of base salary. Actual bonus may range from 0% - 200% of target, based on individual and company performance targets (including, but not limited to, targets related to your performance and MMC’s financial performance) as MMC may establish from time to time.

Target Long Term Incentive Opportunity		Long term incentive awards are discretionary. Anticipated target grant-date value of 200% of base salary. Grant date value of actual long term incentive awards may range from 100% to 300% of base salary.

Exhibit 10.4

[MMC Letterhead]

March 18, 2010

Peter J. Beshar

[Address]

[City, State Zip Code]


Subject:		Terms of Employment

Dear Peter:

This letter agreement is intended to set forth the terms of your continued employment by Marsh & McLennan Companies, Inc. (“ MMC ” or the “ Company ”) as its Executive Vice President and General Counsel. This position reports to the Chief Executive Officer of MMC. Your current principal work location is in New York, NY. The terms of this letter agreement are effective as of March 31, 2010. On that date, except as otherwise provided herein, the terms of the Employment Agreement dated as of November 21, 2007 between you and MMC, as amended (the “Prior Agreement”) shall be of no further force and effect.

1.	Duties and Responsibilities

You will continue to devote all of your attention and time during working hours to the affairs and business of the Company and use your best efforts to perform such duties and responsibilities as are consistent with your position and as shall, from time to time, be reasonably assigned to you by the Chief Executive Officer of MMC. In addition, you agree to serve, without additional compensation, as an officer and director for any member of the Affiliated Group. For purposes of this letter agreement, the term “ Affiliated Group ” means MMC and any corporation, partnership, joint venture, limited liability company, or other entity in which MMC has a 10% or greater direct or indirect interest. Except for those boards or committees set forth on Exhibit A, if any, you may not serve on corporate, civic or charitable boards or committees without the prior written consent of MMC.

2.	Compensation and Benefits

Your compensation and benefits are as set forth below and in Exhibit A.

Vacation : You are entitled to 5 weeks of vacation annually, in accordance with our Company policy.

March 18, 2010

Peter J. Beshar

Page 2

Annual bonus : You are eligible for an annual bonus on the terms set forth on Exhibit A. Bonus awards are discretionary and may be paid in the form of cash, deferred cash or MMC stock units, or a combination thereof. Except as provided in this paragraph and in Section 3(a), to qualify for an annual bonus you must remain continuously and actively employed by the Company through the date of the bonus payment. The annual bonus shall be paid no later than March 15 of the year following the year for which such bonus is earned. In the event of your Permanent Disability (as defined below) or death, the Company shall pay you (or your estate in the case of death) a prorated target annual bonus for the year in which your termination occurs based on the portion of the year elapsed as of the date of your termination. Any such bonus amount shall be paid within 30 days of your death. In the event of your Permanent Disability, your prorated annual bonus payment is conditioned upon, and subject to, your execution and delivery to the Company within 30 days of the date of such event a valid confidential waiver and release of claims agreement (including restrictive covenants) in a form satisfactory to the Company (the “Release”) and such Release has become irrevocable as provided therein (the “Release Date”). Payment of any such annual bonus amount shall then be paid within 30 days following the Release Effective Date.

Benefit Programs : You and your eligible family members are eligible for participation in employee benefit plans, policies and programs provided by the Company on such terms and conditions as are generally provided to similarly situated employees of the Company. Please be aware that nothing in this letter agreement shall limit the Company’s ability to change, modify, cancel or amend any such policies or plans. In addition, you will be eligible to participate in the MMC Financial Services Program, as in effect from time to time.

March 18, 2010

Peter J. Beshar

Page 3

3.	Termination of Employment

You will be designated as a “Key Employee” under the Marsh & McLennan Companies, Inc. Senior Executive Severance Pay Plan (the “Senior Executive Severance Pay Plan”). In the event that your employment with the Company terminates for any reason, the Senior Executive Severance Plan will exclusively govern the terms under which you may be eligible to receive severance and/or other transition benefits from the Company. In the event that the reason for your termination of employment entitles you to receive severance benefits under Article 5 of the Senior Executive Severance Plan, the Company shall also pay you the earned annual bonus, if any, for the calendar year that preceded your termination to the extent not theretofore paid.

4.	Restrictive Covenants

You are subject to existing restrictions with respect to confidentiality, noncompetition or nonsolicitation under confidentiality, noncompetition, nonsolicitation, or other agreements. Such restrictions, including specifically the restrictions and provisions set forth in Section 4 of the Prior Agreement (including Section 4.1(a)(iii) of the Prior

March 18, 2010

Peter J. Beshar

Page 4

Agreement, which provides that your practice of law in any capacity following a termination of employment with the Company is not a competitive activity), shall remain in full force and effect and, by your execution of this letter agreement, you hereby reaffirm and ratify such restrictions.

5.	Miscellaneous

Brian Duperreault

President and Chief Executive Officer

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, NY 10036

Assignment of this Agreement . This letter agreement is personal to you and shall not be assignable by you without the prior written consent of MMC. This letter agreement shall inure to the benefit of and be binding upon the Company and its respective successors and assigns. MMC may assign this letter agreement, without your consent, to any member of the Affiliated Group or to any other respective successor (whether directly or indirectly, by agreement, purchase, merger, consolidation, operation of law or otherwise) to all, substantially all or a substantial portion of the business and/or assets of the Company, as applicable. If and to the extent that this letter agreement is so assigned, references to the “Company” throughout this letter agreement shall mean the Company as hereinbefore defined and any successor to its business and/or assets as applicable.

Merger of Terms . Except as set forth in Section 4 above and Section 5.d. below, this letter agreement supersedes all prior discussions and agreements between you and the Company with respect to the subject matters covered herein, including, without limitation, the Prior Agreement.

Indemnification . The indemnification provisions set forth in Section 3.8 of the Prior Agreement shall remain in full force and effect.

March 18, 2010

Peter J. Beshar

Page 5

Section 409A .

March 18, 2010

Peter J. Beshar

Page 6

Withholding Requirements . All amounts paid or provided to you under this Agreement shall be subject to any applicable income, payroll or other tax withholding requirements.

Please acknowledge your agreement with the terms of this letter agreement by signing and dating the enclosed copy and returning it to me on or before March 26, 2010.

Sincerely,

/s/ Brian Duperreault

Brian Duperreault

President and Chief Executive Officer

Marsh & McLennan Companies, Inc.

Accepted and Agreed:

/s/ Peter J. Beshar

(Signature)

3/25/10

(Date)

Exhibit A


Board or Committee Membership		Rye Country Day School

Base Salary		$800,000

Target Bonus Opportunity		Bonus awards are discretionary. Anticipated target bonus of 100% of base salary. Actual bonus may range from 0% - 200% of target, based on individual and company performance targets (including, but not limited to, targets related to your performance and MMC’s financial performance) as MMC may establish from time to time.

Target Long Term Incentive Opportunity		Long term incentive awards are discretionary. Anticipated target grant-date value of $2,000,000.

Exhibit 12.1

Marsh & McLennan Companies, Inc. and Subsidiaries

Ratio of Earnings to Fixed Charges

(In millions, except ratios)


	Three Months Ended March 31, 2010 (Unaudited)	Years Ended December 31,
		2009	2008	2007	2006	2005
Earnings
Income before income taxes ^(a)	$391	$598	$604	$ 855	$ 904	$296
Interest expense	60	241	220	267	303	332
Portion of rents representative of the interest factor	40	142	156	170	170	149
	$491	$981	$980	$1,292	$1,377	$777
Fixed Charges
Interest expense	$ 60	$241	$220	$ 267	$ 303	$332
Portion of rents representative of the interest factor	40	142	156	170	170	149
	$100	$383	$376	$ 437	$ 473	$481
Ratio of Earnings to Fixed Charges	4.9	2.6	2.6	3.0	2.9	1.6

^(a)	Excludes goodwill impairment charges of $315 million and $540 million recorded in the Risk Consulting & Technology segment in 2009 and 2008, respectively. Including these charges, the Ratio of Earnings to Fixed Charges was 1.7 and 1.2 for the years ended December 31, 2009 and 2008, respectively.

Exhibit 31.1

CERTIFICATIONS

I, Brian Duperreault, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 7, 2010		/s/ Brian Duperreault
		Brian Duperreault
		President and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Vanessa A. Wittman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the “registrant”);

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 7, 2010		/s/ Vanessa A. Wittman
		Vanessa A. Wittman
		Executive Vice President & Chief Financial Officer

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

The certification set forth below is being submitted in connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010 of Marsh & McLennan Companies, Inc. (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Brian Duperreault, the President and Chief Executive Officer, and Vanessa A. Wittman, the Executive Vice President & Chief Financial Officer, of Marsh & McLennan Companies, Inc. each certifies that, to the best of his or her knowledge:

1.	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Marsh & McLennan Companies, Inc.


Date: May 7, 2010		/s/ Brian Duperreault
		Brian Duperreault
		President and Chief Executive Officer

Date: May 7, 2010		/s/ Vanessa A. Wittman
		Vanessa A. Wittman
		Executive Vice President & Chief Financial Officer