Mr. Smith: MMC is the parent of Marsh, Putnam and Mercer. Marsh, of course, is the leading risk manager and insurance broker worldwide, Putnam is a very distinguished investment management firm, these days with more than 300 billion under management; and Mercer is a consulting firm, both in the human resource and management consulting area that probably will approach 2 billion in revenues in 1999. The role of the parent is to be parental to all of the three companies, be a sounding board for the leaders of the companies and actively foster collaboration among them.
TWST: From that overview, what are the trends, the issues that you feel
each of them are having to face - and how does that impact you as you
look at setting strategies and goals over the next few years?
Mr. Smith: You would need to take them one at a time. All of them have a
great potential for growth over the next few years. As far as I and the
parent company are concerned, our vision is to foster that growth and
work with the operating companies individually to develop their
strategies to achieve growth. Let me start with Marsh. They're in the
business of helping our clients manage risk. Our clients are primarily
corporate, although also individuals with substantial net worth, and
their lives are getting more complex, their risks are getting more
diverse and getting bigger - and all of these mean that they're more
than ever likely to look for the most expert help they can get to manage
the risks in their corporate lives. So that's really what drives our
growth. We sometimes work with them to reduce their business risk. We
will occasionally suggest strategies for ameliorating risk by some kind
of hedging. Most often, we'll suggest that the best way to deal with the
risk is to transfer it to an insurance underwriter. At the moment, the
prices that our clients are charged for insurance are very favorable so
that's very often their best strategy. In the investment management
business, of course, everybody is concerned about the securities markets
at the moment. The question is just how much further can the markets go
from here after the great run they've had, and the Putnam business is
sensitive to the levels of securities markets. But our view about the
fundamentals of that business is very bullish. The demographics, pretty
much around the world, are causing people to focus on retirement and
increased investment and saving, and the mutual fund seems to be
accepted as the best instrument for that. In the consulting business,
there again our business is driven by the increasing complexity of the
world, and the need for companies to look for specialized advice to be
as competitive as they can be. The market for human resources and
management consulting globally, which probably is on the order of 25
billion, is thought to be growing by something between 10 and 15 percent
per annum. So there again, we think this is a business that has great
growth potential.
Tickers included in this excerpt: MMC
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