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Large Accelerated Filer
x
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Accelerated Filer
¨
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Non-Accelerated Filer
¨
(Do not check if a smaller reporting company)
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Smaller Reporting Company
¨
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•
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our exposure to potential liabilities arising from errors and omissions claims against us;
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•
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our ability to make acquisitions and dispositions and to integrate, and realize expected synergies, savings or benefits from the businesses we acquire;
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•
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changes in the funded status of our global defined benefit pension plans and the impact of any increased pension funding resulting from those changes;
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•
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the impact of competition, including with respect to our geographic reach, the sophistication and quality of our services, our pricing relative to competitors, our customers' option to self-insure or utilize internal resources instead of consultants, and our corporate tax rates relative to a number of our competitors;
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•
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the extent to which we retain existing clients and attract new business, and our ability to incentivize and retain key employees;
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•
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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 trade sanctions laws such as the Iran Threat Reduction and Syria Human Rights Act of 2012, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, local laws prohibiting corrupt payments to government officials, as well as import and export restrictions;
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•
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our ability to maintain adequate physical, technical and administrative safeguards to protect the security of data;
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•
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our ability to successfully recover should we experience a disaster or other business continuity problem, such as an earthquake, hurricane, terrorist attack, pandemic, security breach, cyber attack, power loss, telecommunications failure or other natural or man-made disaster;
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•
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the impact of changes in interest rates and deterioration of counterparty credit quality on our results related to our cash balances and investment portfolios, including corporate and fiduciary funds;
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•
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the impact on our net income caused by fluctuations in foreign currency exchange rates;
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•
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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;
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•
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changes in applicable tax or accounting requirements; and
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•
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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, including the effect of any subsequent adjustments to the estimates we use in applying this accounting standard.
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ITEM 1.
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FINANCIAL STATEMENTS
(UNAUDITED)
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ITEM 2.
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OF OPERATIONS
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ITEM 3.
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ITEM 4.
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ITEM 1.
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ITEM 1A.
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ITEM 2.
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ITEM 3.
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ITEM 4.
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ITEM 5.
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ITEM 6.
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Item 1.
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Financial Statements.
|
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Three Months Ended
June 30, |
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Six Months Ended
June 30,
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||||||||||||
(In millions, except per share figures)
|
2013
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2012
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2013
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2012
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||||
Revenue:
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$
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3,088
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$
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3,026
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$
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6,214
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$
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6,077
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Expense:
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|
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||||||||
Compensation and benefits
|
1,766
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1,776
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3,569
|
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3,572
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|
||||
Other operating expenses
|
745
|
|
|
732
|
|
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1,461
|
|
|
1,460
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||||
Operating expenses
|
2,511
|
|
|
2,508
|
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5,030
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|
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5,032
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|
||||
Operating income
|
577
|
|
|
518
|
|
|
1,184
|
|
|
1,045
|
|
||||
Interest income
|
4
|
|
|
6
|
|
|
8
|
|
|
12
|
|
||||
Interest expense
|
(40
|
)
|
|
(45
|
)
|
|
(84
|
)
|
|
(91
|
)
|
||||
Investment income
|
23
|
|
|
4
|
|
|
44
|
|
|
24
|
|
||||
Income before income taxes
|
564
|
|
|
483
|
|
|
1,152
|
|
|
990
|
|
||||
Income tax expense
|
164
|
|
|
144
|
|
|
340
|
|
|
297
|
|
||||
Income from continuing operations
|
400
|
|
|
339
|
|
|
812
|
|
|
693
|
|
||||
Discontinued operations, net of tax
|
(5
|
)
|
|
(2
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)
|
|
7
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|
|
(2
|
)
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||||
Net income before non-controlling interests
|
395
|
|
|
337
|
|
|
819
|
|
|
691
|
|
||||
Less: Net income attributable to non-controlling interests
|
7
|
|
|
8
|
|
|
18
|
|
|
15
|
|
||||
Net income attributable to the Company
|
$
|
388
|
|
|
$
|
329
|
|
|
$
|
801
|
|
|
$
|
676
|
|
Basic net income per share – Continuing operations
|
$
|
0.71
|
|
|
$
|
0.61
|
|
|
$
|
1.45
|
|
|
$
|
1.24
|
|
– Net income attributable to the Company
|
$
|
0.71
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|
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$
|
0.60
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|
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$
|
1.46
|
|
|
$
|
1.24
|
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Diluted net income per share – Continuing operations
|
$
|
0.70
|
|
|
$
|
0.60
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|
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$
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1.42
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|
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$
|
1.23
|
|
–
Net income attributable to the Company
|
$
|
0.69
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|
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$
|
0.59
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|
|
$
|
1.44
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|
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$
|
1.22
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Average number of shares outstanding – Basic
|
551
|
|
|
545
|
|
|
549
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|
|
544
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– Diluted
|
559
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|
553
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|
|
558
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|
|
552
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Shares outstanding at June 30
|
549
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|
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544
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549
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|
544
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Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||
(In millions)
|
2013
|
|
|
2012
|
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2013
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2012
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Net income before non-controlling interests
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$
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395
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$
|
337
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$
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819
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|
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$
|
691
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(85
|
)
|
|
(191
|
)
|
(345
|
)
|
|
(29
|
)
|
||||
Unrealized investment loss
|
(1
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)
|
|
—
|
|
(1
|
)
|
|
(1
|
)
|
||||
Gain related to pension/post-retirement plans
|
50
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|
|
120
|
|
302
|
|
|
134
|
|
||||
Other comprehensive income (loss), before tax
|
(36
|
)
|
|
(71
|
)
|
(44
|
)
|
|
104
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|
||||
Income tax expense on other comprehensive income (loss)
|
20
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|
|
21
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|
84
|
|
|
31
|
|
||||
Other comprehensive income (loss), net of tax
|
(56
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)
|
|
(92
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)
|
(128
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)
|
|
73
|
|
||||
Comprehensive income
|
339
|
|
|
245
|
|
691
|
|
|
764
|
|
||||
Less: comprehensive income attributable to non-controlling interest
|
7
|
|
|
8
|
|
18
|
|
|
15
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|
||||
Comprehensive income attributable to the Company
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$
|
332
|
|
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$
|
237
|
|
$
|
673
|
|
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$
|
749
|
|
(In millions, except per share figures)
|
June 30,
2013 |
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December 31,
2012 |
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||
ASSETS
|
|
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|
||||
Current assets:
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|
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|
||||
Cash and cash equivalents
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$
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1,230
|
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$
|
2,301
|
|
Receivables
|
|
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|
||||
Commissions and fees
|
3,162
|
|
|
2,858
|
|
||
Advanced premiums and claims
|
64
|
|
|
62
|
|
||
Other
|
219
|
|
|
244
|
|
||
|
3,445
|
|
|
3,164
|
|
||
Less-allowance for doubtful accounts and cancellations
|
(100
|
)
|
|
(106
|
)
|
||
Net receivables
|
3,345
|
|
|
3,058
|
|
||
Current deferred tax assets
|
410
|
|
|
410
|
|
||
Other current assets
|
229
|
|
|
194
|
|
||
Total current assets
|
5,214
|
|
|
5,963
|
|
||
Goodwill and intangible assets
|
7,281
|
|
|
7,261
|
|
||
Fixed assets
(net of accumulated depreciation and amortization of $1,595 at June 30, 2013 and $1,582 at December 31, 2012)
|
804
|
|
|
809
|
|
||
Pension related assets
|
668
|
|
|
260
|
|
||
Deferred tax assets
|
1,129
|
|
|
1,223
|
|
||
Other assets
|
742
|
|
|
772
|
|
||
|
$
|
15,838
|
|
|
$
|
16,288
|
|
(In millions, except per share figures)
|
June 30,
2013 |
|
|
December 31,
2012 |
|
||
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
10
|
|
|
$
|
260
|
|
Accounts payable and accrued liabilities
|
1,786
|
|
|
1,721
|
|
||
Accrued compensation and employee benefits
|
858
|
|
|
1,473
|
|
||
Accrued income taxes
|
171
|
|
|
110
|
|
||
Dividends payable
|
139
|
|
|
—
|
|
||
Total current liabilities
|
2,964
|
|
|
3,564
|
|
||
Fiduciary liabilities
|
4,563
|
|
|
3,992
|
|
||
Less – cash and investments held in a fiduciary capacity
|
(4,563
|
)
|
|
(3,992
|
)
|
||
|
—
|
|
|
—
|
|
||
Long-term debt
|
2,703
|
|
|
2,658
|
|
||
Pension, post-retirement and post-employment benefits
|
1,979
|
|
|
2,094
|
|
||
Liabilities for errors and omissions
|
440
|
|
|
460
|
|
||
Other liabilities
|
906
|
|
|
906
|
|
||
Commitments and contingencies
|
|
|
|
||||
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 June 30, 2013
|
|
|
|
||||
and December 31, 2012
|
561
|
|
|
561
|
|
||
Additional paid-in capital
|
1,002
|
|
|
1,107
|
|
||
Retained earnings
|
9,036
|
|
|
8,628
|
|
||
Accumulated other comprehensive loss
|
(3,435
|
)
|
|
(3,307
|
)
|
||
Non-controlling interests
|
67
|
|
|
64
|
|
||
|
7,231
|
|
|
7,053
|
|
||
Less – treasury shares, at cost, 11,596,053 shares at June 30, 2013
|
|
|
|
||||
and 15,133,774 shares at December 31, 2012
|
(385
|
)
|
|
(447
|
)
|
||
Total equity
|
6,846
|
|
|
6,606
|
|
||
|
$
|
15,838
|
|
|
$
|
16,288
|
|
For the Six Months Ended June 30,
|
|
|
|
||||
(In millions)
|
2013
|
|
|
2012
|
|
||
Operating cash flows:
|
|
|
|
||||
Net income before non-controlling interests
|
$
|
819
|
|
|
$
|
691
|
|
Adjustments to reconcile net income to cash provided by operations:
|
|
|
|
||||
Depreciation and amortization of fixed assets and capitalized software
|
142
|
|
|
133
|
|
||
Amortization of intangible assets
|
35
|
|
|
34
|
|
||
Adjustments to acquisition related contingent consideration liability
|
10
|
|
|
—
|
|
||
Provision for deferred income taxes
|
71
|
|
|
25
|
|
||
Gain on investments
|
(44
|
)
|
|
(24
|
)
|
||
Loss on disposition of assets
|
5
|
|
|
12
|
|
||
Stock option expense
|
12
|
|
|
20
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Net receivables
|
(283
|
)
|
|
(193
|
)
|
||
Other current assets
|
(34
|
)
|
|
(29
|
)
|
||
Other assets
|
(498
|
)
|
|
(37
|
)
|
||
Accounts payable and accrued liabilities
|
27
|
|
|
(218
|
)
|
||
Accrued compensation and employee benefits
|
(615
|
)
|
|
(484
|
)
|
||
Accrued income taxes
|
53
|
|
|
49
|
|
||
Other liabilities
|
124
|
|
|
68
|
|
||
Effect of exchange rate changes
|
13
|
|
|
19
|
|
||
Net cash (used for) provided by operations
|
(163
|
)
|
|
66
|
|
||
Financing cash flows:
|
|
|
|
||||
Purchase of treasury shares
|
(250
|
)
|
|
(100
|
)
|
||
Proceeds from debt
|
50
|
|
|
248
|
|
||
Repayments of debt
|
(255
|
)
|
|
(254
|
)
|
||
Shares withheld for taxes on vested units – treasury shares
|
(68
|
)
|
|
(89
|
)
|
||
Issuance of common stock from treasury shares
|
206
|
|
|
95
|
|
||
Payments of contingent consideration for acquisitions
|
(5
|
)
|
|
(14
|
)
|
||
Distributions of non-controlling interests
|
(15
|
)
|
|
(4
|
)
|
||
Dividends paid
|
(255
|
)
|
|
(242
|
)
|
||
Net cash used for financing activities
|
(592
|
)
|
|
(360
|
)
|
||
Investing cash flows:
|
|
|
|
||||
Capital expenditures
|
(192
|
)
|
|
(149
|
)
|
||
Net sales of long-term investments
|
82
|
|
|
(8
|
)
|
||
Proceeds from sales of fixed assets
|
2
|
|
|
1
|
|
||
Dispositions
|
3
|
|
|
2
|
|
||
Acquisitions
|
(91
|
)
|
|
(129
|
)
|
||
Other, net
|
2
|
|
|
(1
|
)
|
||
Net cash used for investing activities
|
(194
|
)
|
|
(284
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(122
|
)
|
|
(31
|
)
|
||
Decrease in cash and cash equivalents
|
(1,071
|
)
|
|
(609
|
)
|
||
Cash and cash equivalents at beginning of period
|
2,301
|
|
|
2,113
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,230
|
|
|
$
|
1,504
|
|
For the Six Months Ended June 30,
|
|
|
|
||||
(In millions, except per share figures)
|
2013
|
|
|
2012
|
|
||
COMMON STOCK
|
|
|
|
||||
Balance, beginning and end of period
|
$
|
561
|
|
|
$
|
561
|
|
ADDITIONAL PAID-IN CAPITAL
|
|
|
|
||||
Balance, beginning of year
|
$
|
1,107
|
|
|
$
|
1,156
|
|
Change in accrued stock compensation costs
|
(69
|
)
|
|
(79
|
)
|
||
Issuance of shares under stock compensation plans and employee stock purchase plans and related tax impact
|
(36
|
)
|
|
(25
|
)
|
||
Purchase of subsidiary shares from non-controlling interests
|
—
|
|
|
1
|
|
||
Balance, end of period
|
$
|
1,002
|
|
|
$
|
1,053
|
|
RETAINED EARNINGS
|
|
|
|
||||
Balance, beginning of year
|
$
|
8,628
|
|
|
$
|
7,949
|
|
Net income attributable to the Company
|
801
|
|
|
676
|
|
||
Dividend equivalents declared (per share amounts: $0.71 in 2013 and $0.67 in 2012)
|
(3
|
)
|
|
(4
|
)
|
||
Dividends declared – (per share amounts: $0.71 in 2013 and $0.67 in 2012)
|
(390
|
)
|
|
(364
|
)
|
||
Balance, end of period
|
$
|
9,036
|
|
|
$
|
8,257
|
|
ACCUMULATED OTHER COMPREHENSIVE GAIN (LOSS)
|
|
|
|
||||
Balance, beginning of year
|
$
|
(3,307
|
)
|
|
$
|
(3,188
|
)
|
Other comprehensive income (loss), net of tax
|
(128
|
)
|
|
73
|
|
||
Balance, end of period
|
$
|
(3,435
|
)
|
|
$
|
(3,115
|
)
|
TREASURY SHARES
|
|
|
|
||||
Balance, beginning of year
|
$
|
(447
|
)
|
|
$
|
(595
|
)
|
Issuance of shares under stock compensation plans and employee stock purchase plans
|
312
|
|
|
212
|
|
||
Purchase of treasury shares
|
(250
|
)
|
|
(100
|
)
|
||
Balance, end of period
|
$
|
(385
|
)
|
|
$
|
(483
|
)
|
NON-CONTROLLING INTERESTS
|
|
|
|
||||
Balance, beginning of year
|
$
|
64
|
|
|
$
|
57
|
|
Net income attributable to non-controlling interests
|
18
|
|
|
15
|
|
||
Dividends and other changes
|
(15
|
)
|
|
(1
|
)
|
||
Balance, end of period
|
$
|
67
|
|
|
$
|
71
|
|
TOTAL EQUITY
|
$
|
6,846
|
|
|
$
|
6,344
|
|
Basic and Diluted EPS Calculation -
Continuing Operations
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions, except per share figures)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Net income from continuing operations
|
$
|
400
|
|
|
$
|
339
|
|
|
$
|
812
|
|
|
$
|
693
|
|
Less: Net income attributable to non-controlling interests
|
7
|
|
|
8
|
|
|
18
|
|
|
15
|
|
||||
|
$
|
393
|
|
|
$
|
331
|
|
|
$
|
794
|
|
|
$
|
678
|
|
Basic weighted average common shares outstanding
|
551
|
|
|
545
|
|
|
549
|
|
|
544
|
|
||||
Dilutive effect of potentially issuable common shares
|
8
|
|
|
8
|
|
|
9
|
|
|
8
|
|
||||
Diluted weighted average common shares outstanding
|
559
|
|
|
553
|
|
|
558
|
|
|
552
|
|
||||
Average stock price used to calculate common stock equivalents
|
$
|
39.15
|
|
|
$
|
32.31
|
|
|
$
|
37.68
|
|
|
$
|
32.13
|
|
(In millions of dollars)
|
2013
|
|
|
2012
|
|
||
Assets acquired, excluding cash
|
$
|
126
|
|
|
$
|
131
|
|
Liabilities assumed
|
(24
|
)
|
|
(31
|
)
|
||
Contingent/deferred purchase consideration
|
(14
|
)
|
|
(18
|
)
|
||
Net cash outflow for current year acquisitions
|
88
|
|
|
82
|
|
||
Deferred purchase consideration from prior years' acquisitions
|
3
|
|
|
47
|
|
||
Net cash outflow for acquisitions
|
$
|
91
|
|
|
$
|
129
|
|
(In millions of dollars)
|
2013
|
|
|
2012
|
|
||
Interest paid
|
$
|
89
|
|
|
$
|
92
|
|
Income taxes paid
|
$
|
185
|
|
|
$
|
160
|
|
(In millions of dollars)
|
Unrealized Investment Gains
|
|
Pension/Post-Retirement Plans Gains (Losses)
|
|
Foreign Currency Translation Adjustments
|
|
Total
|
||||||||
Beginning Balance
|
$
|
4
|
|
|
$
|
(3,451
|
)
|
|
$
|
140
|
|
|
$
|
(3,307
|
)
|
Other comprehensive income (loss) before reclassifications
|
(1
|
)
|
|
121
|
|
|
(340
|
)
|
|
(220
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
92
|
|
|
—
|
|
|
92
|
|
||||
Net current period other comprehensive income (loss)
|
(1
|
)
|
|
213
|
|
|
(340
|
)
|
|
(128
|
)
|
||||
Ending Balance
|
$
|
3
|
|
|
$
|
(3,238
|
)
|
|
$
|
(200
|
)
|
|
$
|
(3,435
|
)
|
Three Months Ended June 30,
|
2013
|
|
2012
|
||||||||||||||||
(In millions of dollars)
|
Pre-Tax
|
|
Tax
|
|
Net of Tax
|
|
|
Pre-Tax
|
|
Tax
|
|
Net of Tax
|
|
||||||
Foreign currency translation adjustments
|
$
|
(85
|
)
|
$
|
(1
|
)
|
$
|
(84
|
)
|
|
$
|
(191
|
)
|
$
|
(14
|
)
|
$
|
(177
|
)
|
Unrealized investment gains (losses)
|
(1
|
)
|
—
|
|
(1
|
)
|
|
—
|
|
1
|
|
(1
|
)
|
||||||
Pension/post-retirement plans:
|
|
|
|
|
|
|
|
||||||||||||
Amortization of losses (gains) included in net periodic pension cost:
|
|
|
|
|
|
|
|
|
|
||||||||||
Prior service gains (a)
|
(5
|
)
|
(2
|
)
|
(3
|
)
|
|
(8
|
)
|
—
|
|
(8
|
)
|
||||||
Net actuarial losses (a)
|
78
|
|
28
|
|
50
|
|
|
68
|
|
1
|
|
67
|
|
||||||
Subtotal
|
73
|
|
26
|
|
47
|
|
|
60
|
|
1
|
|
59
|
|
||||||
Foreign currency translation adjustments
|
(23
|
)
|
(5
|
)
|
(18
|
)
|
|
60
|
|
33
|
|
27
|
|
||||||
Pension/post-retirement plans losses
|
50
|
|
21
|
|
29
|
|
|
120
|
|
34
|
|
86
|
|
||||||
Other comprehensive income (loss)
|
$
|
(36
|
)
|
$
|
20
|
|
$
|
(56
|
)
|
|
$
|
(71
|
)
|
$
|
21
|
|
$
|
(92
|
)
|
Six Months Ended June 30,
|
2013
|
|
2012
|
||||||||||||||||
(In millions of dollars)
|
Pre-Tax
|
|
Tax
|
|
Net of Tax
|
|
|
Pre-Tax
|
|
Tax
|
|
Net of Tax
|
|
||||||
Foreign currency translation adjustments
|
$
|
(345
|
)
|
$
|
(5
|
)
|
$
|
(340
|
)
|
|
$
|
(29
|
)
|
$
|
(14
|
)
|
$
|
(15
|
)
|
Unrealized investment gains (losses)
|
(1
|
)
|
—
|
|
(1
|
)
|
|
(1
|
)
|
2
|
|
(3
|
)
|
||||||
Pension/post-retirement plans:
|
|
|
|
|
|
|
|
||||||||||||
Amortization of losses (gains) included in net periodic pension cost:
|
|
|
|
|
|
|
|
||||||||||||
Prior service gains (a)
|
(11
|
)
|
(4
|
)
|
(7
|
)
|
|
(16
|
)
|
(5
|
)
|
(11
|
)
|
||||||
Net actuarial losses (a)
|
156
|
|
57
|
|
99
|
|
|
134
|
|
43
|
|
91
|
|
||||||
Subtotal
|
145
|
|
53
|
|
92
|
|
|
118
|
|
38
|
|
80
|
|
||||||
Foreign currency translation adjustments
|
157
|
|
36
|
|
121
|
|
|
16
|
|
5
|
|
11
|
|
||||||
Pension/post-retirement plans losses
|
302
|
|
89
|
|
213
|
|
|
134
|
|
43
|
|
91
|
|
||||||
Other comprehensive income (loss)
|
$
|
(44
|
)
|
$
|
84
|
|
$
|
(128
|
)
|
|
$
|
104
|
|
$
|
31
|
|
$
|
73
|
|
For the Six Months Ended June 30, 2013
|
|
||
(Amounts in millions)
|
|
||
Cash
|
$
|
95
|
|
Estimated fair value of deferred/contingent consideration
|
14
|
|
|
Total Consideration
|
$
|
109
|
|
Allocation of purchase price:
|
|
||
Cash and cash equivalents
|
$
|
7
|
|
Accounts receivable, net
|
7
|
|
|
Property, plant, and equipment
|
4
|
|
|
Intangible assets
|
51
|
|
|
Goodwill
|
62
|
|
|
Other assets
|
2
|
|
|
Total assets acquired
|
133
|
|
|
Current liabilities
|
10
|
|
|
Other liabilities
|
14
|
|
|
Total liabilities assumed
|
24
|
|
|
Net assets acquired
|
$
|
109
|
|
•
|
January - Marsh acquired Alexander Forbes' South African brokerage operations, including Alexander Forbes Risk Services and insurance broking operations in Botswana and Namibia to expand Marsh's presence in Africa. Marsh subsequently completed the acquisitions of the Alexander Forbes operations in Uganda, Malawi and Zambia.
|
•
|
March - Marsh & McLennan Agency business ("MMA") acquired KSPH, LLC, a middle-market employee benefits agency based in Virginia, and Marsh acquired Cosmos Services (America) Inc., the U.S. insurance brokerage subsidiary of ITOCHU Corp., which specializes in commercial property/casualty, personal lines, and employee benefits brokerage services to U.S. subsidiaries of Japanese companies.
|
•
|
June - MMA acquired Progressive Benefits Solutions, an employee benefits agency based in North Carolina, and Security Insurance Services, Inc., a Wisconsin-based insurance agency which offers property/casualty and employee benefits products and services to individuals and businesses.
|
•
|
August - MMA acquired Rosenfeld-Einstein, a South Carolina-based employee benefits service provider, and Eidson Insurance, a property/casualty and employee benefits services firm located in Florida.
|
•
|
October - MMA acquired Howalt+McDowell, a South Dakota-based agency which offers property casualty, surety, personal protection and employee benefits insurance to individuals and businesses, and The Protector Group Insurance Agency, a Massachusetts-based agency which provides property casualty, employee benefits services, personal insurance and individual financial services.
|
•
|
November - MMA acquired Brower Insurance, an Ohio-based company providing employee benefits, property/casualty and consulting services.
|
•
|
December - MMA acquired McGraw Wentworth, a Michigan-based company providing consulting services to mid-sized organizations, and Liscomb Hood Mason, a Minnesota-based company providing property/casualty and employee benefits products and services.
|
•
|
February - Mercer acquired the remaining
49%
of Yokogawa-ORC, a global mobility firm based in Japan, which was previously accounted for under the equity method, and Pensjon & Finans, a leading Norway-based financial investment and pension consulting firm.
|
•
|
March - Mercer acquired REPCA, a France-based broking and advisory firm for employer health and benefits plans.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In millions, except per share figures)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Revenue
|
$
|
3,099
|
|
|
$
|
3,061
|
|
|
$
|
6,237
|
|
|
$
|
6,153
|
|
Income from continuing operations
|
$
|
404
|
|
|
$
|
344
|
|
|
$
|
817
|
|
|
$
|
701
|
|
Net income attributable to the Company
|
$
|
391
|
|
|
$
|
334
|
|
|
$
|
806
|
|
|
$
|
684
|
|
Basic net income per share:
|
|
|
|
|
|
|
|
||||||||
– Continuing operations
|
$
|
0.72
|
|
|
$
|
0.62
|
|
|
$
|
1.45
|
|
|
$
|
1.26
|
|
– Net income attributable to the Company
|
$
|
0.71
|
|
|
$
|
0.61
|
|
|
$
|
1.47
|
|
|
$
|
1.25
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
||||||||
– Continuing operations
|
$
|
0.71
|
|
|
$
|
0.61
|
|
|
$
|
1.43
|
|
|
$
|
1.24
|
|
– Net income attributable to the Company
|
$
|
0.70
|
|
|
$
|
0.60
|
|
|
$
|
1.44
|
|
|
$
|
1.24
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
(In millions of dollars, except per share figures)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Loss from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
Disposals of discontinued operations
|
(6
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
||||
Income tax credit
|
(1
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
||||
Disposals of discontinued operations, net of tax
|
(5
|
)
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Discontinued operations, net of tax
|
$
|
(5
|
)
|
|
$
|
(2
|
)
|
|
$
|
7
|
|
|
$
|
(2
|
)
|
Discontinued operations, net of tax per share
|
|
|
|
|
|
|
|
||||||||
– Basic
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
|
$
|
—
|
|
– Diluted
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.01
|
)
|
June 30,
|
|
|
|
||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
||
Balance as of January 1, as reported
|
$
|
6,792
|
|
|
$
|
6,562
|
|
Goodwill acquired
|
62
|
|
|
113
|
|
||
Other adjustments
(a)
|
(50
|
)
|
|
(32
|
)
|
||
Balance at June 30, 2013
|
$
|
6,804
|
|
|
$
|
6,643
|
|
(a)
|
Primarily reflects the impact of foreign exchange in each year.
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
(In millions of dollars)
|
Gross
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|
|
Gross
Cost
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Amount
|
|
||||||
Amortized intangibles
|
$
|
849
|
|
|
$
|
372
|
|
|
$
|
477
|
|
|
$
|
814
|
|
|
$
|
345
|
|
|
$
|
469
|
|
For the Years Ending December 31,
|
|
||
(In millions of dollars)
|
Estimated Expense
|
|
|
2013 (excludes amortization through June 30, 2013)
|
$
|
36
|
|
2014
|
70
|
|
|
2015
|
69
|
|
|
2016
|
60
|
|
|
2017
|
54
|
|
|
Subsequent years
|
188
|
|
|
|
$
|
477
|
|
Level 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:
|
a)
|
Quoted prices for similar assets or liabilities in active markets;
|
b)
|
Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
|
c)
|
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
|
d)
|
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).
|
|
Identical Assets
(Level 1)
|
|
Observable Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||||||||||||||||||
(In millions of dollars)
|
06/30/13
|
|
|
12/31/12
|
|
|
06/30/13
|
|
|
12/31/12
|
|
|
06/30/13
|
|
|
12/31/12
|
|
|
06/30/13
|
|
|
12/31/12
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial instruments owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mutual funds
(a)
|
$
|
138
|
|
|
$
|
139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
138
|
|
|
$
|
139
|
|
Money market funds
(b)
|
24
|
|
|
483
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
483
|
|
||||||||
Interest rate swap derivatives
(c)
|
—
|
|
|
—
|
|
|
5
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
6
|
|
||||||||
Total assets measured at fair value
|
$
|
162
|
|
|
$
|
622
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
167
|
|
|
$
|
628
|
|
Fiduciary Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Municipal Bonds
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
3
|
|
Money market funds
|
4
|
|
|
149
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
149
|
|
||||||||
Total fiduciary assets measured at fair value
|
$
|
4
|
|
|
$
|
149
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
152
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent consideration liability
(d)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
63
|
|
|
$
|
81
|
|
|
$
|
63
|
|
Senior Notes due 2014
(e)
|
—
|
|
|
—
|
|
|
255
|
|
|
256
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|
256
|
|
||||||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
255
|
|
|
$
|
256
|
|
|
$
|
81
|
|
|
$
|
63
|
|
|
$
|
336
|
|
|
$
|
319
|
|
(a)
|
Included in other assets in the consolidated balance sheets.
|
(b)
|
Included in cash and cash equivalents in the consolidated balance sheets.
|
(c)
|
Included in other receivables in the consolidated balance sheets.
|
(d)
|
Included in accounts payable and accrued liabilities and other liabilities in the consolidated balance sheets.
|
(e)
|
Included in long term debt in the consolidated balance sheets.
|
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
||
Balance at January 1,
|
$
|
63
|
|
|
$
|
110
|
|
|
Additions
|
13
|
|
|
18
|
|
|
||
Payments
|
(5
|
)
|
|
(14
|
)
|
|
||
Revaluation Impact
|
10
|
|
|
2
|
|
|
||
Balance at June 30,
|
$
|
81
|
|
|
$
|
116
|
|
|
Combined U.S. and significant non-U.S. Plans
|
Pension
|
|
Postretirement
|
||||||||||||
For the Three Months Ended June 30,
|
Benefits
|
|
Benefits
|
||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Service cost
|
$
|
61
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
144
|
|
|
149
|
|
|
3
|
|
|
3
|
|
||||
Expected return on plan assets
|
(225
|
)
|
|
(225
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(6
|
)
|
|
(5
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Recognized actuarial loss
|
80
|
|
|
68
|
|
|
1
|
|
|
—
|
|
||||
Net periodic benefit cost
|
$
|
54
|
|
|
$
|
47
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Combined U.S. and significant non-U.S. Plans
|
Pension
|
|
Postretirement
|
||||||||||||
For the Six Months Ended June 30,
|
Benefits
|
|
Benefits
|
||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Service cost
|
$
|
125
|
|
|
$
|
121
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest cost
|
289
|
|
|
297
|
|
|
6
|
|
|
6
|
|
||||
Expected return on plan assets
|
(453
|
)
|
|
(451
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(11
|
)
|
|
(10
|
)
|
|
—
|
|
|
(6
|
)
|
||||
Recognized actuarial loss
|
158
|
|
|
134
|
|
|
1
|
|
|
—
|
|
||||
Net periodic benefit cost
|
$
|
108
|
|
|
$
|
91
|
|
|
$
|
9
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. Plans only
|
Pension
|
|
Postretirement
|
||||||||||||
For the Three Months Ended June 30,
|
Benefits
|
|
Benefits
|
||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Service cost
|
$
|
25
|
|
|
$
|
23
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
57
|
|
|
58
|
|
|
2
|
|
|
2
|
|
||||
Expected return on plan assets
|
(81
|
)
|
|
(80
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(4
|
)
|
|
(4
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Recognized actuarial loss (gain)
|
53
|
|
|
39
|
|
|
—
|
|
|
(1
|
)
|
||||
Net periodic benefit cost (credit)
|
$
|
50
|
|
|
$
|
36
|
|
|
$
|
2
|
|
|
$
|
(2
|
)
|
U.S. Plans only
|
Pension
|
|
Postretirement
|
||||||||||||
For the Six Months Ended June 30,
|
Benefits
|
|
Benefits
|
||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Service cost
|
$
|
52
|
|
|
$
|
47
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
114
|
|
|
115
|
|
|
4
|
|
|
4
|
|
||||
Expected return on plan assets
|
(162
|
)
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(8
|
)
|
|
(8
|
)
|
|
—
|
|
|
(6
|
)
|
||||
Recognized actuarial loss (gain)
|
104
|
|
|
76
|
|
|
—
|
|
|
(1
|
)
|
||||
Net periodic benefit cost (credit)
|
$
|
100
|
|
|
$
|
69
|
|
|
$
|
5
|
|
|
$
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Significant non-U.S. Plans only
|
Pension
|
|
Postretirement
|
||||||||||||
For the Three Months Ended June 30,
|
Benefits
|
|
Benefits
|
||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Service cost
|
$
|
36
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
87
|
|
|
91
|
|
|
1
|
|
|
1
|
|
||||
Expected return on plan assets
|
(144
|
)
|
|
(145
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service credit
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized actuarial loss
|
27
|
|
|
29
|
|
|
1
|
|
|
1
|
|
||||
Net periodic benefit cost
|
$
|
4
|
|
|
$
|
11
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Significant non-U.S. Plans only
|
Pension
|
|
Postretirement
|
||||||||||||
For the Six Months Ended June 30,
|
Benefits
|
|
Benefits
|
||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Service cost
|
$
|
73
|
|
|
$
|
74
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
175
|
|
|
182
|
|
|
2
|
|
|
2
|
|
||||
Expected return on plan assets
|
(291
|
)
|
|
(290
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of prior service cost
|
(3
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||
Recognized actuarial loss
|
54
|
|
|
58
|
|
|
1
|
|
|
1
|
|
||||
Net periodic benefit cost
|
$
|
8
|
|
|
$
|
22
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
Combined U.S. and significant non-U.S. Plans
|
Pension
Benefits
|
|
Postretirement
Benefits
|
||||||||
June 30,
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Weighted average assumptions:
|
|
|
|
|
|
|
|
||||
Expected return on plan assets
|
7.66
|
%
|
|
8.04
|
%
|
|
—
|
%
|
|
—
|
%
|
Discount rate
|
4.38
|
%
|
|
4.91
|
%
|
|
4.32
|
%
|
|
5.05
|
%
|
Rate of compensation increase
|
2.43
|
%
|
|
3.09
|
%
|
|
—
|
%
|
|
—
|
%
|
(In millions of dollars)
|
June 30,
2013 |
|
|
December 31,
2012 |
|
||
Short-term:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
10
|
|
|
$
|
260
|
|
Long-term:
|
|
|
|
||||
Senior notes – 4.850% due 2013
|
—
|
|
|
250
|
|
||
Senior notes – 5.875% due 2033
|
297
|
|
|
296
|
|
||
Senior notes – 5.375% due 2014
|
325
|
|
|
326
|
|
||
Senior notes – 5.75% due 2015
|
479
|
|
|
479
|
|
||
Senior notes – 2.30% due 2017
|
249
|
|
|
249
|
|
||
Senior notes – 9.25% due 2019
|
398
|
|
|
398
|
|
||
Senior notes – 4.80% due 2021
|
497
|
|
|
497
|
|
||
Mortgage – 5.70% due 2035
|
417
|
|
|
422
|
|
||
Term Loan Facility - due 2016
|
50
|
|
|
—
|
|
||
Other
|
1
|
|
|
1
|
|
||
|
2,713
|
|
|
2,918
|
|
||
Less current portion
|
10
|
|
|
260
|
|
||
|
$
|
2,703
|
|
|
$
|
2,658
|
|
|
2013
|
|
2012
|
||||||||||||||||||||
Income statement classification
(In millions of dollars)
|
Loss on Swaps
|
|
Gain on Notes
|
|
Net Income Effect
|
|
Loss on Swaps
|
|
Gain on Notes
|
|
Net Income Effect
|
||||||||||||
Other Operating Expenses
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||||||||||
(In millions of dollars)
|
Carrying
Amount
|
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
|
Fair
Value
|
|
||||
Short-term debt
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
260
|
|
|
$
|
261
|
|
Long-term debt
|
$
|
2,703
|
|
|
$
|
2,939
|
|
|
$
|
2,658
|
|
|
$
|
2,986
|
|
(In millions of dollars)
|
Liability at 1/1/12
|
|
Amounts
Accrued
|
|
|
Cash
Paid
|
|
|
Other
|
|
|
Liability at 12/31/12
|
|
Amounts
Accrued
|
|
|
Cash
Paid
|
|
|
Other
|
|
|
Liability at 6/30/13
|
||||||||||||
Severance
|
$
|
27
|
|
|
$
|
46
|
|
|
$
|
(38
|
)
|
|
$
|
1
|
|
|
$
|
36
|
|
|
$
|
7
|
|
|
$
|
(26
|
)
|
|
$
|
(2
|
)
|
|
$
|
15
|
|
Future rent under non-cancelable leases and other costs
|
154
|
|
|
32
|
|
|
(50
|
)
|
|
(2
|
)
|
|
134
|
|
|
6
|
|
|
(21
|
)
|
|
1
|
|
|
120
|
|
|||||||||
Total
|
$
|
181
|
|
|
$
|
78
|
|
|
$
|
(88
|
)
|
|
$
|
(1
|
)
|
|
$
|
170
|
|
|
$
|
13
|
|
|
$
|
(47
|
)
|
|
$
|
(1
|
)
|
|
$
|
135
|
|
▪
|
Risk and Insurance Services
, comprising insurance services (Marsh) and reinsurance services (Guy Carpenter); and
|
▪
|
Consulting
, comprising Mercer and Oliver Wyman Group
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions of dollars)
|
Revenue
|
|
Operating
Income
(Loss)
|
|
Revenue
|
|
Operating
Income
(Loss)
|
||||||||
2013 –
|
|
|
|
|
|
|
|
||||||||
Risk and Insurance Services
|
$
|
1,688
|
|
(a)
|
$
|
421
|
|
|
$
|
3,459
|
|
(c)
|
$
|
889
|
|
Consulting
|
1,410
|
|
(b)
|
205
|
|
|
2,772
|
|
(d)
|
392
|
|
||||
Total Operating Segments
|
3,098
|
|
|
626
|
|
|
6,231
|
|
|
1,281
|
|
||||
Corporate / Eliminations
|
(10
|
)
|
|
(49
|
)
|
|
(17
|
)
|
|
(97
|
)
|
||||
Total Consolidated
|
$
|
3,088
|
|
|
$
|
577
|
|
|
$
|
6,214
|
|
|
$
|
1,184
|
|
2012–
|
|
|
|
|
|
|
|
||||||||
Risk and Insurance Services
|
$
|
1,641
|
|
(a)
|
$
|
390
|
|
|
$
|
3,330
|
|
(c)
|
$
|
802
|
|
Consulting
|
1,398
|
|
(b)
|
183
|
|
|
2,769
|
|
(d)
|
347
|
|
||||
Total Operating Segments
|
3,039
|
|
|
573
|
|
|
6,099
|
|
|
1,149
|
|
||||
Corporate / Eliminations
|
(13
|
)
|
|
(55
|
)
|
|
(22
|
)
|
|
(104
|
)
|
||||
Total Consolidated
|
$
|
3,026
|
|
|
$
|
518
|
|
|
$
|
6,077
|
|
|
$
|
1,045
|
|
(a)
|
Includes inter-segment revenue of $
3 million
and
$2 million
in
2013
and
2012
respectively, interest income on fiduciary funds of
$6 million
and
$10 million
in
2013
and
2012
, respectively, and equity method income of
$7 million
and
$9 million
in
2013
and
2012
, respectively.
|
(b)
|
Includes inter-segment revenue of
$7 million
and $
11 million
in
2013
and
2012
, respectively, and interest income on fiduciary funds of $
1 million
in
2013
and 2012.
|
(c)
|
Includes inter-segment revenue of $
3 million
in both 2013 and 2012, interest income on fiduciary funds of $
14 million
and
$21 million
in
2013
and
2012
, respectively, and equity method income of
$8 million
and
$10 million
in
2013
and 2012, respectively.
|
(d)
|
Includes inter-segment revenue of
$14 million
and $
19 million
in
2013
and
2012
, respectively, and interest income on fiduciary funds of
$2 million
and
$1 million
in
2013
and
2012
, respectively.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
||||
Risk and Insurance Services
|
|
|
|
|
|
|
|
||||||||
Marsh
|
$
|
1,402
|
|
|
$
|
1,364
|
|
|
$
|
2,797
|
|
|
$
|
2,694
|
|
Guy Carpenter
|
286
|
|
|
277
|
|
|
662
|
|
|
636
|
|
||||
Total Risk and Insurance Services
|
1,688
|
|
|
1,641
|
|
|
3,459
|
|
|
3,330
|
|
||||
Consulting
|
|
|
|
|
|
|
|
||||||||
Mercer
|
1,044
|
|
|
1,017
|
|
|
2,085
|
|
|
2,032
|
|
||||
Oliver Wyman Group
|
366
|
|
|
381
|
|
|
687
|
|
|
737
|
|
||||
Total Consulting
|
1,410
|
|
|
1,398
|
|
|
2,772
|
|
|
2,769
|
|
||||
Total Operating Segments
|
3,098
|
|
|
3,039
|
|
|
6,231
|
|
|
6,099
|
|
||||
Corporate
/
Eliminations
|
(10
|
)
|
|
(13
|
)
|
|
(17
|
)
|
|
(22
|
)
|
||||
Total
|
$
|
3,088
|
|
|
$
|
3,026
|
|
|
$
|
6,214
|
|
|
$
|
6,077
|
|
|
Three Months Ended June 30, 2012
|
|
Six Months Ended June 30, 2012
|
||||||||||||||||||||
(In millions of dollars)
|
As Reported
|
|
Reclassification
|
|
Current Presentation
|
|
As Reported
|
|
Reclassification
|
|
Current Presentation
|
||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Risk and Insurance Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Marsh
|
$
|
1,421
|
|
|
$
|
(57
|
)
|
|
$
|
1,364
|
|
|
$
|
2,809
|
|
|
$
|
(115
|
)
|
|
$
|
2,694
|
|
Guy Carpenter
|
277
|
|
|
—
|
|
|
277
|
|
|
636
|
|
|
—
|
|
|
636
|
|
||||||
Total Risk and Insurance Services
|
1,698
|
|
|
(57
|
)
|
|
1,641
|
|
|
3,445
|
|
|
(115
|
)
|
|
3,330
|
|
||||||
Consulting
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mercer
|
960
|
|
|
57
|
|
|
1,017
|
|
|
1,917
|
|
|
115
|
|
|
2,032
|
|
||||||
Oliver Wyman Group
|
381
|
|
|
—
|
|
|
381
|
|
|
737
|
|
|
—
|
|
|
737
|
|
||||||
Total Consulting
|
1,341
|
|
|
57
|
|
|
1,398
|
|
|
2,654
|
|
|
115
|
|
|
2,769
|
|
||||||
Total Operating Segments
|
3,039
|
|
|
—
|
|
|
3,039
|
|
|
6,099
|
|
|
—
|
|
|
6,099
|
|
||||||
Corporate Eliminations
|
(13
|
)
|
|
—
|
|
|
(13
|
)
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
||||||
Total Revenue
|
$
|
3,026
|
|
|
$
|
—
|
|
|
$
|
3,026
|
|
|
$
|
6,077
|
|
|
$
|
—
|
|
|
$
|
6,077
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Risk and Insurance Services
|
$
|
401
|
|
|
$
|
(11
|
)
|
|
$
|
390
|
|
|
$
|
818
|
|
|
$
|
(16
|
)
|
|
$
|
802
|
|
Consulting
|
172
|
|
|
11
|
|
|
183
|
|
|
331
|
|
|
16
|
|
|
347
|
|
||||||
Total Operating Segments
|
573
|
|
|
—
|
|
|
573
|
|
|
1,149
|
|
|
—
|
|
|
1,149
|
|
||||||
Corporate Eliminations
|
(55
|
)
|
|
—
|
|
|
(55
|
)
|
|
(104
|
)
|
|
—
|
|
|
(104
|
)
|
||||||
Total Consolidated
|
$
|
518
|
|
|
$
|
—
|
|
|
$
|
518
|
|
|
$
|
1,045
|
|
|
$
|
—
|
|
|
$
|
1,045
|
|
•
|
Risk and Insurance Services
includes risk management activities (risk advice, risk transfer and risk control and mitigation solutions) as well as insurance and reinsurance broking and services. We conduct business in this segment through Marsh and Guy Carpenter.
|
•
|
Consulting
includes Health, Retirement, Talent and Investments consulting and services, and specialized management and economic consulting services. We conduct business in this segment through Mercer and Oliver Wyman Group.
|
|
Second Quarter
|
|
Six Months
|
||||||||||
(In millions, except per share figures)
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
||||
Revenue
|
$
|
3,088
|
|
$
|
3,026
|
|
|
$
|
6,214
|
|
$
|
6,077
|
|
Expense:
|
|
|
|
|
|
||||||||
Compensation and Benefits
|
1,766
|
|
1,776
|
|
|
3,569
|
|
3,572
|
|
||||
Other Operating Expenses
|
745
|
|
732
|
|
|
1,461
|
|
1,460
|
|
||||
Operating Expenses
|
2,511
|
|
2,508
|
|
|
5,030
|
|
5,032
|
|
||||
Operating Income
|
577
|
|
518
|
|
|
1,184
|
|
1,045
|
|
||||
Income from Continuing Operations
|
400
|
|
339
|
|
|
812
|
|
693
|
|
||||
Discontinued Operations, net of tax
|
(5
|
)
|
(2
|
)
|
|
7
|
|
(2
|
)
|
||||
Net Income Before Non-Controlling Interest
|
395
|
|
337
|
|
|
819
|
|
691
|
|
||||
Net Income Attributable to the Company
|
$
|
388
|
|
$
|
329
|
|
|
$
|
801
|
|
$
|
676
|
|
Income From Continuing Operations Per Share:
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.71
|
|
$
|
0.61
|
|
|
$
|
1.45
|
|
$
|
1.24
|
|
Diluted
|
$
|
0.70
|
|
$
|
0.60
|
|
|
$
|
1.42
|
|
$
|
1.23
|
|
Net Income Per Share Attributable to the Company:
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.71
|
|
$
|
0.60
|
|
|
$
|
1.46
|
|
$
|
1.24
|
|
Diluted
|
$
|
0.69
|
|
$
|
0.59
|
|
|
$
|
1.44
|
|
$
|
1.22
|
|
Average Number of Shares Outstanding:
|
|
|
|
|
|
||||||||
Basic
|
551
|
|
545
|
|
|
549
|
|
544
|
|
||||
Diluted
|
559
|
|
553
|
|
|
558
|
|
552
|
|
||||
Shares Outstanding at June 30
|
549
|
|
544
|
|
|
549
|
|
544
|
|
|
Three Months Ended
June 30, |
|
%
Change
GAAP
Revenue
|
|
Components of Revenue Change*
|
||||||||||||||
Currency
Impact
|
|
Acquisitions/
Dispositions
Impact
|
|
Underlying
Revenue
|
|||||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
|||||||||||||
Risk and Insurance Services
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Marsh
|
$
|
1,397
|
|
|
$
|
1,356
|
|
|
3
|
%
|
|
(1
|
)%
|
|
2
|
%
|
|
3
|
%
|
Guy Carpenter
|
285
|
|
|
275
|
|
|
4
|
%
|
|
(2
|
)%
|
|
1
|
%
|
|
5
|
%
|
||
Subtotal
|
1,682
|
|
|
1,631
|
|
|
3
|
%
|
|
(1
|
)%
|
|
1
|
%
|
|
3
|
%
|
||
Fiduciary Interest Income
|
6
|
|
|
10
|
|
|
|
|
|
|
|
|
|
||||||
Total Risk and Insurance Services
|
1,688
|
|
|
1,641
|
|
|
3
|
%
|
|
(1
|
)%
|
|
1
|
%
|
|
3
|
%
|
||
Consulting
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Mercer
|
1,044
|
|
|
1,017
|
|
|
3
|
%
|
|
(1
|
)%
|
|
(1
|
)%
|
|
4
|
%
|
||
Oliver Wyman Group
|
366
|
|
|
381
|
|
|
(4
|
)%
|
|
—
|
|
|
(1
|
)%
|
|
(4
|
)%
|
||
Total Consulting
|
1,410
|
|
|
1,398
|
|
|
1
|
%
|
|
—
|
|
|
(1
|
)%
|
|
2
|
%
|
||
Corporate/Eliminations
|
(10
|
)
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
||||||
Total Revenue
|
$
|
3,088
|
|
|
$
|
3,026
|
|
|
2
|
%
|
|
(1
|
)%
|
|
—
|
|
|
3
|
%
|
|
Three Months Ended
June 30, |
|
%
Change
GAAP
Revenue
|
|
Components of Revenue Change*
|
||||||||||||||
Currency
Impact
|
|
Acquisitions/
Dispositions
Impact
|
|
Underlying
Revenue
|
|||||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
|||||||||||||
Marsh:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
EMEA
|
$
|
455
|
|
|
$
|
455
|
|
|
—
|
|
|
(1
|
)%
|
|
(1
|
)%
|
|
1
|
%
|
Asia Pacific
|
184
|
|
|
181
|
|
|
2
|
%
|
|
(3
|
)%
|
|
—
|
|
|
5
|
%
|
||
Latin America
|
88
|
|
|
87
|
|
|
2
|
%
|
|
(8
|
)%
|
|
—
|
|
|
10
|
%
|
||
Total International
|
727
|
|
|
723
|
|
|
—
|
|
|
(2
|
)%
|
|
—
|
|
|
3
|
%
|
||
U.S. / Canada
|
670
|
|
|
633
|
|
|
6
|
%
|
|
—
|
|
|
4
|
%
|
|
2
|
%
|
||
Total Marsh
|
$
|
1,397
|
|
|
$
|
1,356
|
|
|
3
|
%
|
|
(1
|
)%
|
|
2
|
%
|
|
3
|
%
|
Mercer:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Health
|
$
|
376
|
|
|
$
|
353
|
|
|
7
|
%
|
|
—
|
|
|
1
|
%
|
|
6
|
%
|
Retirement
|
338
|
|
|
350
|
|
|
(4
|
)%
|
|
(1
|
)%
|
|
(4
|
)%
|
|
2
|
%
|
||
Talent
|
133
|
|
|
132
|
|
|
—
|
|
|
(2
|
)%
|
|
3
|
%
|
|
(2
|
)%
|
||
Investments
|
197
|
|
|
182
|
|
|
8
|
%
|
|
(1
|
)%
|
|
—
|
|
|
9
|
%
|
||
Total Mercer
|
$
|
1,044
|
|
|
$
|
1,017
|
|
|
3
|
%
|
|
(1
|
)%
|
|
(1
|
)%
|
|
4
|
%
|
Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as: acquisitions, dispositions and transfers among businesses.
|
|
*
|
Components of revenue change may not add due to rounding.
|
|
Six Months Ended
June 30, |
|
%
Change
GAAP
Revenue
|
|
Components of Revenue Change*
|
||||||||||||||
Currency
Impact
|
|
Acquisitions/
Dispositions
Impact
|
|
Underlying
Revenue
|
|||||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
|||||||||||||
Risk and Insurance Services
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Marsh
|
$
|
2,785
|
|
|
$
|
2,677
|
|
|
4
|
%
|
|
(1
|
)%
|
|
2
|
%
|
|
3
|
%
|
Guy Carpenter
|
660
|
|
|
632
|
|
|
4
|
%
|
|
—
|
|
|
—
|
|
|
5
|
%
|
||
Subtotal
|
3,445
|
|
|
3,309
|
|
|
4
|
%
|
|
(1
|
)%
|
|
2
|
%
|
|
3
|
%
|
||
Fiduciary Interest Income
|
14
|
|
|
21
|
|
|
|
|
|
|
|
|
|
||||||
Total Risk and Insurance Services
|
3,459
|
|
|
3,330
|
|
|
4
|
%
|
|
(1
|
)%
|
|
2
|
%
|
|
3
|
%
|
||
Consulting
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Mercer
|
2,085
|
|
|
2,032
|
|
|
3
|
%
|
|
(1
|
)%
|
|
—
|
|
|
3
|
%
|
||
Oliver Wyman Group
|
687
|
|
|
737
|
|
|
(7
|
)%
|
|
—
|
|
|
(1
|
)%
|
|
(6
|
)%
|
||
Total Consulting
|
2,772
|
|
|
2,769
|
|
|
—
|
|
|
—
|
|
|
(1
|
)%
|
|
1
|
%
|
||
Corporate/Eliminations
|
(17
|
)
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
||||||
Total Revenue
|
$
|
6,214
|
|
|
$
|
6,077
|
|
|
2
|
%
|
|
(1
|
)%
|
|
1
|
%
|
|
2
|
%
|
|
Six Months Ended
June 30, |
|
%
Change
GAAP
Revenue
|
|
Components of Revenue Change*
|
||||||||||||||
Currency
Impact
|
|
Acquisitions/
Dispositions
Impact
|
|
Underlying
Revenue
|
|||||||||||||||
(In millions of dollars)
|
2013
|
|
|
2012
|
|
|
|||||||||||||
Marsh:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
EMEA
|
$
|
1,049
|
|
|
$
|
1,032
|
|
|
2
|
%
|
|
—
|
|
|
(1
|
)%
|
|
2
|
%
|
Asia Pacific
|
331
|
|
|
323
|
|
|
3
|
%
|
|
(2
|
)%
|
|
—
|
|
|
5
|
%
|
||
Latin America
|
166
|
|
|
161
|
|
|
3
|
%
|
|
(8
|
)%
|
|
—
|
|
|
12
|
%
|
||
Total International
|
1,546
|
|
|
1,516
|
|
|
2
|
%
|
|
(1
|
)%
|
|
—
|
|
|
4
|
%
|
||
U.S. / Canada
|
1,239
|
|
|
1,161
|
|
|
7
|
%
|
|
—
|
|
|
5
|
%
|
|
2
|
%
|
||
Total Marsh
|
$
|
2,785
|
|
|
$
|
2,677
|
|
|
4
|
%
|
|
(1
|
)%
|
|
2
|
%
|
|
3
|
%
|
Mercer:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Health
|
$
|
757
|
|
|
$
|
704
|
|
|
8
|
%
|
|
—
|
|
|
2
|
%
|
|
6
|
%
|
Retirement
|
681
|
|
|
710
|
|
|
(4
|
)%
|
|
(1
|
)%
|
|
(4
|
)%
|
|
—
|
|
||
Talent
|
256
|
|
|
257
|
|
|
(1
|
)%
|
|
(1
|
)%
|
|
4
|
%
|
|
(3
|
)%
|
||
Investments
|
391
|
|
|
361
|
|
|
8
|
%
|
|
(1
|
)%
|
|
—
|
|
|
9
|
%
|
||
Total Mercer
|
$
|
2,085
|
|
|
$
|
2,032
|
|
|
3
|
%
|
|
(1
|
)%
|
|
—
|
|
|
3
|
%
|
Underlying revenue measures the change in revenue using consistent currency exchange rates, excluding the impact of certain items such as: acquisitions, dispositions and transfers among businesses.
|
|
*
|
Components of revenue change may not add due to rounding.
|
For the Three and Six Months Ended June 30,
|
Second Quarter
|
|
Six Months
|
||||||||||
(In millions of dollars)
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
||||
Revenue
|
$
|
1,688
|
|
$
|
1,641
|
|
|
$
|
3,459
|
|
$
|
3,330
|
|
Compensation and Benefits
|
878
|
|
867
|
|
|
1,797
|
|
1,748
|
|
||||
Other Expenses
|
389
|
|
384
|
|
|
773
|
|
780
|
|
||||
Expense
|
1,267
|
|
1,251
|
|
|
2,570
|
|
2,528
|
|
||||
Operating Income
|
$
|
421
|
|
$
|
390
|
|
|
$
|
889
|
|
$
|
802
|
|
Operating Income Margin
|
24.9
|
%
|
23.8
|
%
|
|
25.7
|
%
|
24.1
|
%
|
For the Three and Six Months Ended June 30,
|
Second Quarter
|
|
Six Months
|
||||||||||
(In millions of dollars)
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
||||
Revenue
|
$
|
1,410
|
|
$
|
1,398
|
|
|
$
|
2,772
|
|
$
|
2,769
|
|
Compensation and Benefits
|
806
|
|
822
|
|
|
1,602
|
|
1,650
|
|
||||
Other Expenses
|
399
|
|
393
|
|
|
778
|
|
772
|
|
||||
Expense
|
1,205
|
|
1,215
|
|
|
2,380
|
|
2,422
|
|
||||
Operating Income
|
$
|
205
|
|
$
|
183
|
|
|
$
|
392
|
|
$
|
347
|
|
Operating Income Margin
|
14.5
|
%
|
13.1
|
%
|
|
14.2
|
%
|
12.5
|
%
|
For the Three and Six Months Ended June 30,
|
Second Quarter
|
|
Six Months
|
||||||||||
(In millions of dollars)
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
||||
Corporate Advisory and Restructuring Operating Income
|
$
|
—
|
|
$
|
2
|
|
|
$
|
—
|
|
$
|
3
|
|
Corporate Expense
|
(49
|
)
|
(57
|
)
|
|
(97
|
)
|
(107
|
)
|
||||
Total Corporate and Other
|
$
|
(49
|
)
|
$
|
(55
|
)
|
|
$
|
(97
|
)
|
$
|
(104
|
)
|
For the Three and Six Months Ended June 30,
|
Second Quarter
|
|
Six Months
|
||||||||||
(In millions of dollars, except per share figures)
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
||||
Loss from discontinued operations, net of tax
|
$
|
—
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
$
|
(2
|
)
|
Disposals of discontinued operations
|
(6
|
)
|
—
|
|
|
(5
|
)
|
—
|
|
||||
Income tax credit
|
(1
|
)
|
—
|
|
|
(12
|
)
|
—
|
|
||||
Disposals of discontinued operations, net of tax
|
(5
|
)
|
—
|
|
|
7
|
|
—
|
|
||||
Discontinued operations, net of tax
|
$
|
(5
|
)
|
$
|
(2
|
)
|
|
$
|
7
|
|
$
|
(2
|
)
|
Discontinued operations, net of tax per share
|
|
|
|
|
|
||||||||
– Basic
|
$
|
—
|
|
$
|
(0.01
|
)
|
|
$
|
0.01
|
|
$
|
—
|
|
– Diluted
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
|
$
|
0.02
|
|
$
|
(0.01
|
)
|
|
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
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt
|
2,708
|
|
|
—
|
|
|
871
|
|
|
273
|
|
|
1,564
|
|
|||||
Interest on long-term debt
|
1,228
|
|
|
153
|
|
|
265
|
|
|
206
|
|
|
604
|
|
|||||
Net operating leases
|
2,312
|
|
|
333
|
|
|
545
|
|
|
413
|
|
|
1,021
|
|
|||||
Service agreements
|
306
|
|
|
104
|
|
|
106
|
|
|
74
|
|
|
22
|
|
|||||
Other long-term obligations
|
164
|
|
|
57
|
|
|
103
|
|
|
2
|
|
|
2
|
|
|||||
Purchases commitments
|
33
|
|
|
18
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
6,761
|
|
|
$
|
675
|
|
|
$
|
1,905
|
|
|
$
|
968
|
|
|
$
|
3,213
|
|
Item 3.
|
Qualitative and Quantitative Disclosures About Market Risk
|
(In millions of dollars)
|
June 30, 2013
|
||
Cash and cash equivalents invested in money market funds, certificates of deposit and time deposits
|
$
|
1,230
|
|
Fiduciary cash and investments
|
$
|
4,563
|
|
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
|
|
||
April 1-30, 2013
|
__
|
|
|
__
|
|
|
__
|
|
|
$
|
223,605,897
|
|
|
May 1-31, 2013
|
1,416,241
|
|
|
$
|
40.6379
|
|
|
1,416,241
|
|
|
$
|
954,946,831
|
|
June 1-30, 2013
|
2,320,796
|
|
|
$
|
39.8341
|
|
|
2,320,796
|
|
|
$
|
862,499,972
|
|
Total Q2 2013
|
3,737,037
|
|
|
$
|
40.1387
|
|
|
3,737,037
|
|
|
$
|
862,499,972
|
|
Date:
|
August 8, 2013
|
/s/ J. Michael Bischoff
|
|
|
J. Michael Bischoff
|
|
|
Chief Financial Officer
|
|
|
|
Date:
|
August 8, 2013
|
/s/ Robert J. Rapport
|
|
|
Robert J. Rapport
|
|
|
Senior Vice President & Controller
|
|
|
(Chief Accounting Officer)
|
Exhibit No.
|
|
Exhibit Name
|
|
|
|
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
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
Customers
Customer name | Ticker |
---|---|
American Financial Group, Inc. | AFG |
Mercury General Corporation | MCY |
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|