Fitch Affirms Marsh & McLennan's Ratings Following Putnam Announcement.

CHICAGO -- Fitch Ratings today affirmed the 'BBB' senior debt rating of Marsh & McLennan Companies, Inc. (MMC). Fitch also affirms MMC's issuer default rating (IDR) and short-term rating at 'BBB' and 'F2', respectively. The Rating Outlook remains Negative.

Fitch's ratings actions follow MMC's announcement that the company has agreed to sell Putnam Investments to Power Financial Corporation for $3.9 billion. The transaction is expected to close during the middle of 2007 and the after tax proceeds of the sale could total approximately $2.5 billion. MMC expects to use part of the proceeds to pay down debt and for share repurchases. Fitch expects that the company could use a portion of the remaining proceeds to fund future acquisitions.

Fitch's decision to affirm MMC's rating's at this time reflects Fitch's expectation that MMC's credit fundamentals will not deteriorate from current levels following the completion of MMC's balance sheet restructuring. At Sept. 30, 2006, MMC's debt-to-capital was approximately 45%. MMC's interest coverage improved to 4.6 times (x) for the first nine months of 2006 after languishing between 2.0x-3.0x in 2004 and 2005. In Fitch's view, these levels are sufficient to support MMC's existing ratings.

Fitch believes that the sale of Putnam will free MMC's management from the distraction of running an underperforming, ancillary business that shares little synergy with remaining businesses. As a result, MMC can focus more on improving its core insurance brokerage business (Marsh).

Partially offsetting these positives are the fact that Putnam has historically provided MMC with a diversified earnings stream. However, Fitch notes that Putnam's contributions have significantly diminished since market timing allegations surfaced in late 2003. Putnam contributed more than one-third of MMC's pretax earnings in 2001, but currently accounts for only about 20% of MMC's profits.

Although Fitch views MMC's decision to sell Putnam favorably, Fitch feels that a Negative Outlook is still warranted. Fitch continues to believe that Marsh, which will now comprise a larger percentage of MMC's ongoing business, has experienced a material decline in franchise value following the New York Attorney General's civil suit and allegations of bid rigging. Although Fitch recognizes that Marsh has maintained a leading global market share, and that Marsh's recent operating performance, although improving, continues to lag its closest competitors.

During the first nine months of 2006, Marsh's reported revenues declined by 4% (23% on an organic basis). Pretax margins in the Risk and Insurance Services segment improved to 13.5% from 5.7% in the year-ago period, but remain below historical levels between 24%-28%. While Marsh's margins should improve to the mid-to-high teens in the near term, they are unlikely to return to prior peak levels, as Marsh encounters a more challenging operating environment due to the softening of commercial insurance pricing. Moreover, MMC remains at a relative disadvantage versus many smaller competitors that still accept contingent commissions.

Items that Fitch is monitoring that may promote a return to a Stable Rating Outlook include the following:

--Improvement in MMC's insurance brokerage margins to levels in the high-teens on a stable or increasing revenue base.

--Settlements of outstanding litigation at modest costs, and no additional litigation filings.

--Debt-to-capital ratios migrating closer to historical levels near 40% from current levels around 45%.

The following ratings are affirmed by Fitch:

Marsh & McLennan Companies, Inc. (all ratings have a Negative Rating Outlook)

Fitch affirms the following senior debt 'BBB':

--$550 million 5.15% due Sept. 15, 2010;

--$750 million 5.75% due Sept. 15, 2015;

--$500 million floating due July 13, 2007;

--$650 million 5.375% due July 15, 2014;

--$500 million 5.375% due March 15, 2007;

--$250 million 3.625% due Feb. 15, 2008;

--$400 million 7.125% due June 15, 2009;

--$250 million 6.25% due March 15, 2012;

--$250 million 4.85% due Feb. 15, 2013;

--$300 million 5.875% due Aug. 1, 2033;

--Issuer default rating at 'BBB';

--Commercial paper at 'F2'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.