OREANDA-NEWS. September 15, 2015. Fitch Ratings has assigned a senior unsecured debt rating of 'A-' to Marsh & McLennan Companies, Inc.'s (MMC) new issue of \\$600 million 3.75% senior notes due 2026. Fitch has also affirmed MMC's Long-term Issuer Default Rating (IDR) and existing senior unsecured debt ratings at 'A-' and short-term ratings at 'F2'. A full list of MMC's ratings follows at the end of this release. The Rating Outlook is Stable.

KEY RATING DRIVERS

Fitch expects MMC to use the net proceeds of this offering for general corporate purposes. The company's debt maturities remain well-laddered and interest expense remains manageable as MMC was able to take advantage of the current low rate environment. Fitch expects that MMC's key credit ratios will continue to approximate recent levels over the next 12 - 24 months.

MMC's consolidated EBIT operating margin, debt-to-EBITDA ratio, and EBITDA-to interest coverage ratios have each been consistently strong and are projected to remain so following the incremental debt issue. Given MMC's prospects for solid earnings growth in 2015, Fitch expects these key credit metrics to remain well within guidelines for the current rating category. The ratings continue to reflect MMC's continued trend of improved operating performance and stronger credit metrics that has persisted for several years.

The company has successfully demonstrated consistent and material key credit metric improvement over the past several years. Through June 30, 2015, MMC's trailing-twelve month (TTM) EBITDA-to-interest coverage was excellent at roughly 17x, and financial leverage as measured by TTM debt-to-EBITDA remained moderate at 1.5x. Pro-forma for the additional \\$600 million debt issuance, financial leverage will increase modestly to roughly 1.7x, within Fitch's expectations

MMC has sustained improved performance levels due in part to a largely stable commercial pricing environment, an improving global macroeconomic environment, and reduced expenses. Through June 30, 2015, MMC's consolidated operating margin was solid at 21%, a modest improvement over the same period in 2014. Both the company's Risk & Insurance Services (RIS) and Consulting segments reported organic revenue growth and year over year margin expansion in 2014 and through June 30, 2015.

The ratings also reflect MMC's strong balance sheet and financial flexibility. The company reported \\$930 million of cash and equivalents at June 30, 2015, and \\$2 billion at year-end 2014, and also maintains a \\$1.2 billion multicurrency unsecured revolving credit facility that expires in 2019. Fitch expects free cash flow to continue increasing over time due in part to expense reductions and projected earnings growth. Favorably, restructuring expenses have recently been immaterial, and share repurchases are considered to be discretionary in order to preserve liquidity (\\$775 million repurchased through the first six months 2015). Fitch notes that the second half of the year is typically MMC's strongest cash flow generator.

Looking forward, operating results could benefit from underlying insured exposure growth derived from a modestly growing global economy. Exposure growth benefits are partially offset by some weakening primary insurance market pricing and significant rate softening in many reinsurance lines. These trends should have a modest net favorable impact on top-line growth in MMC's RIS and Consulting segments.

The rating rationale also considers MMC's top-tier competitive position as one of the world's largest diversified services firms, with major operations in insurance brokerage and consulting.

Partially offsetting these favorable factors is the fact that, similar to other insurance brokers that Fitch rates, MMC faces contingent risks, including reputational risk and as an occasional target of litigation and regulatory actions that can have a financial impact.

The affirmation of Fitch's 'F2' short-term ratings is based on MMC's 'A-' Long-term IDR and continues to reflect MMC's strong liquidity position and supporting contingency programs, and proven access to the capital markets.

RATING SENSITIVITIES

Key rating triggers that could lead to a downgrade if observed over a sustained period of time include:

--Debt-to-EBITDA exceeding 2.0x; and
--EBITDA-to-interest expense coverage deteriorating to levels below 10.0x; or
--If MMC incurred material charges arising from litigation or regulatory rulings that could affect long-term performance;
--If MMC were to report a material goodwill impairment that casts doubt on its ability to generate future earnings and cash flows.

Longer term key rating triggers that could lead to an upgrade if observed over a sustained period of time include:

--Consolidated EBIT operating margins of 20% or better; and
--Debt-to-EBITDA approaching 1.0x; and
--EBITDA-to-interest expense in excess of 18.0x.

FULL LIST OF RATING ACTIONS

Fitch has assigned the following rating:

Marsh & McLennan Companies, Inc.
--\\$600 million 3.75% senior debt due 2026 'A-'.

Fitch has affirmed the following ratings:

Marsh & McLennan Companies, Inc.
--Short-term IDR at 'F2';
--Commercial paper at 'F2'.
--Long-term IDR at 'A-';
--\\$250 million 2.30% senior debt due 2017 at 'A-';
--\\$250 million 2.55% senior debt due 2018 at 'A-';
--\\$300 million 2.35% senior debt due 2019 at 'A-';
--\\$500 million 2.35% senior debt due 2020 at 'A-';
--\\$500 million 4.80% senior notes due 2021 at 'A-';
--\\$250 million 4.05% senior debt due 2023 at 'A-';
--\\$600 million 3.50% senior notes due 2024 at 'A-';
--\\$500 million 3.50% senior debt due 2025 at 'A-';
--\\$300 million 5.875% senior debt due 2033 at 'A-'.

The Rating Outlook is Stable.