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Contact: Mercer Feedback

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UK
London, 11 June 2007

Mercer Human Resource Consulting has set up a specialist European Financial Strategy Group to address the burgeoning market demand for integrated, multi-disciplinary services in pensions risk management.

The group brings together consultants in funding, accounting and investment strategy together with experts in corporate finance and investment banking. It employs around 75 existing staff, with some aggressive recruitment underway to take this number to 100 by the year end. These efforts are targeted at adding further expertise in longevity modelling, credit ratings and investment banking to augment Mercer's current advisory capability.

Mick Moloney, head of the European group, commented: “We're seeing very strong demand for sophisticated risk advice from our larger clients, and are working with their finance and treasury departments to integrate pension scheme management into the broader financial management of their business. With the recent rapid development of derivative-based and other risk products, we’re bringing a range of innovative strategies to the table.

“In the last year, we’ve been approached by over 30 major organisations to bring an integrated approach to financial risk management at the corporate level. The new strategy group formalises this approach and concentrates our best thinking in a single, dedicated unit,” he added.

The new group is part of a global initiative within Mercer.  The US team, some 70 strong, has been up and running for several months.  European teams are already operational in the UK, Netherlands, Ireland and Switzerland, and Germany will go live later this month. The bulk of the European expertise is concentrated in London, where 50 consultants are now based.

“Our experience is that many companies want access to best-of-breed advice on their investment, benefit and funding strategy – something we’re offering by drawing on our specialist knowledge and resources in these areas. Companies that pursue this approach can avoid potential overpayments when using products from a single provider such as an investment bank or insurer,” Mr Moloney added.

Mr Moloney identified four scenarios for the group’s early focus where there is strong interest from corporate clients: de-risking as plan funding levels improve; decreasing the risk of stranded fund surplus*; managing global pensions risk much more closely, in the case of multinationals; and looking more closely at managing longevity risk exposures. “The area of longevity risk is one where we’re investing considerable resources to make sure that realistic alternatives to benefit buyouts are available and feasible," Mr Moloney said.
 
He added: “The market in hedging longevity risks without asset transfer is still in the early stages of development but we believe we’re well positioned to facilitate and drive its development. We are working closely with the most active reinsurers and investment banks in this area to see how longevity risk transfers, through insurers, could be made at a more competitive cost.  Oliver Wyman and Guy Carpenter, our financial services and reinsurance consulting sister companies, are two big advantages we bring to bear on this problem.
 
“We’re also actively exploring the case for our directly packaging longevity hedging solutions for some of our clients,” he said.

Notes for editors

*Stranded surplus is where a fund surplus has no economic benefit to an employer - as in the case of closed plans where the surplus cannot be used up or where the trustees insist on using the surplus for a buyout or to fund additional members’ benefits/security.

Mercer will draw on the following global expertise and research in delivering best-of-breed advice:

• accounting and funding from Mercer’s global Retirement operations
  
• investment strategy and products from its Investment Consulting business
  
• longevity risk transfers from both Oliver Wyman (its financial services sister
  company) and Guy Carpenter (its reinsurance sister company).

Mercer Human Resource Consulting is a global leader for HR and related financial advice and services, with more than 15,000 employees serving clients in more than 180 cities and 42 countries and territories worldwide. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit mercerHR.com.

It is the largest consulting firm of its type in the UK, with some 3,000 staff in 19 office locations.

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