Marsh executives have to be less happy with Putnam Investments than they were before the start of the bear market. Not only are Putnam’s own earnings in decline, losses in its venture capital affiliate took a whack out of Marsh’s bottom line this quarter.

The firm said today that it took a two-cent charge to account for $20 million of venture capital losses in the portfolio of Thomas H. Lee Partners. The private-equity fund actually wrote its portfolio down by $32 million, but $12 million of the amount was offset by a payment recorded from Putnam's Italian joint-venture partner.

Meanwhile, Marsh reported that its investment management business, which is primarily Putnam Investments, earned $116 million in the third quarter. That amount is 38 percent below the $189 million of earnings reported for the unit in the third quarter of 2001. The weakening bottom line was off by even more than revenues were in the unit. Putnam’s revenues slipped 15.2 percent to $522 million from $616 million in the prior-year period.

The decline in revenue was slightly less than the 16.7 percent decline in assets under management at Putnam over the same period. Those assets totaled $238 billion at the end of the third quarter, down from $286 billion a year earlier and $284 billion at the end of the second quarter. Mutual fund assets declined to $161 billion at the end of the quarter from $203 billion a year ago while institutional funds assets fell by just $6 billion to $77 billion.

The continued decline of prices in the equity market is the primary cause of the diminishing asset base, according to the company. Net redemptions during the quarter were $7.1 billion, nearly twice the $3.6 billion of redemptions in the first and second quarters.  

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