Chief of insurance broker resigns amid investigation

Eileen Alt Powell

Tuesday, Oct. 26, 2004 | 10:55 a.m.

NEW YORK -- A day after sacking its chief executive, Marsh & McLennan announced today that it is adopting "significant reforms" to its business operations, including ethics training and the permanent elimination of incentive fees that New York's attorney general denounced as kickbacks.

Marsh & McLennan said the reforms in Marsh Inc. "will ensure that the best interests of its clients are served and that every transaction is executed in accordance with the highest professional and ethical standards."

On Monday, the board of the nation's largest insurance brokerage accepted the resignation of Jeffrey W. Greenberg from the posts of chairman and chief executive.

The ouster was precipitated by the a civil suit against Marsh & McLennan Companies Inc. filed Oct. 14 by state Attorney General Eliot Spitzer. In it, he accused Marsh & McLennan of bid-rigging and price fixing and said he wouldn't deal with the current management.

Greenberg's ouster, Spitzer said Monday, would permit his office to work toward "a civil resolution of our lawsuit." Any criminal action would not be against the company but against individuals, he added.

The company had already halted collection of the fees, which had brought it some $1.2 billion over the last 18 months.

In addition to insurance brokering, Marsh & McLennan is the parent company of Putnam Investments, an investment management and mutual fund firm, and Mercer Inc., a consulting service.

Greenberg's replacement will be Michael Cherkasky, 54, who had been chief executive of Marsh Kroll, the Marsh & McLennan risk consulting subsidiary. Cherkasky had joined Kroll in 1994 after 16 years in the criminal justice system, some of them as Spitzer's boss in the New York district attorney's office. Kroll was purchased by Marsh & McLennan in July.

Greenberg had been CEO since November 1999.