boston.com Business your connection to The Boston Globe

Cherkasky says Marsh may settle Spitzer's lawsuit within a month

CEO is seeking to fix 40% drop in share price

NEW YORK -- Marsh & McLennan Cos., the world's largest insurance broker, may settle New York Attorney General Eliot Spitzer's claims of rigged bids and kickbacks within a month, chief executive Michael Cherkasky said.

"We're hopeful it will get done by the end of the year," Cherkasky, 54, said yesterday. "We are actively having discussions every day."

Cherkasky, who was Spitzer's boss at the Manhattan District Attorney's office more than a decade ago, is working to repair Marsh after Spitzer's suit prompted a 40 percent decline in the company's shares. Marsh yesterday said it agreed with Citigroup Inc. and two other lenders to extend $2.7 billion of credit lines threatened by the suit.

Settling Spitzer's allegations would resolve an investor concern that contributed to a $9.6 billion decline in the company's market value since the Oct. 14 suit. Cherkasky, installed by the board after Marsh ousted Jeffrey Greenberg on Oct. 25, said he's negotiating with as many as 26 other state regulators that have joined the probe.

"Spitzer is the biggest name and definitely the one you want to resolve," said Judson Brooks, an analyst at Harris Associates LP in Chicago, which manages $30 billion, including 462,000 Marsh shares as of September. "The sooner that they can make the settlement the better."

Shares of New York-based Marsh rose 63 cents to $27.90 in New York Stock Exchange composite trading yesterday. Cherkasky declined to estimate how much the company may pay to resolve the attorney general's suit.

The suit alleged Marsh steered business to insurers that paid it the highest fees, going so far to create phony bids with insurers including American International Group Inc. and Hartford Financial Services Group Inc. Only Marsh was sued.

Cherkasky said he doesn't expect the states to "get in line and settle" the way regulators did with Wall Street companies. Ten Wall Street firms paid a combined $1.4 billion in an April 2003 agreement to separate investment banking and research.

Marsh's credit lines with Citigroup, Bank of America Corp., and Deutsche Bank AG were only assured through Dec. 30 under a provisional agreement signed after the suit. Marsh yesterday said the banks kept a $1.7 billion credit line open until at least 2007 and agreed to lead a new $1 billion loan. The lines are needed to refinance $1.9 billion in commercial paper that investors will no longer buy, Marsh said earlier this month.

Cherkasky declined to comment on Marsh's dividend after the company last week announced that it would delay a decision on its first-quarter 2005 dividend until it finishes reviewing its business model. Marsh has increased its dividend each year since at least 1980, according to Bloomberg data. The quarterly dividend is 34 cents a share.

SEARCH THE ARCHIVES
 
Today (free)
Yesterday (free)
Past 30 days
Last 12 months
 Advanced search / Historic Archives