Marsh & McLennan Cos., the world's largest insurance broker, slashed its dividend Tuesday and said it planned 2,500 job cuts after reporting a $676 million loss from settling New York Attorney General Eliot Spitzer's bid-rigging accusations.
The fourth-quarter net loss of $1.28 a share compares with net income of $375 million, or 69 cents, a year earlier, the New York-based company said. Marsh, which trimmed 3,000 jobs in November, cut its dividend in half and said the new job cuts would contribute to more than $375 million of annual cost savings.
Under the $850 million settlement with Mr. Spitzer, Marsh gave up fees that the attorney general called kickbacks from insurers and is compensating clients whose insurance rates may have been inflated because of the payments. Chief executive officer Michael Cherkasky said he is searching for alternative revenue sources.
The quarter included an $80 million expense for client restitution at Marsh's Putnam Investments unit and $65 million for the higher estimated cost of managing U.K. insurance claims. Marsh had not reported a quarterly loss since 1997.
The company's revenue fell 1%, to $3 billion. Brokerage revenue, excluding the effect of acquisitions, fell 13% because of the lost fees and a decline in commercial insurance prices.
