Fitch said yesterday that its rating actions follow additional analysis of the likely implications of the civil suit brought against Marsh & McLennan by New York Attorney General Eliot Spitzer, which accuses the firm of price fixing and bid rigging and seeks punitive damages.

Regardless of the ultimate outcome of the suits, Fitch said it believes that MMC will suffer a material decline in its franchise value as a result of the allegations, especially given recent reputation issues suffered in its Putnam mutual fund unit, tied to improper trading practices.

Fitch said it believes MMC will likely lose clients and face margin compression in the company's insurance brokerage operation and reduced short-term financial flexibility as a result of these allegations.

The agency also said its action anticipates potential shareholder and client lawsuits that could adversely affect the company's operations, future earnings, cash flows and capital base.

Fitch said it could downgrade MMC lower if criminal charges are filed. It added that it does not currently believe it would return to the prior ratings levels in the near or intermediate term.

Both Standard & Poor's and Moody's have taken ratings action against the broker. S&P has put the firm on Rating Watch with negative implication. Moody's changed the rating on the company's senior debt from stable to negative.