Marsh & McLennan Companies Inc. said it has completed its sale of MMC Capital, its private equity subsidiary, to the management team of MMC Capital.
The new firm, based in Greenwich, Conn., will be named Stone Point Capital, LLC.
Stone Point will continue to focus on investments in the insurance and financial services sectors, New York-based MMC said.
Stone Point will assume management responsibility for the Trident Funds, a private equity group that has invested in the insurance and financial services sectors since 1985. It will manage more than $2 billion of capital, including its most recent fund, Trident III, L.P., a $1.1 billion fund formed in 2003.
MMC made the decision to sell MMC Capital after questions of conflict of interest in brokerage handling of customer accounts were raised in a lawsuit filed by New York Attorney General Eliot Spitzer in October.
The suit led a number of brokerages to stop accepting incentive fees from insurers, which were said to have led to steering of customers, price-fixing an inflation of fees.
Last week, Marsh said it is considering the sale of two of its wholesale brokerage units, Crump Group Inc., based in Dallas, and Price Forbes Limited, based in London.
"We believe this new structure will remove any appearance of conflict, while at the same time continuing to facilitate the creation of new capacity in the insurance market as needed," said Michael G. Cherkasky, president and chief executive officer of MMC.
He added that MMC would remain the largest investor in the Trident Funds but would not participate in the investment decisions or management of Stone Point or the Trident Funds.
Charles A. Davis, chief executive officer of Stone Point, said the company is excited about its future and intends to continue its specialized focus on the insurance and financial services sectors. He added that the Trident Limited partners voted overwhelmingly for the move.
MMC said terms of the deal were disclosed in the firm's Proxy Statement filed with the Securities and Exchange Commission on March 31, 2005.
In addition, MMC Capital has agreed to pay a partial year bonus of $3.3 million in total to the professional staff of MMC Capital for service through May 31, 2005.
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