Marsh & McLennan Corp. has been put on watch by a rating firm after it was reported preparing to sell its financial investment firm Putnam to a Canadian corporation.
MMC is the parent company of New York-based insurance broker Marsh. Friday in reaction to news of an upcoming sale of Putnam to Montreal-based Power Corp., Standard & Poor's rating service placed MMC on credit watch with developing implications.
S&P said the move was made because the subsidiary provides significant earnings and income to MMC's bottom line. It noted that the sale would be applied to paying down debt, but how much debt would be paid was undetermined at this time.
A representative from MMC did not return a request for comment.
Putnam has been trying to rebuild its reputation since it was hit by allegations of improprieties in 2003.
The scandal concerned portfolio managers' illegal sale of mutual funds through market timing, or rapid sale of the mutual funds. The allegations resulted in Boston-based Putnam agreeing to pay regulators $55 million in penalties and disgorgement of profits.
Since then Putnam has struggled to regain its worth and reputation as investors, primarily pension funds, pulled their investments out from the firm. The company has watched its assets under management dip to its current $191 billion, down from $240 billion in 2003.
Among the financial holdings listed on the Power Web site are Great West Lifeco Inc., London Life Co., Canada Life Assurance Company, IGM Financial Inc., Investors Group Inc., Mackenzie Financial Corp. and Pargesa Holdings S.A.
The purchase of Putnam would give Power a foothold in the United States. Through Mackenzie, it already does investment management throughout Canada. Its insurance company, Great West Lifeco, provides self-funded employee health plans for businesses in the United States, according to the Web site.
After months of denying plans to sell Putnam, Michael G. Cherkasky, president and chief executive officer of MMC, announced in September that MMC would explore selling the firm after receiving numerous inquiries.
The sale was called for by some MMC investors and financial analysts who saw it as a drag on the company and not a natural fit.
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