Guy Carpenter added, “As many of our clients have confirmed during this investigation, these facilities result in improved availability and terms of reinsurance, and ultimately benefit insurance buyers. Simply put, there is no basis for the attorney general's lawsuit, and we intend to defend ourselves vigorously.”

In 2005, the firm's parent–MMC–settled a price-fixing suit brought by New York State for $850 million over the actions of its brokerage subsidiary, Marsh Inc.

Robert P. Hartwig, president of the Insurance Information Institute, said the numbers cited by the attorney general, “that hundreds of millions of dollars were overpaid over the span of half-a-century, is astonishing, incredulous. Because no insurer could be systematically overcharged and disadvantaged in the market for generations…It's hard to believe–your customers would have left you back in the 1960s.”

The lawsuit also names Excess Reinsurance Company, which, according to the attorney general, Guy Carpenter “funneled business to, despite its ownership interest in the company.”

Mr. Hartwig questioned the soundness of the allegations. “Are they alleging the insurers ripped off themselves? I don't understand it,” he said.

He went on to say “small companies that use these entities bundle up their reinsurance needs, and the idea is that they get a better deal from the reinsurers.”

He said a small reinsurer with a thin balance sheet “might be better buying larger amounts of reinsurance in concert with others–similar to a purchasing group or co-op. So there's a mutuality of interest here among these small and medium insurers.”

He added that “to my knowledge, these small and medium insurers were not banging down the attorney general's door for this action–so I don't understand the basis of this.”

Mr. Hartwig predicted that “you'll see Guy Carpenter vigorously defending themselves,” noting that the companies in question will most likely say “they are providing a benefit to these small companies, which have been successful in a highly competitive environment.”

Excess Re, in a statement issued yesterday, said the company's board of directors is determined to defend the firm aggressively against the allegations brought by Connecticut. “The company is confident that the allegations against Excess are without merit,” the statement said.

Excess Re's counsel, Jeremy D. Frey, a partner with the law firm of Pepper Hamilton LLP in Philadelphia, told National Underwriter that the carrier was demutualized more than 10 years ago, meaning “the policyholders became shareholders. Roughly 91 percent of the stock is held by insurance companies.”

Mr. Blumenthal alleged that Guy Carpenter served as a “ringleader in choreographing the reinsurance market to fix prices, stifle competitors and collect excessive profits at the expense of an entire industry.”

Mr. Hartwig responded that “to allege that 170 small and medium-sized reinsurers were somehow corralled by Guy Carpenter for half a century and were basically forced to overpay hundreds of millions of dollars, and have that lead to buyers of insurance paying up to 40 percent more on their policy, is beyond belief.”

He said this suggests the insurers were able to, “for half a century, charge far more than their competitors, pass that cost along to policyholders, and yet somehow stay in business in a very competitive industry. That seems hard to believe.”

He added that “it's also hard to believe, because this is an antitrust case, but Guy Carpenter does not have any monopoly power–far from it. Antitrust implies that you basically exert pricing power over the market.”

The reinsurance brokerage market, he said, “is very competitive, with other major brokers such as Aon Re, Benfield, Willis Re, as well as the direct reinsurance market. I can tell you, reinsurers compete very heavily for exactly this type of risk.”