NU Online News Service, Feb.10, 12:38 p.m. EST

Marsh & McLennan Companies Inc. reported fourth-quarter net income dropped 53 percent, driven down by a $435 million settlement of a stockholders' class action.

In December, the New York-based professional services firm settled a class action securities and ERISA lawsuit brought in 2004 stemming from the New York attorney general's investigation of the firm.

That probe involved allegations that MMC brokerage units and other brokers accepted hidden payments to steer commercial clients to insurers involved in a bid-rigging scheme.

MMC, the parent company of insurance broker Marsh and reinsurance broker Guy Carpenter, paid a total of $435 million. The company said it received $230 million from its insurance carriers for the settlement.

During a conference call today with investment analysts, Vanessa A. Wittman, chief financial officer, said the company received $163 million of the insurance settlement in December and the remainder of $67 million in January.

She added that the $205 million the company paid is tax deductible and the company expects to receive a sizable refund this summer.

In the fourth quarter, MMC reported net income fell $42 million to $38 million, or 7 cents a share. Revenues rose 3 percent, or $90 million, to $2.7 billion.

For the year, net income increased $315 million from net loss of $73 million in 2008 to $242 million, or 45 cents a share. Revenues were down 9 percent, or slightly more than $1 billion to $10.5 billion.

Brian Duperreault, president and chief executive officer for MMC, said the company feels good about what it accomplished in 2009 despite the bad economy and soft market conditions that affected earnings.

He said while 2009 was about expense management, in 2010 MMC will concentrate on growth through acquisitions and improvement in earnings while still watching expenses and consolidating operations to gain efficiency.

For its operating segments, insurance broker Marsh reported organic growth at negative 1 percent and reinsurance broker Guy Carpenter reported 4 percent growth.

Consulting services came in with negative 2 percent organic growth, but executives said they thought the worst was behind that segment and expected to see an uptick in the future as the economy improves.

MMC's risk consulting and technology segment, which includes Kroll, reported flat organic growth.

During the call, Daniel S. Glaser, chairman and CEO of Marsh, noted that the brokerage's revenues have been challenged by clients' cost consciousness, which "we have never seen before." He said many clients have substantially cut discretionary spending, which has affected their insurance buying habits.

"I think the economic impact is the single biggest factor," said Mr. Glaser. "It is much broader than the insurance cycle. The insurance cycle over my career...has been soft. I think Marsh can improve in any sort of insurance cycle. The economic impact has been considerable."