Insurance broker Marsh & McLennan has posted a 57% decline in its second quarter profits as the company attempts to recover from allegations of fixing prices in its insurance unit.
Net income for Q2 fell to $166 million from $389 million a year earlier, with the firm experiencing revenue losses across the board. Risk and insurance services dropped 11%, while investment management declined 13%.
Marsh & McLennan claims it is suffering a slow recovery from a lawsuit filed in January by New York Attorney General Eliot Spitzer, which accused the firm of rigging bids, fixing prices and guiding insurance business to carriers paying the highest placement fees.
The company agreed to settle the lawsuit with an $850 million pay-off and a promise to adopt a series of reforms. As a result, the firm claims, quarterly revenue fell 9% excluding purchases and sales.
In its consulting operations the company posted an increase in revenues of 6%, and a 2% hike in total revenue to $3.10 billion. This was largely due to the acquisition of risk consulting company Kroll, which reported revenues of $267 million in the second quarter. The group achieved strong performance in legal technologies, background screening and mortgage-related service offerings. Kroll’s corporate advisory and restructuring practice also recorded double-digit revenue growth.