Marsh & McLennan Companies Inc.'s chief executive said thatafter a tough year of adjustment and reorganization, the company's2005 fourth-quarter net income rose 105 percent and the firm willimprove through 2007.

Michael G. Cherkasky, president and CEO of the New York-basedprofessional services firm, said the company “is a stronger companythan it was and a better-positioned company than a year ago.”

“We are not where we want to be, but we are heading in thatdirection,” he said during an analyst's call today after the firmreleased its fourth-quarter results for 2005.

For the quarter, MMC reported net income increased $715 million,going from a loss of $680 million, or $1.29 per share, to $35million, or 6 cents a share. Revenues decreased 2 percent, or $54million, going from $2.88 billion to $2.83 billion.

For the year, net income improved 130 percent, or $228 million,going from $176 million, or 33 cents a share, to $404 million, or74 cents a share. Revenues were down 1 percent, or $109 million,from $11.8 billion to $11.7 billion.

For its four individual business segments, insurance services',which includes insurance broker Marsh and reinsurance broker GuyCarpenter, revenues dropped 10 percent for the year, from $6.2billion to $5.6 billion.

Kroll, MMC's risk consulting and technology group, saw revenuesincrease 133 percent, from $405 million to $946 million. Mercerconsulting rose 4 percent, from $3.6 billion to $3.8 billion. Thecompany's investment arm, Putnam, saw revenues drop 12 percent,from $1.7 billion to $1.5 billion.

For MMC, 2005 was a year of tremendous adjustment after settlingallegations of kick-backs and bid-rigging at Marsh brokerage overthe placement of insurance with carriers paying lucrativevolume-based contingent commissions.

The company paid $850 million into a settlement fund to end theinvestigation. As part of the agreement, the company gave upcontingent commissions, which made up a substantial portion of itsrevenues.

Loss of the commissions meant the company had to reduce headcount and abandon unprofitable accounts that were considered toosmall for Marsh to handle.

“We will never be the old Marsh,” said Mr. Cherkasky. “We can'tafford to be.”

He said he is cautiously optimistic that business trends willimprove and that all segments of the business will improve thisyear into next–except Putnam.

While the investment arm, which was hit by its own securitiesscandal over mutual fund trading, still has a way to go toprofitability, Mr. Cherkasky said it is beginning to stem the tideof lost business and is on the way toward improved financialresults.

Mr. Cherkasky said he believes MMC is on the road to regaininghistoric levels of earnings, but he would not venture to say howsoon that would be.

In 2006 the litigation environment should also become lessintense, said Mr. Cherkasky, and “go down to normal levels for thisindustry.”

The fourth quarter included a $40 million expense in connectionwith litigation and related matters, MMC said.

Analysts David Small at Bear Sterns and Brian Meredith at Bankof America said they were disappointed with MMC's results, as thecompany's divisions missed margin estimates.

Consensus estimates for operating income per share was 31 cents,versus MMC's 28 cents a share, which excluded noteworthy items andstock options expense.

The analysts noted the disappointing news was in part due to thereporting of revenues of Sedgwick Claims Management as discontinuedoperations.