NU Online News Service, July 13, 2:02 p.m.EDT

Moody’s says it expects Marsh & McLennan Cos. Inc. to remainthe preeminent player in its primary business of insurance brokingand consulting, as moves to improve business performance gaintraction.

“We expect MMC’s credit metrics to benefit from restructuringsteps and debt reduction achieved over the past few years,” saysBruce Ballentine, Moody’s lead analyst for Marsh & McLennan, ina statement. “The stable rating outlook reflects our view that thecompany will gradually improve its operating margins and remain amarket leader in insurance brokerage and consulting.”

The company, like other insurance brokers, still faceschallenges from “slow economic recovery, soft pricing in thecommercial property and casualty insurance market, and potentialerrors and omissions,” Moody’s says.

While the company has a strong insurance market presenceglobally, its strengths are tempered by “relatively weak, butimproving, operating margins” and volatile net profits.

The rating service made the observation in rating a $500 millionnote offering of 10-year senior unsecured notes by Marsh &McLennan.

Moody’s assigned a rating of “Baa2” to the offering.

Marsh & McLennan says the note would be used to repurchaseapproximately $600 million outstanding notes due on 2014 and 2015.The closing of the offer is expected on July 15.

Bank of America Merrill Lynch, Citigroup Global Markets Inc.,Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC aremanaging the offering.

Marsh & McLennan suffered through the brokerage steering andkick-back scandal back in 2005 when executives were allegedlycaught steering insurance contracts to certain insurance carriersin exchange for lucrative contingent commissions.

The company paid an $850 million dollar settlement at that timeand was barred from accepting any contingent commissions untilrecently. As a result of the loss of commissions, the firm wasforced to eliminate hundreds of jobs and deal with significant lossin revenues.