In an analyst's conference call today, Michael G. Cherkasky, president and chief executive officer, said the insurance brokerage business at Marsh, which accounts for the bulk of revenue for the company, has been impacted by soft market pricing affecting commissions and the loss of contingent commissions.

Marsh agreed to forego contingent commissions last year after New York Attorney General Eliot Spitzer brought a civil action, since settled, that alleged the contingent payments were part of a kickback scheme to fix prices with cooperating insurers.

Mr. Cherkasky said Marsh is currently operating in a "two-tier" market, where some brokers take contingent commissions while others, such as Marsh, do not, affecting broker charges to clients.

The company, he said, will still be in for some rough sailing, as he predicted Marsh will be in the headlines once more with executives going on trial over the contingent fee kick-back scandal that has rocked the industry.

As part of the settlement agreement with New York Attorney General Eliot Spitzer this year, the company agreed to pay $850 million into a settlement fund and give up contingent commissions. In 2004, contingent commissions made up more than $800 million in revenue.

This is uncharted territory for Marsh, Mr. Cherkasky said, and the company is learning how to deal with the new realities. He said the broker is charging fair market value for services and increasing retentions as the year progresses.

He predicted the company would see further improvements throughout the year and begin its turnaround by the beginning of 2006.

On the increase for fees, he said clients are "not happy about them, but they are accepting them."

He said the company's producers have done "an outstanding job implementing" the new business model and "our clients will be better off because of our compliance. This gives us a competitive edge."

Eventually, he said, brokers will give up contingent commissions as clients show they are not willing to deal with brokers who take them. He distinguished broker contingent payments from agent contingent payments, which he said were more commodity driven and would not have to go away.

While retentions are up, Mr. Cherkasky noted that the firm is struggling to write new business. He said this struggle is from the turmoil the broker has been through. As producers adjust, he said, they will begin to be able to refocus their attention on the writing of new business, and that will be part of the turnaround in 2006.

He said Marsh has lost "substantial pieces" of business to regional brokers, but he believed this was short-term because customers would soon discover these brokers cannot do what they promised.

In MMC's other divisions, its risk consulting and technology business, Kroll, saw revenues increase 927 percent, from $26 million to $267 million in the quarter. Its consulting arm, Mercer, saw revenues increase 6 percent, from $911 million to $963 million. Revenues at Putnam, MMC's investment firm, dropped 13 percent, from $434 million to $377 million.