The chief executive of the world's largest insurance brokerage firm said the direction that insurance market prices are taking is unclear so far, but it appears inevitable there will be broad-based increases.

Michael G. Cherkasky, president and chief executive officer of Marsh & McLennan Companies, made his comments today at the Goldman Sachs Financial Services CEO Conference.

In response to an audience inquiry, he said that it remains an open question what impact there will be on business from the past season's hurricanes.

"I think that even at Dec. 6 it is still a premature question. It is remarkable how slow the markets have been to give us clarity on pricing," Mr. Cherkasky said in remarks that were broadcast over the Internet.

He said the reinsurance segment of the market is providing a better idea of what direction pricing will go, but primary insurers have not been as clear.

"Our job is to do the best we can for our clients," he said. "The reality is that there [are] going to be increases, and I think they will be pretty broad based.

"We have to wait to get into the January renewals, to get into January and February, to really have a good idea what impact [the rate increases] are going to have," he added.

Further impact on MMC's earnings will come from discussions with clients over whether compensation will be fee based or commission based, he continued.

"We have a large piece of our business which is oriented to commissions, and we would expect that for a major segment of the markets, there will be price [increases]," said Mr. Cherkasky.

During his talk, Mr. Cherkasky emphasized the need for MMC to return shareholder value and improve the company's earnings, which he said have been below average.

Historically, the company has operated in silos and not collectively, he continued. It is in the process of changing that. He said the insurance and consulting units would begin to operate more collectively and add services for customers to improve relationships.

"We are a professional services firm that gives advice and solutions," he said. "That is going to be our focus, to operate as one company."

However, he said Putnam would operate as a holding company. Because of the nature of the investment arm, and the conflicts of interest that arose with regulators, Putnam will not be integrated with Marsh and Mercer consulting.

"What we need to do is simple; the execution is the challenge," Mr. Cherkasky observed.

Concerning Marsh's stance on retention of business and employees, he said Marsh continues to exit unprofitable lines, representing about 1 percent of its business, but its retention of profitable business is improving. He said there will be a marked improvement in its business retention in 2006.

Mr. Cherkasky said the firm would not overpay to keep employees, and that under the team concept he is advancing there are excellent individuals to service the business.

He added that the company has not lost business because of individuals leaving. However, he acknowledged that there was a "scary" period in January when there was a high attrition rate, but the figure is now at historical levels.

"I will not play the game of matching everyone's salary," he said.

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