MMC Sees 4Q Net Income Drop 62%

He said, however, that Marsh produced very strong business in the fourth quarter, increasing revenues by 6 percent, or $66 million, to $1.2 billion. Mr. Bartley added that this included strong performance in the United States. The growth in new business generated in the quarter was the best production since the first quarter of 2003, when the industry was in the middle of a hard market cycle.

Despite the soft market, Marsh was able to increase organic growth by 1 percent in the quarter, but dropped 1 percent for the year.

The reinsurance sector, Guy Carpenter, suffered a 2 percent decline in revenue, or $4 million, to $167 million. The results were a combination of soft market conditions and traditional light renewals during the fourth quarter.

The company's investment portfolio fell 90 percent, or $66 million, to $8 million on the revaluation of investments, and that segment will continue to be volatile going forward, Mr. Bartley said.

Revenues in the company's consulting division, consisting of Mercer and Oliver Wyman Group, grew 19 percent, or $209 million, in the quarter to $1.32 billion.

MMC's risk consulting and technology unit, Kroll, grew 3 percent, or $8 million, to $249 million in the quarter.

MMC's organic growth increased 2 percent in the quarter and 4 percent for the year.

The results were also affected by $14 million in expense related to the departure of Michael Cherkasky, who was president and chief executive officer of MMC until the hiring of Brian Duperreault on Jan. 29. MMC would not elaborate on the nature of the expense.

Bear Stearns analyst David Small said in a note that the brokerage results were in line with estimates, but that Kroll was a disappointment. He said Marsh has discontinued many of the initiatives begun by the old management, and this has affected earnings in a positive way.

Alain Karaoglan, an analyst for Bank of America, gave MMC's performance mixed reviews in his note, saying revenues from brokerage and Kroll were disappointing, but overall revenues exceeded expectations.

During the conference call, Mr. Duperreault said he would closely examine the position of Kroll within MMC and did not rule out a sale or spin-off of the unit.

"I'm not trying to signal that Kroll is for sale," he said in answer to a question. "I am saying that I am looking at Kroll and am looking at it in-depth."

He said a decision on the future of Kroll would be made once his examination is complete. He also indicated that the company would be open to making acquisitions for future growth.

On the subject of MMC as a whole, he said mistakes were made in the past but he is confident in the underpinnings of the company and that "its problems are not systemic." It will take time to find solutions, he said, emphasizing that his aim is to grow the company, not see it diminished.

Explaining his reason for taking the position, he said, "I was excited, because I know what [MMC] has been and what it can be."

Mr. Duperreault made it clear that Daniel S. Glaser, the chairman and CEO of Marsh who was hired in December, would be firmly in control of making the necessary changes to bring the broker back to profitability.

Addressing Marsh's future, Mr. Glaser said the major problem with the firm is "we don't make enough money," adding that the way to correct this is to get back to basics. He said this would be done by simplifying processes and changing brokering operations from centralized command to a hub system of brokerage offices. Mr. Glaser said there would also need to be reductions in costs and expenses, and implied that the firm is looking to accomplish this by eliminating unnecessary spending.

He also said the company would be working to review its compensation from insurers to see that it receives sufficient payment for Marsh's services. Mr. Glaser said this would not have a substantial immediate impact on results but would translate into improvements in the future.