Top executives of Marsh Inc. were asked to step down, and Marsh & McLennan Companies Inc., New York, says it will lay off 3,000 employees in the wake of the insurance brokerage scandal.[@@]
M&M announced that Roger E. Egan, president of Marsh, and Christopher M. Treanor, Marsh’s chairman and chief executive officer of Global Placement, were asked to resign. In addition, William L. Rosoff, senior vice president and general counsel for M&M, has resigned.
All 3 will help their replacements in assuming their new duties, M&M says.
Egan is to be replaced by Peter F. Garvey, president of Marsh’s North American operations, and William A. Malloy, president of Marsh’s Europe and Middle East operations. Both were promoted to co-president of Marsh.
Philip V. Moyles Jr., chairman of client development-North America, was promoted to executive vice president.
This makes a total of 7 executives who have been let go since New York’s Attorney General Eliot Spitzer announced a suit against M&M over bid-rigging and manipulation of insurance contract placements in return for profitable market service agreements, a form of contingency-fee commission based on account volume.
During an investor’s conference call, Michael G. Cherkasky, president of M&M and chairman and chief executive officers of Marsh, said the removal of the 3 executives was not a reflection of guilt.
“Freedom from criminal culpability is not our standard [for management] at M&M,” he said. “The issues that surfaced over the last few weeks have occurred under the stewardship of these executives. Such leadership is not up to the M&M or Marsh standards of care, and I have therefore replaced them.”
He said M&M’s internal investigation has not unearthed any evidence of extensive acts of bid-rigging or other illegal activity and added, “I’m cautiously optimistic that it is confined to a limited area” of Marsh. He said the internal probe should be completed by the end of next week.
The company also announced it would eliminate about 3,000 positions, or about 5% of its staff, worldwide.