The cost of handling compensation investigations and other regulatory matters hit earnings hard during the fourth quarter of 2004 at a big New York insurance broker.[@@]

The broker, Marsh & McLennan Companies Inc., is reporting a $676 million net loss for the latest quarter on $3 billion in revenue, compared with $375 million in net income on $3 billion in revenue for the fourth quarter of 2003.

Marsh says it is responding to the fourth-quarter loss by restructuring its operations and eliminating unprofitable accounts. The changes could affect 2,500 employees, Marsh says.

Marsh also says it will be cutting its first-quarter dividend in half, to 17 cents per share.

Retirement consulting revenue at Marsh’s Mercer Human Resource Consulting unit was flat, and revenue at Mercer’s health care and group benefits operations showed modest growth despite the investigations Mercer has been facing.

But the company’s Putnam Investments unit, a money manager that has been working to ease investors’ concerns about allegations that it once offered large speculators special trading privileges, saw its revenue fall 24%, to $421 million.

The net loss for the company as a whole includes $80 million in Putnam restitution payments and $618 million in restitutions payments negotiated with New York state regulators, Marsh says.