NEW YORK — The head of Marsh & McLennan Companies Inc. insurance brokerage stepped down Monday in a move seen as clearing the way for settlement of bid-rigging charges brought by New York's attorney general.
The resignation of Jeffrey W. Greenberg from the posts of chairman and chief executive was accepted at an emergency board meeting at the company's New York headquarters.
Shortly after it was announced, New York Attorney General Eliot Spitzer said the board's action "permits Marsh and this office to move forward toward a civil resolution of our lawsuit."
Spitzer added that any criminal action would not be against the company but against individuals.
The board said that Greenberg will be replaced by Michael Cherkasky, 54, who just last week was named head of Marsh Inc., the company's insurance brokerage unit. Before that, Cherkasky had been chief executive of Marsh Kroll, the Marsh & McLennan risk consulting subsidiary.
Cherkasky had joined Kroll in 1994 after 16 years in the criminal justice system, some of them as Spitzer's boss in the New York district attorney's office. Kroll was purchased by Marsh & McLennan in July 2004.
The board also said that today it will announce "significant reforms" in the way its Marsh Inc. subsidiary does business.
The reforms, the board said, "will be rooted in transparency" and ensure that "Marsh will receive compensation for its services from only one party — its clients."
Spitzer filed a civil suit against Marsh & McLennan on Oct. 14, charging that the nation's largest insurance brokerage was rigging bids and fixing prices in the sale of property and casualty insurance to businesses. Spitzer also charged that the company's commission system — which included payments from insurance companies in exchange for more deals — was the equivalent of accepting payoffs.
Spitzer had said he wouldn't negotiate with the Marsh & McLennan management team under Greenberg, alleging that the attorney general's office was "misled at the very highest levels of that company."
After Marsh & McLennan announced that Greenberg was leaving, Spitzer said in a statement: "We are persuaded that the goals that would have been advanced by a criminal prosecution of the corporation — punishment, restitution, general deterrence and industry reform — will be better accomplished by criminal prosecution of individuals, adoption by the company of dramatically new business procedures, installation of new leadership, a full examination of prior wrongdoing and a pledge of restitution to those harmed."
He concluded: "Realizing these goals, while also allowing Marsh & McLennan to retain a viable role in the marketplace, makes corporate criminal prosecution unnecessary."
The announcement came after several days of reported negotiations between Spitzer's office and independent directors on Marsh & McLennan's 16-member board.
Greenberg, 53, had been CEO of Marsh & McLennan since November 1999. He added the title of chairman in 2002.
He is a member of an insurance family dynasty that includes his father, Maurice Greenberg, who heads American Insurance Group Inc., and his brother Evan Greenberg, who heads ACE Ltd., which is based in Bermuda.