has agreed to set aside a whopping $850 million to compensate clients who used its services as an insurance broker. The news comes amid continued talk that executives at subsidiary Putnam Investments
are considering a management-led or investor-backed buyout of the company, reports the Boston Globe
Although Putnam's chief exec Ed Haldeman Jr.
has denied the rumors, other unnamed employees at Putnam told the Globe that "the matter is under discussion, but in preliminary stages."
As for the settlement, Marsh announced the agreement, (while not admitting nor denying its guilt), with the New York Attorney General and the New York State Insurance Department on Monday.
Taking the non-admission one step further, Marsh maintained in a release
that the $850 million represented neither a "fine or penalty."
Marsh will pay -- or willingly part with -- the $850 million via four payments on June 1 of every year from 2005 to 2008. The amount is $50 million more than the $800 million that Eliot Spitzer alleged Marsh earned in contingent commissions in his original complaint.
The settlement will hit Marsh's bottom line in the form of a $618 million charge to the firm's fourth quarter earnings. Marsh took a $232 million charge in the third quarter in anticipation of a settlement.
The settlement looks to be a bonanza for clients who used Marsh to purchase insurance from January 1, 2001 to December 31, 2004 -- the clients will not have to prove that they were harmed to receive a share of the settlement.
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