NEW YORK – Marsh & McLennan Cos. (MMC) shares were whipsawed on Friday amid conflicting reports that a change in the insurance broker's top management was imminent.
Marsh stock surged as much as 10 percent in the early afternoon after the Financial Times reported that embattled Chairman and Chief Executive Jeffrey Greenberg (search) would resign "within hours."
The newspaper's Web site also reported that Jules Kroll, 63, founder of corporate security firm Kroll Inc. (search) and a vice chairman of insurance brokerage unit Marsh Inc., would succeed Greenberg.
But Kroll quickly issued a statement denying the report as "erroneous," cooling enthusiasm for Marsh shares. The stock closed up 7.8 percent at $26.79 on the New York Stock Exchange (search).
Greenberg has been under intense fire since New York Attorney General Eliot Spitzer (search) last week sued Marsh & McLennan, accusing the world's largest insurance broker of bid-rigging and price-fixing in insurance markets. The suit marked the third time in the past year that Spitzer's office has investigated a Marsh & McLennan subsidiary.
In an unusual step, Spitzer criticized Marsh's management and urged the company's board to clean house.
"The leadership of that company is not a leadership I will talk to and not a leadership I will negotiate with," Spitzer said at the time.
Investors rallied on the Kroll speculation, since it would lessen uncertainty surrounding the company's future. Kroll, as a pioneer in investigations and corporate security, was expected to be well suited to run the company at this time.
Kroll sold corporate security company Kroll Inc. to Marsh & McLennan earlier this year. A Kroll Inc. spokeswoman declined to comment beyond Jules Kroll's statement. Kroll remains executive chairman of Kroll Inc.
Last week Kroll's former CEO, Michael Cherkasky, was appointed to head Marsh Inc., the unit at the center of Spitzer's lawsuit. Cherkasky was once Spitzer's boss when they both worked for the Manhattan District Attorney's office.
The Wall Street Journal, citing sources familiar with the matter, on Friday reported that the 10 outside directors on Marsh & McLennan's 16-member board met Thursday to discuss the investigation.
The newspaper said Greenberg's expected departure was unlikely to happen on Friday, but that the situation remains fluid as the firm's independent directors mull their options, including candidates for an interim CEO.
Also on Friday, the New York State Insurance Department (search) said it issued citations to Marsh & McLennan in conjunction with Spitzer's probe.
Representatives of Marsh & McLennan and their New York-licensed insurance brokerage have been directed to appear before the insurance department on Nov. 23, the agency's Superintendent Gregory Serio said in a statement.
Marsh officials will be asked to respond to charges they used "fraudulent, coercive, dishonest practices and demonstrated untrustworthiness" under the state's insurance laws, the insurance department said.