NEW YORK – Marsh & McLennan Cos. (MMC) announced Monday Chairman and Chief Executive Jeffrey Greenberg (search) resigned, 11 days after New York's attorney general accused the world's biggest insurance broker of rigging insurance prices.
Michael Cherkasky, the chief executive of Marsh's risk and insurance services unit, is replacing Greenberg as chief executive, the company said.
The resignation of Greenberg, 53, came after the attorney general, Eliot Spitzer (search), called for changes in Marsh's top management, saying: "The leadership of that company is not a leadership I will talk to and not a leadership I will negotiate with."
"The markets will like him leaving, but I think there is a lot more involved in Spitzer's case than just getting rid of Greenberg," said David Jordan, chief investment officer of the First Focus Funds. "I would think there's still more bad news for Marsh down the road."
Spitzer's office also declined immediate comment. But an official familiar with the attorney general's lawsuit against Marsh said Spitzer would like to see Marsh directors also propose an overhaul of the company's business practices.
Cherkasky was named chief executive of Marsh Inc. on Oct. 15, the day after Spitzer sued Marsh & McLennan.
He previously ran Kroll Inc. (search) , a private investigation agency that Marsh & McLennan bought in July. Cherkasky was also at one time Spitzer's former boss as investigations chief for the New York County district attorney.
Spitzer sued Marsh on Oct. 14, accusing it of rigging bids and colluding with American International Group Inc. (AIG) and other insurers to fix prices. His probe has also expanded to life and medical insurers.
J.P. Morgan analyst David Sheusi has written that regulators might extract more than $2 billion in penalties for the alleged wrongful practices, more than the $1.4 billion that Spitzer won last year from 10 Wall Street banks for biased stock research.
Marsh and rivals Aon Corp. and Willis Group Holdings Ltd. have said they will stop taking the "contingent commissions" that Spitzer faulted.
All three of Marsh's divisions have been probed by Spitzer's office in just the past year.
Spitzer investigated mutual fund manager Putnam Investments for allowing rapid fund trading at ordinary investors' expense. He also rebuked Mercer Human Resource Consulting, which advised the New York Stock Exchange (search) on former Chairman Richard Grasso's controversial $188 million pay package.
Greenberg is part of an insurance family dynasty, and once was expected to take over AIG, the world's largest insurer by market value, from his father Maurice "Hank" Greenberg.
But Jeffrey Greenberg quit AIG to join Marsh & McLennan in 1995, and in 1999 became chief executive. Until recently, he had generally received high marks for his stewardship.
Jeffrey Greenberg's brother Evan is chief executive of Ace Ltd. (search) , a Bermuda-based insurer.
AIG itself faces probes by the SEC and U.S. Justice Department on other matters, and on Monday said it ordered its lawyers to seek a "prompt resolution" of those probes.
Marsh shares rose 6 cents to $26.85, after earlier trading as high as $27.90. They closed at $46.13 the day before Spitzer announced his lawsuit.