Marsh Needs New CEO, Storms is Out
On Friday Marsh & McLennan Cos. Inc. announced the stepping down of Brian Storms as chief executive of the insurance brokerage’s subsidiary Marsh Inc. Michael Cherkasky, CEO of Marsh & McLennan, will serve as the unit's acting head.
“Brian has made important contributions to Marsh’s recovery over the past two years,” MMC President and CEO Michael G. Cherkasky said in a statement. “That said, we now need a different set of leadership and operational skills to complete the successful transformation of Marsh.
Those familiar with the matter said Mr. Storms was removed from his post. New York-based Marsh & McLennan has been trying in recent years to recover from a costly 2005 agreement, which settled charges that the New York firm fixed bids in order to steer business to favored insurers and boost its own commissions.
The agreement with insurance regulators and then-New York Attorney General Eliot Spitzer forced the company to give up more than $800 million a year in revenue from so-called contingent commissions from insurers. Marsh's profitability collapsed soon after the bid-rigging scandal, forcing the company to cut costs by eliminating thousands of jobs.
Key to its recovery strategy is an effort to expand its relationship with corporate customers by increasing the range of services they receive from the parent company. Marsh Inc. is the company's largest unit. At the same time, however, the company also needs to make sure that it isn't undermining the core brokerage business in the process.
Mr. Cherkasky said Friday that Mr. Storms had made "important contributions to Marsh's recovery over the past two years." He added that "our long-term strategy is sound, and a solid foundation has been built."
The company's share price has dropped in recent months from more than $31 in July. It fell 26 cents to $26.18 in 4 p.m. New York Stock Exchange composite trading Friday. Last month, it agreed to buy back $800 million of its shares outstanding in an accelerated share-repurchase transaction.
Published on September 17, 2007
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