The Wall Street Journal-20080131-Marsh Pins Hopes for a Turnaround on Duperreault- Hiring of Veteran May Satisfy Holders Who Seek a Breakup

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Marsh Pins Hopes for a Turnaround on Duperreault; Hiring of Veteran May Satisfy Holders Who Seek a Breakup

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Marsh & McLennan Cos., the insurance brokerage and consulting firm, said yesterday that it is hiring Brian Duperreault, who successfully ran insurer ACE Ltd., to be its new chief executive. The move to bring in an industry veteran could placate shareholders who have been frustrated by the company's poor performance.

Some of those shareholders have called for breaking up the company, which includes not only the core insurance brokerage, Marsh Inc., but units such as Kroll, a corporate investigations operation, and Mercer, a human-resources consulting concern. In recent weeks, rival Willis Group Holding Ltd. made an overture about a possible merger of the two companies.

But the naming of Mr. Duperreault sends another signal: that the board believes the company can be fixed. Mr. Duperreault joins Daniel Glaser, another respected insurance industry insider, who was hired in December to run the brokerage.

"My first priority is to make sure that they're all operating well," Mr. Duperreault said of the company's various parts, in an interview yesterday. "As a CEO, and as a board, you are constantly asking yourself about the portfolio mix in the company . . . That question never goes away." He declined to discuss the Willis inquiry.

Mr. Duperreault, 60 years old, is taking over from Michael Cherkasky, a former prosecutor who got the top job amid a bid-rigging investigation led by then-New York Attorney General Eliot Spitzer in 2004. That probe led Marsh to agree to an $850 million settlement. Mr. Cherkasky wasn't able to turn the company around, and the board announced it was looking for a new CEO in December, shortly after Mr. Glaser's appointment.

For those who complained about Mr. Cherkasky's lack of experience in the insurance industry, Mr. Duperreault's resume will provide solace. Before his time at ACE, he worked for American International Group Inc. for more than two decades.

Given that Marsh has been losing ground to insurance brokerage rivals Willis and Aon Corp., Mr. Duperreault's contacts in the industry could prove helpful in retaining clients. "His Rolodex is going to help a lot there," said David Small, an analyst with Bear Stearns.

Mr. Duperreault's experience running a large company may prove to be more important. Aon and Willis, for instance, have thrived in recent years with CEOs whose experience was largely outside the insurance industry. Shares in Marsh fell in 4 p.m. composite trading on the New York Stock Exchange, closing at $27.17, down 19 cents, or 0.7%.

While he was at Bermuda-based ACE, Mr. Duperreault engineered some large acquisitions, including the purchase of property-casualty- insurance operations from Cigna Corp. ACE's revenues also rose sharply under Mr. Duperreault, from $537.5 million in fiscal 1994, the year he became CEO, to $13.3 billion in fiscal 2004, the year he left as CEO.

Mr. Duperreault became chairman of ACE in 2004, and he was succeeded as CEO by Evan Greenberg, the son of former AIG chief executive Maurice R. "Hank" Greenberg. At Marsh, Mr. Duperreault is taking over a post that Evan Greenberg's brother, Jeffrey, held at the time Mr. Spitzer launched his probe.

Mr. Duperreault emerged as a strong contender right after Marsh began its external search late last year, partly because he had recently wrapped up his role as ACE chairman. No one will be surprised if he turns over the reins to Mr. Glaser after five years, however.

Yesterday, Mr. Duperreault essentially endorsed Mr. Glaser's work. He called Mr. Glaser an "excellent executive" and added, "He's making the right moves . . . He's looking at expenses, he's looking at revenues."

Still, the challenges of turning around Marsh are real, not least because prices -- and, thus, commissions -- are falling for many of the commercial policies that brokers such as Marsh arrange for corporate clients.