washingtonpost.com  > Business > Industries > Insurance

Quick Quotes

Page 2 of 2  < Back  

Spitzer Targets Insurance Brokers

In one internal Marsh e-mail, a top executive wrote, "We need to place our business in 2004 with those that have superior financials, broad coverage and pay us the most."

In the case of Fortune Brands Inc., an Illinois-based consumer products company that used a Marsh broker in 2002, e-mails suggest the bidding process was entirely corrupt.


Spitzer describes the investigation as "disappointing for what it reveals." (Gregory Bull -- AP)

_____Stock Quotes_____
American International Group (AIG)
Fortune Brands Inc (FO)
Hartford Financial Services (HIG)
ACE Limited (ACE)
Marsh & McLennan Co's (MMC)
_____Related Coverage_____
Research Settlement Completed (The Washington Post, Aug 27, 2004)
Former NYSE Director Asks Judge to Dismiss Suit (The Washington Post, Jul 23, 2004)
Another Spitzer Lawyer Bolts for New Job on Wall Street (The Washington Post, Jun 10, 2004)
Eliot Spitzer Spoils for a Fight (The Washington Post, May 31, 2004)

Both ACE and AIG participated, and an ACE executive described what happened in an e-mail cited in the complaint. ACE's "original quote [was] $990,000. We were more competitive than AIG in price and terms. MMGB [Marsh] requested we increase premium to $1.1 M to be less competitive so AIG does not loose [sic] the business."

Clarkson Hine, a Fortune Brands spokesman, said in a statement: "We're obviously concerned by what we learned today. We're already investigating the matter."

Spitzer had harsh words for Marsh. Noting that its mutual fund arm Putnam Investments was heavily implicated in the mutual fund scandal, he said, "The leadership of that company is not a leadership I will negotiate with. . . . We were misled by the very highest levels of that company."

Marsh officials said in a statement that they are cooperating with Spitzer's office. "We are committed to getting all the facts, determining any incidence of improper behavior and dealing appropriately with any wrongdoing."

Marsh is already the subject of a lawsuit by plaintiffs seeking class-action status. Filed in August, it alleges the firm fraudulently concealed the payments it received from brokers.

Unlike Wall Street, which is generally the province of the Securities and Exchange Commission, the insurance industry is primarily regulated by the states. New York State Insurance Superintendent Gregory V. Serio said his office and Spitzer's have been working in tandem for nearly six months on this investigation.

AIG said in a statement that the company is cooperating with Spitzer and had sought guidance from Serio's office as recently as last fall about paying commissions to brokers. The company said it was "saddened" by the news that Karen Radke, a senior vice president, and Jean-Baptist Tateossian, manager of national accounts, had pleaded guilty to felony fraud.

ACE and Hartford said in statement that they are cooperating with Spitzer, and Hartford added that the company "does not condone bid-rigging."


< Back  1 2

© 2004 The Washington Post Company