Facing charges from New York Attorney General Eliot L. Spitzer of bid-rigging and kickbacks, Marsh & McLennan Cos. jettisoned chairman and chief executive Jeffrey W. Greenberg on Monday, by accepting his resignation, and replaced him with one of Spitzer's former mentors.

New chief executive Michael G. Cherkasky faces the difficult task of righting a firm that lost almost half its market value in 11 days and has faced scandals in all three of its major divisions in less than a year. Marsh shares, which rose Friday on rumors that Greenberg would resign, closed the day at $26.42, down 37 cents, or 1.38 percent.

"It is now time for the company to move forward to resolve the issues confronting it," the Marsh board said in a statement that also promised to unveil a series of comprehensive reforms in its insurance arm, Marsh Inc., on Tuesday.

Spitzer said in an interview Monday that the board's decision to replace Greenberg and to renounce all third-party payments persuaded him not to charge the company with criminal wrongdoing, a potentially devastating step that could have put the company's survival and the livelihoods of its 63,000 employees in danger.

Marsh's latest woes began Oct. 14, when Spitzer unveiled civil fraud charges alleging that Marsh Inc. brokers had colluded with insurance company executives, soliciting sham bids and taking "contingent commissions" for steering corporate liability insurance to particular carriers.

Within two days, Marsh, the world's largest insurance broker, had renounced the commissions, which brought in $845 million last year, and ousted the head of Marsh Inc. in favor of Cherkasky. Cherkasky, who was Spitzer's supervisor at the Manhattan district attorney's office more than a decade ago, joined Marsh & McLennan only this summer, when the company bought Kroll Inc., the security and risk management firm he headed.

However, Spitzer made clear that more changes were needed, having said at the initial press conference when he announced the charges against both the brokerage and its parent company, "The leadership of that company is not a leadership I will negotiate with."

"This is a fundamental shift," Spitzer said of the announcement that Cherkasky would step up to the top job. "Mike and the new leadership of Marsh are completely dedicated not only to rooting out the wrongdoing but to ensuring that the dynamics that caused it are changed."

Greenberg, 53, had been chief executive of Marsh & McLennan since 1999 and chaired the company's MMC Capital Inc. private equity unit from 1996 to 2002. Before that, he spent 17 years at American International Group Inc., a carrier headed by his father, which is also caught up in the insurance investigation.

His attorney Richard I. Beattie did not return a phone call seeking comment, but sources familiar with the succession process said Greenberg had said he would resign if the board wanted him to.

The Marsh board thanked Greenberg in its statement for 41/2 years of leadership, adding, "We respect the fact that Jeff has placed the interests of the company first."

Outside legal experts reacted favorably to the prospect of management change.

"The board looks to be doing the right thing," said Tom Dewey, a New York corporate defense attorney. "Marsh has very serious problems because they are in Spitzer's eyes a repeat offender."

Marsh directors had to clean house just last year -- albeit at a lower level -- because of Spitzer's mutual fund investigation.

Last fall, after the New York attorney general raised the issue of predatory short-term trading, known as market timing, the Securities and Exchange Commission and Massachusetts regulators began probing Marsh's Boston-based mutual fund arm, Putnam Investments. Investigators quickly learned that Putnam portfolio managers had been profiting at the expense of the funds they personally managed.

Institutional investors fled the fund company, and Marsh sacked Putnam chief Lawrence J. Lasser and announced a series of reforms. The firm agreed in April to pay $110 million to settle the investigations by the SEC and Massachusetts securities regulators.

But Spitzer has pointedly criticized the SEC for what he saw as letting Putnam off too easily, and he said during his press conference about the insurance complaint that his office still has an open investigation of Putnam.

Another Marsh arm, Mercer Human Resource Consulting LLC, was embroiled in Spitzer's battle with former New York Stock Exchange chief executive Dick Grasso over his $139.5 million pay package. Mercer, which advised the NYSE on Grasso's 2003 contract, agreed in May to return more than $440,000 in consulting fees and acknowledged that it misled the board about savings it would realize by approving the payout immediately.

Outgoing Marsh chief Greenberg's family, long prominent in the insurance industry, has recently come under regulatory scrutiny as well. His father, Maurice R. "Hank" Greenberg, heads AIG, and his brother Evan heads Ace Ltd., a Bermuda-based carrier. Both firms have were identified by Spitzer as having participated in the alleged bid-rigging. Neither insurance company has been charged, nor have any of the Greenbergs.

Hank Greenberg has also tangled with Spitzer and other regulators before. He served on the NYSE compensation committee when it approved several large Grasso contracts, though not the final $139.5 million payout.

AIG Looking to Settle Probes

Both the SEC and the Justice Department told AIG in September that they may bring charges against it for allegedly helping PNC Financial Services Group Inc. hide under-performing loans. A federal grand jury in Indiana also is probing AIG's use of insurance policies to help corporations smooth out their earnings.

AIG said in a statement Monday that it is actively seeking to settle with both the SEC and the Justice Department.

Jeffrey W. Greenberg resigned as head of Marsh.