Updated from 9:01 a.m. EST
Marsh & McLennan
reported a wide loss for the fourth quarter that includes the cost of the firm's $850 million settlement in the insurance industry bid-rigging investigation.
The nation's biggest insurance broker also halved its dividend and said it is considering eliminating another 2,500 jobs on top of the 3,000 layoffs its already announced. Marsh will also sell its MMC Capital private equity arm to the employees that run the division.
The new job cuts, the reduced dividend and private equity sale are all part of a series of steps by Marsh's new management to streamline the company's operations and find a way to make for the loss of hundreds of millions of dollars in revenue in the wake of the insurance scandal.
The nation's largest insurance broker lost $676 million, or $1.28 a share, in the quarter, compared with a profit of $375 million, or 69 cents a share, a year ago. Revenue declined 1% from a year ago to $2.99 billion.
The latest quarter included a pretax settlement charge of $618 million and restructuring expenses totaling $337 million. Marsh has been ensnared in a bid-rigging scandal brought to light by New York Attorney General Eliot Spitzer and said more restructuring is likely.
Analysts expected a loss of 60 cents a share on revenue of $2.94 billion, according to Thomson First Call. The per-share number wasn't comparable to Marsh's bottom-line number.
In late morning trading, shares of Marsh rose 47 cents, or 1.4%, to $33.12, as investors are inclined to believe the company is taking the necessary steps to put its house in order.
Marsh -- which has also had roles in the mutual fund trading and Dick Grasso pay scandals -- has had a lot of cleaning up to do the past year. The company really hit the skids in October, when Spitzer announced an insurance-industry crackdown, which included accusations that Marsh & McLennan rigged bids and fixed prices on commissions in a widespread scheme with other companies.
The probe led to the swift resignation of the company's CEO and a January settlement, in which Marsh agreed to pay $850 million. It is in the process of laying off thousands of workers.
New York-based Marsh said it will pay a 17-cent first-quarter dividend on March 30, half of the last quarter's payout.
Shares of Marsh remain well below their 52-week high of more than $49. But the stock is up nearly 37% from its low point last October in the immediate aftermath of the insurance scandal.
In announcing that it will sell its MCC Capital division, Marsh became the second financial services firm Tuesday to announce it was getting out of the private equity business.
J.P. Morgan Chase
, the nation's No. 2 bank, said Tuesday it was spinning off its JP Morgan Partners venture capital group. J.P. Morgan said it will continue to retain an equity interest in the venture capital group, which has $13 billion in assets under management.