Marsh & McLennan results disappoint, shares drop

* CEO says credit mkt woes hamper divestitures

* Analysts see longer road for MMC turnaround

* Adjusted profit $O.21/shr, misses Wall Street view

* Shares fall as much as 13 percent

(Adds analyst comment)

By Lilla Zuill

NEW YORK (Reuters) - U.S. insurance broker Marsh & McLennan Cos Inc (MMC.N) posted third-quarter results that missed Wall Street expectations, as it lost money on investments and increased its liability reserves, sending its shares down as much as 13 percent.

Investors had hoped for a repeat of the better-than-expected results reported a quarter ago, a bright spot for Marsh & McLennan after several years of flagging profitability.

"There were a lot of moving parts, and it was a bit messy," said Chief Executive Brian Duperreault, installed earlier this year to improve the company's fortunes. But he pointed to the strength of the firm's underlying earnings.

"The investment swing was significant, and somewhat out of our control. Strip that out, and other one-time notables, and income was up significantly," Duperreault said in an interview.

The company reported a net loss of $8 million, or 2 cents a share, compared with a year-earlier profit of $1.9 billion, when Marsh & McLennan benefited from a one-time sales gain.

Increasing its professional-liability reserves cost about 4 cents a share, and investment losses from market declines on private equity investments another 3 cents a share.

Excluding special items, the company earned $111 million, or 21 cents per share -- a 10 percent increase from the $100 million, or 19 cents a share, in the year-ago quarter, but missing Wall Street's average expectations by 11 cents per share.

"Despite management's best efforts to put a positive spin on third-quarter earnings release, the results were quite discouraging," said Friedman, Billings, Ramsey analyst Bijan Moazami, in a note to clients.

"The market is beginning to realize that even if management effectively executes on cost initiatives, the improvement in profit margins will take time to materialize," Moazami added.

He cut his price target on the stock to $25, below its closing price on Wednesday of $26.06, down 12.26 percent.