Marsh & McLennan ousts Cherkasky

By Ed Leefeldt

NEW YORK (Reuters) - Marsh & McLennan Cos Inc (MMC.N) said on Friday it will replace its embattled chief executive, Michael Cherkasky, following a year of disappointing results and is evaluating strategies to boost shareholder value.

The news sent its shares higher as investors bet a sale of the insurance broker's consulting units -- or the whole company -- was under consideration.

"There are people who would like this business," said Douglas Lane, head of investment advisers Douglas C. Lane & Associates, which manages $2.1 billion in assets for high net worth families. "Going naked without a CEO and a cheap stock is dangerous if you want to stay independent."

But others sounded a note of caution. "The company is far from out of the woods yet in terms of improving its financial performance," said Goldman Sachs analyst Thomas Cholnoky. He cited softening prices and operating margins below those of its competitors.

Marsh & McLennan acknowledged its problems and said a change in leadership would enable it to move forward.

"Marsh & McLennan's financial performance in 2007 has fallen far short of our expectations," Stephen Hardis, the non-executive chairman of the board, said in a statement.

In early-afternoon trading, Marsh & McLennan shares were up 82 cents, or 3.3 percent, to $25.71 on the New York Stock Exchange.

The shares had closed at $24.89 on Thursday, down 26 percent from a 12-month high of $33.46 in May.

The New York-based insurance broker said its board would "evaluate strategies to enhance shareholder value," which is often considered code for a possible sale of assets. Marsh & McLennan's operations include human resources, management and risk consulting, as well as reinsurance,

"Cherkasky's strategy was to make the consulting and brokerage arms work together," said Bill Bergman, an analyst with Morningstar. "The board may now be willing to sell off some of the pieces."

Bergman said Daniel Glaser, a former American International Group (AIG.N) executive who became head of Marsh's brokerage unit in November, would not have taken the job without knowing who his boss would be or if he was in line for Cherkasky's job himself.

Marsh mentioned Glaser prominently in its press release announcing Cherkasky's departure. It said Glaser was expected to "significantly improve Marsh's profitability."

Neither Cherkasky nor Glaser was available for comment, according to Marsh & McLennan spokeswoman Christine Walton. She declined to comment on whether the broker had hired an investment banker to advise the company.

UNDER PRESSURE

Cherkasky had been under pressure since October 2004, when he took over in the middle of a bid-rigging scandal in which the company faced charges from then-New York Attorney General Eliot Spitzer.