Marsh & McLennan Forms Insurance Firm

Marsh & McLennan Cos., the world’s largest insurance broker, said Friday that it is forming a firm to deal with industry cutbacks in coverage that have occurred since the Sept. 11 terrorist attacks.

The firm, to be called Axis Specialty Ltd., is being created to capitalize on the shortage of services as insurance companies are hit hard by losses stemming from the attacks that destroyed the World Trade Center towers and damaged the Pentagon, Marsh & McLennan said.

The attacks are expected to be the most expensive disaster for the insurance industry, with its costs expected to exceed the record $20-billion payout from Hurricane Andrew in 1992.

Bermuda-based Axis is expected to have about $1 billion in capital and will start underwriting in the fourth quarter, Marsh & McLennan said. Trident II, a fund managed by Marsh’s MMC Capital Inc. unit, will be the lead investor, the firm said.

John Charman, former president of ACE International, will be chief executive of the new insurance and reinsurance company. Robert Newhouse Jr., who was chairman at Mid-Ocean Ltd. and a vice chairman at MMC before that, will become chairman.

Marsh & McLennan shares rose $3 to close at $96.70 on the New York Stock Exchange.