S&P; Lowers Marsh Debt Rating to BBB

Marsh & McLennan Cos., the insurance brokerage accused by New York Atty. Gen. Eliot Spitzer of colluding with insurers to win more fees, on Tuesday had its credit rating cut one level to BBB by Standard & Poor’s.

S&P; lowered the senior debt rating on New York-based Marsh from BBB+ because cash flows in 2005 and 2006 may be lower than the rating company previously expected. The expense savings from 3,000 job cuts announced two weeks ago will take effect more slowly than S&P; expected, analyst Steven Ader said. S&P; said it might lower the rating further.

Spitzer sued Marsh on Oct. 14, accusing it of fabricating bids and steering clients to insurers that paid it the highest fees. The broker has since banned the disputed fees -- arrangements that contributed $845 million to revenue last year -- and cut 5% of its staff. The job cuts and other expense savings are slated to cut $400 million in annual costs.

Marsh & McLennan’s rating is now two levels from the junk, or below-investment-grade, rating. Lower ratings make it more costly for a company to borrow.

Marsh shares rose 16 cents to $28.06 on the New York Stock Exchange.