Spitzer's Wars

Physician's Money Digest, December31 2004, Volume 11, Issue 24

Fresh from the battlefields of themutual fund scandals, New YorkAttorney General Eliot Spitzer has nowtaken on the insurance industry. Spitzer'stop target is the nation's largest insurancebroker, Marsh & McLennan, which waspilloried in a Spitzer news conference forallegedly rigging bids on property andcasualty policies and accepting paymentsfrom some of the nation's biggest insurancecompanies, including AIG and TheHartford, in return for steering businesstheir way. Spitzer then refused to negotiatewith Jay Greenberg, Marsh's chairmanand CEO, forcing his resignation.

Spitzer's critics claim he's attacking apractice that has been around for decadesbut has never attracted censure frominsurance regulators. They also chargethat the major damage from the probeisn't being borne by Marsh executiveswho may have been guilty of wrongdoing,but instead by Marsh employees andstockholders. Marsh recently announcedthe layoff of 3000 workers, many ofwhom are also invested in Marsh stock,which plunged after Spitzer went publicwith his accusations. Shortly after theinvestigation was announced, Marshstock hit a low of $22.75, less than halfits value on the day before the announcement,before making a slight comeback.In late November, the stock wastrading at around $28.