Standard & Poor's Rating Services lowered its counterparty credit rating on Marsh & McLennan Cos. by three notches today, to BBB+/A-2 from A+/A-1 and said the rating remains on CreditWatch with negative implications.
S&P first put the rating on watch on Oct. 15, after New York state Attorney General Eliot Spitzer sued the company and its brokerage unit, Marsh Inc., on bid-rigging charges.
The downgrade reflects S&P's revised expectations for Marsh's earnings and cash flow given Marsh's decision to stop all market service agreements--the special commissions paid to brokers from insurers in exchange for getting business are at the heart of Mr. Spitzer's probe. S&P said the reduced earnings will make it harder for MMC to retire the short-term debt it assumed when it bought Kroll Inc. this summer for $1.9 billion.
The action also reflects Standard & Poor's belief that the Marsh franchise has been damaged by the allegations.
In other ratings actions, S&P placed London-based Willis Group Holdings Inc on CreditWatch with negative implications after the company said Thursday it would stop accepting contingency commission payments from insurers. In addition, Aon Corp.'s counterparty credit rating was cut to BBB+/A-2 from A-/A-2 and is on CreditWatch with negative implications.
For more news, see Crain's New York Business.