The largest U.S. insurance brokerage agreed today to pay US$850 million in restitution to end an investigation into bid rigging, price fixing and the use of hidden incentive fees, according to New York Attorney General Eliot Spitzer.

Marsh & McLennan Inc. will provide US$850 million over four years to policyholders hurt by the conflicts of interest and will change its practices, Spitzer said.

The money will compensate clients that retained the company’s subsidiary, Marsh Inc., to place insurance with inception dates between Jan. 1, 2001 and Dec. 31, 2004, where contingent commission or overrides were recorded by Marsh.

Standard & Poor’s Rating Services said that its ratings on Marsh are remaining on CreditWatch with negative implications.

Standard & Poor’s says it considers the amount of this settlement to be consistent with the tolerances underlying the current ratings. The company’s ratings are being kept on CreditWatch negative because of continuing concerns about potential regulatory and civil actions and the potential ramifications, it adds.

The ratings take into account Standard & Poor’s expectation that Marsh will have the financial resources to manage any settlements reached in connection with outstanding legal and regulatory investigations. The ratings also reflect the expectation of a modest adverse impact (up to a 5% revenue loss) to Marsh’s business.

Short of criminal charges being filed against the company by a legal authority, Standard & Poor’s continues to believe that the diversified operational profile of Marsh, with several well-positioned operating business, will enable it to remain a viable and profitable entity.