Marsh & McLennan CEO Jeffrey Greenberg resigned today as the contingent commissions crisis at Marsh continues. He will be replaced by Michael Cherkasky, the CEO of subsidiary company Marsh Kroll.

Mr Cherkasky had already replaced the head of Marsh’s brokerage unit, Ray Groves. He is a law enforcement veteran who once supervised Mr Spitzer in the Manhattan District Attorney’s office.

Mr Greenberg, son of legendary AIG Chairman Maurice, was responsible for the insurance brokerage unit, Marsh, as well as the Mercer consultancy business and Putnam investments company.

He joined Marsh & McLennan in 1995, becoming Chairman and then CEO in 2000.

Marsh shares have lost half their value since New York Attorney-General Eliot Spitzer announced a lawsuit which accused Marsh of fee-fixing and illegal market practices. The loss in value is reported to have hit home with Marsh employees, who have half their pension fund invested in the company. Last week the share value of Marsh dropped from $US46.13 to $US26.29.

Media reports from Europe and the UK suggest that the Spitzer investigations may be taken up by regulators there, with many industry leaders expecting tough new laws regulating brokers’ earnings methods. Reactions magazine says tying – the practice under which brokers placing business with an insurer demand to have the reinsurance on the deal placed through them as well – is also expected to come under the spotlight.