As it labours through another quarter of mediocre earnings, global broker Marsh is seeking to redraft its agreement with the state of New York to ban contingency fees.

Second-quarter profit for parent company Marsh & McLennan (MMC) rose just 2.9% from the previous corresponding period to $US177 million ($210 million) – the first financial statement to be clear of contingency fee revenue.

Total revenue grew 7% to $US2.8 billion ($3.32 billion) in the second quarter, but the result failed to impress analysts. First-half profit now trails the corresponding period in 2006 by 24% or $US143 million ($169 million).

In an added blow for MMC, its results were eclipsed by archrival Aon, which last week reported a 24% increase in second-quarter profit to $US240 million ($284 million).

MMC is still rebuilding its reputation – and its management ranks – following a contingency fee scandal that cost the broker $US850 million ($1 billion).

Despite the setbacks, CEO Michael Cherkasky describes the quarter’s growth as solid.
“Although profitability varied across our business segments, the overall revenue gain illustrates our long-term growth strategy,” he said.

“We will continue our strategy of growing revenue and investing in the future, with continued attention on expense discipline.”

In a conference call last week, Marsh CEO Brian Storms said the company is seeking to amend an agreement reached with New York that would allow it to collect fees from insurers for specific services.

Details of the new agreement are being drawn up, but the fees will not be volume-based.