Robert Stearns has become the first executive at Marsh to plead guilty to engaging in improper practices with regard to the bid process to win insurance business.
Stearns, a senior vice-president at Marsh, pleaded guilty to one count of scheming to defraud in the first degree on charges brought by Eliot Spitzer, the New York attorney-general. Stearns could face up to four years in prison.
Details emerged that Stearns, in one instance dated March 19, 2003, had requested a colleague to obtain a ‘B’ quote from AIG that would be deliberately less favorable to a Chubb quote in order to secure the business for Chubb.
Stearns becomes the sixth executive to plead guilty to charges filed by Spitzer after two managers at AIG, a pair of underwriters from Zurich American Insurance Company, and one executive from ACE.
The news comes as a major blow to parent company Marsh & McLennan, which has seen 40% of its share value wiped out since Spitzer first filed a lawsuit against it in October.
In response to the damaging developments the company released the following statement: We are saddened by this development. We have been and will continue to cooperate fully with the office of the Attorney General in its investigation. We are committed to resolving the company’s legal issues and to serving our clients with the highest standards of transparency and ethics.