Feb. 12 (Bloomberg) -- Marsh & McLennan Cos., the insurance broker that replaced its chief executive officer last month, said fourth-quarter profit fell 62 percent on higher expenses.

Net income declined to $85 million, or 16 cents a share, from $226 million, or 40 cents, in the same period a year earlier, the New York-based company said in a statement today. Revenue rose 8.1 percent to $2.93 billion on gains from consulting units.

New CEO Brian Duperreault was hired to boost sales at Marsh & McLennan, the world's largest brokerage, as falling rates for commercial insurance translate into smaller commissions for arranging deals. Predecessor Michael Cherkasky, hired to clean up a 2004 bid-rigging scandal, was unable to regain lost clients and revenue, and spent more on bonuses for brokers. Cherkasky's departure cost the company about $14 million in the quarter.

``Growth rates across most businesses were decent,'' said analyst William Wilt of Morgan Stanley in a note to investors. ``A decent revenue quarter suggests the company is in less disarray than some might have feared.'' Wilt raised his rating to ``overweight'' after Duperreault's appointment.

Marsh & McLennan rose 69 cents, or 2.7 percent, to $25.99 at 4:27 p.m. in New York Stock Exchange composite trading. The company has fallen about 13 percent in the past year, compared with the 19 percent decline in the 24-member KBW Insurance Index.

Profit was 26 cents a share excluding discontinued operations and one-time costs, missing the 31-cent average estimate of 13 analysts surveyed by Bloomberg.

Rates Decline

Brokers help corporate clients shop for insurance coverage, typically taking a percentage of the policy premium as a commission. The price of business policies in the U.S. fell 12 percent in the fourth quarter as insurers competed for market share, according to a survey by the Council of Insurance Agents and Brokers.

Revenue at the company's flagship Marsh Inc. insurance brokerage grew by about 1 percent excluding currency fluctuations and acquisitions, compared with a 2 percent increase at No. 2 Aon Corp. and little change at Willis Group Holdings Ltd.

Consulting fees from the Mercer and Oliver Wyman units rose 13 percent, while the security unit, Kroll, declined about 3 percent.

For the full year, profit more than doubled to $2.48 billion as revenue advanced 7.6 percent to $11.4 billion.

``The situation here is actually coming around,'' Duperreault said in a conference call with analysts and investors today. While Marsh and Kroll need to improve, ``there's a lot to be optimistic about,'' he said.

CEO Switch

Duperreault, the CEO of Ace Ltd. from 1994 to 2004, replaced Cherkasky last month. Cherkasky, a former prosecutor, took the top job in the wake of an investigation by New York's then-attorney general, Eliot Spitzer, who is now governor. The probe led to an $850 million settlement and an agreement to forgo $845 million a year in payments from insurers.

Duperreault will be paid at least $3.25 million this year, the company said in a regulatory filing. He also gets options on 1.2 million shares of stock priced at $27.28 each, and a grant of 300,000 restricted shares.

Marsh & McLennan had the most brokerage and consulting revenue in 2006, according to Business Insurance magazine, ahead of Aon, based in Chicago, and third-ranked Willis, of London.

To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.

Last Updated: February 12, 2008 17:32 EST