Marsh & McLennan Cos.’ Mercer consulting unit agreed to pay $500 million to settle a lawsuit brought by the Alaska Retirement Management Board that blamed the firm for billions in unfunded liabilities.
The settlement was in the company’s best interest because of the uncertainty of the outcome of a jury trial in Juneau, Alaska, where many plan participants live and because the plaintiffs were seeking at least $2.8 billion in damages, Mercer said yesterday in a statement. Spokesman Charles Salmans declined to comment further.
Alaska Attorney General Dan Sullivan said in a separate statement that the unfunded liabilities were caused by stock market declines, increases in health-care costs and Mercer’s negligence. The Alaska board accused Mercer of malpractice, breach of contract and unfair trade practices in advising the state on management of two retirement funds.
“This is a significant settlement that will benefit the state and our citizens,” Sullivan said in the statement. “We have been informed that by a large margin it is the largest such settlement in history for this kind of claim.”
Mercer denied liability, it said in its statement. Insurance will cover $100 million of the settlement, the company said.
The case is Alaska Retirement Management Board v. Mercer, 1JU-07-0974, Alaska Superior Court (Juneau.)