NEW YORK (CNNMoney.com) - Marsh & McLennan continues to face significant challenges, particularly in its troubled Marsh and Putnam units, but the company should start to see some improvement in 2006, the company's top executive said.

Speaking at an industry conference in New York, MMC (Research)'s chief executive officer Michael Cherkasky said the company, which has been hammered following New York Attorney General Eliot Spitzer's investigation into bid-rigging, continues to face relatively weak financial performance, lack of organic growth in its key Putnam and Marsh operations and a number of civil lawsuits against its brokerage unit.

But he said the company is actively working to address those issues by altering MMC's current business model. Cherkasky said the company will "isolate" the Putnam Investments unit -- which was embroiled in a mutual fund scandal -- and view the business as more of a holding company to avoid any conflict of interest with its Mercer unit, which advises clients about investments. Other businesses, such as the Marsh brokerage unit and Mercer, will be considered integrated companies to cut costs and eventually the company hopes to cross-sell products between the different businesses.

"We have to operate as one company and evolve our business model," he said, adding that as part of the company's effort to centralize its operation, MMC hired a corporate head of IT to manage all of the businesses technology platforms.

Cherkasky said the company also plans to exit from unprofitable business in 2006 to focus on those operations that are more profitable. In October, it sold its U.S.-based wholesale brokerage operation Crump Group and in May, it sold the assets of MMC Capital, its private equity manager.

Cherkasky said while the company won't make any major announcements when it exits a business, it plans to continue to separate itself from underperforming businesses.

"This business won't have the same components in 5 years that it does right now," Cherkasky said.

Cherkasky also said the company's client retention rates have improved this past summer, bringing it roughly to historical levels and he was confident that retention would continue to improve. When it comes to retaining its own brokers -- many of whom jumped ship after the bid-rigging scandal -- he said MMC "will not play the game of matching everyone's salary and compensation" in order to keep brokers that are considering moving to a competitor offering significant salary increases.

"It's part of my philosophy that I can't keep 100 percent of the people," he said. "If I try to do that in this competitive environment, I have to pay more... we're not going to compete with that."

But he said the company hasn't lost any business to the Marsh brokers that have left the company. Willis Group Holdings and the start-up Integro, which was founded by former Marsh employees, are among the competitors that have actively recruited Marsh employees in the last year.