Weeks after reportedly rebuffing a bid for its Kroll unit, Marsh & MacLennan Cos. (MMC) said it will sell parts of the business.

Insurance broker Marsh & MacLennan bought corporate security and investigations firm Kroll in 2004, but never successfully integrated it into the larger business, said Brian Duperreault, Marsh & MacLennan's chief executive during the company's first-quarter earnings call Wednesday.

During the quarter, the company undertook a restructuring of Kroll, to separate the businesses it expects to keep from those it will seek to sell.

Duperreault said that he considers Kroll's employment-screening, business- intelligence and investigations operations "core Kroll," and intends to incorporate those more closely into Marsh and MacLennan.

Kroll's corporate restructuring group should also perform well in the current economic downturn, Duperreault said.

Kroll's other businesses "do not fit into MMC's long-term growth," Duperreault said. These businesses include Factual Data Corp., which provides services to mortgage lenders, and its government services business.

"These may have greater value outside MMC and we will seek to divest these businesses," Duperreault said.

The Kroll restructuring resulted in a non-cash goodwill impairment charge of $ 425 million, or 81 cents per share, driving the company to a net loss for the quarter.

The Kroll write-down reflects cutting the amount carried on Marsh's books that it paid for the consultancy over its book value. Marsh bought Kroll in 2004 for $1.9 billion.

Late last month, Marsh & MacLennan reportedly rebuffed an offer for Kroll from former Kroll chairman David Buchler, who was backed by private equity firm BC Partners.

Marsh & MacLennan, one of the world's largest insurance brokers, on Wednesday reported a net loss of $210 million, or 40 cents a share, compared with year- earlier net income of $268 million, or 47 cents a share.

Excluding the Kroll-related charge and other items, earnings from continuing operations fell to 46 cents a share from 52 cents. Revenue climbed 8.4% to $3.05 billion.

The mean estimates of analysts polled by Thomson Reuters were for earnings of 45 cents a share on $2.92 billion in revenue.

Earnings at the brokerage's risk-and-insurance business fell 7.3% amid weakness at its risk-capital segment. The operating margin, which has been severely trailing Marsh's rivals, slid to 15.9% from 17.5%.

But profits at Marsh & McLennan's consulting firms - Mercer and Oliver Wyman Group - rose 10% as revenue increased 15%.

As catastrophes continue to run below long-term averages, insurance brokerages have been grappling with how to price policies low enough to attract customers less concerned with risk. And while the resulting price wars between insurers have meant a buyer's market for most forms of property and casualty insurance - a boon for consumers and businesses - they have been taking a toll on insurers.

Meanwhile, Marsh & McLennan has been trying in recent years to recover from a costly 2005 agreement, which settled charges that the New York firm fixed bids in order to steer business to favored insurers and boost its own commissions.

In February, two former executives were convicted in New York state court on a monopoly charge in the case brought by the New York Attorney General's office. The executives were cleared on other counts.

In late January, Marsh & McLennan announced the hiring of Duperreault, who previously ran insurer ACE Ltd. (ACE), to be its new chief executive.

The move to bring in an industry veteran helped placate shareholders who had grown frustrated by the company's poor performance and were calling for a breakup of the company.

Duperreault took over from Michael Cherkasky, a former prosecutor who got the top job amid the bid-rigging investigation in 2004.

Shares of Marsh & McLennan closed Tuesday at $27.58, and there was no premarket trading.

-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141; lavonne.kuykendall@dowjones.com

-(Donna Kardos and Kevin Kingsbury contributed to this report.)

  (END) Dow Jones Newswires
  05-07-08 0941ET
  Copyright (c) 2008 Dow Jones & Company, Inc.