new york (Bloomberg) — Marsh & McLennan Companies, the brokerage that settled an insurance bid-rigging probe in 2005 for $850 million, illegally fixed reinsurance prices through a subsidiary, Connecticut Attorney General Richard Blumenthal said in a lawsuit.

And units of two Bermuda-based reinsurers, Arch Capital Group and Aspen Insurance Holdings, have been named in the suit as co-conspirators, as well as units of American International Group and Swiss Reinsurance, though none of those companies is a defendant.

The Guy Carpenter unit, in a "series of conspiracies," generated more than $1 billion in premiums paid to reinsurers by insurance companies it represented, Blumenthal said in a complaint dated October 4 and served yesterday. The misconduct occurred for almost 50 years, he said. Guy Carpenter said there is no basis for the suit and that it would defend itself "vigorously".

The unit earned more than $80 million in fees and millions of dollars in undisclosed commissions by conspiring with reinsurers to overcharge 170 insurers, Blumenthal said. Reinsurance is coverage for insurers. Marsh settled with then-New York Attorney General Eliot Spitzer in 2005 over allegations it steered customers to insurers in exchange for hidden fees. It didn't admit or deny wrongdoing in a settlement that reimbursed thousands of clients.

"It feels like a here-we-go-again situation," said Blake Howells, who helps oversee $2.5 billion at Portland, Oregon-based Becker Capital Management, including about one million shares of New York-based Marsh & McLennan.

Guy Carpenter's $217 million of revenue in the second quarter represented 7.8 percent of the total at Marsh & McLennan, the world's largest insurance brokerage. Guy Carpenter is the second largest reinsurance brokerage behind Chicago-based Aon Corp.

Marsh & McLennan trades for about 40 percent less than it did before Spitzer's suit in 2004 and is still defending itself in civil cases inspired by that case. Dozens of former brokerage customers who declined to participate in that settlement have filed suit, as has Marc Dann, the Ohio Attorney General. Marsh & McLennan fell 27 cents, or one percent, to $26.45 as of 2.24 p.m. in New York Stock Exchange composite trading.

Blumenthal said in an interview he may recover "tens of millions of dollars or more" through the suit. Guy Carpenter aggregated small and medium-sized insurers' accounts into "facilities" where favoured reinsurers were able to charge prices up to 40 percent above market rates, Blumenthal said.

"Reinsurers, in order to gain access to this closed market, agreed not to compete on price and terms" set by Guy Carpenter, Blumenthal said in the complaint.

The lawsuit, filed in state Superior Court in Hartford, is "based on a fundamental misunderstanding of reinsurance facilities," Guy Carpenter said in a statement. "As many of our clients have confirmed during this investigation, these facilities result in improved availability and terms of reinsurance."

The investigation continues, with a focus on reinsurers, Blumenthal said. Reinsurers named as co-conspirators in the complaint include units of Swiss Reinsurance, American International Group, Arch Capital Group and Aspen Insurance Holdings. None are defendants.

Swiss Re spokeswoman Alayna Tagariello and Mario Chiappetti of Arch didn't immediately return calls seeking comment. Michael Arcaro, a spokesman for AIG declined to immediately comment.

Blumenthal's office demanded records from Guy Carpenter in late 2006, according to an August regulatory filing by Marsh & McLennan.

Blumenthal in July said he subpoenaed at least 20 companies since last year as he probed possible anticompetitive reinsurance practices.