NEW YORK (Bloomberg) ? Connecticut Attorney General Richard Blumenthal accused Marsh & McLennan Cos., the world's largest insurance broker, of taking a hidden kickback for steering an $80 million state contract to Bermuda-based insurer ACE Ltd.

ACE paid Marsh a secret $50,000 fee to get the workers compensation contract, Blumenthal said in an interview. Both companies were sued in Hartford Superior Court yesterday, he said.

Blumenthal's claims are similar to New York Attorney General Eliot Spitzer's allegations that the broker steered clients to insurers that paid the highest fees. Spitzer's October suit, which also made more serious accusations that Marsh rigged bids, led to the ouster of Chief Executive Officer Jeff Greenberg and spurred investigations in dozens of states.

"Marsh knows it has to go settle with each state," said Nicholas Xie, an analyst at PNC Advisors in Philadelphia, which manages $48 billion and holds Marsh and Ace shares. "This may make it more costly."

Barbara Perlmutter, a spokeswoman for New York-based Marsh, and Ace spokesman Robert Grieves said their companies were cooperating with Blumenthal's investigation and declined to comment further. Spitzer hasn't sued Ace.

Shares of Marsh fell 50 cents, or 1.6 percent, to $31.01 in New York Stock Exchange composite trading, and have declined 32 percent since Spitzer's October suit. Shares of Bermuda-based Ace fell 85 cents, or 2 percent, to $42.83.

"Whatever name they are called ? bonuses, commissions, overrides ? the effect of these concealed kickbacks is to steer contracts, corrupt competitive bidding, inflate costs and deceive customers," Blumenthal said in a statement.

Connecticut's Department of Administrative Services hired Marsh and another broker, Hagedorn & Co., in 2001 to find an insurer that would assume responsibility for the state's 678 most serious workers' compensation cases.

Marsh presented ACE Financial Solutions Inc., one of Ace's units, as its "preferred" insurer, while Hagedorn suggested American International Group Inc. and Hartford Financial Services Group Inc., Blumenthal said in an interview.

The state negotiated with all three insurers, ultimately choosing Ace and paying Marsh a $100,000 fee. The state agency prohibited the company from accepting additional compensation, the suit said.

Marsh and ACE violated the Connecticut Unfair Trade Practices Act, finding they engaged in deceptive business practices, Blumenthal said. He's also investigating whether Ace paid Marsh additional commissions to get the contract.

Hartford spokesman Josh King and AIG spokesman Joe Norton had no immediate comment. Dan Gabel, president of New York-based Hagedorn, said he hasn't seen the suit.

Blumenthal said his probe of the industry has found evidence of price-fixing and bid-rigging. He plans to sue more companies.

"Blumenthal is throwing his hat into the ring so that when there is some big settlement, he'll get his piece of the pie," said Michael Paisan, an insurance analyst at Legg Mason Wood Walker. "This is more of a political issue."