Leading broker Marsh & McLennan has reduced its stake in Bermuda-based AXIS Capital by 50 percent.

The move follows speculation in recent months that Marsh could curtail its association with AXIS, after providing initial capital for the company when it set up in response to a capacity crunch after the September 11, 2001 terrorist attacks.

Marsh may have made the decision to sell off some of its stake after New York Attorney General Eliot Spitzer ? who has been probing business arrangements between brokers and re/insurers since early last year, including a suit against Marsh that was settled in recent months for $850 million ? raised concerns that there could be a conflict of interest in insurance brokers being invested in the re/insurers they place business for.

Marsh?s Risk Capital Holdings unit sold 3.7 million AXIS shares in a block trade to Merrill Lynch which will will in turn sell those shares to investors, it was revealed in a Press statement.

The sale equates to half of Marsh?s stake in AXIS and was valued at $105.6 million.

Marsh also has an investment in AXIS through an investment fund in MMC Capital, a buyout unit that Marsh is selling to MMC Capital?s management.

A Bloomberg news report said an AXIS filing showed that MMC Capital?s Trident II fund owns 30.6 million AXIS shares, or 18 percent of outstanding stock.MMC Capital has a long association with Bermuda having backed several now established reinsurance ventures from these shores in the last two decades.