It emerged yesterday that beleaguered global broker Marsh & McLennan might be putting its investment subsidiary up on the selling block to avoid conflict of interest concerns.

The subsidiary, MMC Capital, has a long association with Bermuda having backed several now established reinsurance ventures from these shores.

The news, coming from international media reports, follows the company saying since last month that the fate of MMC was unclear after the conflict of interest fears were raised by probing New York attorney General Eliot Spitzer.

In October, Mr. Spitzer announced a damning civil lawsuit against the company after claims the company had, with insurers it places business with - including a US casualty risk unit Bermuda-based ACE Limited - engaged in a practice of rigging bids to create the sham appearance of competition.

Marsh is still in talks with the attorney general's office on a settlement, with the million dollar penalty fee and terms yet to be agreed. The company was said to have narrowly avoided criminal proceedings by axing CEO Jeffrey Greenberg - brother of ACE Limited CEO Evan Greenberg - as well as other staff and several directors also handing in notice.

In addition, Mr. Spitzer later said he was concerned about potential conflicts of interest arising from brokers taking large stakes in reinsurance ventures, including both Marsh and rival Aon having been behind a number of Bermuda-based ventures in the last two decades. Most recently the company was an investor in AXIS Capital - one of a wave of companies that set up on the Island in response to a capacity crunch after the September 11 terrorist attacks.

However the broking giant, as recently as last quarter, moved to again use MMC to launch a new reinsurance venture, this time the new Bermuda-based life reinsurer Wilton Re Holdings Ltd., with records at Government's Registrar of Companies showing the company as being incorporated on September 1. Money for the new venture - with $600 million in initial capitalisation - was reportedly raised in large part by the private equity arm, and reports that Mr. Spitzer's probe had not dampened investor interest. A Wall Street Journal report yesterday said that of the three private-equity funds managed by MMC Capital, Marsh's own money can represent up to 25 percent in each fund. And yesterday Marsh officials were reported as weighing a host of options for MMC Capital including its sale or closure.

Last month, Michael Cherkasky, Marsh's new CEO, told CBS MarketWatch that the firm was considering MMC's future and its relationship to Bermuda insurers.

Although Marsh has not been the only broker to put money into Bermuda ventures, rival broker Aon Corporation recently moved to avoid concerns by selling off its stake in the company it helped to set up, Endurance Specialty Holdings.