NEW YORK (Bloomberg) ? Marsh & McLennan Cos., the world?s largest insurance broker, reported smaller-than-expected profit and declining revenue in the fourth quarter following last year?s settlement of bid-rigging accusations.

Net income was $35 million, or 6 cents a share, compared with a net loss of $680 million, or $1.29, a year earlier, the New York-based company said yesterday. Profit before certain expenses was 19 cents a share; Jon Balkind, an analyst at Fox-Pitt Kelton Inc., had estimated 29 cents.

Brokerage revenue fell five percent, a sixth straight quarterly decline. The drop suggests Marsh is losing market share after settling New York Attorney General Eliot Spitzer?s allegations of steering business to insurers for kickbacks. Marsh shares fell as much as seven percent, headed toward its biggest one-day drop since Spitzer?s October, 2004 suit.

?What you would like to see is some numbers that are going up,? said Donald Yacktman, chief investment officer of Yacktman Asset Management in Austin, Texas, who manages about $1.1 billion, including more than 230,000 Marsh shares, as of September. ?Reputation is very important.?

Marsh chief executive officer Michael Cherkasky said in November that Spitzer?s allegations were repelling prospective clients, reducing Marsh?s share of the brokerage business. The company?s biggest rival, Aon Corp., reported a 3.6 percent increase in brokerage revenue in the quarter.

Marsh stock fell $1.58, or 5.1 percent, to $29.64 in New York Stock Exchange composite trading. Chicago- based Aon, which paid $190 million in March to settle a probe by Spitzer, rose 37 cents to $38.43.

Marsh, whose subsidiaries include mutual-fund company Putnam Investments, benefits consultant Mercer Inc., and security consultant Kroll Inc., said total revenue fell two percent to $2.83 billion. Brokerage revenue fell to $1.14 billion, the smallest decline in the six quarters.

?The scandal is still there,? Cherkasky, 55, said in an interview yesterday, ?but people understand what happened and how we handled it. In general, the client has moved beyond? issues surrounding the company?s reputation.

The chance for Aon and No. 3 broker Willis Group Holdings Ltd. to take more of Marsh?s brokerage business ?is really gone?, he said.

Cherkasky replaced Jeffrey Greenberg, who resigned after Spitzer?s lawsuit and now runs Validus, a Bermuda-based reinsurance start-up. A former Manhattan prosecutor, Cherkasky banned fees collected from insurers and settled the suit without admitting or denying wrongdoing. He also halved the dividend and eliminated more than 5,000 jobs.

Fox-Pitt?s Balkind, who has an ?underperform? rating on Marsh shares, said profit from Mercer and Kroll amounted to about 6 cents below his projection, and brokerage earnings were about two cents less than his estimate.

Marsh?s brokerage unit earned $62 million, compared with an $871 million loss a year ago. Profit at Mercer more than tripled to $94 million.

?2006 will be a better year with higher revenue, better margins and higher profits,? Cherkasky said on a conference call with analysts today. The fourth quarter was ?materially better? in terms of keeping clients, and January provided the ?first glimmer that new business is starting to kick in,? he said.

Marsh has lost at least 80 executives to startup Integro Ltd., Integro founder Roger Egan said in an interview in January. Egan started the competitor after being asked to resign in November 2004 as president of Marsh?s brokerage unit.

Marsh plans to be ?aggressive? in hiring this year, Brian Storms, the unit?s chief, said last month.

Companies hire insurance brokers to help them find property and liability coverage. Spitzer alleged that Marsh solicited phoney quotes from insurers including American International Group Inc. to pre-select the winner of a client?s business.

AIG, the world?s largest insurer, settled its own bid- rigging probe last week as part of a $1.64 billion settlement with Spitzer and federal regulators. Jeffrey Greenberg?s father, Maurice (Hank) Greenberg, was removed as CEO of AIG last March.