Marsh & McLennan Cos. emphatically stressed Tuesday that it is not putting up Putnam Investments, the company's mutual fund unit, and Mercer Inc., its consulting unit, for sale. Marsh, which reported a fourth-quarter loss of $676 million, is cutting its quarterly dividend in half and slashing up to 2,500 jobs to pay for settlements over allegations that its insurance brokerage unit rigged bids.

Michael Cherkasky, Marsh's CEO, ardently denied that Putnam and Mercer are for sale during the company's fourth-quarter earnings call, the Boston Business Journal reports. "It's not going to happen," he said.

However, Cherkasky and company reportedly face considerable dissent from officials at Putnam who believe a breakaway would greatly help the firm, which saw clients withdraw roughly $105 billion in the 15 months since regulators unearthed illegal trading activities by its money managers. Putnam officials cite private ownership, which would help Putnam resurrect its customer base, as a top reason for a spinoff. They also say they don't want to be part of a parent company that is cleaning up its own mess.

Still, a breakaway poses risks for both Putnam and its parent company, Marsh. Putnam, if it were to be sold, would essentially be trading one owner for another because of the billions of dollars needed for a buyout. Marsh would need to foot an enormous tax bill to facilitate a breakoff, something that the company is unlikely to agree to do given the $850 million in restitution it already needs to fork over to policyholders hurt by bid-rigging practices. Marsh would also need to satisfy the parent company's shareholders and overcome Cherkasky's opposition to the sale.

Marsh executives expressed hope that Putnam's assets would begin to grow again in 2006. At the end of February, Putnam had $205 billion under management, down from $260 billion at the end of 2003. Ten of Putnam's 12 flagship funds performed above the median of their peer groups for the 12 months ended Jan. 31, 2005. Marsh said during its earnings call that it will pay another $80 million to Putnam investors hurt by the trading abuses of money managers.

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