NEW YORK (AP) -- Marsh & McLennan Cos. said Tuesday its profit shrank 62% in the fourth quarter as stiff competition squeezed the commissions the insurance broker charged.

Marsh & McLennan earned $85 million, or 16 cents per share, in the fourth quarter, compared with profit of $226 million, or 40 cents per share, in the fourth quarter of 2006.

Analysts polled by Thomson Financial had forecast profit of 31 cents per share.

Marsh & McLennan makes most of its money by charging commissions for linking clients with insurers. Many insurance brokers are struggling because insurers do not want to pay higher commissions as premiums slip.

An industry group, the Council of Insurance Agents & Brokers, said the average insurance rate fell 12% in the fourth quarter. Marsh said insurance rates began to fall more rapidly throughout 2007, and have continued to fall this year.

Revenue climbed 8% to $2.9 billion in the quarter, compared with analysts' expectations for revenue of $2.82 billion.

Revenue in the risk and insurance services business was flat at $1.37 billion.

Marsh & McLennan's new chief executive, Brian Duperreault, said in a statement his "immediate focus is to improve profitability" at the company's insurance brokerage and security segments.

For 2007, Marsh & McLennan earned $2.47 billion, or $4.53 per share, compared with profit of $990 million, or $1.76 per share, in 2006.

Marsh & McLennan (MMC, Fortune 500) shares rose 8 cents to $25.38 in morning trading. 

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