Marsh & McLennan, the world’s largest insurance broker, said yesterday quarterly profit fell 70% after the company cut jobs and gave up fees that New York Attorney General Eliot Spitzer said were tantamount to kickbacks.

Net income declined to $134 million, or 25 cents a share, from $446 million, or 83 cents, a year earlier, the New York-based company said in a statement. Marsh had $225 million in severance costs, regulatory expenses, fund reimbursements at its Putnam Investments unit, and employee retention expenses.

As part of its $850 million settlement in January of Mr. Spitzer’s bid-rigging accusations, Marsh scrapped fees from insurers that were allegedly hidden from clients. The lost revenue contributed to a 19% drop in first-quarter brokerage revenue and a 39% plunge in Marsh’s shares since Mr. Spitzer’s suit last year.

“They have eliminated the practice that brought them disrepute, but eliminating that practice is going to eliminate a considerable amount of their profit,” said Stanley Nabi, a vice chairman at Silvercrest Asset Management Group in New York, which oversees about $6 billion, including 87,990 Marsh shares as of December.

Since Mr. Spitzer sued the company on October 14, Marsh has cut more than 5,000 jobs, ousted Jeffrey Greenberg as chief executive officer, and slashed its dividend by 50%.

Michael Cherkasky, who replaced Mr. Greenberg, said yesterday he expected to recoup about 25% of the $600 million of lost fees in America by charging clients higher commissions. Marsh expects the new commissions to be in place in the third quarter. Though paid by the client, the commissions are negotiated with the insurers because they’re based on a percentage of premiums.

“We have some notable companies that we’re still actively discussing with,” Mr. Cherkasky said in an interview. Marsh is trying to get insurers to agree to uniform commissions for each type of insurance coverage, he said. The uniform fees would eliminate any perception that Marsh was steering clients to insurers that agreed to the highest commissions, he said.

“The 25% is pretty much in line with what we were assuming,” said Williams Capital Group analyst Peter Streit, who has a “strong buy” rating on Marsh shares. “I think insurance carriers have responded positively to the discussions that they have had with brokers.”

Fox-Pitt Kelton analyst Jon Balkind, who has an “underperform” rating on Marsh shares, said first-quarter profit excluding severance, regulatory costs, and other items was 45 cents a share, lower than his 56-cent estimate.

Marsh shares rose 15 cents to $28.25 yesterday in New York Stock Exchange composite trading.

Marsh spent $145 million on severance, $26 million on regulatory and compliance, $30 million on fund reimbursements, and $25 million on employee retention.

Three former Marsh employees have pleaded guilty to Mr. Spitzer’s bid-rigging accusations, and Mr. Cherkasky said he expects more charges against individual employees. Some former employees plan to contest the charges, he said in an interview, without providing more detail.

Marsh had more success in attracting new clients in April than earlier in the year, Mr. Cherkasky said.

“Companies that didn’t know us, all they knew were the headlines,” he said. “Only in April have we started to see some incremental improvement in comparison to March and February.”

A slump in commercial insurance prices eroded commissions, contributing to the first-quarter decline in brokerage revenue to $1.2 billion.