DealZone

The return of contingent commissions to the insurance brokerage business has provided one company with an opening to differentiate itself – by not accepting them.

Insurance brokers are middlemen between insurance companies and insurance buyers. They’re supposed to act in the interest of the buyer, but they can receive “contingent” commissions by steering a certain amount of business to the companies.

The practice was banned five years ago after an assault led by Eliot Spitzer, riding high at the time as New York’s attorney general and the “sheriff of Wall Street.”

But now the practice has returned from the dead, and two top players – Aon and Marsh & McLennan – are taking steps to return to it.

That gives another company, Willis, an opening to differentiate itself by advertising that it refuses to sully itself with such a conflict of interest. As other companies made clear that they were moving back to accepting the payments, Willis fired off a press release blasting the practice.

Lehman Brothers‘ plan to raise $6 billion in new capital wasn’t a shock, but the investment banks’ expected results for the second quarter were still a nasty surprise: A $2.87 billion loss, or $5.14 per share, compared with a Reuters Estimate forecast of a 38 cent-per-share loss. And you know there’s really trouble when net revenue is in the red — the company expects it to be negative $668 million, compared with positive $5.51 billion a year earlier, due to asset writedowns and trading losses.

Moody’s followed by moving its rating outlook on Lehman to “negative” from stable” and the bank’s shares were down 10 percent in pre-open trading. If nothing else, we can probably rule out a huge surge in pronouncements that the credit crisis is over.

Willis Group Holdings, the world’s third largest insurance brokerage, is buying smaller rival Hilb Rogal & Hobbs for $1.7 billion, looking to boost business as insurance rates soften, and expand its presence in the United States. Willis will also take on $400 million of HRH debt in a cash-and stock deal valued at $46 a share — nearly a 50 percent premium to HRH’s closing price on Friday. The acquisition is the largest transaction for this industry since Marsh & McLennan’s 1998 acquisition of Sedgwick Group, and if rates soften further, more consolidation could follow.