NEW YORK—Marsh & McLennan Cos. Inc.'s sale of Kroll Inc. removes what had become a noncore operation from the company while providing cash Marsh can use in its strategy of acquiring small and midsize commercial brokerage operations.

MMC announced last week that it had reached an agreement to sell Kroll to Falls Church, Va.-based Altegrity Inc. in a cash transaction valued at $1.13 billion. The transaction is expected to close by late September, subject to regulatory approvals and closing conditions.

Screening and security company Altegrity is owned by private equity firm Providence Equity Partners. Its CEO, Michael G. Cherkasky, was president and CEO of Kroll when New York-based Marsh & McLennan paid $1.9 billion to acquire the risk consulting and technology company in July 2004, and replaced Jeffrey W. Greenberg as MMC's CEO in October of that year, shortly after former New York Attorney General Eliot Spitzer brought fraud and bid-rigging charges against Marsh.

At the time MMC acquired Kroll, Mr. Greenberg said in an analysts call that “the combination of Marsh and Kroll will enable us to offer end-to-end risk mitigation services to our clients from diagnostics and analytical tools to post-event and advisory services.”

“The original plan to be able to cross-sell Kroll's services through the brokerage business never really got any momentum, particularly because of the bid-rigging scandal in "04 and leadership changes in the organization,” said Mark Lane, a principal at William Blair & Co. in Chicago.

“So it never fit strategically. It got to be noncore,” Mr. Lane said. “So it makes sense for them to take those proceeds and invest in their core business.”

Meyer Shields, principal at Stifel, Nicolaus & Co. Inc. in Baltimore, noted that when MMC acquired Kroll, the company had a broader business strategy.

“When you look back at when Kroll was acquired, that was when they still owned Putnam (Investments),” Mr. Shields said. “So if you look at what they were trying to achieve in professional services, it was very different than it is now.” MMC sold Putnam in 2007 for $3.9 billion.

“I think it was really just a matter of time,” Mr. Shields said of the Kroll divestiture. “Clearly, there was never any emphasis on Kroll being an important strategic part of MMC.”

In fact, instead of a strategic component, Kroll had come to be seen as a drag on MMC's financials. When he replaced Mr. Cherkasky as MMC's president and CEO at the start of 2008, Brian Duperreault set out to turn Kroll around.

But the drag continued and MMC sold off some of Kroll's operations, including selling Kroll Government Services to New York-based private equity firm Veritas Capital for an undisclosed sum in 2009, and Kroll Laboratory Specialists, Kroll's substance abuse testing business, to Inverness Medical Innovations Inc. for $110 million in cash this year.

In March, MMC began accepting bids for Kroll's remaining operations, seeking approximately $1.3 billion.

Analysts thought MMC had done well with the $1.13 billion it ultimately received for Kroll.

“I think it's a good decision, and they also seemed to get a good price,” said William Blair's Mr. Lane.

While the price is “a little bit less than numbers that were quoted in the press earlier,” Stifel, Nicolaus' Mr. Shields said he thinks MMC will come out ahead in terms of the multiples associated with the sale proceeds.

With the $1.13 billion, “they can buy much more insurance-related earnings than they gave up with Kroll,” he said.

In a statement announcing the sale, Mr. Duperreault said that while Kroll had been “a valued member” of the company, MMC had decided “our long-term strategy is to focus on the risk and insurance services and consulting businesses.”

In announcing it was affirming its existing ratings of MMC after the sale announcement, Moody's Investors Service Inc. said it expects MMC to use the sale proceeds for such purposes as debt reduction, acquisitions and contingencies.

The Kroll sale “will enhance MMC's financial flexibility while moderately reducing its business diversification,” Bruce Ballentine, Moody's lead analyst for MMC, said in a statement.

“MMC has the world's largest insurance brokerage and consulting operations, and it is well diversified in terms of products, clients and geographic scope,” Mr. Ballentine said. “The proposed divestiture will allow the company to focus on these core businesses.”

In early 2009, Marsh embarked on a new middle-market strategy with the formation of its Marsh & McLennan Agency L.L.C. operation. The company has focused on advancing that middle-market portion of its business through acquisitions of small and midsize brokers, looking to build out a hub-and-spoke model around the country.