Aon to cut 2,700 jobs as profits rise
Aon Corp., the world's second-largest insurance broker, said third-quarter profit rose 92 percent but it intends to cut 2,700 jobs in a second round of restructuring in three years.
Net income increased to $204 million, or 64 cents a share, the Chicago-based brokerage said in a statement.
Chief Executive Officer Gregory Case said the layoffs will be handled in a similar way to the 2005 restructuring. This latest round of layoffs is expected to save $360 million a year, the firm said.
Predominantly, the layoffs will be of workers in non-client facing roles, including 1,100 positions that will be off-shored or outsourced.
There will be a further consolidation of human resources, finance and information technology around the world, Aon said in a statement.
European operations and international real estate operations will have to "simplify," the company said.
Case has been chasing new clients in a bid to catch Marsh & McLennan Cos.
Case posted better revenue growth in his brokerage unit than his larger rival every quarter since 2004, when Marsh & McLennan bore the brunt of an industrywide collusion scandal.
"Aon is well-positioned to gain share," said Cliff Gallant, an analyst at KBW Inc., in a research note before the results were released.
Aon was expected to earn 59 cents a share from what it terms "continuing operations," which exclude items such as severance pay for job cuts, according to the average estimate of 13 analysts compiled by Bloomberg.
Marsh & McLennan has been lagging Aon's growth since October 2004, when Eliot Spitzer, then the New York attorney general, focused his probe of anti-competitive practices on the New York- based firm. Marsh & McLennan replaced CEO Jeffrey Greenberg, and agreed to pay $850 million to settle Spitzer's allegations.
Aon later settled with Spitzer for $190 million.
Aon gained 28 percent this year in New York Stock Exchange composite trading. The stock rose 10 cents Wednesday to $45.32. The company released financial results after the close of trading on U.S. markets.
• Daily Herald business writer Michael Sean Comerford contributed to this report.