CHICAGO (AP) - Insurance brokerage Aon Corp., faced by fierce competition and falling rates, said Wednesday it will cut 2,700 jobs as part of a restructuring plan that will eventually save it about $240 million a year.
The layoffs were announced as Aon reported third-quarter net earnings of $204 million, up 92 percent from a year earlier. But the industry has been struggling to cope with three straight years of sinking insurance rates, and Aon's biggest competitor Marsh & McLennan also is restructuring and laying off employees.
Aon said it will record related pretax charges of about $360 million for the restructuring.
The job cuts will be mostly in back-office operations, with about 1,100 expected to be 'off-shored or outsourced,' Aon said. It will include consolidation of its human resources, finance and information technology divisions.
Aon will also combine European operations on a country-by-country basis.
'This restructuring plan has a similar approach to that of our 2005 restructuring plan, which has had very positive results,' Greg Case, Aon's president and chief executive, said in a statement. 'We are continuing efforts to simplify our complex organization, and eliminate expense that does not contribute directly to our ability to efficiently deliver value-added products and services to our clients.'
Restructuring will likely lead to savings between $50 million and $70 million in 2008; $175 million and $200 million in 2009 and $240 million in annualized savings by 2010, the company said.
Third-quarter earnings amounted to 64 cents per share, compared with $106 million, or 32 cents per share, for the same period in 2006. Aon said net income from continuing operations was 59 cents per share, matching the consensus estimate of analysts polled by Thomson Financial.
Revenue rose 11 percent to $2.41 billion from $2.17 billion, well above the $2.26 billion that analysts expected.
Shares of Aon fell a penny in extended-hours trading after closing up 10 cents at $45.32.
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