Largest Insurance Broker Aon To Cut 700 Jobs After Completing Benfield Takeover

New York, NY (AHN) - Aon Corp. (NYSE: AOC) has warned that it may hand out pink slips to as many as 700 employees after it completed its acquisition of Benfield Group Ltd., in a nearly $1.5 billion worth deal.

The completion of the takeover was announced on Friday, leading to create Aon Benfield - the world's premiere reinsurance intermediary and capital advisor - which will launch on Dec.1.

"The completion of this transaction marks an important milestone in the history of our firm and a new era of leadership for the global reinsurance industry," Greg Case, president and chief executive officer of Aon, said in a statement on Friday.

The world's largest insurance broker purchased its London-based competitor for $1.43 billion, which is almost $320 million lower than the original price announced in the month of August.

The reduction in the acquisition price is due to recent gains in the U.S. dollar, before premium costs associated with implementing the hedging program, the company said in the statement.

Under the hedging program, the company expensed $6 million of costs in the third quarter. It now expects to post the remaining $44 million of costs required to complete the hedging program during the fourth quarter.

The restructuring plan is expected cost the firm by almost $185 million over a three-year period, which will include workforce reduction, lease consolidation, asset impairment and other related expenses.

The insurance broker is likely to estimate between 500 and 700 positions, mainly non-client facing jobs, as part of the restructuring plan. The company had almost 42,500 employees at the end of 2007, while Benfield had 2,000 workers. The company has reduced as many as 3,200 jobs since Case was hired in 2005 as Aon's CEO.

"By combining the talent and capabilities of Aon Re Global and Benfield Group, we are creating a powerful global franchise capable of expanding and redefining reinsurance and capital market solutions, as well as a compelling opportunity for current and prospective clients," Michael O'Halleran, executive chairman of Aon Benfield, said.

Aon's restructuring plan is expected to save up to $41 million in 2009, up to $94 million of savings in 2010 and around $122 million of annualized savings in 2011.