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The job reductions are part of a global restructuring plan to integrate and streamline operations at the new Aon-Benfield organization, which will incur about $185 million in costs over a three-year period. The restructuring will yield some $122 million in annualized savings by 2011, Aon said.
The restructuring will begin in 2009, said Aon spokesman David Prosperi, who noted not all of the job reductions will come through layoffs.
?It?s going to be a combination of eliminating positions, either through restructuring or not filling jobs that are vacant, and through attrition,? he said.
The reductions will take place in the former Aon Re and Benfield Group elements of the new organization, he said.
?This is a growth opportunity. We?re going to be putting more people in client-facing roles, so we?ll be looking primarily at back-office positions," he said.
The acquisition was finalized on Nov. 28. In announcing the merger this summer, Aon said it would achieve savings by ?sharing administrative and support functions? (BestWire, Aug. 22, 2008).
The purchase price reflects savings Aon achieved through hedging the acquisition's foreign currency transaction exposure by entering into currency options to purchase British pounds at a fixed exchange rate. The hedging program cost $50 million in premium and improved the purchase price by $320 million, the company said in a statement.
The new entity?s name was changed between the August announcement and the completion of the deal ? to Aon-Benfield from Aon-Benfield Re.
Aon Re Global is the world's largest reinsurance broker, with 2007 brokerage revenue of $958 million, according to the Best's Review annual ranking of global reinsurance brokers. Benfield was third largest, with $656.7 million in revenue.
Shares of Aon Corp. were selling at $43.87 in morning trading on Dec. 1, down 3.16% from the previous close.
(By Alyn Ackermann, senior associate editor, BestWeek: Alyn.Ackermann@ambest.com)
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