Aon has agreed to pay rival brokerage Benfield $18.4 million (?9.5 million) to settle accusations it did economic damage by illegally poaching employees and business from Benfield’s facultative reinsurance department.
According to statements released today by Chicago-based Aon and London-based Benfield, the firms reached an “amicable settlement” with one another and the former members of Benfield’s facultative solutions team.
“We are pleased to have reached a mutually acceptable accord on this matter,” said Michael D. O’Halleran, chairman and chief executive officer of Aon Re Global.
Aon added that the employees in dispute will join Aon April 1.
Both firms said they could make no other statements related to the settlement.
The case goes back to Aon’s announced hiring of Elliot Richardson to head up its global cedent facultative reinsurance division on Sept. 25. He was global head of Benfield’s facultative unit at the time of his resignation.
In mid-October Benfield issued a statement to the London Stock Exchange that due to the departure of senior managers in its facultative solutions group there would be an impact on the firm’s business and it was suing Aon.
The company said it expected profit to be affected by $19.3 million (?10 million).
Benfield filed suit in both London and U.S. District Court in New York City.
According to the U.S. District Court filing, an estimated 30 employees left the unit, including Mr. Richardson; Derek Talbott, senior vice president and head of Benfield’s U.S. division of the facultative group; and Alexander Garner, a reinsurance broker in the United States, who were named in the U.S. District Court filing.
Benfield accused Mr. Richardson and the others of engaging in a scheme to “misappropriate substantially all of the valuable business assets of the Fac Group through illegal means” in the spring of 2006. The firm also accused them of seeking to break their employment agreements and breach of contract.
Benfield said the business generated approximately $45 million in annual revenues.
On Wednesday, Benfield released its financial results for 2006. The company showed revenues increased 9.6 percent from ?324 million ($625 million) in 2005 to ?355 million ($685 million) in 2006. The company reported a before tax profit of ?53 million ($102 million) compared with ?53.8 million ($103.8 million) in 2005.