Aon To Eliminate 400 More Jobs

Aon has disclosed it plans to eliminate 1,800 positions, an increase by 400 from its original job cutback announcement last November.

According to the insurance brokerage's March 9 10-K filing with the Securities and Exchange Commission, a planned three-year restructuring plan, in addition to job cuts, also involves space consolidation.

Over that period the company said it expects to take a cumulative pretax charge of $262 million–$12 million more than the company said it would.

Annualized savings from the restructuring are expected to be $180 million. In its third-quarter report, the company said it would realize $150 million in annualized savings.

Aon said it has already incurred $158 million in charges in the restructuring.

The restructuring charges primarily involve activity in the United Kingdom. In the third quarter, it was reported that Aon would eliminate 750 positions in the U.K.

While not stating if that figure has changed, the filing did show that the bulk of the restructuring would be in the United Kingdom with an estimated charge of $147 million, followed by the U.S. at $65 million, Europe at $40 million, and the rest of the world at $10 million.

According to the filing, most of the restructuring costs will be in work force reduction, most of which was in 2005.

Aon also revealed that its pension plan is closed to new employees in the U.S. and U.K. The plan is also closed to all employees hired after 1999 in the U.K.

On legal issues, Aon said in 2005 it paid $76 million, its first installment, in the $190 million settlement agreement with New York State Attorney General Eliot Spitzer over allegations the firm rigged bids and steered contracts to insurers who paid lucrative volume-based contingent commissions.

Aon said it will make two more payments over the next two years in the sum of $76 million and $38 million.

The settlement agreement also included the New York State Insurance Department, attorneys general for Connecticut and Illinois, and the Illinois Department of Insurance.

Aon reached a settlement in a class action case concerning the disclosure of brokerage commissions within the company's reserve of $40 million. The case, Daniels vs. Aon, received preliminary approval from the Circuit Court of Cook County, Ill., and a final decision is expected during the first quarter of this year.

The settlement was reportedly for $38 million.