Marsh & McLennan to axe 3,000 staff as profits crash

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The Independent Online

Marsh & McLennan, the world's largest insurance broker which is at the heart of a new investigation by the New York attorney-general into fraudulent commission payments, said yesterday it was to shed 3,000 jobs as it announced a 94 per cent fall in third-quarter profits.

Marsh & McLennan, the world's largest insurance broker which is at the heart of a new investigation by the New York attorney-general into fraudulent commission payments, said yesterday it was to shed 3,000 jobs as it announced a 94 per cent fall in third-quarter profits.

The group said the cost of the job cuts, which represent 5 per cent of Marsh's 60,000 workforce, would be $325m (£175m) over the next six months. But it said the move would generate cost-savings of $400m a year.

The cuts follow Marsh's recent announcement that it is to stop accepting so-called "contingent commissions", which have been the subject of the investigation by Eliot Spitzer, the New York attorney-general, and which account for about 7 per cent of Marsh's revenues. The sharp fall in third-quarter profits came principally as a result of provisions which have been made for legal costs incurred as a result of the inquiry.

Michael G Cherkasky, the new president and chief executive of Marsh, who was appointed after his predecessor, Jeffrey Greenberg, resigned last month, said yesterday: "We recognise the seriousness of the problems we are facing and are moving to correct them. We are examining all parts of the company's cost structure to identify areas where expenses can be reduced appropriately. Unfortunately, we must also adjust staff levels based on the realities of the marketplace and our situation."

Marsh also announced that its asset management division, Putnam Investments, had agreed to pay the US Securities and Exchange Commission a settlement of $40m for failing to disclose certain brokerage practices.

Earlier this week, Marsh ousted two senior executives in relation to Mr Spitzer's investigation - Roger Egan, the chief operating officer of its risk and insurance services subsidiary, and Christopher Treanor, the subsidiary's chairman.

Shares in Marsh have fallen by more than 40 per cent since Mr Spitzer's allegations were revealed last month. After trading at more than $46 before the announcement, they are now at around $27, giving the company a market value of $14bn.

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