Marsh & McLennan to Lay off 3,000 Workers

The associated press reported yesterday that the world's largest insurance brokerage business, Marsh & McLennan Cos., has announced that it will lay off 3,000 employees, about 5% of the company's global workforce.

The move comes as the company scrambles to deal with the fallout from civil charges filed last month by New York Attorney General Elliot Spitzer alleging improper conduct by the company.  The claims allege that the company cheated its clients by rigging bids for insurance contracts and steering businesss to firms that paid Marsh contingent commissions, payments that Spitzer has compared to kickbacks.

Since Spitzer announced his investigation on October 14, the value of the Marsh's shares has fallen by more than 40%.  Third-quarter profits of the company also fell to $21 million, down 94% from the $357 million profit the company reported in last year's third quarter.  Earnings of the company also have fallen drastically as the result of a $232 million reserve that that was created to settle the Spitzer charges.

The company said most of the 3000 layoffs would come in its risk and insurance business, but addmitted that other areas of the company such as its Putnam asset management subsidiary and its Mercer human resources consulting businesses would be affected by the layoffs as well.  The company also noted that, unfortunately, more layoffs may follow in the future.