Marsh & McLennan Cos., the nation’s largest insurance broker, said Tuesday that it would lay off 3,000 employees -- about 5% of its workforce -- because of fallout from a bid-rigging probe by New York Atty. Gen. Eliot Spitzer.
The company, in announcing that its third-quarter earnings fell 94%, also said it had reached a $40-million “agreement in principle” with the Securities and Exchange Commission to settle allegations of questionable brokerage allocation practices at its Putnam asset management firm.
Marsh & McLennan’s shares fell 56 cents to $26.80 on the New York Stock Exchange. The stock has fallen nearly 42% since Spitzer announced his investigation Oct. 14.
The New York-based brokerage said in a statement accompanying its earnings report that it was reducing staff levels “based on the realities of the marketplace and our current situation.”
The company said that most of the layoffs would come in its risk and insurance businesses but that Putnam and its Mercer human resources consulting businesses also would lose workers. Chief Executive Michael Cherkasky said in a conference call with analysts that more staff cuts might be necessary.
The announcement of layoffs came a day after Marsh & McLennan ousted two top executives of Marsh Inc., the company’s risk and insurance services unit.
The company said third-quarter net income fell to $21 million, or 4 cents a share, from $357 million, or 65 cents, a year earlier. Profit was reduced by 55 cents a share because of several charges, including a reserve for “possible regulatory settlements.” Excluding charges, profit was 59 cents a share. Analysts expected 67 cents, according to Thomson First Call.
Revenue was $2.97 billion, up from $2.84 billion a year earlier.