NEW YORK - Marsh & McLennan Cos. on Friday said it will cut 750 jobs and take a $225 million charge in a restructuring designed to save $350 million a year.
Marsh, one of the world's largest insurance brokers, said it will consolidate data centers, networks and infrastructure, and vacate 15 of 30 floors at its New York headquarters.
It expects to achieve the savings by the end of 2008, including $220 million in the first year. "By becoming more efficient, we will be able to sell more aggressively," Chief Executive Michael Cherkasky said in an interview.
Marsh stock was up nearly 2 percent.
Most of the job cuts will be layoffs, and none involves staff who deal directly with customers, he said. Marsh employs 55,000 people.
The company expects to incur 15 percent of the charge in 2006, 55 percent in 2007 and 30 percent in 2008. Prior restructuring under Cherkasky resulted in about $800 million in savings and the loss of more than 5,000 jobs.
"It's positive," said Steve Roukis, a managing director at Matrix Asset Advisors Inc. in New York, which invests $1.6 billion and owns Marsh shares. "They're finding a balanced, evolutionary approach to improving results."
Cherkasky has been under pressure to improve profits, stop a decline in market share, and boost Marsh's stock price, which has lagged behind rival Aon Corp. since he became chief executive in October 2004.
Marsh is recovering from an insurance bid-rigging scandal that led to its January 2005 agreement to pay $850 million to settle a lawsuit by New York State Attorney General Eliot Spitzer.
Its Putnam Investments unit has lost roughly one-third of its assets under management over three years after being embroiled in the mutual fund industry trading scandal.
ADDING 'BACKBONE'
Under the new initiative, Marsh plans to consolidate 132 data centers and computer rooms into six, and eliminate 3,200 of 8,000 computer servers, Chief Technology Officer David Fike said in an interview.
Cherkasky said Friday's initiative "gives us the backbone to put in better applications, and reduces some of the cost burden. It says we're going to make this company better, and each person who faces a client will be in a better position."
He declined to say if more job cuts are possible. "What we always are going to say is we are going to right-size our business," he said. "This is consistent with what we are doing today."
Marsh also plans profit initiatives and organizational improvements that will most affect its Marsh insurance unit and Mercer human resources consulting business.
Last year, the company posted net income of $404 million, or 74 cents per share, on revenue of $11.65 billion.
Analysts polled by Reuters Estimates, on average, expect profit of $1.53 per share in 2006 and $1.82 in 2007.
Marsh shares rose 45 cents to $27.65 on the New York Stock Exchange.
Through Thursday, Marsh shares had risen 3 percent under Cherkasky, while Aon shares were up 73 percent.
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