Issue 08-11-2007

By Tom Flack, James Dean 

Hundreds of broker jobs threatened as 

weak dollar and credit crunch squeeze sector

Analysts have warned that UK-based employees of 

major international brokers are at 

the greatest risk of losing 

their jobs, as the credit crunch and 

weak dollar take their toll. 

The news follows Aon's confirmation that 

2,700 jobs will be 

lost as part of its three-year global 

restructuring programme - 

1,300 more than it originally 

estimated - with cuts to hit the UK.

Analysts said brokers with high 

dollar revenues faced the 

biggest threat of UK job losses, 

as the relative high value 

of the pound meant staffing was 

more expensive in the UK. 

The slowdown in the UK economy 

and the global credit 

crunch were also given as reasons for 

cuts being likely. 

Charles Coyne, analyst at KBC Peel Hunt, said: 

"If revenues are in dollars, but expenses 

are in sterling - or euros - then 

expenses in areas where currencies are 

stronger become more of an issue." 

Brokers are in a difficult position. Primary insurers may 

be retaining more risk as prices drop, so there's less to 

pass around to brokers," he added.

Mark Adams, insurance partner at Deloitte, said that 

job losses at global brokers were a natural 

fall-out from the 

Spitzer reforms, but it was difficult to 

predict losses in the UK. 

He said: "The stresses affecting the 

larger players are 

very different from those impacting 

on the smaller ones." 

However, research by Plimsoll 

Publishing suggests that 

5,000 UK broker employees could 

lose their jobs, as 

a result of the slowdown in the 

economy and the credit crunch. 

David Pattison, senior 

analyst at Plimsoll, said: 

"We can expect significant 

players making significant job cuts. 

"When announcing its global 

restructuring plans in 

October 2005, Aon estimated a 

loss of 1,400 jobs worldwide 

by the end of 2007, with 750 

going in the UK. 

But, this figure had risen to 1,800 

jobs globally by March 2006. 

Gretchen Roetzer and Gregory 

Dickerson, analysts at 

Fitch Ratings, said: "We would 

not be surprised if the recently 

announced programme was focused 

more on the company's 

European businesses, although further 

job cuts in the US and UK remain possible."

However, they did not believe that Aon's cuts were 

made because of potential subprime losses." 

Fitch views Aon's exposure, if any, to sub-prime losses 

as modest, and does not believe that these actions 

are related to investment impairments", they said.

They added that it was "not clear" whether Aon's 

biggest rivals, Marsh and Willis, would cut jobs. 

A spokesperson for Willis said: 

"We are always reviewing 

our business model, but currently have no need to 

restructure or have significant job cuts."

Marsh declined to comment.