Cost cutting at broker as profits fall again

Benfield will cut jobs from its offices across the world in a bid to slash costs by £15m, as it reported a third consecutive year of profit falls.

Travel and entertaining costs will also be targeted, chief executive Grahame Chilton said this week, unveiling the broker’s 2007 results. He added that Benfield expected to report an even lower trading result in 2008.

Chilton would not disclose how many jobs will be cut but said: “75%-80% of costs are for travel and people, so we are seeking to make savings there. There will be a global headcount reduction.”

He blamed the continued weakening in exchange rates for the falls, saying that Benfield took around 75% of its income in dollars and that on a constant currency basis, results have improved.

Benfield’s 2007 pre-tax profit was £50.9m, down £2.1m on 2006. In 2007, £194.3m was spent on staff costs and £19.6m on travel and entertaining.

Chilton continued: “There are certain difficulties in doing business in over 105 countries across the world. Here’s a company that has improved its trading result and revenues, so the need to report results in sterling is a frustrating matter.”

New division Benfield Corporate Risk reduced its losses from £17.2m to £11m, although Chilton said he could not predict when it would break even.

He added that legislative reforms in Florida, relating to property insurance, and opportunities in developing countries could be exploited.

Looking ahead, he said in the 2007 report: “We do not anticipate the headwinds facing the business from currency and market softening to ease substantially during 2008 and this will make short-term progress difficult.

“At this stage, in the absence of significant improvement in market conditions, we anticipate the 2008 trading result will be marginally below that for 2007.”