Up to 50 people have quit brokers facultative business
Benfield Group has warned that profits could fall by as much as £10m after mass resignations from its facultative reinsurance business.
The broker, which issued a profits warning on Monday, said it had been forced to launch a "legal process" to protect its business interests following the departure of 20 senior members from its facultative solutions team.
However, industry sources have suggested that more than 50 people have resigned. They said the final number could rise to as many as 90.
Benfield has admitted that despite its facultative reinsurance business representing less than 6% of the group's total revenue, the fourth quarter was an "important period" for facultative placements.
It said that the fourth quarter placements accounted for a significant proportion of its annual facultative revenue.
Consequently, the broker said, the departures would impact on the 2006 full year results of the group.
The Benfield Group announced 2006 half-year operating revenues of £252m compared to £192m in the same period last year. Profits were up to £97.8m this year compared to £72.3m last year.
The resignations follow the high-profile departure of head of facultative reinsurance Elliot Richardson earlier this month.
He will take over as head of Aon's global cedant facultative reinsurance activities after a lengthy recruitment programme by the rival broker.
It is understood that some of the 110-strong team at Benfield, who work out of 14 offices worldwide, could join Richardson at Aon.
This will come as a massive blow to Benfield in its attempts to become market leader in facultative reinsurance sector.
Benfield recently said it had seen "strong growth" in its facultative solutions division following investment in its core reinsurance capabilities.
But, measures have already been put in place to strengthen leadership of this area of the business and to ensure continuity of service for its facultative customers.
Aon's coup comes after a lengthy recruitment programme by the rival broker in the cedant facultative reinsurance area.
Michael O'Halleran, chairman and chief executive of Aon Re Global, said: "We have already made considerable progress in cedant facultative reinsurance.
"This appointment demonstrates our commitment to investing further in our capability to serve our clients in this important area of business, which has high growth potential."
