NEW YORK(Bloomberg) - Aon Corp., the world's biggest insurance brokerage, said second-quarter profit fell 11 percent on higher costs related to job cuts and the acquisition of Benfield Group Ltd.

Earnings excluding the impact of unit sales declined to $147 million, or 51 cents a share, from $166 million, or 54 cents, a year earlier, the Chicago-based broker said today in a statement. Aon had $95 million in expenses linked to cutting jobs and the Benfield purchase, almost 80 percent more than a year earlier, the company said.

Aon and rivals Marsh & McLennan Cos. and Willis Group Holdings Ltd., which earn commissions by matching buyers and sellers of insurance, are under pressure as insurance prices decline and companies scale back coverage. CEO Gregory Case started lowering head count in a 2007 restructuring that the company said will trim expenses by as much as $265 million this year and $370 million next year.

"We continue to operate in a soft insurance pricing market as rates continue to decline, albeit at a somewhat slower pace," Mr. Case said on Thursday in a conference call.

Aon fell 10 cents to $39.64 in composite trading on the New York Stock Exchange at 4.03 p.m. The stock declined 13 percent this year through yesterday, compared with the 6.3 percent gain in the 24-company KBW Insurance Index.

Case agreed in August to buy London-based Benfield for about $1.6 billion to expand abroad and boost Aon's reinsurance business. Aon has achieved about 40 percent of the $492 million in savings tied to the purchase and the 2007 reorganisation, Mr. Case said on Thursday.

Rates charged for US commercial insurance slipped 4.9 percent in the second quarter, according to the Council of Insurance Agents and Brokers. Prices have fallen in every period since 2004 as insurers compete for business. Liberty Mutual CEO Edmund "Ted" Kelly said this week that the industry is cutting rates to unprofitable levels.

"The industry has traditionally been like an alcoholic who swears off drink until it reaches the next saloon," Mr. Kelly said.

Aon's total revenue fell four percent to $1.9 billion on currency translations and a 69 percent drop in investment income. Excluding certain items, Aon earned 76 cents a share, beating the 74-cent average estimate of 14 analysts surveyed by Bloomberg.

The company's revenue from risk and brokerage services was about $1.6 billion, with declines in fees and commissions in the Americas, Europe and Asia balanced by a 50 percent rise in reinsurance to $372 million.

So-called organic revenue, which excludes the impact of acquisitions and currency exchange rates, was mostly unchanged from a year earlier.

Net income fell 87 percent to $149 million, from $1.13 billion a year earlier, when the company booked a gain on the sale of Combined Insurance Company of America to Ace Ltd.

Aon and Marsh & McLennan are lobbying the New York insurance regulator to revisit curbs on commissions imposed in 2005 following probes led by Eliot Spitzer, then the state's attorney general.

Arthur J Gallagher & Co., the No.4 insurance broker, said this week that regulators released the company from some restrictions, providing the firm with another $10 million in annual revenue starting in 2011.

American International Group Inc., once the world's largest insurer, was replaced by Aon as sponsor of English soccer team Manchester United. Aon signed a four-year agreement that starts June 2010.