Global broker Willis Group will cut 500 jobs and has set aside severance costs and finances amounting to around $US20 million in case of further legal claims.

The company says the job cuts are the result of reviewing its expense base “in light of an evolving business model for insurance brokerage”.

Last month Willis stopped collecting contingent commissions and paid close to $US51 million to resolve inquiries into its business practices by the attorneys-general of New York and Minnesota. That led to a 51.4% drop in profits for the first quarter.

Despite the profit drop and mass job cuts, CEO Joe Plumeri says he is optimistic about the direction of the company.

“We have confronted and put behind us a number of issues during the first quarter,” he said. “The resulting changes we are embracing in our business model define this transitional period in the new world of insurance.”