UPDATE 1-Arthur Gallagher sees difficult 2010; shares fall

* Sees difficult 2010 as client exposures continue to fall

* Says 75 pct of savings from job cuts to add to bottomline

* Sees M&A ramping up in 2010

* Shares down as much as 6 pct

By Anurag Kotoky and Brenton Cordeiro

BANGALORE, Oct 28 (Reuters) - Arthur J. Gallagher (AJG.N) said on Wednesday it sees a difficult 2010 as client exposures continue to fall, a day after the U.S. insurance broker announced job cuts.

Shares of the company fell 6 percent to $22.54 in morning trade on the New York Stock Exchange.

"When you combine this (falling client exposure) with continuing reduction in rates, organic growth is really, really squeezed," Chief Executive J. Patrick Gallagher said on a conference call with analysts.

The Itasca, Illinois-based company reported on Tuesday that organic revenue declined 5.5 percent to $279.2 million for the third quarter, and said it would cut about 400 positions. [ID:nBNG514373]

The company, which expects annual pretax cost savings of about $25 million to $28 million tied to the workforce reduction, said it sees 75 percent of savings to add to bottomline.

"We expect the weak economy and softening P&C pricing to remain formidable headwinds, and expect pressure on both growth and margins for the foreseeable future," Keefe, Bruyette & Woods analyst Dean Evans said.

The insurance brokerage industry helps commercial clients find insurance coverage for a wide range of risks. However, a number of companies are looking to chase growth through deals as a softening market for most insurance lines nips at their revenue base.

The company expects to ramp up the number of deals in 2010, aided by potential tax benefits and a recognition that values are not going to rebound soon, CEO Gallagher said. (Reporting by Anurag Kotoky and Brenton Cordeiro in Bangalore; Editing by Ratul Ray Chaudhuri)