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Aon PLC on Friday reported revenue of $2.61 billion in the second quarter of 2019, a 2% growth increase over last year’s second quarter, largely on strong growth in its reinsurance brokerage division.
Revenue for the brokerage’s core commercial retail unit was flat at $1.16 billion, reinsurance brokerage revenue increased 10.5%, retirement solutions revenue fell 2.8% to $419 million, health solutions revenue increased 2.6% to $317 million and data and analytic services revenue increased 3.2% to $286 million.
Foreign exchange fluctuations had a negative effect on several areas and on an organic basis total revenue increased 6% in the quarter, including 6% organic growth in commercial retail and 12% organic growth in reinsurance, Greg Case, Aon’s CEO, said on a conference call with analysts on Friday.
The brokerage is seeing a sustained increase in organic growth from 3% in 2014 and 2015, 4% in 2016 and 2017 and 5% in 2018, he said, and Aon has a goal of “mid-single-digit organic revenue growth or greater over the long term,” he said.
Increases in commercial insurance and reinsurance pricing had a “modest” effect on revenue growth in the quarter, Mr. Case said.
“A lot of demand is coming from insurers who are looking to use reinsurance capability … to help them grow their own businesses, whether it’s in the traditional high-risk natural catastrophe areas, but also the growing areas of cyber and other specialty liability areas,” Eric Andersen, co-president of Aon, said on the call.
Aon reported net income of $287 million for the second quarter, up from $58 million in the same period last year, which was hit by the sale of its employee benefits outsourcing business in 2017.
For the first half of 2019, Aon reported revenue of $5.75 billion, up 1.7% compared with the same period last year, and net income of $963 million, up 44.2%.
The brokerage remains on track to complete its restructuring program, which began in 2017 after the sale of the employee benefits outsourcing unit, by the end of 2019, Christa Davies, chief financial officer of Aon, said on the call. The restructuring program, which includes an up to 5,400 reduction in staff numbers, according to previous Aon filings, will result in $510 million in annualized savings in 2019 and $535 million in 2020, she said.
The workforce reduction has led to increased use of outsourced providers in India and Poland “and they’re actually improving the quality and standardizing processes for us and reducing error rates for our clients,” Ms. Davies said.
Aon P.L.C reported a 30% increase in revenue for the first quarter of 2018 to $3.10 billion, up 13% on an underlying basis after the effect of new accounting methods instituted this year.