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Top insurance brokers, No. 2: Aon PLC

Posted On: Jul. 12, 2023 12:00 AM CST

Eric Andersen

2022 brokerage revenue: $12.4B
Percent increase: 1.8%

Aon PLC implemented more organizational changes over the past year, hired senior staff and made targeted acquisitions as it continued to rebound from its failed effort to buy rival Willis Towers Watson PLC. 

The brokerage, which had revamped its organizational structure in 2021 after calling off the WTW deal, in May realigned its operations around two main areas in part to address emerging risks and changing client needs, said Eric Andersen, president of the company. 

In addition, the brokerage furthered its diversity and inclusion efforts.

Aon reported $12.4 billion in brokerage revenue in 2022, up 1.8% from the prior year, and remains No. 2 in Business Insurance’s ranking of the world’s largest brokerages. 

Aon performed solidly in 2022, posting 6% organic growth, a year after its protracted attempt to buy WTW collapsed under regulatory pressures, said Meyer Shields, Baltimore-based managing director at Keefe, Bruyette & Woods Inc. 

The brokerage is likely still in the process of restaffing in areas where it lost people during the abortive takeover and competing with rivals that recruited aggressively during that period, he said.

“It’s a high caliber group of professionals and a very strong senior management team, so I think they’ll weather this quite comfortably, but we are seeing that concern,” Mr. Shields said.

Aon’s organic growth last year was “pretty good” but not as good as some of its rivals’ gains, said J. Paul Newsome Jr., managing director with Piper Sandler & Co. in Minneapolis. 

In addition, the company has a long track record of buying businesses with high profit margins, and it completed fewer deals over the past couple of years, he said.

“It may be that that process has peaked, and they’re hitting a point where margin expansion can only really come from pure efficiencies,” Mr. Newsome said.

Aon’s acquisition strategy focuses on bringing in new capabilities, Mr. Andersen said.

“In areas where we’ve got these new emerging risks that our clients are dealing with, for us to be able to match the risk and capital, you need insight,” he said.

In May, Aon announced a realignment of its operations around two main categories: risk capital, which includes commercial insurance and reinsurance and is headed by Andy Marcell, and human capital, which includes health and retirement benefits consulting and human resources services, which is led by Lambros Lambrou.

As a result of the change, the company will be in a better position to offer services to address emerging risks, for example, by using reinsurance analytics capabilities to address concerns of risk management clients, Mr. Andersen said.

Among the acquisitions Aon completed in 2022 was ERN Evaluacion de Riesgos Naturales y Antropogenicos SA de CV, a Mexico City-based catastrophe modeling company.

Meanwhile, U.S. retail brokerage revenue was pressured in 2022 by reduced demand for transaction-related business, such as representations and warranties coverage and run-off services, which declined with a drop in mergers and acquisitions, according to Aon’s 10K filing with the U.S. Securities and Exchange Commission. 

“It has grown to be a good business for us,” Mr. Andersen said. “But that type of business is nonrecurring by nature, so you see a little bit of that volatility showing up from time to time.”

Aon made some notable senior hires over the past year, including Mindy Simon from Conagra Brands Inc. as chief operating officer. 

In addition, the brokerage made some recent hires to address emerging risks, including Curtis Scott as future mobility growth accelerator leader and Patty Daberkow, global business development and strategic operations leader. Both had previously worked at Lyft Inc. and Uber Technologies Inc. 

Aon has also increased its efforts to hire and promote diverse candidates, Mr. Andersen said.

Since 2021, 20% of Aon’s senior executives’ short-term incentives have been tied to the success of diversity and inclusion efforts.

Aon’s executive committee is equally split between male and female executives, Mr. Andersen said. 

“We know it’s a long journey and it's probably never over, but ultimately we wanted to take some strong steps internally so our colleagues knew we were serious about developing all kinds of talent,” he said.

As of Dec. 31, 2022, 25% of staff and 31% of new hires who disclosed their ethnicity were racially or ethnically diverse.