Aon PLC said Friday it recognized $197 million in the fourth quarter of last year for legal settlements related to its involvement in deals caught up in the scandal surrounding Vesttoo Ltd.

The disclosure came as the brokerage reported quarterly results showing revenue increases in its various lines of business.

The Vesttoo scandal involved allegedly fraudulent letters of credit purportedly issued by China Construction Bank Corp. Aon unit White Rock Insurance (SAC) Ltd., a Bermuda-based segregated account company, worked with Tel Aviv, Israel-based Vesttoo on various reinsurance deals. Some Aon clients sued or threatened to sue the brokerage as the alleged fraud unwound.

Aon sued Vesttoo last August, shortly before Vesttoo filed for bankruptcy protection. Aon contends it was largely a middleman in the deals and was not connected to the alleged LOC fraud.

In its fourth-quarter results presentation, Aon said it “recognized legal settlement expenses in connection with certain clients and counterparties who have initiated or indicated that they may initiate legal proceedings against the company in connection with transactions for which capital was arranged by Vesttoo and letters of credit from third party banks that are alleged to have been fraudulent.”

On a call with analysts, Aon President Eric Andersen said, “We see an opportunity for recoveries that will happen over time as the bankruptcy process runs its way through, and we’re confident that we'll be able to recover a meaningful amount.”

Aon set aside the settlement funds to “draw a line under this issue for our market partners and for ourselves,” he said.

Last week, Aon reached a $30 million “strategic business collaboration” with Porch Group Inc. whereby it will provide reinsurance brokerage services to the company and in return be released from claims related to Vesttoo.

Meanwhile, Aon reported $3.38 billion in revenue for the fourth quarter of 2023, a 7.8% increase over the prior-year quarter and up 7% on an organic basis, which excludes investment income, the impact of acquisitions and divestitures, and foreign exchange fluctuations.

Commercial risk solutions, its core insurance brokerage business, reported $1.91 billion in revenue, up 4.6% overall and 4% on an organic basis.

The unit saw growth in Asia Pacific, but the brokerage’s business in the United States continued to be affected by a slowdown in mergers and acquisitions, which has led to a reduction in demand for transactional risk insurance, Aon executives said on the call.

Aon’s reinsurance brokerage reported $332 million in revenue for the quarter, up 18.1% overall and 14% on an organic basis; its health solutions division reported revenue of $763 million, up 12.5% overall and 11% organic; and wealth solutions reported $377 million in revenue, up 6.8% overall and 5% organic.

Aon’s fourth-quarter operating expenses increased 22.6% to $2.6 billion. In addition to being affected by the $197 million in Vesttoo settlement reserves, Aon’s previously announced restructuring program increased operating expenses by $129 million and the company incurred $17 million in transaction costs associated with the expected acquisition of NFP Corp., which it announced in December.

Net income for the quarter fell to $507 million, compared with $666 million in the prior-year quarter.

For the full year, Aon reported $13.38 billion in revenue, up 7.2% compared with 2022 and up 7% on an organic basis. The company reported net income of $794 million, down 3.6%.

The NFP deal will bring Aon some wholesale insurance brokerage business, a sector Aon exited 20 years ago. Mr. Andersen said Aon would continue to examine the wholesale brokerage sector “but we like where we are today.”

Aon will continue to look at M&A opportunities, said Christa Davies, chief financial officer.

“It’s all about return on capital,” she said. “For us to invest in M&A, it’s got to beat (Aon shares) buyback.”