Aon profit and revenue dips despite expenses reduction
Re/insurance broker Aon has reported a slight dip to its net income for the first quarter of 2016, to $315 million, compared with $328 million for the prior year quarter.
Total revenue decreased 2 percent in the quarter to $2.8 billion compared to the prior year quarter, driven primarily by a 3 percent unfavourable impact from foreign currency translation and a 2 percent decrease in commissions and fees related to net divestitures, partially offset by 3 percent organic revenue growth.
Risk Solutions total revenue decreased 1 percent compared to the prior year quarter due to a 4 percent unfavorable impact from foreign currency translation, partially offset by 3 percent organic growth in commissions and fees.
Total operating expenses for the first quarter decreased 3 percent to $2.3 billion, compared to the prior year quarter, due primarily to an $82 million favourable impact from foreign currency translation, a $41 million decrease in expenses related to net divestitures, and a $13 million decrease in intangible asset amortisation, partially offset by an increase in expense to support 3 percent organic revenue growth and $20 million of transaction and portfolio repositioning related costs in HR Solutions associated with the sale of businesses.
Greg Case, president and chief executive officer, Aon, said: "Our first quarter results reflect a solid start to the year as retail brokerage organic revenue increased four percent and adjusted operating margin expanded 100 basis points in Risk Solutions.
“In addition, return on invested capital improved through the disposition of a business in HR Solutions, and we effectively allocated capital highlighted by the repurchase of $750 million of Class A Ordinary shares.
He added: “Investments in our industry-leading platform of client serving capabilities across risk, retirement, and health continues to position the firm for long-term revenue growth, further margin expansion, and strong free cash flow generation towards our near-term goal of $2.4 billion for the full year 2017."
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