Aon profits up despite unfavourable FX movements
Aon posted a solid set of results for the first quarter of 2015, despite a drop in revenues driven by unfavourable foreign currency movements.
Its profits hiked slightly to $328 million in the first quarter 2015, compared with $325 million in the first quarter of 2014, while its revenue fell 3 percent to $2.8 billion in the quarter of 2015, compared with $2.9 billion in the prior year period.
Aon said that this was driven primarily by a 7 percent unfavourable impact from foreign currency translation and partially offset by 3 percent organic revenue growth and a 1 percent increase in commissions and fees related to acquisitions.
Within its reinsurance segment, organic revenue decreased 1 percent to $377 million in the first quarter of 2015, compared with $409 million in the first quarter of 2014. This was driven by an unfavourable market impact globally, most notably in the Americas.
In addition, a modest decline in capital markets transactions contributed but this was partially offset by record levels of new business in treaty placements, as well as modest growth in facultative placements.
Aon said that its retail organic revenue increased 4 percent, reflecting revenue growth in both the Americas and international businesses. The Americas organic revenue increased 4 percent, which reflected growth across all regions driven by solid management of the renewal book portfolio in US retail. There was also double-digit new business growth in Latin America and Canada.
International organic revenue increased 3 percent, which Aon said was driven by strong growth across Asia and emerging markets, as well as solid new business generation in continental Europe.
Greg Case, president and chief executive officer, said: "Our first quarter results reflect a solid start to the year with seven percent earnings growth despite a significant headwind from foreign currency translation.
“Results are highlighted by solid organic revenue growth across both risk and HR solutions, underlying operational improvement, effective capital management, and substantial free cash flow generation enabling the repurchase of approximately $250 million of ordinary shares in the quarter.
"We expect continued progress throughout the year as our industry-leading platform and our investments in innovative client-serving capabilities have positioned the firm for sustainable long-term growth, increased operating leverage and significant free cash flow generation towards our goal of $2.3 billion for the full year 2017.”
