Aon CEO bets on organic growth as Marsh snaps up JLT

Aon is confident about its organic growth potential as its competitor Marsh & McLennan Companies (MMC) acquires specialty re/insurance broker Lloyd Thompson Group (JLT), Gregory Case, Aon CEO suggested during the broker’s third quarter 2018 results conference call.

MMC is in the process of acquiring JLT for $6.4 billion, claiming that the deal will accelerate MMC’s strategy to be "the preeminent global firm" in the areas of risk, strategy and people, further enhancing its ability to drive growth and margin expansion across products and geographies.

Meanwhile, Aon reported organic revenue growth of 6 percent in the third quarter of 2018, an acceleration compared to 2 percent in the third quarter of 2017.

In reinsurance solutions, organic revenue growth was 8 percent in the third quarter, primarily driven by strong growth in facultative placements and continued net new business generation globally in treaty, according to the presentation.

In commercial risk solutions, organic revenue growth was also 8 percent, reflecting growth across every major geography, reflecting strong global new business generation and management of the renewal book portfolio, highlighted by double-digit growth in the US and Latin America, the presentation said.

Aon is targeting mid-single digit organic revenue growth or greater over the long-term, according to the presentation. Organic growth is expected to be driven by continued improvement in core businesses, portfolio mix shift towards faster growing areas of client demand and data & analytic driven solutions, as well as market share gains, the presentation said.

Aon is working on improving existing products and creating new solutions to clients in areas such as cyber and transaction liability, Case noted. This has allowed Aon to gain market share, he added.

The areas Aon operates in which include risk, retirement and health, are highly fragmented and underpenetrated, Case said.

“The world is becoming riskier, and we have an opportunity to actually keep up. And if you just keep up, we're going to grow,” Case said. At the same time he suggested that Aon may be able to do better than that for example by developing a cyber solution that provides more insight and helps clients reduce volatility more effectively.

“We see an underpenetrated risk market in which we can create net new demand and serve clients more effectively over time,” Case said.

“Mid-single digit or greater goal over the coming years is really our focus from a growth standpoint and you're going to see us do that,” Case said.

Overall, Aon expanded revenue in the third quarter of 2018 to $2.56 billion from $2.37 billion in the same period a year ago.

Net income from continuing operations attributable to Aon shareholders dropped to $149 million from $189 million over the period.