9 May 2017Insurance

Aon profit falls in Q1 as expenses rise

Despite higher revenues in the first quarter of 2017, broker Aon saw profits slide as expenses grew due to restructuring and M&A.

Aon reported net income attributable to Aon shareholders of $291 million for the first quarter, down from $325 million in the same period a year ago.

Total operating expenses increased 10 percent year-on-year to $2.0 billion, primarily due to $144 million of restructuring costs, a $60 million increase in operating expenses related to acquisitions, net of divestitures, and an increase in expense to support 4 percent organic revenue growth, according to a company statement.#

Total revenue in the first quarter increased 5 percent to $2.4 billion, compared to the prior year period driven primarily by 4 percent organic revenue growth in commissions and fees and 3 percent increase in commissions and fees related to acquisitions, net of divestitures.

"Our first quarter results reflect a strong start to the year driven by investments in our client-serving capabilities and operating model,” said Greg Case, president and CEO. “Organic growth of 4 percent is the strongest start to the year since 2012, adjusted operating margins expanded by 220 basis points, and earnings per share from continuing operations increased 20 percent, driven by effective operational and capital management," Case noted.

During the quarter, Aon sold its benefits administration and HR business process outsourcing (BPO) platform for a cash consideration of $4.3 billion to Blackstone, a private equity and alternative asset management corporation.

"With the recently completed divestiture of our outsourcing platform, we have taken another meaningful step in a decade long strategy that has produced exceptional results for clients and shareholders,” Case commented.

“As a leading global professional services firm, we are operating from a position of strength. With strong free cash flow generation and roughly $3 billion of incremental transaction proceeds, we have significant financial flexibility to invest in high-growth high-margin areas across our industry-leading portfolio, invest in our operating model and to return capital to shareholders."

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More on this story

13 February 2017   Re/insurance broker Aon plans to deploy a significant part of the proceeds from the $4.3 billion sale of its outsourcing platform to acquisitions, executives said during a Feb. 10 results presentation.
10 May 2017   Aon Risk Solutions, the global risk management business of Aon, has announced the hiring of Joe Clark and Taylor Turney in the US.