Aon begins 2022 with solid organic growth across reinsurance, commercial risk
Global broking giant Aon enjoyed impressive organic revenue growth and higher profits in the first quarter of the year despite taking an “unfavourable” hit from acquisitions, divestitures and increased operating expenses.
Aon achieved 8% organic revenue growth, operating margin expansion of 60 basis points to 38.0%, and EPS growth of 13% during the quarter.
Its Reinsurance Solutions business delivered organic revenue growth of 7%, reflecting strong growth in treaty, facultative placements and double-digit growth in capital markets transactions.
While the Commercial Risk Solutions business generated an organic revenue growth of 9%, attributed to growth across every major geography, thanks to strong retention, new business generation, and management of the renewal book portfolio. The retail brokerage segment saw double-digit growth in the US, Canada, Asia, and the Pacific.
Total revenue increased 4% to $3.7 billion, chiefly driven by organic growth, but partially offset by a 3% unfavorable impact from foreign currency translation and a 1% unfavorable impact from acquisitions, divestitures, and other factors.
Net profit during the period increased 12% to a little over $1 billion, or $4.73 per share on a diluted basis, compared with $913 million in the prior year.
Aon said its investments in long-term growth and organic revenue lead to a 1% increase in the total operating expenses, which came in at $2.3 billion. However, general expenses decreased 5%, or $14 million, due primarily to a $35 million decrease in transaction costs, partially offset by an increase in travel and entertainment expense. Premises expense was also 6%, or $5 million, lower compared to the prior year period due primarily to a reduction in rent expense associated with post-COVID flexible working strategy.
Compensation and benefits expense went up by $48 million, or 3%, compared to the prior year period, and costs related to information technology grew by $9 million, or 8%.
Chief executive officer Greg Case (pictured) praised the company’s strong financial results “in the face of rising complexity and uncertainty”, reiterating its strategy of working towards identifying areas of unmet need, improving service standards, and accelerating delivery of new solutions.
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