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."
Today’s stories
Towergate to merge with Ryan Direct, Chase Templeton, Autonet
Reserve release potential drying up for some reinsurers, says Munich Re CFO
AmTrust plans to sell MGA operations to raise $1bn cash
Allianz Life hires COO for investment management unit in North America
Willis Towers Watson appoints Integro exec as Midwest leader
AmTrust Q1 profit hit by cat losses, adverse reserve development
Willis boosts insurance strategy team in Asia Pacific with new hire
Legal & General poaches former AXA head of regional broker
Former chief executive of QBE North America joins RLI board
Indian regulator forms reinsurance expert committee
Did you enjoy reading this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
