Aon suffers $0.9bn loss despite revenue growth as expenses shoot up by 80%
Re/insurance broker Aon suffered a sizeable quarterly loss despite achieving solid organic revenue growth, new business generation and strong retention as the firm's total operating expenses shot up by 80 percent, due primarily to the increase in charges related to merger terminating with rival Willis Towers Watson.
In the third quarter of 2021, Aon produced a net loss of $0.9 billion, compared with a net profit of $275 million in the prior year period. This was despite its total revenue increasing 13 percent to $2.7 billion, including organic revenue growth of 12 percent, compared with $2.4 billion revenue in Q3 2020.
The company's Commercial Risk Solutions business saw its organic revenue rising 13 percent, reflecting growth across all major geographies, driven by strong new business generation, retention and management of the renewal book portfolio.
In the Reinsurance Solutions business organic revenue grew 8 percent, reflecting strong growth in treaty, driven by continued net new business generation globally, as well as double-digit growth in facultative placements, partially offset by a modest decline in capital markets transactions.
Aon stated that its compensation and benefits expense increased 32 percent, or $448 million, and general expenses increased by 368 percent, or $1.1 billion, during the period. Both primarily related to increase in charges related to terminating the combination with Willis Towers Watson and related costs.
Overall, the broker's total operating expenses in the third quarter increased 80 percent to $3.5 billion as it absorbed a $1.3 billion charge related to WTW deal termination.
Greg Case (pictured), Aon's chief executive officer, hailed the company's “outstanding results” that he said were driven by a successful execution of its Aon United Blueprint strategy.
“Our focus on unmet client needs related to new forms of volatility, workforce resiliency, and access to capital make us more relevant to current clients and more capable of addressing a broader marketplace, positioning Aon to deliver substantial ongoing value to clients and shareholders,” he concluded.
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