DOW JONES NEWSWIRES
Aon Corp.'s (AOC) reported Friday that its first-quarter net
income rose 28% amid an $83 million pension gain while the
insurance company's brokerage and consulting operation each
reported small organic-revenue growth.
The results fell short of analysts' expectations.
In general, as catastrophes continue to run below long-term
averages, insurance brokerages have been grappling with how to
price policies low enough to attract customers less concerned with
risk. The resulting price wars have been taking a toll on
insurers.
Aon has been undergoing major restructuring for more than a
year, including job cuts and sales of some of its businesses. It
also bought U.K. reinsurance broker Benfield Group Ltd. for $1.51
billion in November as part of its plan to boost the reach of its
insurance group, marking a major consolidation in the reinsurance
broker market, where intermediaries arrange cover for insurers for
risks that are too big to keep on their own balance sheets.
Chief Executive Greg Case said the results reflected progress in
the face of soft market conditions.
Aon, one of the world's largest insurance brokerages, posted net
income of $280 million, or 97 cents a share, up from $218 million,
or 68 cents a share, a year earlier. Excluding the pension gain and
restructuring costs, earnings from continuing operations rose to 76
cents from 70 cents.
Revenue decreased 2.7% to $1.85 billion, with the stronger
dollar cutting revenue by 10 percentage points. Also, there was a
44% decline in investment income.
Analysts surveyed by Thomson Reuters expected earnings of 88
cents on revenue of $2.08 billion.
Organic revenue, a closely watched indicator that excludes
recent acquisitions and divestitures as well as currency
fluctuations, rose 1%.
At Aon's largest unit, risk and insurance brokerage services,
organic revenue rose 2%. The segment's pretax profit - the company
didn't provide after-tax figures - rose 4% excluding items. Organic
revenue in the consulting business also increased 2%, while pretax
earnings fell 21% excluding items.
The company widened its estimate for how much it would save
through its restructuring plan this year, saying it expects to save
$240 million to $265 million this year and $370 million next
year.
Aon's shares closed Thursday at $42.20 and haven't traded
premarket.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com