DOW JONES NEWSWIRES
Aon Corp.'s (AOC) second-quarter profit slumped 87% from a year
earlier result that included a $1 billion divestiture gain, while
the insurance company said organic revenue remained flat. Earnings,
however, beat 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. That has led to price wars taking a toll on insurers' bottom
lines.
Aon has been undergoing major restructuring for more than a
year, including job cuts and divestitures. It also bought U.K.
reinsurance brokerage Benfield Group for $1.51 billion in November
as part of its plan to boost the reach of its insurance group. The
move marked 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 sheet.
Chief Executive Greg Case said the merger with Benfield
"continues to perform exceptionally well" and the company's
restructuring programs are on track. He called the second-quarter
results "strong performance against difficult economic and industry
conditions."
Aon, one of the world's largest insurance brokerages, posted
income of $149 million, or 52 cents a share, down from $1.13
billion, or $3.71 a share, a year earlier. Excluding items such as
the year-earlier gain, earnings from continuing operations rose to
76 cents from 70 cents.
Revenue decreased 3.6% to $1.89 billion as investment income
slumped 69% to $21 million.
Analysts polled by Thomson Reuters expected earnings of 74 cents
on revenue of $1.94 billion.
Organic revenue is a closely watched indicator that excludes
recent acquisitions and divestitures as well as currency
fluctuations. It was also flat at Aon's largest unit, risk and
insurance brokerage services. The segment's pretax profit - the
company didn't provide after-tax figures - fell 10%. Organic
revenue in the consulting business slid 1%, while pretax earnings
fell 4.7%.
Shares closed Wednesday at $39.74 and haven't traded
premarket.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com