While Aon continues to make investments to drive organic growth, its president and chief executive officer, Greg Case, emphasized last week that the country's second-biggest insurance brokerage can and will do better.
Aon's organic growth is “short of what Aon's capable of doing, particularly given the assets and the capability we have,” Mr. Case said in a webinar on third-quarter results. He noted that investments made for the future, coupled with Aon's “commitment to distinctive client value,” produced consolidated organic revenue growth of 6 percent for the third quarter–the highest rate since 2003.
Total revenue for the nine months ended Sept. 30 was up 2 percent to $6.5 billion. Revenue from brokerage commissions and fees for the first three quarters were also up 2 percent to $4.85 billion. Net income for the first nine months was down 3 percent to $497 million.
Mr. Case said “the third quarter is evidence of good progress in each of our three key metrics: earnings growth, margin expansion and organic revenue growth.”
Risk and Insurance Brokerage Services revenue rose 5 percent in the third quarter to $1.3 billion, with organic revenue growth of 3 percent–led by reinsurance organic revenue growth of 8 percent, Aon said.
Reinsurance, he said, reported its strongest quarter in three years, with the Asia Pacific and Latin American regions doing “extremely well.” Reinsurance organic revenue growth was 8 percent for the third quarter. Consulting revenue increased 2 percent to $301 million, with organic revenue growth of 3 percent.
On Aon's previously announced restructuring plan, Mr. Case said, “We're ahead of schedule. We committed to $100 million in savings in 2006 and at this point, we're ahead of that pace.”
On underwriting strategy, he said Aon is sharpening its focus on combined insurance and is going to exit or runoff the remaining pieces of its portfolio. Mr. Case noted that Aon has strengthened its reserves on its property-casualty book of business by “more than $100 million, and we continue to explore opportunities for disposition of the books on the runoff side.”
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