Canadian Underwriter

Q1 revenues up 5% at Aon

May 9, 2017   by Canadian Underwriter

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Aon plc reported Tuesday its commercial risk solutions revenue of $984 million in the three months ending March 31, up 2% from $961 million during the same period in 2016, while net income, company wide, dropped 9% due in part to restructuring costs.

All figures are in United States dollars.

Aon reported May 9, 2017 that its total revenue was $2.38 billion in the first three months of the year, up 5% from $2.276 billion in Q1 2016. As of Dec. 31, 2016, Aon had about 69,000 employees, of whom about 33,000 were in risk solutions.

Broken down by segment, Q1 2017 revenue was $984 million in commercial risk solutions (up 2% from $961 million in Q1 2016) $371 in reinsurance solutions (unchanged from Q1 2016), $386 million in retirement solutions, $372  million in health solutions and $268 million in data and analytics services.

Aon topped a list, released in 2014 report by Finaccord Ltd., of top commercial brokerages ranked by commercial non-life broking revenue in 2013. At the time, Aon held an eighth of the commercial non-life broking market, followed by Marsh Inc. and Willis Group plc with 10.5% and 4.2% respectively.

In 2016, 64% of Aon’s total revenues were in risk solutions and the other 36% was in human resources solutions, Aon reported Feb. 23 in its annual report for 2016.

Key executives are president and CEO Greg Case, Aon Risk Solutions CEO Michael O’Connor and Aon Benfield CEO Eric Andersen.

Through its retail brokerage Aon places property, and a variety of liability coverages, including professional, and directors’ and officers’, transaction and cyber, among others. Through its reinsurance brokerage, Aon places treaty and facultative reinsurance. Its Aon Securities Inc. subsidiary underwrites insurance-linked securities and arranges for financing of insurers.

Company-wide, Aon’s net income dropped 9% from $337 million in Q1 to $305 million in the most recent quarter.

Restructuring expenses in Q1 were $144 million.

Aon said it “expects to invest $900 million in total cash over a three-year period, excluding $50 million of non-cash charges, in driving one operating model across the firm.” Of that, $700 million will be cash restructuring charges and another $200 million will be capital expenditures.

To date, Aon has incurred 19% of the total estimated restructuring charges.

Total restructuring charges are estimated at $750 million, of which $606 million is remaining. Of the $750 million total estimated restructuring cost, $207 million is workforce reduction, $146 million in is information technology rationalization and $176 million is in lease consolidation.

Its offices include 190,000 square feet of space in London, 428,000 square feet in Chicago (Aon’s corporate head office until 2012) and 319,000 square feet in New York City.

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