Canadian Underwriter

Aon net income drops

May 5, 2006   by Canadian Underwriter

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The first quarter 2006 net income for broker Aon Corporation (NYSE: AOC) has dropped slightly to US$198 million (US$0.57 per share) from its reported 2005 net income of US$200 million (US$0.59 per share).
The net income fell as a result of:
* restructuring charges of US$0.06 in first quarter 2006;
* a US$0.07 gain in first quarter 2006 related to a previously sold claims business;
* and, the revaluation of Endurance Specialty Holdings warrants, which resulted in a loss of US$0.03 in first quarter 2006 and a gain of US$0.03 in first quarter 2005.
As a result of these events, Aon says its adjusted earnings per share for the first quarter 2006 is US$0.60, representing an increase of 18% over the prior year.
Greg Case, Aon’s president and CEO, says the Company’s core operating performance exceeded expectations, and was materially better than the previous year.
“Each of our operating segments showed margin improvement on positive organic growth,” Case says. “Americas-Brokerage, led by our U.S. retail brokerage business, performed well, and our consulting and underwriting businesses showed improved growth.”
The Company say an increase in its insurance underwriting revenue of 7%, reaching US$841 million in the quarter, with segment organic revenue growth, which is based on written premiums and fees, of 13%.
Total debt and preferred stock decreased US$71 million to US$2.0 billion at March 31, 2006 from March 31, 2005. Total debt and preferred stock as a percentage of total capital decreased to 27.5% from 29.4% over the same period. Stockholders’ equity was US$5.3 billion. Compared to Dec. 31, 2005, total debt decreased US$96 million.
During the first quarter of 2006, Aon completed the repurchase of approximately 6.2 million shares of common stock for US$247 million. Through March 31, 2006, the Company has repurchased approximately 6.8 million shares for US$272 million under the existing US$1 billion buyback authorization announced in Nov. 2005.