Aon reports increased net income for Q1

Net income attributable to Aon plc (NYSE: AON) shareholders was $261 million for the first quarter of the year, up from $238 million reported in the same quarter last year. 

“Our first quarter results reflect a solid start to the year with double-digit earnings growth driven by a strong performance in our Risk Solutions business and effective capital management, as highlighted by the repurchase of $300 million of ordinary shares in the quarter,” Greg Case, president and CEO of Aon noted in a statement on the results. 

The company reported a total revenue increase of 3% to $2.9 billion over Q1 2012, driven primarily by a 2% increase in organic revenue and a 1% increase in commissions and fees resulting from acquisitions, net of divestitures. It was partially offset by a 42% decline in investment income due to lower average interest rates, the company noted. 

Cash flow from operations increased $69 million to $54 million in the first quarter due primarily to improved working capital and 9% growth in net income. This was partially offset by a $106 million increase in cash taxes and an $86 million increase in pension contributions, according to the company. 

In its Risk Solutions business, total revenue increased 3% to $2.0 billion compared to the prior year quarter at $1.9 billion. This was due to 3% organic growth in commissions and fees and a 1% increase in commissions and fees resulting from acquisitions, net of divestitures. It was partially offset by a 42% decline in investment income, Aon said. Risk Solutions’ operating margin was 20.4% and the operating margin, adjusted for certain items, increased 110 basis points to 22.5%. 

Retail Brokerage organic revenue increased 4% reflecting revenue growth in both the Americas and International businesses.  Americas organic revenue increased 6% in the first quarter reflecting improved growth across all regions, including strong growth in Latin America and US Retail driven by new business generation and management of the renewal book portfolio.

International organic revenue increased 3% driven by strong growth across Asia and New Zealand, and modest growth in Australia, partially offset by a decline in Germany.  Reinsurance organic revenue increased 1% due primarily to growth in capital market transactions and advisory business and global facultative placements.

HR Solutions total revenue increased 1% to $954 million compared to the prior year quarter driven by 1% organic growth in commissions and fees.

Organic revenue in Consulting Services increased 1% driven primarily by modest growth in communications and investment consulting, partially offset by a decline in continental Europe.  Organic revenue in Outsourcing increased 1% due primarily to growth in net new client wins and demand for discretionary services in HR BPO and healthcare exchanges, partially offset by a modest decline in benefits administration.

Aon plc is a global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services.