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Currency fluctuation contributes to 3% revenue drop at Aon


February 5, 2016   by Canadian Underwriter


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Commercial insurance brokerage Aon plc reported its revenue from risk solutions dropped 5%, from $7.834 billion in 2014 to $7.426 billion in 2015. All figures are in United States dollars.

London-based Aon reported Friday its financial results for the full year and for the three months ending Dec. 31.

Insurance brokerage Aon plc had a 3% decline in revenue from 2014 to 2015

The company reported net income of $1.422 billion on revenue of $11.682 billion in 2015, compared to net income of $1.431 billion on revenue of $12.045 billion in 2014.

Aon attributed the 3% drop in revenue to a “6% impact from foreign currently translation partially offset by 3% organic growth in commissions and fees.”

The company-wide results include the risk solutions segment as well human resources service provider Aon Hewitt.

For the fourth quarter, risk solutions revenue was $2.009 billion last year, down 2% from $2.056 billion in 2014.

Aon led the commercial insurance brokerage market in 2013, with 12.5% market share, Finaccord Ltd. reported in 2014. That was when Finaccord ranked 150 firms by commercial non-life broking revenues in 2013. At the time, Marsh, Willis and Arthur J. Gallagher ranked second, third and fourth respectively.

In its risk solutions division, Aon’s major offices include Chicago – the head office until 2012 – and New York City. In Canada, Toronto-based Aon Reed Stenhouse has more than 20 offices.

In risk solutions, Aon places commercial property & casualty insurance through its retail brokerage operation. It also places treaty and facultative reinsurance and provides capital management transaction and advisory services. Through Aon Benfield Securities, the company underwrites insurance-linked securities, arranges financing for insurers and provides advice on strategic and capital alternatives.

In the most recent quarter, Aon reported net income of $590 million on revenues of $3.228 billion. During the same period in 2014, net income was 26% lower ($467 million) while revenue was essentially unchanged at $3.299 billion.

The lack of a significant change in Q4 revenue, from 2014 to 2015, was “driven primarily by 5% organic revenue growth, offset by a 5% unfavorable impact from foreign currency translation.”

Total assets as of Dec. 31, 2015 were $27.164 billion, of which $13.972 billion was current assets and $8.448 billion was goodwill. Total liabilities were $21 billion, of which $13.118 billion were current liabilities, $5.175 billion was long-term debt and $1.795 billion was pension, other post-retirement and other post-employment liabilities.