Aon CEO Case highlights strong organic growth in 2019 results

Broker Aon enjoyed a big leap in its profits in 2019 and some revenue growth. Its performance was particularly strong in the fourth quarter, in part boosted by strong organic growth and some savings from a restructuring process.

The broker’s profit attributable to its shareholders increased to $1.5 billion last year, a 35 percent increase from the $1.1 billion it posted the year before. In the fourth quarter, it made a profit of $374 million, compared with $345 million in the same period a year earlier.

Its revenues for 2019 reached $11 billion, a 2 percent increased on the year before, driven by 6 percent organic revenue growth, partially offset by a 3 percent unfavorable impact from foreign currency translation and a 1 percent unfavorable impact from divestitures, net of acquisitions. For the fourth quarter, its total revenues increased by 4 percent to reach $2.9 billion, including organic revenue growth of 7 percent.

Greg Case, the chief executive of Aon, said: "Our fourth quarter results reflect strong operational and financial performance to finish the year, highlighted by organic revenue growth of 7 percent, including growth of 5 percent or greater in four of the five solutions lines, and substantial operating margin improvement of 210 basis points. For the full year, we delivered our strongest level of organic revenue growth in over 15 years and adjusted operating margin of 27.5 percent.

"Our strong performance reflects continued momentum as we strategically position the firm to bring the best of global Aon to clients and execute against our Aon United strategy. We enter 2020 in a position of strength to continue to improve the long-term growth profile of the firm that we believe will unlock significant value for clients and shareholders."

Its total operating expenses in the fourth quarter increased by 4 percent to $2.4 billion compared to the prior year period due primarily to an increase in expense associated with 7 percent organic revenue growth, an increase in investments supporting growth initiatives across the portfolio, and a $51 million increase in restructuring charges, partially offset by $54 million of incremental savings from restructuring and other operational improvement initiatives, a $27 million favorable impact from foreign currency translation, and a $12 million decrease in expenses related to divestitures, net of acquisitions.

Restructuring expenses were $170 million in the fourth quarter, primarily driven by workforce reductions and other costs associated with restructuring and separation initiatives. It noted that all charges associated with the program have been completed as of the fourth quarter of 2019. In total, the company incurred $1.4 billion of expense, including $1.3 billion of cash charges and $115 million of non-cash charges.

Restructuring savings in the fourth quarter from restructuring and other operational improvement initiatives are estimated to be $162 million, before any reinvestment, an increase of $54 million compared to the prior year period.

Before any reinvestment of savings, restructuring and other operational improvement initiatives delivered estimated annualized savings of $529 million in 2019 and are expected to deliver estimated annualized savings of $580 million in 2020, an increase of $45 million from the previous estimated savings of $535 million in 2020. Incremental savings in 2020 are expected to be realized throughout the year and will be reported as part of overall operating performance.