Aon shares fall after earnings report even as revenue grows

Aon’s shares suffered a post-earnings decline of 4.19% on Friday, July 28, despite the global re/insurance broker reporting revenue growth, “strong operating results”, and CEO Greg Case (pictured) instilling a confident outlook for the rest of the year.

Aon turned a net profit of $560 million for the second quarter of 2023, 12% higher compared to $501 million in the prior year period.

Total revenue increased 7% to $3.2 billion, including organic revenue growth of 6%.

The company attributed the organic revenue growth to “strong retention, management of the renewal book, and net new business generation, and a 2% favourable impact from fiduciary investment income”. Aon said it was partially offset by a 1% unfavourable impact from foreign currency translation.

The broker’s total operating expenses in the quarter increased 2% to $2.3 billion, due primarily to an increase in expense associated with 6% organic revenue growth and “investments in long-term growth”, partially offset by a $10 million favourable impact from foreign currency translation.

Within its Commercial Risk Solutions business, organic revenue grew 5%, thanks to “strong growth” across most major geographies, particularly in Asia and the Pacific. The US grew “modestly”. Overall, Aon said, exposures and pricing were positive, resulting in a “modestly positive market impact”.

Its Reinsurance Solutions organic revenue rose by 9%, reflecting “strong growth in treaty”, as well as double-digit growth in both facultative placements and investment banking, and in the Strategy and Technology Group. Aon noted “modestly positive” market impact on results in the quarter, highlighting that the majority of revenue in the treaty portfolio was recurring in nature.

Its Health Solutions unit saw an organic revenue growth of 10% globally, and Wealth Solutions grew 2% reflecting growth in Retirement.

Commenting on the results, chief executive officer Case said: “Our global team delivered strong operating results in the second quarter, including 6% organic revenue growth and 110 basis points of adjusted operating margin improvement, demonstrating the strength of our Aon United strategy and ongoing progress against our financial goals.

“By aligning solution development around Risk Capital and Human Capital, we're accelerating innovation in our core business and more effectively leveraging our Aon Business Services platform to address growing client demand for analytical tools that will help them make better decisions on risk and people challenges and opportunities.”

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