Aon holds organic revenue growth to 8%, pads bottom line

Global broker  Aon laid claim to its second straight quarter of 8% organic revenue growth alongside largely stable margins, then leveraged a one-off deal and a tax boon to pad the bottom line.

"In the second quarter, our team delivered strong financial results that reflect the momentum of our business, with 8% organic revenue growth, operating margin expansion of 40 basis points to 26.2%, and EPS growth of 15%," CEO Greg Case said.

Total revenue rose 3.4% year on year to nearly $3.0 billion and was said to include organic revenue growth of 8%, strong vis-a-vis the group's long-term goal for 'mid-single digit' growth. Q1 organic growth had also been pegged at 8%, down from 10% in Q4 2021.

Aon sourced its best revenue growth to reinsurance broking, up 7% year on year or 9% in the organic measure, ahead of 3% growth (7%) for corporate risk solutions, both facing headwinds from the strong dollar.

Commercial risk solutions claimed its revenue gain visible "across every major geography" including double-digit growth in EMEA, the Pacific, and Latin America, driven by continued strength in core P&C.

"On average globally, exposures and pricing were modestly positive, resulting in a modestly positive market impact," management said.

Reinsurance Solutions organic revenue growth of 9% was said to reflect double-digit growth in treaty on continued net new business volume. Market impact was called "modestly positive." With the big renewals seasons done, the focus switches to facultative in H2.

The group's operating margin increased by 0.2 percentage points (pps) 20 basis points to 23.5% and an adjusted measure was said to have risen by 0.4 pps to 26.2%. Those figures are down notably from the first quarter's 37.2%, but well on track to meet full-year guidance.

Aon currently expects adjusted operating margin expansion for the full-year 2022, management said in its earnings presentation. That's seemingly a low bar: H1's 32.7% is up 0.5 pps year on year and well above FY2021's 17.1%.

Net profits surged 32% to a $500 million gain thanks in large part to $31 million in other income, chiefly the gain on sale of a bus9iness in Commercial risk solutions. A lower effective tax rate also helped.

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