Aon Corp. has reported net income attributable to stockholders rose 69% in the second quarter to $258 million. For the first half of the year, earnings were $504 million, up 52% from last year's first half.
"We delivered solid organic revenue growth in our retail brokerage business while delivering on the synergy savings related to Aon Hewitt," said Greg Case, president and chief executive officer, in a webcast on July 29. "We continue to execute on strategy to strengthen and unite Aon around the globe irrespective of the soft market, economic conditions or other conditions outside our control."
Total revenue increased 48% to $2.8 billion from the prior year's quarter due in part to a 42% increase in commissions and fees resulting from acquisitions, primarily of Hewitt, a 6% increase from foreign currency translation, and a 1% increase in organic revenue.
Case said while macro conditions remain challenging, the company is on track to deliver growth in 2011. Its restructuring programs are delivering costs savings, he said.
The restructurings are of businesses Aon acquired in a $4.9 billion merger in 2010 with Hewitt Associates, a 2008 merger with Benfield Group Ltd., and a restructuring program in 2007. Restructuring savings in the second quarter related to the 2007 program are estimated at $134 million, compared with $113 million in the prior year's quarter. Before any potential reinvestment of savings, the 2007 restructuring program is expected to deliver cumulative costs savings of $536 million in 2011, the company said in a release.
The Benfield program is expected to deliver cumulative cost savings of $122 million this year, and the Aon Hewitt program is expected to deliver savings of $355 million in 2013, according to the company.
Aon's two major segments performed positively. Risk Solutions' revenue increased 9% to $1.7 billion with organic revenue growth of 2%, and its operating margin was 20.5%. HR Solutions, which became much bigger when Aon acquired Hewitt last year, had total revenue of $1.1 billion and an operating margin of 10.6%.
Also in the quarter, Aon closed on the acquisition of South African broker Glenrand M.I.B. Case said Aon is also expanding its international footprint in Asia.
Aon is the second-largest global insurance broker, with $8.51 billion in revenues, according to Best's Review. Its top lines are risk solutions, human resource consulting, and outsourcing.
In the late afternoon on July 29, Aon shares were trading at $48.12, down 2.58% from the previous day's close.
(By Ron Panko, senior associate editor, Best's Review: Ronald.Panko@ambest.com)
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