Aon posts higher revenue, lower profit

Aon PLC Friday reported $3.72 billion in third-quarter revenue,  a 26% increase over the same period last year, and up 7% on an organic basis, driven by strong growth across all of its main divisions.

But Aon’s net income fell 24% to $355 million as higher expenses related to the integration of NFP Corp. and its ongoing restructuring program were partially offset by $25 million in restructuring savings realized in the quarter.

The brokerage continues to focus on hiring staff in specialty areas such as construction, energy, health and enterprise, senior Aon executives said on an earnings call with analysts.

“We expect these new colleagues to season and contribute to organic growth within 12 to 18 months,” said Aon Chief Financial Officer Edmund Reese.

Aon is on track to deliver mid-single-digit or higher organic growth for the full year, Mr. Reese said.

CEO Greg Case said NFP continues to perform “exceptionally well.” Aon completed the $13 billion purchase of NFP in April.

NFP delivered mid-single-digit organic revenue growth in the quarter, Mr. Reese said.

Aon reported $1.85 billion in third-quarter revenue in commercial risk solutions, its main insurance brokerage unit, a 17% increase over the same period last year and up 6% on an organic basis.

The brokerage’s North American core property/casualty business had a strong quarter, driven by net new business, strong retention, and double-digit growth in mergers and acquisitions services.

M&A volumes are still 13% below the 10-year average but have come back a bit, Mr. Case said.

“Over time the dry powder out there is substantial, and so our view is this will be a real area of client value that we can deliver,” Mr. Case said.

Aon’s reinsurance broking business reported $503 million in revenue, up 8% overall and 7% on an organic basis, led by growth from treaty and a double-digit increase in facultative placements.

Aon’s health and benefits unit reported $870 million in revenue, up 58% overall and 9% on an organic basis; its wealth solutions division reported $499 million in revenue, up 42% overall and 7% organic.

Aon completed six middle-market acquisitions across its commercial risk, health and wealth divisions in the quarter and continues to capitalize on M&A opportunities in the fast-growing middle market through NFP.