Aon Corp. reported that it is considering “strategic options” for its life insurance subsidiary, including a possible spinoff or sale of the company.
Aon disclosed the strategy in announcing its second quarter results showing net income increased 24 percent to $240 million or $0.75 per share, compared to $193 million or $0.57 per share for the prior year quarter.
The life company, Combined Insurance Company of America, sells supplemental insurance coverage including accident, health, life, disability, cancer, Medicare supplement, long-term care and critical illness insurance. It reported more than $1.4 billion in revenues in 2006.
CICA units include Combined Life Insurance Company of New York, which has more than 400,000 policyholders in six office locations; Combined Select Programs, which sells blanket and group accident and health to university students, employer groups and other specialty groups; BeneTrax, a benefit information software program; and Employee Benefit Communications, a leading voluntary benefit enrollment firm in the United States.
In addition to the 24 percent jump in net income for the quarter ending June 30, 2007, Aon reported total revenue increased 13 percent to $2.5 billion with organic revenue growth of 8 percent.
“Despite soft market conditions, our brokerage segment generated the highest rate of organic revenue growth since 2003, with growth across all major business units,” said Greg Case, president and chief executive officer. “Strong organic revenue growth, combined with expense initiatives, led to another quarter of meaningful margin improvement and earnings growth, even as we invest in innovative solutions and talent to deliver increased value for clients.”
Total expenses increased 9 percent or $182 million to $2.1 billion due primarily to a $94 million increase in benefits to policyholders and a $62 million unfavorable impact from foreign currency translation, partially offset by pension expense savings and benefits related to the restructuring program.
Restructuring expense from a three-year plan was $26 million in the second quarter compared to $19 million for the prior year quarter. The previously announced three-year restructuring plan is anticipated to result in annualized cost savings of approximately $235 million in 2007 and $280 million in 2008, consistent with previous estimates. Restructuring savings realized in the second quarter are estimated at $58 million compared to $29 million in the prior year quarter. Of the estimated restructuring savings in the second quarter, $45 million were related to the brokerage segment, primarily for workforce reduction.
Source: Aon Corp.
www.aon.com
Was this article valuable?
Here are more articles you may enjoy.
Why New York’s Attorney General Objects to Trump’s Bond Insurer 
Chubb Wins Latest Battle With New York Diocese in Bid to Avoid Sex Abuse Claims 
Former Congressman Charged After Collision with State Trooper in Florida 
Jury Awards $80M to 3 Former Zurich NA Employees for Wrongful Termination 
