Aon Corp., the world’s largest insurance brokerage by assets, posted better-than-expected quarterly profit Friday, helped by growth in fees and commissions.
Excluding items, profit from continuing operations rose 33 percent to 69 cents per share, and revenue was up 6 percent to $1.85 billion. On that basis, analysts, on average, expected profit of 64 cents per share on revenue of $1.85 billion, Reuters Estimates said.
Third-quarter net income, including discontinued operations, fell 43 percent to $117 million, or 40 cents a share, from $204 million, or 64 cents a share, in the year-earlier quarter.
Aon, which competes with Marsh & McLennan Cos. Inc., saw 5 percent growth in fees and commissions to $1.75 billion.
The company posted higher revenue from its main business, risk and insurance brokerage — increasing 4 percent to $1.47 billion.
In August, the company reached a deal to buy London-based reinsurance broker Benfield Group Ltd an acquisition expected to make it the market leader in reinsurance brokerage.
Reinsurers provide insurance to other insurers, thereby spreading the risk of losses among several carriers.
Aon’s operating costs increased by 8 percent to $1.6 billion from a year earlier.
Aon has been trying to streamline its business to boost savings since 2005, when an industrywide probe led big brokerages to drop contingent commissions — a lucrative practice whereby insurers compensated their brokers for business.
Through two separate rounds of restructuring, Aon has cut thousands of jobs and moved some operations to lower-cost regions.
The company, saying the moves will pay off mightily in 2008, raised its forecast for expected savings this year to between $345 million and $350 million from $286 million.
It said the additional savings came from streamlining its back-office operations.
In 2009, Aon sees restructuring savings between $220 million and $245 million, and $300 million in 2010.
Aon’s stock, which closed down 16 cents to $38.10 on Thursday, has fallen 15 percent this month. Over the same period the S&P Insurance Index has fallen twice that.
(Reporting by Lilla Zuill; Editing by Derek Caney/Jeffrey Benkoe)
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