Risk and insurance brokerage service provider Aon Corp. reported 3 percent revenue growth along with a 3 percent decline in profit for the first quarter.
First quarter net income declined to $238 million from $246 million reported last year. The profit drop was attributed to unfavorable foreign currency movement and investments.
Total revenue increased 3 percent to $2.8 billion from the prior year quarter driven by a 4 percent increase in organic revenue, partially offset by a 1 percent decrease from unfavorable foreign currency translation, the company said.
Total operating expenses increased 3 percent, or $78 million, to $2.4 billion due primarily to a 4 percent increase in organic revenue, the inclusion of $25 million of expenses from acquisitions, and a $13 million increase in intangible asset amortization expense, partially offset by a $29 million favorable impact from foreign currency translation, benefits related to the formal restructuring programs and a $15 million decline in Hewitt Associates related costs.
Risk and insurance solutions total revenue increased 3 percent to $1.9 billion compared to the prior year quarter due to 4 percent organic growth in commissions and fees and a 1 percent favorable impact from acquisitions, net of divestitures, partially offset by a 2 percent unfavorable impact from foreign currency.
Retail brokerage organic revenue increased 4 percent, reflecting revenue growth in both the Americas and International businesses. Americas organic revenue increased 4 percent primarily as a result of strong renewals across all regions and new business growth in Latin America. International organic revenue increased 4 percent driven by growth in Asia, New Zealand and emerging markets, and improved renewal business across continental Europe. Reinsurance organic revenue increased 5 percent due primarily to new business growth in treaty placements globally and a modest favorable impact from pricing internationally, partially offset by higher cedent retentions.
The company completed its change in corporate domicile of the parent company from Delaware to the United Kingdom in the first quarter. In addition, the board authorized a $5 billion share repurchase program and a 5 percent increase to the annual cash dividend.
“Our first quarter results reflect the strongest rate of organic revenue growth since the second quarter of 2007 despite overall results that were unfavorably impacted by foreign currency movement and investments to strengthen our client-serving capabilities,” said Greg Case, president and chief executive officer of the company said.
“We have taken significant steps to position the firm for long-term growth, strong free cash flow generation and increased financial flexibility as highlighted by the completed redomestication to London, the authorization of a $5 billion share repurchase program and a 5 percent increase in our dividend.”
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