Aon Q2 Adj. Profit Rises, Meets Estimates

(RTTNews) - Risk and insurance brokerage service provider Aon Plc (AON) reported Friday a decline in second-quarter profit, reflecting higher charges. Adjusted earnings increased from last year and met analysts' estimates on higher revenue in its two segments.

President and Chief Executive Officer Greg Case said, "Our second quarter results reflect organic growth across each of our major segments, continued margin improvement in Risk Solutions, twenty percent growth in free cash flow and the repurchase of $225 million of ordinary shares in the quarter."

For the second quarter, net income attributable to shareholders dropped 2 percent to $241 million from last year's $246 million. Earnings per share, however, grew 4 percent to $0.76 from $0.73 per share in the prior year, reflecting a 6 percent drop in outstanding shares. The latest quarter results included restructuring charges as well as intangible asset amortization expenses. Adjusted net income, which excluded items, grew to $353 million from $341 million last year, and net income per share increased 9 percent to $1.11 from last year's $1.02. On average, 20 analysts polled by Thomson Reuters expected earnings per share of $1.11 for the quarter. Analysts' estimates typically exclude one-time items.

Total quarterly revenues advanced 3 percent to $2.9 billion from $2.82 billion a year ago, helped by growth in organic revenue and in commissions and fees resulting from acquisitions. This was partially offset by unfavorable impact from foreign currency translation and a 25 percent drop in investment income due to lower average interest rates. Analysts estimated revenues of $2.91 billion for the quarter.

Segment-wise, risk solutions revenue increased 2 percent to $1.9 billion with organic revenue growth of 3 percent. The segment's operating margin, adjusted for certain items, increased 60 basis points to 22.5 percent.

HR Solutions segment's revenue increased 3 percent to $956 million with organic revenue growth of 2 percent. The operating margin, adjusted for certain items, decreased 50 basis points to 14.9 percent

Total operating expenses for the second quarter increased 4 percent to $2.5 billion.

Greg Case added, "Our solid financial performance has absorbed significant investments made in areas such as the Global Risk Insight Platform and in healthcare exchanges, strengthening our industry-leading platform for long-term growth, strong free cash flow generation and increased financial flexibility."

Aon shares closed Thursday's trading at $67.55, up $0.67 or 1 percent.