Aon Q4 Profit Up 16%, Beats Estimates, But Revenues Miss

(RTTNews) - UK-based risk and insurance brokerage service provider Aon Plc (AON) on Friday reported a 16 percent increase in profit for the fourth quarter from last year, reflecting higher revenues and margins at its HR Solutions segment. Adjusted earnings beat analysts' expectations, while revenues missed their estimates.

Net income attributable to shareholders for the fourth quarter rose to $355 million or $1.14 per share from $305 million or $0.93 per share in the year-ago period. The latest quarter results included restructuring charges as well as intangible asset amortization expenses.

Adjusted net income for the quarter, which excludes items, was $480 million or $1.54 per share, compared to $416 million or $1.27 per share in the same period last year. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings per share of $1.50 for the quarter. Analysts' estimates typically exclude one-time items.

Total revenue for the quarter grew 3 percent to $3.21 billion from $3.12 billion in the year-ago quarter, helped by a 4 percent increase in organic revenue. This was partially offset by a 1 percent unfavorable impact from foreign currency translation. Analysts had a consensus revenue estimate for the quarter of $3.27 billion.

Segment-wise, risk solutions revenue for the quarter was flat with last year at $2.05 billion, due to 3 percent organic growth in commissions and fees that was offset by a 2 percent decrease in commissions and fees resulting from acquisitions as well as a 1 percent unfavorable impact from foreign currency translation. The segment's operating margin, adjusted for certain items, increased 40 basis points to 23.6 percent.

HR Solutions segment's revenue increased 8 percent to $1.17 billion, with organic growth in commissions and fees of 8 percent. Operating margin, adjusted for certain items, increased 440 basis points to 21.4 percent.

Total operating expenses for the quarter increased 4 percent to $2.7 billion, due primarily to an increase in expense associated with 4 percent organic revenue growth and a $29 million increase in formal restructuring costs.

For fiscal 2013, net income attributable to Aon shareholders rose to $1.11 billion or $3.53 per share from $993 million or $2.99 per share in the prior year. Adjusted net income was $1.54 billion or $4.89 per share, compared to $1.40 billion or $4.21 per share in the previous year.

Total revenue for the year rose 3 percent to $11.82 billion from $11.51 billion last year.

Street expected the company to earn $4.85 per share for the year on revenues of $11.88 billion.

Greg Case, president and chief executive officer of Aon said, "As we look ahead to 2014, our industry-leading platform is positioned for continued long-term growth, improved operational performance, strong free cash flow generation and significantly increased financial flexibility."

Aon shares closed Thursday's trading at $80.74, up $1.36 or 1.72 percent on a volume of 2.00 million shares.