Reinsurance News

Aon falls to $900mn Q3 loss after WTW merger collapse

29th October 2021 - Author: Matt Sheehan

Re/insurance broker Aon has posted a net loss of $900 million and an operating loss of $801 million for the third quarter of 2021, after incurring $1.3 billion of charges related to the termination of its planned combination with Willis Towers Watson.

But costs associated with the merger collapse disguised what was otherwise another strong quarter for Aon, which posted reported overall revenue growth of 13% to $2.7 billion for the third quarter of 2021, including organic revenue growth of 12%.

Its performance was aided by organic revenue growth in its Reinsurance Solutions business, which at 8% was still strong but well below the 13% posted in Q3 of last year.

Reinsurance Solutions revenue stood at $353 million by the end of the quarter, which was 10% higher than the $321 million recorded in the previous year.

“In the third quarter, our team delivered outstanding results, including 12% organic revenue growth translating into 14% growth in adjusted earnings per share,” said Greg Case, Chief Executive Officer.

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“This performance is driven by great execution of our Aon United Blueprint and the work our colleagues do every day to ensure clients are better informed, better advised and able to make better decisions to protect and grow their businesses,”

Our focus on unmet client needs related to new forms of volatility, workforce resiliency, and access to capital make us more relevant to current clients and more capable of addressing a broader marketplace, positioning Aon to deliver substantial ongoing value to clients and shareholders.”

Aon noted that, with its Reinsurance Solutions segment, the majority of revenue in its treaty portfolio is recurring in nature and is recorded in connection with the major renewal periods that take place throughout the first half of the year.

Thus, the second half of the year is largely driven by facultative placements and capital markets that are more transactional in nature.

Aon also explained that its overall performance reflected growth in core business, driven by net new business generation and ongoing strong retention, as well as double-digit growth overall in the more discretionary portions of the business.

Looking at other segments, Commercial Risk Solutions improved revenues by 14% to $1.5 billion, with organic revenue growth of 13% that reflected growth across every major geography, driven by strong new business generation, retention and management of the renewal book portfolio.

Health Solutions also saw organic revenue growth of 16% due to double-digit growth in Human Capital, driven by both rewards and assessments solutions, and organic revenue growth of 4% in Wealth Solutions reflected strong growth in delegated investment management and modest growth in Retirement Consulting.

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