Reinsurance News

Aon posts organic reinsurance revenue growth of 9%

31st July 2020 - Author: Matt Sheehan

Re/insurance broker Aon has reported organic revenue growth of 9% in its Reinsurance Solutions division for the second consecutive quarter this year.

Aon logoThe Reinsurance Division posted revenue of $448 million in Q2 2020, compared with $420 million for the same period last year. This followed organic revenue growth of 9% in Q1 2020 and 17% in Q4 2019.

Howeverm this was the only Aon division to record an increase in revenue over Q2, helping to offset an overall decline in revenue of 4%.

Aon’s total revenue was recorded at $2.50 billion, down from the $2.61 billion posted in Q2 2019, including organic revenue decline of 1%.

Organic growth in the Reinsurance Solutions segment was driven by strong net new business generation in treaty and solid growth in facultative placements.

And according to Aon, market impact was modestly positive on its reinsurance results last quarter, both in the US and internationally.

The majority of revenue in the broker’s treaty portfolio is recurring in nature and is recorded in connection with the major renewal periods throughout H1, while the second half of the year is largely driven by facultative placements and capital markets that are more transactional in nature.

But Aon’s other divisions did not perform so well, with the Commercial Risk Solutions segment’s revenue falling 4% to $1.13 billion, with 1% organic growth.

Organic growth in the Commercial Risk Solutions segment was driven by growth across most major geographies, including modest growth in the US and EMEA and double-digit growth in Latin America and Asia, driven by strong retention and management of the renewal book portfolio, partially offset by a decline in the Pacific region.

Results also include a decline declines due to COVID-19, including transaction liability, construction, and project-related work.

Aon also reported revenue of $393 million for its Retirement Solutions division (a 6% decrease compared with Q1), $258 million for Health Solutions (a 19% decrease), and $274 million for Data & Analytic Services (a 4% decrease).

The broker’s total operating expenses in the second quarter decreased 13% to $1.9 mainly due to a $127 million decrease in restructuring charges, a $53 million favorable impact from foreign currency translation, a $35 million decrease from accelerated amortization.

It also recorded a temporary reduction and deferral of certain discretionary expenses in an effort to proactively manage liquidity due to uncertainty surrounding COVID-19, partially offset by $18 million of transaction costs related to the pending combination with Willis Towers Watson.

“Our second quarter results reflect the resiliency of our business, the efficiency of our operations and the dedicated client service of our 50,000 colleagues around the world,” said Greg Case, Chief Executive Officer of Aon.

“We delivered strong results including 240 basis points of operating margin expansion in the quarter and free cash flow of $1.1 billion, up $875 million from the first half last year,” he continued.

“We are living in a time of increasing economic and geopolitical volatility – as evidenced by the COVID-19 pandemic and broader social injustice and unrest – which demands action within our firm and on behalf of clients.”

“Our Aon United strategy has proven essential to delivering more relevant solutions today, and our combination with Willis Towers Watson will accelerate innovation and strengthen capability to meet the evolving, long-term challenges our clients will face in the future.”

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