Reinsurance News

Aon reports 8% organic reinsurance revenue growth

26th October 2018 - Author: Steve Evans

Insurance and reinsurance broking powerhouse Aon has reported 8% organic revenue growth for its reinsurance broking operations during the third-quarter of 2018.

Aon logoAon’s results show that total revenue was flat across the company at $2.3 billion, but that factors in a decrease of $117 million, or 6%, related to the FASB’s new revenue recognition standard that the company is reporting under.

Overall though and on an organic basis, which is better for comparisons sakes, Aon reported 6% revenue growth for the quarter across its business operations, with reinsurance and the commercial risk solutions broking driving 8% each.

Importantly, the broker also reported 5% organic revenue growth for its data and analytic solutions, which represents the emerging service layer in the industry where brokers, and indeed re/insurers, seek to add more value for their clients and earn new sources of income.

Under U.S. GAAP accounting Aon’s operating margin increased 30 basis points to 11.2%, but on a comparable basis operating margin, adjusted for certain items, increased 190 basis points to 18.5%.

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Commenting on the brokers third-quarter 2018 results, CEO Greg Case said, “In the third quarter, we delivered positive performance across each of our key financial metrics; highlighted by strong organic revenue growth of 6% overall, with four of our five revenue lines delivering organic revenue growth of 5% or greater, and 18% operating income growth, of which 9% was driven by core operational improvement. Results year-to-date reflect accelerating revenue growth and continued momentum toward achieving our near-term target of exceeding $7.97 adjusted earnings per share for the full year 2018.

“While we are increasing our long-term growth profile through significant investments in client-facing colleagues and capabilities that deliver Aon United, we are also driving substantial free cash flow generation that is expected to enable tremendous capital allocation opportunities and unlock significant shareholder value creation over the long-term.”

In the Aon Reinsurance Solutions division the company said that its organic revenue growth of 8% was delivered thanks to strong growth across facultative reinsurance placements, as well as the generation of net new business globally in treaty reinsurance.

On top of this, Aon said that market impact was modestly favorable on its reinsurance results in the third quarter, especially in the U.S.

On the commercial broking side, Aon said that its 8% organic revenue growth was delivered thanks to growth across every major geography.

Aon said this reflects strong global new business generation and management of its renewal book portfolio, with double-digit growth achieved in the U.S. and Latin America.

Aon’s commercial risk solutions business also experienced double-digit growth in both cyber insurance solutions and transaction liability, which are both areas the firm has been investing to support client demand.

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