Global broker Aon’s Reinsurance Solutions arm achieved organic revenue growth of 9% in the fourth quarter of 2022, as revenue across the group increased by 2%, year-on-year, to $3.1 billion, reflecting organic revenue growth of 5%.
Higher total revenue of $3.1 billion includes the 5% organic revenue growth and a 1% favourable impact from fiduciary investment income, partially offset by a 4% unfavourable impact from foreign currency translation.
Across the group, total operating expenses in Q4 2022 increased 1% to $2.1 billion when compared with the prior year period, primarily as a result of an increase in expense associated with 5% organic revenue growth and investments in long-term growth. This was partially offset by a $102 million favourable impact from foreign currency translation.
All in all, net income attributable to Aon shareholders in the fourth quarter of 2022 fell by 24%, year-on-year, to $657 million.
The global insurance and reinsurance broker’s fourth quarter 2022 results show that its Reinsurance Solutions division contributed to the solid revenue growth experienced in the period.
The unit’s revenue increased by 27% to $281 million in Q4 2022 compared with $222 million a year earlier, with 9% organic revenue growth reflecting double-digit growth in both the Strategy and Technology Group and facultative placements.
“Market impact was modestly positive on results in the quarter,” says Aon. “The majority of revenue in our 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, while the second half of the year is largely driven by facultative placements and capital markets that are more transactional in nature.”
The Health Solutions segment saw revenue jump from $651 million in Q4 2021 to $678 million in Q4 2022, with organic revenue growth of 7% reflecting growth globally in core health and benefits brokerage, driven by strong retention, new business generation and management of the renewal book portfolio.
In Commercial Risk Solutions, revenue actually fell by 1% to $1.822 billion, although Aon notes organic revenue growth of 4% on the back of growth across major geographies driven by strong retention, net new business generation, and management of the renewal book portfolio.
Aon’s Wealth Solutions arm also reported a dip in revenue in Q4 2022 to $353 million compared with $364 million in Q4 2021. However, Aon says that organic revenue growth was 6% and reflects growth in Retirement, driven by higher demand and project-related work related to pension risk transfer and ongoing impacts of regulatory changes.
Greg Case, Chief Executive Officer (CEO) at Aon, commented: “In the fourth quarter, our colleagues delivered 5% organic revenue growth, to finish a very strong year, contributing to full year organic revenue growth of 6%, margin expansion of 70 basis points to 30.8%, EPS growth of 12% to $13.39, and over $3 billion of free cash flow, an all-time high.
“These results continue our long-term progress and demonstrate the success of our Aon United strategy as we enter 2023 in a position of strength to continue delivering results for clients, colleagues, and shareholders.”
For the full-year 2022, Aon has today reported that total revenue increased, year-on-year, by 2% to $12.5 billion, reflecting 6% organic revenue growth and a 1% favourable impact from fiduciary investment income, partially offset by a 4% unfavourable impact from foreign currency translation and a 1% unfavourable impact from acquisitions, divestitures and other.
Across the group, net income for 2022 increased to $2.6 billion from $1.3 billion a year earlier.
For the full-year 2022, the Reinsurance Solutions arm saw revenue increase by 10% to $2.2 billion. The Health Solutions unit has reported revenue growth of 3% to $2.2 billion, Commercial Risk Solutions has reported annual revenue growth of 1% to $6.7 billion, and the Wealth Solutions division has reported a dip in revenue of 4% to $1.4 billion.