Aon Net Drops 5 Percent In Quarter

By Mark E. Ruquet

NU Online News Service, May 5, 4:20 p.m. EDT - Aon Corp. today reported net income dropped 5 percent despite seeing revenue increase 14 percent in the first quarter of 2003.

The results were blamed on a $37 million charge related to the World Trade Center disaster for temporary office space and $32 million in increased pension costs the firm reported.

The WTC charge will be added to the firm's insurance claims for the event. Aon added it expected additional related charges not to exceed $15 million.

For the first quarter, net income fell $8 million from $160 million in 2002 to $152 million for the first quarter ending March 31, 2003. Net income per share dropped 9 cents from 57 cents in 2002 to 48 cents per share. Revenues rose $300 million from $2.1 billion in 2002 to $2.4 billion.

Breaking down the operating revenue segments, brokerage services gained 19 percent or $217 million, going from $1.2 billion to $1.4 billion. Consulting rose 21 percent or $49 million, from $233 million in 2002 to $282 million. Insurance underwriting rose $60 million or 9 percent, from $649 million to $709 million.

Aon reported total debt was reduced from $1.8 billion as of Dec. 31, 2002, to $1.7 billion ending the first quarter of 2003.

In an analysts' conference call, Mr. Ryan said "our fundamental businesses are strong." He said Aon remained comfortable with a 2003 earnings per share range of $1.90 to $2, excluding the WTC item.

Tom Jalics, an associate director in the insurance group with Fitch Ratings headquartered in New York, said there were no real surprises in Aon's report and what the firm reported was "overall fairly clean" and "a good sign for them."

"Now what they have to do is execute on the things they put in place a year-and-a-half ago," he added.

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Aon Net Drops 5 Percent In Quarter

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