Aon Corp. brokerage in Chicago yesterday reported first-quarter net income of $198 million compared with $200 million for the period in 2005.

“Core operating performance exceeded our expectations and was materially better than last year,” said Greg Case, chief executive officer. “Each of our operating segments showed margin improvement on positive organic growth.”

Bank of America securities analyst Brian Meredith said Aon results showed “the organic growth story continues to be positive.”

Risk and insurance brokerage services first-quarter revenue increased 3 percent to $1.4 billion, with 2 percent organic revenue growth, the company said.

Mr. Meredith noted that the downside surprise in net earnings in comparison to the consensus expectation was driven largely by weaker than expected margins in this unit.

Organic revenue in Aon's Brokerage-Americas unit rose 5 percent, primarily driven by U.S. retail business and growth in Latin America.

Excluding the impact of Aon's agreement with regulators to eliminate contingent commissions, Brokerage-Americas organic growth was 6 percent, the brokerage said.

Brokerage-International organic revenue grew 1 percent, reflecting new business generation particularly in France, the Middle East and Africa, the company reported.

Reinsurance organic revenue was unchanged year-over-year, reflecting new business and improved pricing in the Americas offset by the impact of higher risk retention by clients and weaker pricing in the international markets, the company reported.

Consulting revenue was $308 million during the quarter, with 4 percent organic revenue growth, primarily from operations in the U.K. and Canada, as well as from compensation consulting.

“Consulting earnings came in significantly better than expected, due principally to higher than anticipated margins,” Mr. Meredith wrote.

Insurance underwriting revenue increased 7 percent to $841 million in the quarter, with segment organic revenue growth, which is based on written premiums and fees, of 13 percent.

The previously announced three-year restructuring plan, the company said, is currently expected to result in cumulative pretax charges of $290 million, including employee termination and lease consolidation costs, asset impairments, and other costs associated with the restructuring.

Annualized cost savings are now targeted at approximately $190 million by 2008.

“Year-over-year expense savings appear to have moderated somewhat,” Mr. Meredith wrote.

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