NU Online News Service, July 30, 3:07 p.m.EDT

Chicago-based insurance broker Aon Corp. reported second-quarternet income grew 3 percent as it improved organic growth andstrengthened operating efficiencies.

The firm reported second-quarter net income rose $4 million to$153 million compared to the same period last year, translatinginto a 3 cent increase in earnings per share to 54 cents. Revenuesrose 1 percent, or $16 million, to $1.9 billion.

For the first six moths of this year, net income compared tolast year was down 23 percent, dropping $98 million to $331million. Earnings per share dropped 29 cents to $1.18 a share.

First-half revenues rose 2 percent, or $74 million, to $3.8billion.

"We believe we delivered solid progress against our corecommitment to shareholders, and while we face headwinds from thebroader economy, we are driving the set of initiatives that aredriving strong, core operational improvement, positioning Aon forlong-term growth with greater client-serving capability andeffectively allocating capital to maximize shareholder valuecreation," said Greg Case, president and chief executive officer ofAon, during a conference call with investment analysts today.

Organic growth improved to negative 1 percent from the previousquarter's negative 3 percent as the firm saw improvements in bothits insurance brokerage and consulting business.

Mr. Case noted that despite the soft market and economicweakness in the United States and other parts of the world, thefirm managed to maintain a high retention rate, underscoring itsvalue proposition to clients.

In its retail brokerage business, Mr. Case said the firm sawstrong growth in Latin America and Asia Pacific despite the marketplace and economic challenges. He said the retail segment generatednew business of nearly $200 million and the firm had a retentionrate approaching 93 percent.

He also credited Aon's service platform, GRIP (Global RiskInsight Platform), which allows clients insurance placement dataacross a broad spectrum of the market, with helping to drive thefirm's value to clients.

Aon's performance was also driven by acquisitions, savingsthrough restructuring and a decrease in operating expenses.

When asked about the firm's recent announcement that it wouldbegin to accept contingent commissions again, Mr. Case said theclient reaction was "very muted." He underscored the need fortransparency while accepting the commissions, but added thatcontingents were historically not a significant part of the firm'searnings.

On a question regarding implementation of new health carelegislation, Mr. Case said Aon is just beginning to see an openingin client interest from the consulting end. He said he expects thisto produce "real opportunity" for the firm in the future.