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

Chicago-based insurance broker Aon Corp. reported second-quarter net income grew 3 percent as it improved organic growth and strengthened operating efficiencies.

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

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

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

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

Organic growth improved to negative 1 percent from the previous quarter's negative 3 percent as the firm saw improvements in both its insurance brokerage and consulting business.

Mr. Case noted that despite the soft market and economic weakness in the United States and other parts of the world, the firm managed to maintain a high retention rate, underscoring its value proposition to clients.

In its retail brokerage business, Mr. Case said the firm saw strong growth in Latin America and Asia Pacific despite the market place and economic challenges. He said the retail segment generated new business of nearly $200 million and the firm had a retention rate approaching 93 percent.

He also credited Aon's service platform, GRIP (Global Risk Insight Platform), which allows clients insurance placement data across a broad spectrum of the market, with helping to drive the firm's value to clients.

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

When asked about the firm's recent announcement that it would begin to accept contingent commissions again, Mr. Case said the client reaction was "very muted." He underscored the need for transparency while accepting the commissions, but added that contingents were historically not a significant part of the firm's earnings.

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

Special Reports /

Aon 2Q Net Income Rose 3%; Organic Growth Improves

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