Aon Sees Stock Upturn On 4Q Report
By Mark E. Ruquet
NU Online News Service, Feb. 12, 12:57 p.m. EST?Chicago?based insurance broker Aon Corp. saw its stock increase to more than six percent by mid-day after its fourth-quarter earnings report showed a 500 percent gain in net income for the quarter and 217 percent increase for the year.
In a conference call to investors, Patrick G. Ryan, the broker's chairman and chief operating officer, said 2003 would hold "a stronger and more settled operating environment" for the firm. He added, "We know we can increase returns to our stockholders and we are focused on that."
For the fourth quarter ending Dec. 31, 2002, net income increased $151 million from $27 million in 2001 to $178 million. Earnings per share rose 49 cents, going from 10 cents in 2001 to 59 cents. Revenues for the quarter rose 16 percent, or $330 million, going from 2.04 billion to $2.4 billion,
For the year, net income grew $319 million, going from $147 million to $466 million in 2002. Earnings per share increased $1.11, from 53 cents in 2001 to $1.64 per share. Revenues for the year rose 15 percent, or $1.15 billion, from $7.68 billion to $8.8 billion in 2002.
Aon saw growth in all three of its operating segments: insurance brokerage, consulting and insurance underwriting. The firm was helped by the demands of the hard market, premium increases, and the termination of unprofitable underwriting business in Mexico, Argentina and Brazil.
The firm has cut its total debt from $2.2 billion on Sept. 30, 2002, to $1.8 billion as of Dec. 30, 2002. Aon said its total debt and preferred securities, as a percentage of total capital, was approximately 40 percent as of Dec. 30, compared to 45 percent on Sept. 30.
Aon said pension costs are expected to increase $130 million in 2003. Of that, Aon expects to contribute $40 million. The remainder are expected to be offset by "increased operating segment income and improved corporate and other segment revenue."
In a statement, Mr. Ryan said the firm is comfortable with 2003 earning estimates of $1.90 to $2 per share.
By noon, the firm's stock was up $1.20 to $19.25 a share.
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