Aon insurance brokerage reported first-quarter net income increased 8 percent over the period last year, helped by 5 percent organic growth for the whole corporation.
Greg Case, president and chief executive officer for the Chicago-based firm, said the company was able to achieve growth despite the challenges of a soft market that he said would continue and intensify through the rest of the year.
Mr. Case said Aon's plan calls for continued growth throughout all segments of the company as it winds down its restructuring.
For the first quarter, net income increased $15 million to $213 million, or 66 cents a share, up 9 cents. Revenues were up 10 percent, or $216 million, to $2.4 billion.
Aon showed its brokerage segment increased 3 percent overall, with America and Asia Pacific segments of the business growing 8 percent. However, organic growth in the United Kingdom business dropped 11 percent.
Mr. Case said the drop was not unexpected as the United Kingdom has undergone restructuring which included the elimination of more than 1,250 employees either through attrition or outsourcing.
Aon's insurance underwriting unit reported organic growth of 13 percent, while consulting increased 1 percent.
The firm has recorded $335 million in restructuring since 2005 and expects another $30 million in 2007. The company anticipates the restructuring will result in a savings of $235 million this year and $280 million next.
"On balance we remain very comfortable with our growth plans for the rest of the year," said Mr. Case during an analyst's call today.
He said the firm would continue to concentrate on providing increased value for the price it believes it should be paid by customers for its service.
Though Aon may charge more than another broker, Mr. Case said, it has been able to convince customers that it can deliver more than its competition. He added if a client does not understand that, then they would walk away from a client not willing to pay for that value.
Aon, he said, is seeing growth through a combination of new business, increased retention and increased services for existing customers.
On the issue of supplemental commissions, Mr. Case said the company will not do anything to jeopardize its position with clients and violate the trust the firm has earned with them.
He also noted that no one has even defined what a supplemental commission is.
The bottom line for Aon, said Mr. Case, is "the form of compensation is not going to impact our performance. We're going to drive performance based on the value we add to our clients."
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