Aon Reports 4Q Profit After '08 Loss

NU Online News Service, feb. 8, 3:25 p.m. EST

Insurance broker Aon Corp. reported fourth-quarter net income rose $204 million despite the challenges from the continuing soft market and economic recession.

The Chicago-based insurance broker reported fourth-quarter net income of $198 million, or 69 cents a share, compared to net loss of $6 million, or negative 2 cents, for the prior year. Revenues were up 9 percent, or $167 million, to $2.07 billion.

For the year, net income dropped 49 percent, or $715 million from the prior year, to $747 million, or $2.57 a share. Revenues were up 1 percent, or $67 million, to $7.6 billion.

"Our team is very proud to deliver results that represent another quarter of solid and continued progress and momentum as well as a strong finish to a challenging year," Greg Case, Aon's president and chief executive officer, said during an analyst's conference call on Friday. "Irrespective of economic conditions, a soft market or other challenges outside of our control, we continued to execute on our plans to substantially strengthen our firm for long-term growth and shareholder value creation."

The soft market and recession continued to take a toll on organic growth. Aon reported retail and reinsurance brokerage stood at negative 1 percent for the quarter and year.

Mr. Case said lower exposures, decline in client spending and soft market pricing contributed to the decline for the retail brokerage, while reinsurance remained flat or down.

But the firm is positioned to take advantage of future improvements in the economy and is experiencing high rates of retention above 90 percent, he said.

Of its four operating segments, the United Kingdom proved to be the most challenging, with organic growth at negative 9 percent, while Europe, the Middle East and Africa were positive at 2 percent.

Mr. Case said that 2010 is expected to see continued headwinds to economic performance without dramatic improvement during the year.

According to analyst's notes, Aon beat consensus estimates of 81 cents a share for adjusted operating earnings per share, which came in at 96 cents a share. They noted, however, that soft market conditions continue to pressure the performance of the brokerage segment.