Aon’s net profit rises 3% on lower tax rate
Aon plc’s quarterly profit beat analysts’ estimates as investments aimed at increasing margins at its human resources services business helped boost profit.The company’s third-quarter earnings rose three percent as the insurance brokerage benefited from a lower tax rate.In January, the insurance broker was the First Fortune 500 company to move its domicile to the UK, moving its headquarters from Chicago to London.Aon’s quarterly profit rose for the first time in three quarters as it posted net income of $204 million, or 62 cents per share, from continuing operations, up from $198 million, or 59 cents per share, a year ago.Excluding items, it posted adjusted earnings of 95 cents per share, above analysts’ estimates of 89 cents per share. It fell short of the average revenue estimate of $2.89 billion.Revenue rose 0.3 percent to $2.74 billion from Q3 of 2011.Aon, the world’s largest insurance broker, posed flat revenue of $1.8 billion in the third quarter from its broking operations as organic growth was offset by falling investment income and unfavourable foreign exchange rates.The risk solutions division delivered three percent organic growth in commissions and fees, slowing slightly from the four percent organic growth delivered in the first and second quarters.But the powerhouse was the firm’s reinsurance arm, Aon Benfield. For the second quarter in a row, it posted organic growth of seven percent due to new business growth and favourable benefit from pricing.Aon, the world’s largest insurance broker, which competes with Marsh & McLennan Co and Willis Group Holdings in its retail insurance brokerage and reinsurance businesses, said it was on track to meet its long-term targets of operating margins of 22 percent in the HR business and 26 percent in insurance.The company suffered lower margins as it invested in its HR services business, the former Hewitt Associates it bought in 2010.Aon’s operating margin in the business rose in the quarter for the first time in eight quarters, to 17.5 percent from 16 percent on an adjusted basis.The company has consistently said the investments in its HR solutions unit, which provides consulting and outsourcing operations for companies, would start to pay off towards the end of this year.Shares of the company, which has a market value of $16.85 billion, have risen 12 percent in the past three months, outperforming the broader S&P 500 Index, which has risen about 7 percent during the period.