Aon shares surge 6% after earnings beat expectations
Shares of global insurance broker Aon surged more than six percent on Friday after its second-quarter results beat analysts’ expectations.Aon said its risk solutions segment benefited from an improving pricing environment.It recorded a standout seven percent increase in organic revenue in its reinsurance business — its highest levels since 2006.The company says the growth was fuelled by its leading market share of Japanese and Australasian accounts and a post-loss rate spike. Property cat rates in the loss-affected regions of Australia, Japan, New Zealand and Thailand have soared following the unprecedented cat events of 2011.The group, which redomiciled from Chicago to London in the second quarter, said the increase in Aon Benfield’s revenues was primarily due to strong new business growth in treaty placements globally.Aon’s net income fell five percent in the April to June period because of unfavourable foreign currency translations and lower investment income, the company said.Aon said it earned $246 million, or 73 cents per share, for the second quarter. That compares with $258 million, or 75 cents per share, in the same period a year ago.However, its adjusted net income per share attributable to shareholders from continuing operations was $1.02 — beating the analysts’ expectations by one cent.Aon’s stock rose $2.84, or 6.1 percent, to $49.32 in New York Stock Exchange trading on Friday.Revenue for Q2 this year was flat at $2.8 billion while investment income declined 33 percent.As the dollar strengthened against other currencies around the world it has hurt earnings for many global companies. At Aon, it led to a four percent decline in revenue.“While macro conditions remain fragile globally, we continue to anticipate improved performance in the second half of the year,” said chief executive, Greg Case.Total operating expenses increased two percent to $2.4 billion. It included a $14 million expense related to its headquarter relocation to London.Shares of the company, which has a market capitalisation of $15.1 billion, have fallen ten percent in the past three months, underperforming the broader S&P 500 Index which has fallen about seven percent during the period.Aon, which competes with Marsh & McLennan Co and Willis Group Holdings, said it is on track to meet its long-term targets.Aon employs approximately 61,000 people worldwide and has 600 offices in 120 countries across the globe.