Aon Risk Solutions reports 6% revenue drop but 2% organic growth

Greg Case, Aon

Aon’s broking division reported a 16% drop in operating profit in the first nine months of 2015 amid falling revenues.

The division, Aon Risk Solutions, made an operating profit of $1.02bn (£668m) in the period, down from $1.21bn in the first nine months of 2014.

The profit drop came as commission and fee revenue fell 6% to $5.40bn from $5.78bn, mainly because of foreign exchange losses. Excluding this impact, organic growth was 2%.

The division’s profit margin fell to 18.7% from 20.9%.

At group level Aon suffered a 17% drop in profit before tax to $987m in the first nine months of 2015 from $1.18bn in the same period last year.

Total group revenues were down 4% to $8.40bn (nine-month 2014: $8.75bn).

Third-quarter results

The picture was similar in the third quarter of 2015 alone.

Aon Risk Solutions’ operating profit fell 6% to $324m (Q3 2014: $343m) as commission and fee revenue dropped 8% to $1.68bn (Q3 2014: $1.83bn).

Organic growth for the quarter was 1%.

However the third quarter profit margin improved to 19.2% from 18.7%.

At group level, profit before tax fell 10% to $352m (Q3 2014: $390m) as revenues fell 5% to $2.74bn (Q3 2014: $2.87bn).

Aon chief executive Greg Case said: “In our seasonally weakest quarter, our results reflect organic revenue growth and operating margin expansion across both segments, effective capital management and significant free cash flow generation, despite the impact of unfavourable foreign currency translation and macroeconomic challenges.”

He added: “Driven by our industry-leading portfolio and investments across data and analytics, we expect a strong fourth quarter and finish to the year across each of our key metrics, further positioning the firm for free cash flow generation and shareholder value creation.”