Reinsurance broking revenues drop 4% in Q2 because of ‘unfavourable market impact’
Aon’s risk solutions division made an operating profit of $862m (£507m) in the first half of 2014, up 9% on the $794m it made in last year’s first half.
The improvement came despite almost flat revenues of $3.94bn (H1 2013: $3.92bn). Organic growth for the unit was 2%.
Within this, the retail insurance brokerage grew by 1% to $3.16bn (H1 2013: $3.12bn), while the reinsurance brokerage fell by 1% to $769m (H1 2013: $778m).
Aon said its reinsurance revenues fell because of “an unfavourable market impact” in the treaty reinsurance business and a decline in facultative placements.
The effect was more pronounced in the second quarter, where reinsurance revenues fell by 4%.
The Aon group overall, which includes the HR solutions division, made a profit after tax of $629m in the first half of 2014, up 25% on the $502m it made in the first half of 2013.
Group revenues increased by 1% to $5.87bn (H1 2013: $5.81bn) and organic growth was 2%.
Second quarter performance
In the second quarter of 2014 alone, Aon’s risk solutions division enjoyed a 7% increase in operating profit to $417m (Q2 2013: $391m).
As with the half year, this was despite flat revenues of $1.95bn (Q2 2013: $1.94bn). Organic growth for the quarter was 1%.
The group as a whole made a second-quarter net profit of $304m, up 26% (Q2 2013: $241m).
Revenues were flat at $2.9bn.
Aon chief executive Greg Case said: “We are well on track to deliver continued organic growth across each segment and operational improvement through returns on investments in GRIP and healthcare exchanges.
“We continue to effectively manage capital for shareholders, as highlighted by the return of $1.4 billion of capital through the first six months of 2014.”