Aviation broking probe could be wider than the FCA – Aon

The regulatory probe into conduct in the aviation and aerospace insurance broking market could involve other regulators in addition to the FCA, Aon has said.

In its results filing for 2016, Aon’s main UK-regulated operating unit, Aon UK Limited, made reference to the probe and said: “Other regulatory agencies may also be conducting formal or informal investigations regarding these matters.

“In such case, Aon intends to work diligently with the FCA and other regulatory agencies to ensure they can carry out their work as efficiently as possible.”

Aon also clarified that the aviation broking probe is into “suspected competition law breaches”.

Aon is one of five brokers caught up in the probe. Rivals JLT, Marsh, Willis Towers Watson and UIB have also confirmed their involvement in the probe.

Aon said that for the group as a whole, aviation and aerospace broking represents less than $100m in global revenue.

But it added: “At this time, in light of the uncertainties and many variables involved, we cannot estimate the ultimate impact on the company from these investigations or any related private investigation, nor any damages, penalties, or fines related to them.

“There can be no assurance that the ultimate resolution of these matters will not have a material adverse effect on our financial position, results of operations, or liquidity.”

Improved results

Aon UK Limited made a profit before tax of £222.8m in 2016, almost double the £114.4m it made in 2015.

This was partly driven by a 10% increase in revenue to £774m (2015: £701m), which was mainly caused by foreign exchange gains as the dollar, yen and euro strengthened against sterling in 2016.

Also helping the result was a reduction in costs.

Staff costs fell 2% to £387.4m (2015: £395.9m, mainly thanks to a one-off £19.5m benefit related to the Aon Retirement Plan. Administrative costs fell 6% to £195m (2015: £206.5m) by savings in property costs following the broker’s move to the Aon Centre in the Leadenhall Building, also known as the Cheesegrater, on Leadenhall Street in London and closure of certain offices.