Aon Corp.'s (AOC) third-quarter earnings rose 3% on prior-year
losses from discontinued operations as the insurance brokerage
posted results slightly below expectations.
The industry is grappling with how to price policies low enough
to attract customers less worried about risk as catastrophes
continue to run below long-term averages. That has led to price
wars, which have weighed on the bottom line. In addition, Aon has
been overhauling its operations for more than a year.
Tuesday, rival insurance broker Arthur J. Gallagher & Co.
(AJG) posted profit growth but warned about continually soft
insurance rates challenging continued growth.
Aon posted a profit of $120 million, or 41 cents a share, up
from $117 million, or 40 cents a share, a year earlier. Excluding
items such as restructuring charges, earnings from continuing
operations fell to 65 cents from 69 cents.
Revenue decreased 2.1% to $1.81 billion as investment income
plunged 69% to $28 million.
Analysts surveyed by Thomson Reuters predicted earnings of 66
cents a share on $1.85 billion in revenue.
Organic revenue, a closely watched indicator that excludes
recent acquisitions and divestitures as well as currency
fluctuations, fell 3%.
Aon's largest segment, risk and insurance brokerage services,
saw organic revenue fall 3% and pretax profit dropped 2%. The
consulting unit's organic revenue decreased 5% as pretax profit
fell 9% excluding charges.
Aon shares closed Thursday at $41.19 and weren't active
premarket. The stock is down 10% so far this year.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com