Aon PLC reported 8% organic revenue growth in the first quarter and expects to report medium single-digit or higher growth for the whole of 2022, despite the uncertain global political and economic outlook.
Inflation, a slowdown in gross domestic product and rising interest rates will have mixed effects on the company, said its chief financial officer.
Aon reported total revenue of $ 3.67 billion for the first quarter, an increase of 4.1% compared to the same period last year. Currency fluctuations, mainly driven by a weaker euro against the US dollar, limited revenue growth, Christa Davies, the brokerage’s CFO, said in an interview with analysts on Friday.
Aon’s core business for commercial brokerage reported $ 1.72 billion in revenue for the quarter, a 9% increase on an organic basis, excluding the effect of currency fluctuations and mergers and acquisitions.
Revenue from reinsurance brokers increased by 7% on an organic basis to $ 976 million.
Aon reported a net profit of USD 1.05 billion for the quarter, an increase of 12.3% compared to the previous year.
Davies said that expected declines in global GDP growth, due to the ongoing effects of covid-19, the war in Ukraine, rising inflation and higher interest rates, could affect Aon’s revenues, which is correlated with economic growth.
But changes in GDP tend to affect the more “discretionary” parts of Aon’s business, such as project-related business, she said.
Inflation, on the other hand, drives higher insurance values and healthcare costs for Aon’s customers, Davies said.
Higher interest rates can affect Aon’s construction and transaction responsibility companies, but higher interest rates also benefit Aon through increased investment income and lower pension liabilities, she said.
Aon’s decision in March to suspend its operations in Russia will have little effect on its revenues, said CEO Greg Case.
“We are discontinuing operations but (with) minimal impact,” he said.