Aon PLC reported nearly flat earnings for the third quarter, but organic revenue grew, albeit at a slower pace than its main competitors.
U.S. retail insurance brokerage revenues were squeezed by lower demand for transaction risk coverage, but reinsurance brokerage revenues rose, the brokerage reported on Friday.
Aon reported $2.7 billion in revenue for the third quarter, down slightly from the same period a year earlier. On an organic basis, which excludes the effects of currency fluctuations, mergers, acquisitions and divestitures, revenue increased 5%.
The third quarter’s organic growth at the world’s second largest brokerage can be compared to 8% organic growth at Marsh & McLennan Cos. Inc., the largest brokerage, and 6% in Willis Towers Watson PLC, the third largest.
Aon̵7;s core commercial insurance brokerage business reported $1.48 billion in revenue for the quarter, down 1.5% from the same period last year but up 5% on an organic basis. Reinsurance brokerage revenue increased 12% to $396 million and 7% on an organic basis; its health solutions revenue fell fractionally to $494 million but rose 5% on an organic basis; and its wealth solutions revenue fell 7.1% to $326 million but rose 2% on an organic basis.
Net profit in the third quarter was $418 million, compared with a loss of $891 million in the same period last year, which was hit by the $1 billion breakup fee it paid after the bid to buy WTW was thrown out.
The brokerage’s U.S. retail brokerage business was pressured by a decline in transactional risk business, or representation and warranty insurance, which fell due to lower merger and acquisition activity compared with last year’s third quarter, Aon CEO Greg Case said on a call with analysts on Friday.
The brokerage house builds a strategy with insurers, reinsurers and buyers for when the market comes back, says Eric Andersen, CEO of Aon.
Aon has also been building out its intellectual property underwriting team in recent years, and in the third quarter it pitched its first intellectual property reinsurance deal, he said.
“It’s really not big dollars but a real symbol of how we’re getting a broader market to support that product,” Andersen said.