Aon PLC reported on Friday increased revenues and a sharp increase in profits for the fourth quarter as several sectors of the economy grew – demand for insurance increased despite the pandemic – insurance companies bought more reinsurance in the middle of a hardening market and the brokerage saw reduced operating costs.
The agency reported $ 2.97 billion in revenue in the fourth quarter, a 2.8% increase over the previous year and a 2% increase in organic revenue, excluding the effect of exchange rate fluctuations and the effect of acquisitions and divestments.
Aon's commercial risk management unit, which has its main brokerage operations, reported $ 1.38 billion in revenue, an increase of 3.4% over the 201
Its reinsurance division amounted to $ 197 million in revenue, an increase of 5.3% over the same period last year and an increase of 12% on an organic basis. a 5% increase in health solutions and a 1% decrease in data and analysis services.
Net profit for the quarter increased by 39.8% to $ 534 million. The agency reported a 5% reduction in operating costs, in part due to a reduction in restructuring costs following the completion of the multi-year restructuring program last year and lower travel costs during the COVID-19 pandemic.
For the full year, revenue increased by less than 1% to $ 11.07 billion and net income increased by 28.3% to $ 2.02 billion.
The improved results are largely due to improvements in the overall economy and feelings about the pandemic and vaccine rollout, Greg Case, CEO of Aon, said in a conference call Friday with analysts.
"We saw positive effects on our revenue from construction starts and M&A activity in the United States, as well as from employment levels," he said.
More "discretionary" business sectors, such as travel, entertainment and data and analytics, continued to be affected by the pandemic, Case said.
The strong growth in reinsurance was partly driven by account gains and by increased demand for reinsurance from new and existing insurance companies, says Eric Andersen, President of Aon. Insurers "want to get support where they need it when they look to grow their own portfolio," he said.
Aon still expects to close its pending acquisition of rival Willis Towers Watson PLC in time, says Christa Davies, CFO of Aon.
Last year, the European Union's competition authorities announced an inquiry into the proposed deal, saying they were worried the acquisition could reduce competition in several different areas where the two brokerages operate.
“We continue to work together to gain approval and are focused on achieving a result that optimizes shareholder value. We will remain committed to our planned completion during the first half of 2021, she said.
EU regulators expect to complete their investigation in May.