Brokerage Revenue 2021: $ 12.19 billion
Percentage increase: 10.4%
Nearly a year after the long-planned acquisition of rival Willis Towers Watson PLC was rejected due to regulatory issues, Aon PLC has renewed its organizational structure and continues with its strategy of trying to offer its customers more financial services.
Although the failure to complete the deal was a blow to the brokerage house, it seems to have recovered as it continues to report solid revenue growth, analysts say.
The Willis deal, which was announced in March 2020 and would have created the world’s largest brokerage house, was scrapped after the US Department of Justice filed an antitrust lawsuit against Aon in June 2021
. First, Aon stated that it would fight the lawsuit, but at. at the end of July, it was announced that the contact would be disconnected. It paid a $ 1 billion resolution fee to Willis and quickly announced a restructuring.The company was reorganized along four business lines – commercial risk solutions, health solutions, reinsurance solutions and wealth solutions – and five geographical regions.
Aon had spent several years building itself into an integrated organization that offers a complete range of services to customers, rather than a collection of business units, says Eric Andersen, CEO of Aon. As part of this effort, the bonuses for the top 250 executives were linked to the success of Aon as a whole.
“We went through the Willis Towers Watson integration process with an eye on moving the combined company to that model, and so when the deal didn’t work out, we basically continued with the play,” Andersen said.
Aon went fast after the deal went through and announced a cost-cutting program that improved its profit margin and stock repurchases, said Mark Dwelle, Director, Insurance Equity Analysis, at RBC Capital Markets LLC in Richmond, Virginia.
“They still ended up with a very strong year, even though it was not necessarily the year they should have planned for,” he said.
Aon reported $ 12.19 billion in brokerage revenue last year, an increase of 10.4% over 2020, and is still number 2 in Business insurance “s ranking of the world’s largest brokers.
Aon has largely recovered from the failure of the Willis deal, says Meyer Shields, Baltimore-based CEO at Keefe, Bruyette & Woods Inc.
“It was clear it was a big deal, but nothing that would really throw them off their game,” he said. “In the results of recent quarters, we have seen Aon produce basically the kind of results that Aon has always produced.”
During the first quarter of 2022, Aon reported 8% organic revenue growth and said they expect to report medium-term single-digit or higher growth for the year.
Unlike several of its rivals who added staff, Aon’s number of employees was static in 2021.
“There has been some internal turnover that they are struggling with, but I think it is manageable overall,” said Mr. Shields.
Aon employs and develops a lot of staff at the beginner level, and its employment tends to focus on areas where the company wants to expand, such as intellectual property rights and other emerging risks, Andersen said. “Other than that, it really has been marketing from within the strategy,” he said.
Andersen noted the fierce competition for staff in the brokerage industry.
“We compete for our people,” he said. “We like our people and we fight hard to keep our people. We do it by paying them well and giving them career opportunities that they cannot get anywhere else.”
The failure of the Willis deal is likely to deter Aon from attempting major acquisitions in the foreseeable future, said Mr. Shields.
“I think there will always be an interest in identifying new business, but I do not think they want to involve regulators in the same way as in the Willis business,” he said.
Earlier this year, Aon announced the acquisition of Tyche, an actuarial program offering capital modeling to reinsurers, from London-based RPC Tyche.
“The plan is to expand it and move it towards not only insurance company customers but also corporate customers,” said Andersen.
Aon will continue to look for acquisitions to expand its capacity, Andersen said.
Meanwhile, last month it agreed to sell its e-discovery practice to legal and cyber service provider Technology Concepts & Design Inc. It acquired e-discovery capabilities through its 2016 acquisition of Stroz Friedberg Inc.
“We look at our portfolio all the time and there are certain things that fit better with other owners,” Andersen said.
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