MWL Secretary General stressed the need for unrestricted delivery of humanitarian aid to the Palestinians by opening all crossings
world8 hours ago
The company raised its forecast for 2008 savings from a restructuring program, which analysts said could offset an expected increase in pension costs.
Excluding items, profit from continuing operations rose 33 percent to 69 cents per share and revenue was 6 percent higher at $1.85 billion. On that basis, analysts on average expected profit of 64 cents per share on revenue of $1.85 billion, Reuters Estimates said.
Shares rose 2.3 percent in early trading.
Net income, which includes costs from discontinued operations, fell 43 percent to $117 million, or 40 cents a share, from $204 million, or 64 cents a share, in the year-earlier quarter.
Aon, which competes with Marsh & McLennan Cos Inc in helping businesses find insurance, saw 5 percent growth in fees and commissions to $1.75 billion.
Organic revenue growth, a key industry measurement, rose 2 percent, driven by Aon’s brokerage and consulting segments. The figure excluded currency fluctuations, acquisitions, divestitures, and investment income.
Risk and insurance brokerage revenue, Aon’s main business, 4 percent to $1.47 billion.
RATE STABILIZATION
Insurance rate pricing, in a slump over the past two years, is showing “more stability,” Chief Executive Greg Case told investors on a conference call -- in line with recent comments by Brian Duperreault, the CEO of rival MMC.
In August, the company reached a deal to buy London-based reinsurance broker Benfield Group Ltd, an acquisition expected to make it the market leader in reinsurance brokerage. The deal is on track to close by the end of the year, Aon said.
Reinsurers provide insurance to other insurers, thereby spreading the risk of losses among several carriers.
Aon’s operating expenses increased 8 percent to $1.6 billion from a year earlier.
Analysts have fretted that Aon and others in the sector will be hurt by higher pension expenses, given financial market turmoil. Chief Financial Officer Krista Davies said on the call the costs could rise in 2008, but it would not be clear by how much until the end of the year.
Aon has been trying to streamline its business to boost savings since 2005, when an industrywide probe led big brokerages to drop contingent commissions -- a lucrative practice whereby insurers compensated their brokers for business.
Through two separate rounds of restructuring, Aon has cut thousands of jobs and moved some operations to lower-cost regions.
The company said the moves will pay off mightily in 2008, raising its forecast for expected savings to between $345 million and $350 million from $286 million.
It said the additional savings came from streamlining its back-office operations. Aon incurred charges of $52 million in the quarter for restructuring.
Aon sees restructuring savings between $220 million and $245 million in 2009, and $300 million in 2010.
Aon’s stock gained 89 cents to $38.99 on the New York Stock Exchange. It has fallen 15 percent this month, compared with a drop more than double that for the S&P Insurance Index.
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