Aon 2nd-quarter profit plunges
July 30, 2009
CHICAGO -- Aon Corp. said Thursday its second-quarter profit fell 87 percent primarily because of a $1 billion gain in the comparable year-ago period from the sale of two insurance companies.
The company reported net income of $149 million, or 52 cents per share, compared with $1.13 billion, or $3.71 cents per share, in the prior year period.
A year ago the company sold Combined Insurance Companies of America and Sterling Life Insurance and recorded an after-tax gain of $1 billion.
On a continuing operations basis, the company said income fell 11 percent to $147 million, or 51 cents per share, from $166 million, or 54 cents per share, a year ago.
Excluding one-time items, operating income was $221 million, or 76 cents per share, compared with $214 million, or 70 cents per share, a year ago.
Analysts surveyed by Thomson Reuters expected 74 cents per share on revenue of $1.94 billion.
The company reported revenue fell 4 percent to $1.89 billion from $1.96 billion a year ago, due to foreign currency translation and a 69-percent decline in investment income, which plunged to $21 million from $67 million a year ago.
Revenue from Aon (AOC)'s risk and insurance brokerage services division slipped 2 percent, while revenue fell 11 percent from its consulting operations. Overall commissions and fee revenue slipped 1 percent to $1.86 billion.
Operating expenses decreased 3 percent to $1.7 billion. That included a $160 million favorable impact of foreign currency translation offset partially by a $42 million increase in restructuring charges.
Shares rose 11 cents to $39.83. They've traded between $32.83 and $50 in the past 52 weeks.
CEO Greg Case said despite difficult economic conditions the company posted growth in its reinsurance business. He said restructuring associated with the company's merger with Britain's Benfield Group Ltd., which was completed in December, is on track and enabling investment in future growth. He said about 40 percent of the anticipated $492 million savings has been realized so far.
Restructuring expenses related to the 2007 and Aon Benfield restructuring programs were $95 million in the second quarter compared to $53 million in the prior year quarter.
Restructuring savings in the second quarter related to the 2007 restructuring program are estimated at $52 million compared to $16 million in the prior year quarter.
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