Aon has released its financial results for the third quarter ending Sept. 30.
The report shows a notable increase in total revenue, rising by $257 million or 10% to reach $2.953 trillion when compared to the same period in the previous year. This growth in revenue was driven by a 6% organic increase, with strong retention, effective management of the renewal book, and the generation of new business playing significant roles.
Additionally, a 2% positive impact from fiduciary investment income and another 2% positive impact from foreign currency translation contributed to the increase.
Total operating expenses in the third quarter increased by 7% to reach $2.3 billion compared to the same period in the previous year. This increase primarily stemmed from the rise in expenses associated with the 6% organic revenue growth, investments in long-term growth, and a $45 million adverse impact from foreign currency translation.
Operating income showed a notable increase, rising by $101 million or 17%, with an operating margin increase of 150 basis points to 23.4% compared to the prior year period. Adjusted for certain items, operating income increased by $93 million or 15%, and operating margin, adjusted for certain items, increased by 120 basis points to 24.3%. These improvements were driven by organic revenue growth and increased fiduciary investment income, offset in part by higher expenses and investments in long-term growth.
In the domain of commercial risk solutions, there was an organic revenue growth of 4%, showcasing substantial progress across most major geographical regions. This achievement was attributed to robust client retention, efficient management of the renewal book, and the generation of fresh business opportunities.
Notably, the retail brokerage sector experienced significant growth, particularly in EMEA and the Pacific regions, bolstered by the enduring strength in core P&C. In the United States, there was a modest growth driven by the construction business and the successful generation of new business, albeit somewhat offset by the influence of external M&A and IPO markets. Globally, exposures and pricing trended positively, resulting in a modestly favourable impact on the market.
Within the scope of reinsurance solutions, there was a notable organic revenue growth of 11%. This was primarily driven by robust retention rates, continuous generation of new business opportunities, and a robust surge in facultative placements.
The strategy and technology group also exhibited a double-digit growth trajectory. Market impact contributed modestly to the positive results for the quarter. Aon mentioned that most of the revenue in the treaty portfolio follows a recurring pattern and is recorded in conjunction with significant renewal periods occurring in the first half of the year. In contrast, the second half of the year typically sees increased activity in facultative placements, capital markets, and advisory work, which are more transactional in nature.
Health solutions achieved an organic revenue growth of 10%, reflecting substantial growth on a global scale in core health and benefits brokerage. This growth was predominantly driven by the generation of new business and efficient management of the renewal book.
Notably, core health and benefits brokerage exhibited double-digit growth in nearly all major geographical regions. The results also demonstrated robust growth in consumer benefit solutions and talent, fuelled by data and advisory solutions.
Turning to wealth solutions, there was a solid organic revenue growth of 4%. This growth was primarily driven by a strong upturn in the retirement sector, driven by increased demand for advisory services and project-related work related to pension de-risking, as well as the continued impact of regulatory changes.
On the other hand, investments remained relatively stable, as the surge in advisory demand and project-related work was offset by declines in the real estate portion of the portfolio, influenced by movements in the real estate market.
“Our global team delivered strong operating results in the third quarter, including 6% organic revenue growth and 120 basis points of adjusted operating margin improvement, contributing to 7% organic revenue growth and 80 basis points of adjusted margin expansion year to date, demonstrating the strength of our Aon United strategy,” Aon CEO Greg Case said.
“We see an ongoing evolution in client demand that will require new and integrated solutions, powered by better analytics, and delivered through Aon Business Services across Risk Capital and Human Capital. To capture this opportunity, we are accelerating our strategy to take Aon Business Services to the next level to enable sustainable value creation for clients, colleagues, and shareholders,” he said.
Elsewhere for the global brokerage, Aon’s recent report showed that global insured losses from natural disasters hit $88 billion at the end of Q3, 17% higher than the annual average of the 21st century.
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