Aon 2Q profit inches up, beats view

CHICAGO

Insurance broker Aon Corp. said Friday that its second-quarter profit rose slightly as a recent acquisition lifted revenue. That gain was largely offset by a loss from litigation.

Its adjusted earnings beat Wall Street expectations and Aon shares climbed $1.08, or 3 percent, to $37.72 in morning trading.

The Chicago company reported net income of $153 million, or 54 cents per share, for the three months ended June 30, up from $149 million, or 51 cents per share, a year ago.

The latest quarter's profit was reduced by a $26 million after-tax loss from discontinued operations, primarily from a previously disclosed legal settlement.

Excluding that charge, Aon's operating profit in the latest quarter was 81 cents per share, beating the consensus estimate of analysts surveyed by Thomson Reuters, who had expected 75 cents per share, on average. Analysts' estimates typically exclude one-time items.

Revenue rose 1 percent to almost $1.9 billion from $1.88 billion, slightly ahead of analysts' consensus estimate of $1.87 billion.

Aon said revenue was boosted by acquisitions, primarily its December acquisition of Allied North America, a surety and construction insurance brokerage. Foreign currency translation also lifted revenue, partially offset by a decline in commissions and fees, and a drop in fiduciary investment income.

Aon's biggest business segment, risk and insurance brokerage services, posted a 1 percent revenue increase to $1.59 billion. Consulting revenue rose 6 percent to $317 million.

Total operating expenses dipped 2 percent, or $32 million, to $1.63 billion.

Aon announced plans on July 12 to acquire human resources specialist Hewitt Associates for $4.9 billion in a cash-and-stock deal that would nearly triple the size of its consulting business. The deal, assuming it is approved by regulators, is the company's biggest ever and dramatically expands its push into human resources consulting worldwide. Aon is the world's largest insurance broker but trails rival Marsh & McLennan Co., whose subsidiaries include Mercer and Oliver Wyman Group, in the size of its consulting business.