Risk and insurance brokerage service provider Aon Corp. (AON) reported Friday a profit for the fourth quarter compared to a loss in the year-ago quarter, reflecting lower loss from discontinued operations as well as 9% quarterly revenue growth.
Favorable foreign currency translations impacted revenues by 6%. However, adjusted earnings per share from continuing operations for the quarter rose 20%, and came in significantly above analysts' expectations.
In a statement, president and chief executive officer, Greg Case said, "Our fourth quarter results reflect solid operational performance across both Brokerage and Consulting. On an adjusted basis, total pretax margin increased 190 basis points and EPS from continuing operations increased 20 percent, despite difficult economic conditions and a 63 percent decline in investment income. Colleagues globally have done an outstanding job supporting our clients in a very challenging year, and we begin 2010 in a position of strength in the industry."
Fourth Quarter Results
The Chicago, Illinois-based company reported net income of $198 million or $0.69 per share for the fourth quarter, compared to a net loss of $6 million or $0.02 per share in the prior-year quarter. Foreign currency translation increased net income by $0.05 per share.
Income from continuing operations for the quarter grew about 15% to $142 million or $0.49 per share from $123 million or $0.42 per share in the year-ago quarter. Excluding certain items, adjusted income from continuing operations increased to $276 million or $0.96 per share from $232 million or $0.80 per share in the corresponding quarter last year.
On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.81 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter increased 9% to $2.07 billion from $1.91 billion in the same quarter last year. Nine Wall Street analysts had a consensus revenue estimate of $1.96 billion for the quarter.
Foreign currency translation positively impacted revenues by 6%, and acquisitions contributed a 5% increase, partially offset by a 63% drop in investment income. Organic revenue declined 2%.
Aon's commissions, fees and other revenues increased 10% from a year ago to $2.06 billion, while investment income dropped 63% from the prior-year quarter to $14 million.
Peer Performance
Among Aon's peers, New York-based Marsh & McLennan Companies, Inc. (MMC) is scheduled to report financial results for the fourth quarter on February 10. Analysts currently expect the company to report earnings of $0.37 per share for the fourth quarter, on revenues of $2.56 billion.
Another peer, Itasca, Illinois-based Arthur J Gallagher & Co. (AJG) reported Tuesday a higher profit for the fourth quarter from a year ago, helped primarily by an increase in quarterly revenues at its brokerage segment. Net income rose to $16.8 million or $0.16 per share from $4.7 million or $0.05 per share in the year-ago quarter. Quarterly revenues increased 5.6% to $435.1 million from $412.1 million in the same quarter last year.
Segmental Results
Aon's main business, the risk and insurance brokerage services reported an 8% increase in revenues from the prior-year quarter to $1.70 billion, with organic revenue decline of 1%. Revenues were impacted by 6% favorable foreign currency translation on commissions and fees, as well as a 9% increase in contribution from acquisitions, partially offset by a 62% plunge in investment income. Pretax income for the segment decreased 8% to $196 million, while adjusted pretax income grew 17% to $363 million from last year.
The company's consulting revenues for the quarter grew 2% from the year-ago quarter to $350 million, due primarily to a 5% favorable impact from foreign currency translation and a 2% increase from acquisitions, net of dispositions, partially offset by a 4% decline in organic commissions and fees revenue. Pretax income for the segment increased 11% to $61 million, and adjusted pretax income grew 15% to $75 million from last year.
Other Metrics
Operating income for the fourth quarter increased 2% to $241 million from $236 million in the prior-year quarter, and total operating expenses was $1.83 billion, up 10% from $1.67 billion in the year-ago quarter.
During the fourth quarter, Aon repurchased about 8.6 million shares of common stock for $340 billion, and the company has about $265 million of remaining in the current share repurchase authorization. The company also authorized a new $2.0 billion share repurchase program subsequent to the close of fiscal 2009.
Restructuring expenses for the fourth quarter, related to the 2007 and Aon Benfield restructuring programs, were $175 million, compared to $87 million in the prior-year quarter. Restructuring savings for the fourth quarter are estimated at $108 million, compared to $32 million in the year-ago quarter.
The company also increased the estimated annualized savings for the 2007 restructuring program by $69 million to $536 million, and restructuring expenses by $50 million to $750 million.
Before any potential reinvestment of savings, the Benfield restructuring program delivered $45 million of cumulative cost savings in 2009, and currently expected to deliver cumulative cost savings of $90 million to 100 million in 2010, and $122 million in 2011.
Full-Year Highlights
For fiscal 2009, Aon posted net income of $747 million or $2.57 per share, sharply down from $1.46 billion or $4.80 per share in the prior year. Income from continuing operations for the year increased to $636 million or $2.19 per share from $621 million or $2.04 per share in the year ago.
Excluding items, adjusted income from continuing operations increased to $906 million or $3.11 per share from $874 million or $2.87 per share in the previous year. Analysts expected the company to report earnings of $2.95 per share for fiscal 2009.
Total revenues for the full-year edged up 1% to $7.60 billion from $7.53 billion posted in fiscal 2008. The Street was looking for full-year 2009 revenues of 7.50 billion.
Stock Quote
AON closed Wednesday's regular trading session at $38.81, down $0.18 on a volume of 2.82 million shares, higher than the three-month average volume of 2.16 million shares. In the past 52-week period, the stock has been trading in a range of $34.81 to $42.92.
In December, Aon changed its New York Stock Exchange ticker symbol for its common stock to "AON" from "AOC", in order to link its common stock listing with its brand.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.