Summary
Aon plc reported a significant increase in revenue and net income for the third quarter and the first nine months of 2002 compared to the same periods in 2001. This growth was primarily driven by strong performance in its Insurance Brokerage and Other Services segment, which saw increased brokerage commissions and fees, and improved performance in the Consulting and Insurance Underwriting segments. The company also benefited from a partial settlement related to World Trade Center-related asset losses, resulting in a credit. However, the company continues to navigate challenges, including ongoing litigation and the impact of the lingering effects of the September 11th attacks on its operations and the broader insurance market. Financially, Aon has strengthened its balance sheet through recent equity and convertible debt offerings totaling over $900 million, which were used to repay short-term debt. The company also reduced its quarterly cash dividend, signaling a strategic shift in capital allocation. Despite considerable contingent liabilities and ongoing legal matters, management believes the resolution of these will not have a material adverse effect on the company's consolidated financial position.
Key Highlights
- 1Revenue increased by 17% to $2.25 billion for the third quarter and by 14% to $6.46 billion for the first nine months of 2002 compared to the prior year.
- 2Net income available for common stockholders more than doubled to $127 million ($0.46 per share) in Q3 2002 from $71 million ($0.26 per share) in Q3 2001. Year-to-date net income was $286 million ($1.03 per share) versus $118 million ($0.44 per share) in the prior year.
- 3The Insurance Brokerage and Other Services segment showed robust growth, with revenue up 19% in the third quarter, driven by organic growth and acquisitions.
- 4Aon completed equity and convertible debt offerings raising approximately $900 million, which were used to repay short-term debt and strengthen liquidity.
- 5The company announced a reduction in its quarterly cash dividend from $0.225 to $0.15 per share, effective November 20, 2002.
- 6Goodwill is no longer being amortized following the adoption of FASB Statement No. 142, which impacted reported expenses and net income positively.
- 7The company is actively managing and resolving significant contingent liabilities and legal matters, including those related to the World Trade Center, and believes these will not materially adversely affect its financial position.