Summary
Aon plc's (AON) Q2 2007 report shows solid revenue growth driven by its Risk and Insurance Brokerage Services and Insurance Underwriting segments. Consolidated revenue increased by 13% year-over-year for the quarter, reaching $2.49 billion, with a notable 21% surge in Premiums and other revenue, largely attributed to the Sterling subsidiary's Medicare Advantage products. Net income from continuing operations for the quarter was $238 million, a significant increase from $175 million in the prior year, translating to diluted earnings per share of $0.74 compared to $0.52. The company's restructuring initiatives are progressing, with substantial cost savings realized and expected to continue. Management is also exploring strategic options for its Combined Insurance Company of America, which could result in a spin-off or sale.
Key Highlights
- 1Total revenue for the second quarter of 2007 increased by 13% to $2.49 billion compared to the prior year's $2.21 billion.
- 2Income from continuing operations rose to $238 million from $175 million in the same period last year, with diluted EPS increasing to $0.74 from $0.52.
- 3The Risk and Insurance Brokerage Services segment, Aon's largest, saw revenue grow 9% to $1.52 billion.
- 4Insurance Underwriting revenue increased by 21% to $610 million, largely driven by the Sterling subsidiary's Medicare Advantage product growth.
- 5The company repurchased approximately 16.2 million shares for $625 million in the first six months of 2007 as part of its $2 billion share repurchase program.
- 6Aon is exploring strategic alternatives for its Combined Insurance Company of America, which could involve a spin-off or sale.
- 7Restructuring initiatives are on track, with an estimated $280 million in annualized cost savings expected by 2008.