) reported first quarter 2013 adjusted operating earnings of
$1.11 per share in line with the Zacks Consensus Estimate.
Results exceeded the year-ago earnings of 98 cents by 13%.
Including restructuring charges of $19.2 million, intangible
assets of $73.2 million and headquarters reallocation costs of
$2.2 million, Aon reported first quarter net income of $261
million or 82 cents compared to $238 million or 71 cents per
share in the year-ago period.
Quarterly Operational Update
Total revenue of Aon was $2.9 billion, up 3% year over year due
to higher organic revenue (up 2% year over year), and commission
and fees resulting from acquisitions net of divestitures (up 1%
year over year) partially mitigated by lower investment income
(down 42% year over year). However, results were a tad lower than
the Zacks Consensus Estimate of $2.94 billion.
Total operating expenses of Aon were $2.5 billion, up 3% year
over year due to increase in organic revenue, higher
restructuring costs (up 30% year over year) and including a $10
million expense from acquisitions. This was partially offset by
an $18 million favorable impact from foreign currency translation
and a decline in intangible asset amortization expense (down 5%
year over year) and savings related to restructuring programs (up
Quarterly Segment Update
Total revenue increased 3% year over year to $2 billion, driven
by an organic growth in commissions and fees (up 3%) and an
increase in commissions and fees from acquisitions, net of
divestitures (up 1%), partially offset by a decline in investment
income (down 42%).
Organic revenue in Retail Brokerage increased 4% year over year
driven by higher organic revenue in Americas business (up 6%) and
International business (up 3%).
Organic revenue in the Reinsurance segment increased 1% year over
year due to an improvement in capital market transactions and
advisory business, and global facultative placements.
Operating earnings increased 10% year over ear to $403 million
during the quarter.
Total revenue was $954 million, up 1% year over year due to a 1%
organic growth in commissions and fees.
Organic revenue in Consulting Services increased 1% year over
year due to modest growth in communications and investment
consulting partly offset by a decline in Continental Europe.
Organic revenue in Outsourcing increased 1% driven by increase in
net new client wins and demand for discretionary services in HR,
BPO and healthcare exchanges. This was partly mitigated by a
modest reduction in benefits administration.
Operating earnings decreased 30% year over year to $51
Share Repurchase Update
During the first quarter, Aon repurchased 5 million Class A
Ordinary shares for $300 million. Currently Aon is left with $3.7
billion under its authorization.
In Apr 2013, the board approved an 11% hike in its annual
dividend on Class A Ordinary Shares to 70 cents per share from 63
cents paid earlier. This translated into a quarterly cash
dividend of 17.5 cents per share, increasing from 15.75 cents
paid earlier. The increased dividend will be paid on May 15,
2013, to shareholders of record as of May 1, 2013.
AON PLC (AON): Free Stock Analysis Report
BROWN & BROWN (BRO): Free Stock Analysis
EHEALTH INC (EHTH): Free Stock Analysis
VALIDUS HOLDING (VR): Free Stock Analysis
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As of Mar 31, 2013, cash and cash equivalents of Aon was $408
million, up 26.3% year over year.
Total assets of Aon at Mar 31, 2013 were $30 billion, down 1.5%
from year end 2012.
Net cash from operations was $54 million in the quarter. Cash
used for operations was $15 million in the year-ago period.
Capital expenditures during the quarter declined 15% year over
year to $60 million.
Free cash flow was $6 million, down 93% from $86 million in the
first quarter of 2012.
Long term debt increased 1.5% from $3.71 billion at year end 2012
to $3.77 billion at Mar 31, 2013. Debt-to-capital ratio of Aon
increased 270 basis points from year end 2012 to 37.5% at the end
of first quarter 2013.
Performance of Others in the Industry
Brown & Brown Inc.
) reported first quarter 2013 earnings of 41 cents per share
exceeding the Zacks Consensus Estimate of 39 cents per share and
year-ago earnings of 34 cents per share.
) reported first quarter 2013 operating earnings of 12 cents per
share surpassing the Zacks Consensus Estimate of 10 cents per
share. Result is in line with the year-ago earnings.
Validus Holdings Limited
) reported first quarter 2013 operating earnings of $1.89 per
share, exceeding the Zacks Consensus Estimate of $1.39 per share
and the year-ago earnings of 91 cents per share.
Aon currently carries Zacks Rank #3 (Hold).