Insurance brokerage and risk consulting firm Aon AOC reported good third-quarter results in light of the weak insurance premium rate environment, and we will keep our fair value estimate unchanged. Aon cited the continued global economic recession as another factor damping its third-quarter result. It might seem difficult to rely on that crutch after the significant positive overall growth rate and acceleration in international trade apparent in the third-quarter GDP report, given Aon's global presence. But it is true that insurance demand and premium rates have yet to pick up like they generally have in past economic recoveries, in part because insurer loss experience has been persistently moving lower in recent years.Aon reported a 3% decline in internal revenue in risk and insurance brokerage. Aon excludes investment income to arrive at "organic" growth in this segment, and the 3% reported decline could have been a bit worse given that exclusion (and decline) in investment income. But this still appears to be a decent result given greater weakness in market rates among larger accounts. Aon reported modestly improved profitability in the brokerage operations, but consulting revenue and margins remained depressed along with results for similar operations reported by competitors. We still anticipate improved results in the consulting as well as brokerage operations for the balance of 2009 and 2010.
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Analyst Notes
10-30-09 | 9:25AM Aon Reports 3Q
07-30-09 | 10:53AM Aon Reports Sluggish 2Q
05-05-09 | 1:39PM Aon's 1Q a Little Weaker
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