Aon Shares Surge 17% on 10% Q2 Profit Jump

Strategic Insights -

Aon's quarterly profits have witnessed a significant 10% jump, reaching $191 million, or 57 cents per share, compared to $173 million, or 52 cents, in the same period last year. This upward trend has propelled Aon's shares to rise 17% yesterday, with the insurance broker announcing a decisive shift away from special commissions from insurers. This strategic move follows a settlement with New York's Attorney General Eliot Spitzer earlier this year, which accused Aon and rival Marsh of steering business to insurers paying higher commissions.

Key Takeaways:

  • Aon's quarterly profits surged 10% to $191 million, or 57 cents per share, compared to $173 million, or 52 cents, in the same period last year.
  • The insurance broker's shares rose 17% yesterday following the announcement of increased profits and a strategic shift away from special commissions from insurers.
  • Aon's decision to scrap contingent commissions will result in a pre-tax charge of as much as $300 million in the third-quarter for restructuring.
  • The broker plans to cut jobs in the UK and reduce spending on technology to adapt to the changing market.
  • Aon's earnings contrast sharply with those of Marsh & McLennan, which reported a 57% fall in profits in the second quarter due to lower revenues and the loss of contingent commissions.
  • Contingent commissions, previously accounting for a third of Marsh's broking division revenues, have become a significant challenge for the company.

Statistics:

  • Aon's quarterly profits increased by 10% to $191 million.
  • The company's shares rose 17% to close at $29.88, or $4.32.
  • The pre-tax charge for restructuring due to the scrapping of contingent commissions will be up to $300 million in the third quarter.
  • Contingent commissions previously accounted for around a third of Marsh's broking division revenues.
  • Marsh & McLennan's profits fell by 57% in the second quarter.

Sources:

  • "Aon shares rise on profit beat" (name and publication date not provided)
  • "Marsh group sees profits fall 57% in quarter" (name and publication date not provided)
  • New York's Attorney General Eliot Spitzer (exact wording not provided)
  • Aon's new Chief Executive Greg Case (exact wording not provided)
  • Aon's quarterly earnings report