Aon shrugs off sharp drop in profits with new acquisitions

Aon has completed its €295m acquisition of leading independent Netherlands broker Unirobe Meeùs Group (UMG) and announced an agreement to acquire UK broker Henderson Insurance Broking Group for an undisclosed sum, days after announcing third-quarter results that showed a sharp drop in profits driven by restructuring costs. The acquisitions of UMG and Henderson are part of Aon’s ongoing effort to diversify its book by driving into the middle and SME markets, as growth in the larger corporate sector remains difficult to achieve amid stubbornly soft and highly competitive conditions. Aon’s third-quarter revenue was up 6% from $2.2bn in the same period last year, to $2.3bn. During the nine-month period, total group revenue was up 5% – rising to $7bn from $6.8bn. But operating profits fell by 28% in Q3, down to $265m from $368m, and by 58% in the first nine months, from $1.18bn down to $490m. Net profit was down 41% to $192m for the third quarter of this year. Aon explained that restructuring expenses were $102m in the third quarter, primarily driven by workforce reductions, IT rationalisation and other “separation costs”. The company expects to invest $900m in total cash over a three-year period, and incur $50m of non-cash charges, in its bid to drive one operating model across the firm. This includes an estimated investment of $700m cash restructuring charges and $200m of capital expenditures. To date, the company has incurred $401m, or 53%, of the total estimated restructuring charges. Independent and often family-owned brokers led by groups such as WBN and Brokerslink appear to be enjoying something of a renaissance at the moment, as risk managers and managers of smaller companies value the level of local service they can offer, particularly as they seek growth opportunities in new markets. But this is not stopping the big global groups such as Aon from seeking further growth through acquisition and driving into the middle and SME markets across Europe. Aon becomes the leading commercial insurance broker in the Netherlands following its acquisition of UMG from Aegon for €295m. Marc van Nuland, country manager of Aon Netherlands, said: “This acquisition will drive value for clients of both UMG and Aon as we combine the knowledge and experience of UMG with Aon’s teams in the Netherlands, as well as with our global network.” Aon also announced this week that it will acquire Henderson Insurance Broking Group, one of the largest independent UK-based insurance broking firms. Henderson focuses on general insurance, health and benefits and trade credit insurance for large corporate, mid-market and SME businesses. The broker currently employs more than 400 people across 16 offices, predominantly in the north of England. Aon said the acquisition of Henderson supports its ambitions to grow UK retail business, specifically by increasing its footprint in the mid-market and specialist sectors. Henderson will be part of Aon Risk Solutions UK (ARS UK). Julie Page, CEO of ARS UK, said: “I’m delighted that the Henderson Insurance Broking Group team is joining Aon, bringing more talented and experienced colleagues to our business. Henderson Insurance Broking Group’s success and the esteem in which it is held, both by clients and the market, is a real indication of the passion it puts into finding the best solutions for its clients. Its underlying ethos of putting clients at the heart of its business aligns perfectly with Aon’s approach and I’m looking forward to working with the leadership team at Henderson Insurance Broking Group to empower results for clients of both firms.” Joe Henderson, CEO and founder of Henderson Insurance Broking Group, said: “Joining Aon provides a wealth of opportunities for both our colleagues and our clients. Our clients will benefit from new access to specialist and global expertise, and Aon’s commitment to continuing our excellent service levels. As for colleagues, I have no doubt that the talented people within our organisation will seize the opportunity to develop their careers within a firm of Aon’s stature.”

Aon shrugs off sharp drop in profits with new acquisitions

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