Aon profit beats as HR business margins improve
(Reuters) - Aon Plc's (AON.N) quarterly profit beat analysts' estimates as investments aimed at increasing margins at its human resources services business helped boost profit.
Aon, the world's largest insurance broker had suffered lower margins as it invested in its HR services business, the former Hewitt Associates it bought in 2010.
Aon's operating margin in the business rose in the quarter for the first time in eight quarters, to 17.5 percent from 16 percent on an adjusted basis.
The company has consistently said the investments in its HR solutions unit, which provides consulting and outsourcing operations for companies, would start to pay off towards the end of this year.
Aon's quarterly profit rose for the first time in three quarters as it posted net income of $204 million, or 62 cents per share, from continuing operations, up from $198 million, or 59 cents per share, a year ago.
Excluding items, it posted adjusted earnings of 95 cents per share, above consensus estimates of 89 cents per share, according to Thomson Reuters I/B/E/S.
Revenue growth came from a 5 percent increase in outsourcing fees at Aon Hewitt and a 7 percent increase in reinsurance revenue due to new business growth and favorable benefit from pricing.
Aon, which competes with Marsh & McLennan Co (MMC.N) and Willis Group Holdings (WSH.N) in its retail insurance brokerage and reinsurance businesses, said it was on track to meet its long-term targets of operating margins of 22 percent in the HR business and 26 percent in insurance.
Shares of the company, which has a market value of $16.85 billion, have risen 12 percent in the past three months, outperforming the broader S&P 500 Index .SPX, which has risen about 7 percent during the period.
(Reporting by Aman Shah in Bangalore; Editing by Rodney Joyce)