AON UK CEO sees significant UK growth
LONDON (Reuters) - AON Corp., the world's second largest insurance broker, is targeting significant organic growth in its British business after two troubled years, the head of the UK unit told Reuters.
"If you think of our market share here in the main segments in which we operate, there's significant scope for growth," Peter Harmer, Chief Executive of AON UK, said in an interview.
Asked what growth he was targeting, Harmer said: "It is in the high single-digits to low double-digits (percent) depending on the segment."
Aon's UK unit was hit hard by the Chicago-based broker's decision in 2005, under pressure from then New York Attorney General Eliot Spitzer and other state prosecutors, to stop taking payments from insurers which critics had argued represented a conflict of interests.
The move triggered a slump in the performance of Aon's UK unit -- the group's third largest regional business -- which traditionally performed services for insurers, such as issuing policies, handling premiums and managing claims, for which it was paid by insurers.
The unit has been brought back on track by slashing costs, including cutting hundreds of jobs, but the restructuring has come at the cost of growth in the unit.
The second quarter was the first time the unit has shown organic revenue growth in over two years that "have been quite traumatic for the business here."
"LIFE-CHANGING EVENTS"
During that time the unit has had to come to terms with supervision by the Financial Services Authority and relinquishing "contingent commissions" from insurers, which had boosted its profits for years.
These "two life-changing events" have helped AON, however, as they forced it to review what services it offers clients, how it delivers and is paid for those services, Harmer said.
The company is now set to expand in the UK, where it can improve its market share substantially, Harmer said.
The company is targeting areas of its business that can deliver revenue growth quickly, Harmer said. "Getting some immediate positive momentum to revenue is critical."
Its unit catering to high net-worth individuals, which arranges insurance for their works of art, classic cars and private yachts, "is about the fastest-growing part of our business ... I think its about 25 percent year-on-year."
He also sees "enormous new opportunities" in offering intermediary services and risk management advice to UK-based global corporates, a market in which it has a 20-25 percent market share.
Small and medium-sized construction, media and technology firms "are key areas of growth" also, while many opportunities exist to offer insurance services to affinity groups, such as unions, employer groups and hobby associations, Harmer said.
