Aon To Quit As P-C Broker; Focus On Life, Accident

Management of Aon Corp. insurance brokerage said today it intends to get out of the property-casualty underwriting business, selling off its warranty and some specialty assets and placing the remainder in runoff.  
 
Greg Case, president and chief executive officer of the Chicago-based firm, made the announcement during the company’s analyst’s conference call to discuss second-quarter results in which company earnings were flat.  
 
He said Aon plans to relinquish all of its p-c underwriting business and concentrate on life, health and accident insurance under combined insurance.  
 
The intention is to sell off some of its niche business, specifically construction, and put the rest in runoff, said Mr. Case. The carrier will also stop underwriting all new business on the p-c side.  
 
In June, the company announced the sale of its Aon Warranty Group to Onex Corp. of Toronto, Canada for $710 million.  
 
“This is the best possible course to take to get as focused on our remaining portfolio as we can,” said Mr. Case.  
 
For the quarter, combined insurance contributed $499 million in revenue, up 11 percent from the same period last year, while p-c business stood at $57 million, down 7 percent for the period.  
 
Overall, Mr. Case said the broker had a solid quarter, pointing to 5 percent organic growth in both insurance brokerage and reinsurance brokerage.  
 
For the quarter, net income increased 1 percent, or $2 million, from $191 million to $193 million. Earnings per share were unchanged at 57 cents a share. Revenues increased 5 percent, or $117 million, from $2.15 billion to $2.27 billion.  
 
For the six months, net income remained unchanged at $391 million, but earnings per share decreased from $1.16 to $1.13. Revenues were up 4 percent, or $169 million, from $4.33 billion to $4.5 billion.  
 
Mr. Case touted recent publications that indicate the broker has moved ahead of its competitor Marsh, considered the number one broker, in brokerage placements and other segments of the business. Marsh is still considered number one overall.  
 
The executive said the broker has been pushing very hard over the past year to obtain new business, but declined to speculate if the new business it has acquired was at the expense of Marsh.  
 
“We have been pushing very hard in the market and have not been focusing on Marsh or any single competitor,” said Mr. Case.  
 
He said Aon representatives, under a new sales strategy, have been concentrating on large accounts and have spoken to accounts “we never got in front of before” to talk about the service value the firm offers them. Aon has also consolidated its selling system to one with measurable goals that has helped it grow its business.  
 
“We have invested a tremendous amount, and there’s a lot of effort going into how Aon approaches the market and delivers value, and how we get paid for our value,” said Mr. Case.  
 
Despite the results, he said the company is not satisfied and will aim to make more improvements in the future.