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Aon eyes reinsurance opportunities as growth accelerates

Reinsurance arm books 7% organic growth in the first three months of the year, as corporate broking unit reports 9%

Aon sees significant opportunities to expand its footprint in the reinsurance broking sector despite the growing competition in the market, senior executives at the broking and consulting giant said.

With competitors such as Gallagher Re, Lockton Re and Inver Re aggressively pursuing the sector, Aon executives said the firm was investing in new capabilities and analytics to bring in new business.

“A lot of what we are doing is truly creating a new market such as in climate and IP,” said Aon chief executive, Greg Case.

“What we are saying is we will increase the size of the pie. With the capability and colleagues that we have in place, we see tremendous opportunity over time,” he added.

Aon’s Reinsurance Solutions business reported full-year 2021 revenues of nearly $2bn up from $1.81bn a year earlier.

Last month, the firm acquired actuarial software platform Tyche to expand its capabilities in capital modelling, pricing and reserving.

Aon president, Eric Andersen, said: “A lot of issues facing the insurance company clients are future risks – trying to handle cyber as a product, how you deal with climate if you are a P&C [property/casualty] insurer. The opportunities there are very strong.”

Andersen added: “I am not surprised [the reinsurance sector] is drawing competition. The reality is we feel good that our franchise and the team are very closely aligned, and we continue to make investments to make sure they have cutting-edge capabilities.”

The comments came as Aon reported accelerating organic growth in its corporate broking and reinsurance divisions in the first quarter of the year.

Aon booked 9% organic growth in its Commercial Risk Solutions business, up from 7% in the first quarter of 2021, while Reinsurance Solutions achieved 7% growth in the quarter, compared to 6% a year earlier.

 

Commercial Risk Solutions reported growth “across every major geography driven by strong new business generation, retention, and management of the renewal book portfolio”, with the division’s first-quarter revenues rising to $1.72bn.

The retail broking business achieved “double-digit growth” in the US, Canada, Asia and the Pacific “driven by continued strength in core property/casualty, as well as strong growth in construction and project-related work”.

On average globally, exposures and pricing were “modestly positive, resulting in a modestly positive market impact”, Aon said.

Revenues in Reinsurance Solutions rose to $976m in the quarter, reflecting “reflects strong growth in treaty, driven by strong retention and continued net new business generation”.

The division also benefitted from “strong growth in facultative placements and double-digit growth in capital markets transactions”. Market impact was “modestly positive” on the quarter’s results.

Overall, Aon’s total revenue increased 4% to $3.7bn in the first quarter, including organic revenue growth of 8%.

Adjusted operating margin increased 60 basis points to 38%.

Net income increased 12% to $1.02bn compared to $913m a year earlier.

Case, said the results were “strong”, adding: “Our performance demonstrates how increasing global volatility has further reinforced the relevance of our Aon United strategy.”

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