Aon PLC reported fourth-quarter 2018 revenue of $2.8 billion on Friday, down 5% from the fourth quarter of 2017, as it felt the effect of newly adopted accounting standards.
Excluding the $225 million impact of the new accounting rules from the Financial Accounting Standards Board, fourth-quarter revenue increased 3% to $2.8 billion, driven by 6% organic revenue growth, according to the Aon statement.
“Our strong results of 2018 are a direct reflection of initial success from the strategic actions we have progressively taken to drive Aon United,” Greg Case, Aon president and CEO, said in the Friday morning analysts call.
Overall organic growth was 5% in 2018, the brokerage’s “strongest level of organic growth since 2006,” Mr. Case said on the call, and the strategic actions taken “will continue to be a driving factor toward our goal of mid- to single-digit organic revenue growth or greater over the longer term.”
“We generated approximately $500 million of organic-related revenue drawn from many areas where we invest heavily including cybersecurity, transaction liability, delegated investment management and voluntary benefits, just to name a few,” Mr. Case said.
Commercial risk solutions unit reported revenue of $1.27 billion for the fourth quarter of 2018, a 4% increase over the same period last year. Reinsurance solutions reported revenue of $162 million, down 55% from fourth-quarter 2017, as the rule change reduced revenue by 61% on a comparable basis. Retirement solutions reported revenue of $509 million, up 4%, with the rule change having no effect. Health solutions reported $558 million in revenue for the quarter, up 4%, and data and analytic services reported $271 million in revenue, down 9% from the 2017 quarter.
Reinsurance solutions saw 8% organic growth and commercial risk solutions 4% organic growth for the quarter, which was an “exceptional performance,” Mr. Case said.
The broker reported net income for the quarter of $345.0 million, compared to a net loss of $19.0 million in the prior year period.
For the full year of 2018, Aon had total revenue of $10.8 billion, up 8% from 2017, including a $13 million hit from the rule change, the earnings statement said. Revenue in commercial risk solutions grew 12% to $4.65 billion, up 12% from 2017, while reinsurance solutions revenue grew 9% to $1.56 billion. Revenue in retirement solutions grew 6% to $1.87 billion, and health solutions revenue rose 5% to $1.60 billion.
For the full year, Aon had net income of $1.13 million, down 8% from 2017, due to unfavorable impact of the new FASB standard.