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$AON General Update: Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, has urged the UK Government to extend pension freedoms to pensioner members of defined benefit schemes. Defined contribution pension scheme members now have the flexibility to choose how best to spend their retirement savings.
$AON said it intends to accelerate the share repurchase program in the second half of 2017, and continue restructuring activities in the coming quarters with focus on workforce reduction. The company plans to invest around $900MM in total cash in the next three years.
$AON completed the divestiture of its outsourcing platform in the second quarter. The transaction created additional capital of about $3Bil, which the company intends to utilize for new investments. In the first half of 2017, overall organic growth accelerated to 4% from 3% in the same period last year.
$AON repurchased 8MM of its Class-A ordinary shares for about $1Bil in 2Q17, and announced a 9% rise in the quarterly cash dividend. During the quarter, the company completed the sales of its Benefits Administration and HR Business Process Outsourcing division for cash consideration of $4.3Bil and an additional consideration of $500MM.
$AON’s revenues from Commercial Risk Solutions advanced 5% YoY to $1.04Bil in 2Q17. Revenues from Reinsurance Solutions grew 4%, while those from Retirement Solutions declined 4%. Health Solutions revenues were higher by 11% compared to 2Q16. Data & Analytic Services revenues increased 4%.
Insurance company $AON reported a sharp increase in 2Q17 earnings on a 4% increase in revenues to $2.4Bil. The growth reflected a 3% organic revenue growth and acquisition related gains. Earnings jumped to $2.93 per share from $1.11 per share in 2Q16. On an adjusted basis, earnings rose 2% to $1.53 per share.
$AON has appointed Andy Marcell as President of Aon Benfield, effective immediately. Based in New York, Marcell will report to Aon Benfield CEO Eric Andersen. Earlier, he was CEO of reinsurance broker Guy Carpenter’s US Operations and head of its Global Facultative business.
Financial consulting firm $AON has appointed Raymond Everett as global president of its unit McLagan. Everett, a member of Aon’s Talent, Rewards & Performance executive committee, leads the McLagan executive committee. He has held many leadership positions in Asia Pacific, the Middle East and North America after joining McLagan.
$AON continues to focus on its four key metrics that is reported every year and committed to grow every year, organic revenue growth, operating income, EPS, and free cash flow. $AON expects double digit free cash flow growth over the long term and then given all the complexity going on, $AON has an EPS target of greater than $7.97 in 2018.
$AON expects to have great options to both reinvest back into the company and to return money to shareholders with a total of about $9Bil. The company expects to have substantial amounts of cash over the coming years. $AON said the highest return on capital remains share repurchases, which is why it lifted authorization by $5Bil in 4Q16.
$AON expects operating model investments to deliver $400MM of estimated annual savings in 2019. This includes the $91MM of stranded costs. The company said it has enormous confidence in its ability to hit the $400MM and this is really increasing operating leverage across the platform instead of significant sort of transformational activity.
In 1Q17, $AON's total operating expenses hiked 10% to $2.0Bil, with restructuring expenses of $144MM. AON plans to invest $900MM in total cash over a three-year period, including an estimated investment of $700MM of cash restructuring charges and $200MM of capital expenditures.
With a reported revenue bump of 5% to $2.4Bil in 1Q17, $AON posted a 10% dip in net attributable income of $291MM from $325MM a year ago. Earnings slipped 8% to $1.09 per diluted share, as income from continuing operations slumped 15% to $265MM or $0.94 per diluted share for the quarter.