Aon Reports 9% Increase In First Quarter Operating Segment Pretax Income Before Special Charges; Consolidated Earnings Per Share Declined Due Mostly To Reduced Valuations Of Investments.Business Editors CHICAGO--(BUSINESS WIRE)--May 3, 2001 Aon Corporation (NYSE NYSE See: New York Stock Exchange :AOC AOC, n an acronym for the Aromatherapy Organizations Council. ) today reported first quarter dilutive earnings per share before special charges and non-operating corporate segment revenue of $0.42. This compares with $0.40 in first quarter 2000 that also excludes the impact of the adoption of SAB SAB Spontaneous abortion. See Abortion. 101 which was a negative $0.03 per share. The increase was driven by revenue growth and margin improvement in total operating segment results before special charges. First quarter 2001 net income and dilutive earnings per share were $19 million and $0.07, respectively, compared with $116 million and $0.44 in the year ago period. Non-operating corporate segment revenue declined from $0.07 per share in first quarter 2000 to a negative $0.19 per share in first quarter 2001, due largely to reduced equity investment valuations. Excluding special charges of $0.16 per share, first quarter 2001 earnings were $0.23 per share compared with $0.44 per share in first quarter 2000. Aon's operating segments - insurance brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. and other services, consulting and insurance underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. - recorded first quarter pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. before special charges of $289 million, up 9% from $266 million in first quarter 2000. First quarter 2001 reported operating segment revenue increased 7% to $1.9 billion. Adjusted for foreign currency translation, first quarter operating segment revenues rose 11%. Insurance brokerage and consulting segment organic revenue growth was 8%. "Aon's combined operating segments showed good results for the quarter, especially given the implementation efforts required by our business transformation plan," said Patrick G. Ryan Ryan may refer to: Places
tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... our previously announced spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. plans later this year." On April 20, 2001, Aon announced that its Board of Directors has approved, in principle, a plan to spin-off its underwriting businesses to its common stockholders. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue of $1.8 billion in the first quarter was even with the prior year due mostly to a $115 million decline in non-operating corporate segment revenue. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern special charges of $72 million, or $0.16 per share, recorded in first quarter 2001 relate to the business transformation plan previously announced in November November: see month. 2000. A portion of the charge was related to separation costs involving certain non-core joint venture and business alliances. After netting the effect of currency hedges Currency hedge Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks). , the impact of foreign currency translations on net income was not material. Goodwill amortization expense equaled $0.09 per share in the first quarters of both 2001 and 2000. First quarter reported insurance brokerage and other services segment revenue grew 4% to $1.117 billion, compared with $1.074 billion in 2000. Adjusted for foreign currency translation, revenue growth was 8%. International, wholesale and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. brokerage and claims services recorded strong revenue growth in the quarter. Premium rates increased across major property and casualty lines and clients continued to utilize alternative risk transfer services including captive captive said of naturally wild or feral animals kept in captivity for educational and scientific investigation with no attempt being made to domesticate them. management, claims, loss control and actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin services to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. price increases. Insurance brokerage and other services pretax income before special charges rose 9% to $196 million from $180 million in first quarter 2000. Pretax margin before special charges in first quarter 2001 increased 80 basis points to 17.6% from 16.8% in the year ago period. The margin improved in part from business transformation expense savings, but was negatively impacted by a temporary reduction in the rate of new account growth, transition costs and an increasing percentage of lower margin claims service revenues. Consulting segment reported revenues rose 20% to $212 million from $176 million in the year-ago first quarter and included the results of Actuarial Sciences Actuarial science applies mathematical and statistical methods to finance and insurance, particularly to risk assessment. Actuaries are professionals who are qualified in this field through examinations and experience. Associates, Inc. acquired early in fourth quarter 2000. Pretax income before special charges rose 32% to $25 million versus $19 million in the 2000 first quarter. The consulting pretax margin expanded 100 basis points to 11.8% in the first quarter from 10.8% in the year ago period before special charges. These results reflect strong fundamental operating performance and continued client demand for workforce productivity solutions. Insurance underwriting segment reported revenues increased 7% to $567 million in first quarter 2001 from $530 million in the 2000 first quarter driven by solid growth in core accident and health insurance and warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. sales. Pretax income was $68 million in the 2001 first quarter, up from $67 million one year ago. The underwriting pretax margin was 12.0% for the quarter compared with 12.6% in first quarter 2000. New underwriting initiatives drove premium growth and resulted in increased benefits to policyholders. Also, as outlined in the April 20th press release, an unusual increase in warranty claims occurred in the first quarter related to an isolated program that will not affect future quarters. Corporate and other segment revenue, comprised primarily of equity-related revenues from limited partnerships and directly-owned equities, was negative $85 million for the quarter compared with positive $30 million in first quarter 2000. The decline was due to reduced valuations for limited partnership investments and the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of certain directly-owned equity investments. The corporate and other segment pretax loss pretax loss A loss reported before tax benefits are considered. for the quarter was $169 million, compared with a pretax loss of $48 million in the prior year quarter due primarily to the decline in corporate and other segment revenue. Interest expense increased versus the prior year period due in part to higher average debt levels and an extension of debt duration in second quarter 2000. "Given our current outlook, Aon's operating segments in aggregate are expected to achieve double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" pretax income growth for the year," Ryan said. "Looking at the second quarter, our non-operating corporate segment is not anticipated to have further write-downs for directly-owned equities. In our limited partnership portfolio, we currently expect that second quarter revenue will improve significantly from the negative $56 million reported in the first quarter, but we expect that it will remain negative." Aon Corporation (www.aon.com) is a holding company that is comprised of a family of insurance brokerage, consulting and insurance underwriting subsidiaries. Aon's common stock is listed on the New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , Frankfurt Frankfurt (frängk`f  rt) or Frankfurt am Main (frängk`f and London stock exchanges London Stock ExchangeLondon marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. . This press release may contain certain statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future results, which are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors such as general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, changes in commercial property and casualty premium rates, the competitive environment, the actual cost of resolution of contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. , the final form of the business transformation plan, the ultimate cost and timing of the implementation thereof, the actual cost savings and other benefits resulting therefrom there·from adv. From that place, time, or thing. Adv. 1. therefrom - from that circumstance or source; "atomic formulas and all compounds thence constructible"- W.V. , whether the Company ultimately implements the proposed spin-off of its underwriting operations, and the timing and terms associated therewith there·with adv. 1. With that, this, or it. 2. In addition to that. 3. Archaic Immediately thereafter. Adv. 1. . Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results are contained in the Company's filings with the Securities and Exchange Commission.
Aon Corporation
Consolidated Summary of Operations
First Quarter Ended
--------------------------
(millions except per share data) Mar. 31, Mar. 31, Percent
2001 2000 Change
------- ------- -------
Revenue
Brokerage commissions and fees........... $ 1,281 $ 1,205 6%
Premiums and other....................... 508 468 9
Investment income........................ 22 137 (84)
------- ------- ------
Total revenue.......................... 1,811 1,810 -
------- ------- ------
Expenses
General expenses......................... 1,324 1,271 4
Benefits to policyholders................ 292 252 16
Interest expense......................... 36 31 16
Amortization of intangible assets........ 39 38 3
------- ------- ------
Total expenses......................... 1,691 1,592 6
------- ------- ------
Income Before Special Charges.............. 120 218 (45)
Special charges.......................... 72 - N/A
------- ------- ------
Income Before Income Tax, Minority
Interest and Accounting Change............ 48 218 (78)
Provision for income tax................. 19 85 (78)
------- ------- ------
Income Before Minority Interest
and Accounting Change..................... 29 133 (78)
Minority interest - 8.205% trust
preferred capital securities............ (10) (10) -
------- ------- ------
Income Before Accounting Change............ 19 123 (85)
Cumulative effect of change in
accounting principle, net of tax (1).... - (7) N/A
------- ------- ------
Net Income................................. $ 19 $ 116 (84)%
======= ======= ======
Preferred stock dividends................ (1) (1) -
------- ------- ------
Net Income Available for
Common Stockholders....................... $ 18 $ 115 (84)%
======= ======= ======
Net Income Per Share:
Basic net income per share............... $ 0.07 $ 0.44 (84)%
======= ======= ======
Dilutive net income per share:
Net income before special charges...... $ 0.23 $ 0.47 (51)%
Special charges........................ (0.16) - N/A
Cumulative effect of change
in accounting principle............... - (0.03) N/A
------- ------- ------
Dilutive net income per share........ $ 0.07 $ 0.44 (84)%
======= ======= ======
Dilutive average common and common
equivalent shares outstanding........... 267.9 260.5
======= =======
(1) Adoption of SEC Staff Accounting Bulletin 101, effective January
1, 2000.
Aon Corporation
Operating Segments
First Quarter Ended
-------------------------
(millions) Mar. 31, Mar. 31, Percent
2001 2000 Change
------- ------- ------
Revenue
-------
Insurance brokerage and
other services (1)...................... $ 1,117 $ 1,074 4%
Consulting (2)........................... 212 176 20
Insurance underwriting................... 567 530 7
------- ------- ------
Total revenue - operating segments..... $ 1,896 $ 1,780 7%
======= ======= ======
Income Before Income Tax
------------------------
Insurance brokerage and other services... $ 196 $ 180 9%
Consulting............................... 25 19 32
Insurance underwriting................... 68 67 2
------- ------- ------
Total income before income tax
excluding special charges -
operating segments.................... 289 266 9
Special charges........................ 72 - N/A
------- ------- ------
Total income before income tax -
operating segments.................... $ 217 $ 266 (18)%
======= ======= ======
(1) Includes investment income of $46 million and $43 million for the
first quarter ended March 31, 2001 and 2000, respectively.
(2) Includes investment income of $2 million and $1 million for the
first quarter ended March 31, 2001 and 2000, respectively.
Aon Corporation
Corporate and Other
First Quarter Ended
--------------------------------
(millions) Mar. 31, Mar. 31, Percent
2001 2000 Change
---------- --------- ---------
Corporate and other revenue (1) $ (85) $ 30 N/A %
---------------------------------
Non operating expenses
----------------------
Amortization of goodwill......... $ 29 $ 27 7 %
Interest expense................. 36 31 16
General expenses................. 19 20 (5)
---------- --------- ---------
Loss before income tax......... $ (169) $ (48) N/A %
========== ========= =========
First Quarter Ended
--------------------------------
Mar. 31, Mar. 31, Percent
(millions) 2001 2000 Change
---------- --------- ---------
(1) Components of corporate and
-------------------------------
other revenue
-------------
Change in valuation on private
limited partnership investments... $ (56) $ 28 N/A %
Income from marketable equity
securities and other investments.. 1 3 (67)
---------- --------- ---------
Corporate and other revenue before
income (loss) on disposals and
related expenses.................. (55) 31 N/A
Income (loss) on disposals and
related expenses.................. (30)(a) (1) N/A
---------- --------- ---------
Corporate and other revenue........ $ (85) $ 30 N/A %
========== ========= =========
(a) Includes impairment write-downs of $29 million.
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion