World’s largest broker sees international retail brokerage revenue drop
Unaudited accounts show that
Aon has seen a $86 Million drop in its international brokerage revenues for the quarter to the end of September 2015 - a 15% drop over the same period in 2014. The international retail brokerage generated $573M, compared to $659M the previous year.
Aon are, however, predicting a better final quarter.
"In our seasonally weakest quarter, our results reflect organic revenue growth and operating margin expansion across both segments, effective capital management and significant free cash flow generation, despite the impact of unfavourable foreign currency translation and macroeconomic challenges.” Said Greg Case, Aon’s CEO.
"Driven by our industry-leading portfolio and investments across data and analytics, we expect a strong fourth quarter and finish to the year across each of our key metrics, further positioning the firm for free cash flow generation and shareholder value creation."
The Chinese are (still) coming
2015 saw around $61.8 billion of major international insurance acquisitions and it looks like 2016 may see more of the same.
“We’ve been pretty active working with Chinese buyers,” said Willis Towers Watson’s dealmaker Rafal Walkiewicz at an Insurance Insider conference in London. We are taking “many more inquiries from large industrials who either want to replicate what Fosun does or they just want to diversify,” he added.
Speaking at the same event, Aon Plc Chief Executive Officer Greg Case said that the industry would need to see “multiple Hurricane Katrinas,” which cost the industry $41.1 billion after it hit the U.S. in 2005, to absorb the excess capital that’s available to underwrite risk.
Fosun International Ltd., whose president Guo Guangchang once likened himself to billionaire Warren Buffett, has built a global empire spanning industries from insurance to holiday resorts. The company said last year that it is focused on building up both its insurance and private banking businesses.
Rules make insurance less competitive
The UK government is trying to wind back some of the provisions of Solvency II amid concerns that the regulations are unfairly making some insurance companies less competitive.
At a cost of over $1.4Bn and 13 years in the making, Solvency II came into effect at the start of this year – the first review of the rules is not for at least another two years.
While the bank of England’s submission to the European Commission has focused on issues such as the ultimate forward rate calculation, the UK Treasury is concerned about the rules’ long term effect on Europe’s Insurance industry.
Our experience of implementing Solvency II to date is already raising issues around the impact of the framework on long-term investment and competitiveness of the European insurance industry,” it wrote in its submission.
