Aon Plunges Most Since 2012 on Reinsurance Revenue Decline

Jul 25, 2014 4:11 pm ET

(Updates shares starting in first paragraph.)

July 25 (Bloomberg) -- Aon Plc, the world’s second-largest insurance broker by market value, fell the most since 2012 after revenue missed estimates as reinsurance sales declined.

Aon slipped $4.65, or 5.1 percent, to $86.32 at 4:03 p.m. in New York, the biggest decline in the 84-company Standard & Poor’s 500 Financials Index.

Revenue was $2.92 billion, compared with analysts’ estimates of $2.96 billion in a survey by Bloomberg. Reinsurance commissions and fees fell 4.3 percent to $360 million, the London-based broker said today in a statement.

The reinsurance slump was “the key negative in the quarter,” Meyer Shields, a Keefe Bruyette & Woods analyst said in an investor note today. The decrease probably “reflects rate declines and shrinking demand.”

Reinsurance provides backup coverage to primary insurers. Sales have declined amid increased competition from catastrophe bond investors willing to shoulder weather-related risks. Everest Re Group Ltd. and Allied World Assurance Co. were among carriers this week that reported profit that missed estimates.

Marsh & McLennan Cos., the world’s largest insurance broker fell 2.5 percent. No. 3 Willis Group Holdings Plc slipped 2.9 percent. They both report earnings July 29.

Aon’s net income was $304 million, or $1.01 a share, compared with $241 million, or 76 cents a share a year earlier.