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Aon Q4 revenue rises as legal cost dents result 

Broker Aon’s key businesses performed strongly in the fourth quarter but group net income fell due to higher expenses, including a $US197 million ($303 million) charge “in connection with certain accrued actual or anticipated legal settlement expenses”.

Total revenue was $US3.37 billion ($5.18 billion), up 8% from a year earlier, while net income declined 24% to $US498 million ($766 million). Commercial risk solutions, Aon’s biggest business by income, recorded a 5% rise in revenue to $US1.9 billion ($2.9 billion) and reinsurance solutions revenue increased 18% to $US332 million ($511 million).

Aon says commercial risk solutions achieved organic revenue growth of 4%, aided by strong retentions across most major regions, management of the renewal book and net new business generation.

“Growth in retail brokerage was highlighted by double-digit growth in Asia and the Pacific, driven by continued strength in core property and casualty,” Aon said. “On average globally, exposures and pricing were positive, resulting in modestly positive market impact.”

Reinsurance solutions organic revenue growth of 14% was driven by strong retention and continued net new business generation, plus strong growth in facultative placements and investment banking.

“The majority of revenue in our treaty portfolio is recurring in nature and is recorded in connection with the major renewal periods that take place throughout the first half of the year, while the second half of the year is typically driven by facultative placements, capital markets activity and advisory work that is more transactional in nature,” Aon said.

Aon says the “actual or anticipated” $US197 million charge, which comes under other general expenses, relates to “transactions for which capital was arranged by a third party, Vesttoo, primarily in the form of letters of credit from third-party banks that are alleged to have been fraudulent”.