Aon has 7 million in reserves for Westtoo settlements;  Publishes the results of the 4th quarter

Aon has $197 million in reserves for Westtoo settlements; Publishes the results of the 4th quarter

Aon PLC said on Friday it recognized $197 million in legal settlements in the fourth quarter of last year for its involvement in deals in the Vesttoo Ltd scandal.

The disclosure came as the brokerage reported quarterly results that showed revenue growth across various business lines.

Vesttoo scandal, China Construction Bank Corp. Aon unit White Rock Insurance (SAC) Ltd. was related to fake letters of credit allegedly issued by Some Aon customers have sued or threatened to sue the broker because the alleged fraud was remedied.

Aon sued Vesttoo last August, shortly before Vesttoo filed for bankruptcy protection. Aon claims it was mainly a broker in the deals and was not involved in the alleged LOC fraud.

In its fourth-quarter results presentation, Aon said it “recognized legal settlement costs related to certain customers and counterparties who have initiated or indicated they may initiate legal proceedings against the company in connection with equity-arranged transactions by Vesttoo and letters. loans from allegedly fraudulent third-party banks”.

Aon President Eric Andersen said in a phone call with analysts: “We see recovery potential over time as the bankruptcy process progresses and we are confident that we will be able to recover a significant amount. “

Aon set aside the settlement funds to “underline this matter for our market partners and ourselves.”

Last week, Aon Porch Group Inc. and reached a $30 million “strategic business partnership” that will provide reinsurance brokerage services to the company in exchange for immunity from claims related to Vesttoo.

Meanwhile, Aon reported revenue of $3.38 billion for the fourth quarter of 2023, up 7.8% from the year-ago quarter and up 7% on an organic basis, driven by investment gains, acquisitions and divestitures. and excluding currency fluctuations.

Commercial risk solutions, the core insurance brokerage business, reported total revenue of $1.91 billion, up 4.6% and 4% on an organic basis.

Aon executives said on the call that the division saw growth in the Asia Pacific region, but the brokerage business in the US continued to be affected by a slowdown in mergers and acquisitions, which led to lower demand for operational risk insurance.

Aon’s reinsurance brokerage reported revenue of $332 million for the quarter, up 18.1% overall and 14% on an organic basis; its health solutions division reported revenue of $763 million, up 12.5% ​​overall and 11% organic; and wealth solutions grew total revenue 6.8% and organic 5% to $377 million.

Aon’s operating expenses rose 22.6% to $2.6 billion in the fourth quarter. In addition to the $197 million impact on vesttoo billing reserves, Aon’s previously announced restructuring program increased operating expenses by $129 million, and the company incurred $17 million in operating expenses related to its pending acquisition of NFP Corp., which it announced in December.

Net income for the quarter fell to $507 million, compared to $666 million in the prior quarter.

For the full year, Aon reported revenue of $13.38 billion, up 7.2% from 2022 and up 7% on an organic basis. The company’s net income decreased by 3.6% and amounted to 794 million dollars.

The NFP deal will bring some wholesale insurance brokerage business to Aon, a sector Aon exited 20 years ago. Mr. Andersen said Aon would continue to explore the wholesale brokerage sector, “but we like where we are today.”

Chief Financial Officer Christa Davies said Aon will continue to look at M&A opportunities.

“It’s all about the return on capital,” he said. “We need to beat the buyback (of Aon shares) in order for us to invest in M&A.”

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