AON - Aon Q3 earnings beat as expenses plummet free cash flow jumps

Aon ( NYSE: AON ) turned in third-quarter earnings that topped the average Wall Street estimate Friday as the insurance broker's operating expenses dropped 40% from a year ago while free cash flow growth jumped nearly 80% year-to-date.

Q3 adjusted EPS of $2.02 topped the average Wall Street estimate of $1.99 and climbed from $1.74 a year before.

Revenue of $2.7B, meanwhile, fell short of the $2.81B consensus and roughly stayed flat from Q3 2021. Nevertheless, organic revenue growth of 5% was driven by strong retention and net new business generation.

Reinsurance Solutions fared the best in terms of revenue growth among all of the company's segments, rising 12% Y/Y to $396M, led by robust growth in its treaty portfolio. On the other hand, Wealth Solutions dipped 7% Y/Y to $326M, marking it as the worst performing unit due to a decline in assets under management-based delegated investment management revenue.

Total operating expenses were $2.11B in Q3, down from $3.5B in Q3 2021.

YTD, free cash flow of $2.05B surged from $1.15B at Sep. 30, 2021.

Operating income of $590M compared with a loss of $801M in the year-ago quarter. Operating margin, in turn, was 21.9% vs. -29.6% in Q3 of last year.

During Q3, the company repurchased 4.2M class A ordinary shares for ~$1.2B.

Earlier, Aon Non-GAAP EPS of $2.02 beats by $0.03, revenue of $2.7B misses by $110M .

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