Aon gets double-digit capital markets revenue growth in Q1 2022

Insurance and reinsurance broking group Aon has benefited from the strong levels of activity in the catastrophe bond and related insurance-linked securities (ILS) market in the first-quarter of 2022, with revenues soaring.

Aon reported its first-quarter results today and said that it has experienced double-digit revenue growth in the capital markets segment of its reinsurance division.

Overall, Aon reported a 4% rise in revenues for Q1 to $3.7 billion, with organic revenue expansion of 8% driving this increase.

Margins also increased for the broker, reflecting the fact major players like Aon continue to be able to extract increasing amounts of value from their activities, even though the market continues to witness attempts to disintermediate and make the value-chain more efficient.

These efforts are so far not affecting the broking community, who continue to reap significant rewards from broking complex insurance and reinsurance business.

“In the first quarter, our team delivered strong financial results with 8% organic revenue growth, operating margin expansion of 60 basis points to 38.0%, and EPS growth of 13%,” explained Greg Case, Chief Executive Officer of Aon. “Our performance demonstrates how increasing global volatility has further reinforced the relevance of our Aon United strategy.

“In the face of rising complexity and uncertainty, our colleagues will continue to employ the advanced analytics and underlying technology of our Aon Business Services platform to identify areas of unmet need, improve service standards, and accelerate delivery of new solutions that provide clients the clarity and confidence they need to protect and grow their business.”

Reinsurance broking revenues rose 6%, or 7% on an organic basis, while commercial risk broking saw organic revenue growth of 9%.

Aon’s Reinsurance Solutions saw strong growth in its treaty business, helped by retention and net new business wins.

In facultative reinsurance broking, Aon also experienced strong growth.

But it is the capital markets activities, which include the operations of Aon Securities, the investment banking and insurance-linked securities (ILS) focused arm of the company, that was the highlight.

Here, Aon said that the company experienced “double-digit growth in capital markets transactions.”

The active catastrophe bond market continues to be a driver for the capital markets units of the major brokers, while they also continue to reap the benefits of other areas of ILS as well.

Alongside this, capital raising, structuring and M&A activity, also involves the capital market teams of broking groups like Aon, driving further revenue opportunities.

With the catastrophe bond market pipeline remaining busy, with Aon acting on numerous transactions in recent weeks, it appears the second-quarter could also see much stronger capital market contributions to Aon’s reinsurance revenues as well.

Of course, Aon is also integrating capital market techniques into other areas of broking, such as its innovative collateralized financing solution for intellectual property assets, providing further areas of potential future revenue growth and building capital market synergies across its business.

In the outstanding catastrophe bond market, Aon remains the most prolific bank or broker servicing the sector, topping our leaderboard according to Artemis’ data.