Aon Corporation (AON) Q2 2010 Earnings Call July 30, 2010 8:30 a.m. ET Executives Greg Case - President & CEO Christa Davies - EVP & CFO Analysts Keith Walsh - Citi Jay Cohen - Bank of America/Merrill Lynch Meyer Shields - Stifel Nicolaus Jay Gelb - Barclays Capital Dan Johnson - Citadel Mathew Heimermann - JPMorgan Presentation Operator
Greg CaseThanks a very much and good morning everyone and welcome to our second quarter 2010 conference call. Joining me here today is our CFO, Christa Davies. To begin, this was an incredibly exciting quarter. Highlighted by the recent announcement of our pending merger with Hewitt creating Aon Hewitt a global leader in human capital solutions and in addition to that the beginning of our four year partnership Manchester United which will substantially strengthen Aon brand recognition around the globe. Against this backdrop these great highlights our team is proud to deliver results, that represent a strong quarter a continued progress and momentum. As we have said before, irrespective of economic conditions, the soft market or other challenges outside our control we continue to execute our plans to substantially strength our firm, positioning Aon as the preeminent global professional services firm in the world focused on risk and human capital solutions. Consistent with our previous quarterly updates I would like cover three areas before turning the call over to Christa for further financial review. First is our performance against key commitments to shareholders, second is continued areas of investment across Aon including the brief update on the progress of Aon Hewitt and third is overall organic growth performance. On the first topic our performance versus commitments, each quarter we measure our performance against the three metrics we committed to shareholders to achieving over the course of the year. To grow organically expand margins and increase earnings per share. In the second quarter, organic revenue declined 1% and improvement from a negative 3% in the prior quarter as consulting delivered positive organic revenue for the first time since Q1 of 2009 and brokerage delivered significant improvement with organic growth coming from key areas such as Latin America, Asia Pacific and benefits from our GRIP platform.
Adjusted operating margin increased a110 basis points, highlighted by a 200 basis point improvement in brokerage as strong operational performance offset a modest decline in organic revenue and fiduciary investment income.EPS on an adjusted basis increased 7% to $0.81 representative of strong operational performance and effective capital management in a challenging environment. Overall, a solid quarter of operational performance as we continue to build and strengthen our client serving capabilities focused on what we believe are two of the most important topics in the global economy today. Risk and people what we believe, we are exceptionally well positioned to capture this opportunity. On the second topic further areas of investment, we believe we are in a unique position. Solid operating performance combined with expense discipline and a strong balance sheet continues to enable substantial investment in colleagues and capabilities. While we have got significant opportunity remain to deliver cost savings under our restructuring programs, we continue to build on our leadership position and industry leading capabilities. Just a few examples, in brokerage, we're investing in innovative technology such as our global risk insight platform and Fact Connect to ensure the clients have seamless access of best of global Aon in every local region around the globe. In fact, GRIP recently completed its 500,000 trades highlighting a unique value of this platform. We are also investing in additional capability as risk continues to increase in size and complexity around the globe. With acquisitions such as Allied North America, and FCC Global strengthening our industry leading construction capabilities as well as the acquisition of Carpenter Moore strengthening our capabilities and professional liability. We are also investing client leadership to drive greater productivity and efficiency with the roll out of the revenue engine in EMEA and Asia Pacific, already on Broking platform to better match client needs to ensure appetite or risks and client promise which is driving greater retention rates and ensuring clients fully understand our value proposition in a completely transparent way. Read the rest of this transcript for free on seekingalpha.com