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Gregory C. CaseThank you, Emily, and good morning, everyone, and welcome to our second quarter conference call. Joining me here today is our CFO, Christa Davies. Consistent with previous quarters, I'd like to cover 3 areas before turning the call over to Christa for further financial review. I would note that there are slides available on our website for you to follow along with our commentary today. First, our performance against key metrics we communicated to shareholders; second, I'll cover overall organic growth performance; and third is continued areas of investment across Aon. On the first topic, our performance versus key metrics. Each quarter, we measure our performance against the 3 metrics we focus on achieving over the course of the year: grow organically, expand margins and increase earnings per share. Turning to Slide 3. In the second quarter, organic revenue growth was 4% overall with solid growth across all major businesses in both Risk and HR Solutions. Operating margin decreased 100 basis points, driven primarily by significant investments we are making in new growth opportunities and in key talent across our businesses. Finally, EPS was $1.02 as growth and effective capital management primarily offset incremental investment spend. Overall, our second quarter results reflect improved organic revenue growth across all of our major businesses as we make significant investments to further strengthen our client-serving capabilities. Our results were also very consistent with the plants we laid out in Q1 for the full year 2012, recognizing that Risk Solutions was a bit better than anticipated and HR Solutions was a bit lighter than anticipated due to higher investment spend and the timing of certain deferred costs. While Christa will provide additional financial commentary in a few minutes, we continue to anticipate improved performance in the second half of the year are on track with our long-term targets and have continued to take significant steps to further position the firm for long-term growth, strong free cash flow generation and increased financial flexibility.
Turning to Slide 4, on the second topic of growth. I want to spend the next few minutes discussing the quarter for both of our segments. In Risk Solutions, overall organic revenue growth was 4% with growth across every major business. As market-related conditions continue to stabilize, we're driving a set of initiatives that are strengthening underlying performance and positioning our Risk Solutions segments for long-term growth and leverage to an improving economy with management of our renewal book through Client Promise and retention rates of 90% or better on average, highlighting strong client satisfaction.New business generation of approximately $250 million across our Retail business with strong growth across many markets including China, New Zealand, Benelux, France, U.S. Retail, Latin America and Affinity, just to name a few, highlighting the strength of our global client-serving capability; investments in new products and service capabilities with the rollout of GRIP and Aon Broking globally; and in our core treaty reinsurance business, net new business trends have now been positive for 5 consecutive quarters. Reflecting on the individual businesses. In the Americas, organic revenue growth improved to 4% compared to 2% in the prior year quarter. Exposures were relatively stable and the impact from pricing was modestly positive, reflecting a continued modest pace of improvement from a year ago. We saw solid management of the renewal book portfolio in U.S. Retail and Affinity, strengthened by the continued rollout of Client Promise. We also saw solid new business growth in Latin America. Overall, results reflect strong performance, overcoming continued market weakness in certain areas such as the commercial construction sector. In International, organic revenue growth was 3% against pricing which was flat on average overall with firmer pricing in cat-exposed regions. We saw strong growth in New Zealand across many regions in Asia and the emerging markets including double-digit growth in many areas such as China, Thailand, Hong Kong and New Zealand. In the U.K. and Continental Europe, macroeconomic conditions remain fragile across many core markets. However, with leadership positions across the U.K. and Europe, we saw strong retention rates and management of our renewal book portfolio would deliver modest growth overall, a solid performance given economic headwinds.
In Reinsurance, organic revenue growth improved to 7% compared to a decline of 2% in the prior year quarter, a level of organic revenue performance not achieved since Q3 2006. Results primarily reflect strong new business growth in global treaty placements, a modest portion of which is nonrecurring revenue. The impact to the market from pricing was favorable in the near term, primarily due to property cat-exposed regions. The underlying strength of the book continues to improve as net new business won was positive for the fifth consecutive quarter. This level of performance and strength in new business generation continues to reflect Aon Benfield's value proposition for clients of strengthening their operational performance and reducing volatility through unmatched data, analytics and advisory capability.Read the rest of this transcript for free on seekingalpha.com