In the Soft Market Aon Sees Acquisition Opportunities
The world's second-biggest insurance broker, Aon Corp., is in acquisition mode as insurance rates drop, according to Chief Executive Officer Gregory Case.
"Aon is in a very privileged position right now,'' Case said yesterday in an interview in Chicago. "We're going to continue to make acquisitions.''
The biggest insurance brokers are buying companies as commercial-insurance prices fall and stock declines persuade smaller rivals to sell. Willis Group Holdings Ltd., the No. 3 broker, agreed on June 8 to purchase Hilb Rogal & Hobbs Co. for $1.7 billion after reporting three straight profit declines.
"The industry is likely to consolidate, certainly over a cycle that gets more difficult,'' said Eric McKissack, who oversees a mid-cap stock fund for $16 billion money manager Calvert Asset Management Co. and owns Aon shares. "I'm sure the remaining companies are in their scope.''
Based in Chicago, Aon spent about $250 million on 21 purchases last year. Chief Administrative Officer Gregory Besio said it may spend more this year. Following Willis's takeover of Hilb Rogal, Besio said he started a review of possible targets.
"It is likely you'll see an acceleration of our M&A activity,'' Besio, head of Aon's corporate strategy, said in a separate interview yesterday. "At least once a quarter we look at everybody and say, what would we do and why? Do the numbers make sense?''
Published on June 11, 2008
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