Aon, one of the world’s top two insurance brokers, makes money from risk. But when Greg Case took over as chief executive in 2005, the group was mired in it.
The former McKinsey consultant inherited a company struggling to emerge from a scandal that led to a large settlement with attorneys-general of several US states.
Two years on, it is evident that Mr Case has had some success. Earlier this month, Aon reported that quarterly revenue at its brokerage services unit had risen 6 per cent to $1.45bn, while its consulting group revenue was up 7 per cent to $329m. And when Mr Case took over, Aon’s stock was hovering at about $22 a share, but today it trades at about $40.
“Aon is at the end of the beginning of its potential,” he says of the 20-year-old company.
Before he took the top job, Mr Case says he became well acquainted with terms of Aon’s settlement with Eliot Spitzer, then the attorney-general in New York. After an investigation into its insurance-broker practices, Aon agreed to pay $190m to settle charges that it had steered clients’ insurance premiums to insurers that agreed to use Aon’s reinsurance brokerage to get insurance for themselves.
“The attorney-general was questioning the integrity of the industry and I wanted to understand more,” he says. “But Aon came out of the settlement and has benefited from the transparency.”
Soon after his appointment, Mr Case embarked on a restructuring plan that is on track to save the company at least $280m a year by 2008. The restructuring includes 3,600 job losses.
With the loss of revenue from contingent commissions, Mr Case has found new ways to improve Aon’s top line. One of his main priorities has been to beef up the brokerage business in speciality areas such as construction and environmental. The business is also growing through acquisitions, mainly in Europe.
Mr Case is starting to turn round Aon’s consulting business, too. “Our objective is to deliver distinctive client value,” he says. “Everybody says that, but we judge it by two criteria: one, have we strengthened our clients’ balance sheets? And (two), have we helped their operating performance?”
Mr Case recognises help from Patrick Ryan, the company’s founder, who served as chief executive of Aon and its predecessor company from 1964. Mr Ryan, who has long personified Aon, sits on the board and holds the title of executive chairman.
“When I took this job, I said two things to the board that were fairly prescriptive. The first was that I am not at Aon to cut costs, and the second was that I wanted Pat to be in the mix,” he says. Mr Case says that Mr Ryan is not involved in the day-to-day running of Aon, but that he is a great counsellor and “sounding board”.
Looking back on his two years as CEO, Mr Case is happy. “One of the things I feel most good about is that when I came here, I felt we collectively had an inferiority complex,” he says. “But now we’ve begun to really build more excitement.”