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Insurance Brokers Q1 Earnings to Watch this Week: AON, MMC

With results from 132 members of the total S&P 500 already on board, the first-quarter earnings season is in full swing. The beat ratio seems strong with 77.3% surpassing bottom-line expectations and 56.1% beating on top line. Total earnings of these members were, however, down 7.9% while revenues decreased 1.1% as per our report. (Read more: Making Sense of the Q1 Earnings Reports)

About 36.4% of the companies in the Finance sector have already reported their results. Total earnings for these companies decreased 15.3% on 4.7% lower revenues. While the earnings beat ratio (68.8%) compares unfavorably with the S&P 500 index, the beat ratio for revenues (56.3%) were better.

Insurance brokers are part of the broader Finance sector. Their extensive global presence and diversified portfolio are expected to drive their results. These along with strategic acquisitions should aid revenue improvement.

Margins may have remained muted attributable to higher expenses. Adverse foreign exchange might have dampened the desired results.

With more than 183 index members releasing results from Apr 25–29, let’s find out what’s in store for two insurance brokers that will report this week.

Aon plc AON provides risk management services, insurance and reinsurance brokerage, human resource consulting and outsourcing services worldwide. The company delivered an 8.61% positive surprise last quarter. Aon has an http://www.zacks.com/earnings/earnings-surprise-predictions/">Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the quarter is pegged at $1.33.

Aon should have benefited from new business, strong retention rates, and returns on the company’s investments in industry leading data and analytics. Robust new business generation and increased operating leverage are expected to drive margins.

However, unfavorable foreign currency translation, higher interest expense and heightened competition from insurers and reinsurers may weigh on the company’s performance. (Read more: Will Q1 Earnings Hold a Surprise for Aon Stock?)

With respect to the surprise trend, Aon surpassed expectations in each of the last four quarters, with an average beat of 4.29%.

Marsh & McLennan Companies, Inc. MMC is a global professional services firm providing risk and insurance services, risk consulting, and employee benefits consulting services to clients worldwide. The company delivered a 1.43% positive surprise last quarter. For the first quarter of 2016, Marsh & McLennan has an Earnings ESP of 0.00%. It currently carries a Zacks Rank #3. The Zacks Consensus Estimate for the quarter is pegged at 88 cents per share.

Diversified global presence and strategic acquisitions should lead to solid performance in the first quarter. Margins are also expected to improve on better revenues. However, adverse foreign exchange and higher expense may dampen results to some extent. (Read more: Marsh & McLennan Q1 Earnings: Will Stock Surprise?)

With respect to the surprise trend, Marsh & McLennan surpassed expectations in three of the last four quarters, with an average beat of 3.06%.

Keep an eye on our full earnings articles to see how these S&P 500 members finally fared.

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MARSH &MCLENNAN (MMC): Free Stock Analysis Report
 
AON PLC (AON): Free Stock Analysis Report
 
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