Aon profit misses estimates on weakness in US retail brokerage business

(Reuters) -Aon first-quarter profit missed estimates on Friday due to underperformance in its U.S. retail brokerage business, sending its shares down nearly 9%.

While the company's retail brokerage revenue grew on the back of solid growth in EMEA, Asia and the Pacific, U.S. results faced pressure from lower net new business and the ongoing impacts from external capital markets activity, TD Cowen analysts said in a note.

Shares of the Dublin-based insurance broker tumbled to $280 and were on track to hit their lowest level in 17 months if the current losses hold.

Excluding one-time charges, it earned $5.66 a share, below analysts' average estimate of $5.91 a share, according to LSEG data.

Still, interest income rose nearly six times to $28 million in the first quarter ended March, primarily due to interest earned on $5 billion investment of debt proceeds used to fund the purchase of NFP.

Last year, Aon agreed to buy privately held NFP in a deal valued at about $13.4 billion to tap the fast-growing middle-market segment of insurance brokerage, wealth management and retirement plan advisory.

As a result, it also incurred $4 million in integration costs in the three months ended March 31.

Fiduciary investment income, which rose to $79 million in the quarter from $52 million a year ago, refers to interest earned on funds held in a fiduciary capacity by entities acting in a custodial role. These funds are typically held on behalf of policyholders, and the fiduciary has a legal obligation to manage them in the best interests of clients.

The U.S. Federal Reserve's higher-for-longer interest rate environment has helped such companies rake in higher income on funds and investments.

Last week, peer Marsh & McLennan also reported a better-than-expected first-quarter profit as fiduciary interest income rose 34% to $122 million.

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Maju Samuel)