Giant US-based broker Aon has had its ratings outlook revised from “stable” to “negative” by Standard & Poor’s following the company’s disappointing second-quarter earnings.

S&P’s changed the ratings outlook on the world’s second-largest insurance broker to reflect the margin deterioration in Aon’s insurance brokerage and consulting practices. Aon’s second-quarter earnings slump – at best it broke even – was described by CEO Patrick Ryan as the worst in Aon’s history. He said it was due to “certain unusual items, compressed operating margins and lower investment income”.

S&P’s credit analyst Matthew Coyle said higher expense levels and continued problems associated with the implementation of Aon’s business-transformation plan were factors causing the margin deterioration.

“S&P’s believes the time and effort that management has spent implementing its business-transformation plan has cost the organisation more than it had set out to achieve, at least in the short term,” he said. “Many of Aon’s competitors [are] capitalising on the operational disruption it has caused inside and outside the organisation.”

Aon also announced it might have to revise its earnings reports for the past three years after the US Securities and Exchange Commission raised questions over its accounting practices. S&P’s said the lowered ratings outlook takes the SEC review into account, as well as the capitalisation of the insurance operations of subsidiary company Combined Specialty Insurance. “These issues could have an adverse effect on Aon’s prospective financial capacity,” S&P said.