AOC Aon Corp.

Aon Study of Insurance Industry Finds Earnings Volatility Lower in 2004 CHICAGO, June 1 /PRNewswire-FirstCall/ -- Aon (NYSE:AOC) today announces the results of its 2004 Insurance Earnings Volatility Study, which highlights the insurers and reinsurers with the least volatile earnings. (Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) According to Michael Bungert, president of Aon Re Global, "Investors place a large amount of emphasis on earnings growth and earnings volatility, among a number of factors, when evaluating investment opportunities. While there is a large amount of research on revenue and earnings growth, this annual report is the only one that recognizes the individual companies that led their respective sectors with the lowest earnings volatility. We believe that less volatile earnings will, over time, contribute to increased shareholder value." The study measures cumulative earnings volatility over one-, two-, three-, and five-year periods ending Dec. 31, 2004. More than 80 public companies within commercial lines, specialty lines, personal lines, reinsurance, life insurance and health insurance participated in the 2004 study. Insurers and reinsurers that have not filed annual reports for 2004 were excluded. Despite hurricane catastrophe losses, disciplined underwriting and investment gains led to strong earnings for the property and casualty industry segment. The industry's combined ratio improved to 98 percent in 2004, marking the first industry-wide underwriting gain since 1978. Furthermore, net investment income increased more than 2 percent to $40 billion and capital gains were nearly $9 billion, up $2.5 billion from 2003. On a year-over-year basis earnings volatility for all participants included in the survey was, on average, 21 percent lower in 2004 than 2003. The companies with the least volatile earnings for 2004, segmented by measurement period, are listed below. 2004 Insurance Earnings Volatility Study Results One Year Two Year Three Year Five Year Period Period Period Period Commercial Lines: Least Volatile Old Republic Old Republic Old Republic Old Republic Runner-up Harleysville Cincinnati Hartford Hartford Financial Specialty Lines: Least Volatile United Fire RLI RLI RLI & Casualty Runner-up American Safety United Fire Baldwin & Lyons American Insurance & Casualty Financial Personal Lines: Least Volatile Mercury General Erie Erie ALFA Runner-up Progressive Direct General ALFA Erie Reinsurance: Least Volatile Partner Re Montpelier Re RenaissanceRe Everest Re Runner-up Endurance RenaissanceRe Everest Re RenaissanceRe Life Insurance: Least Volatile Torchmark Torchmark Nationwide Nationwide Financial Financial Runner-up Nationwide Jefferson-Pilot Torchmark Jefferson-Pilot Financial Health Insurance: Least Volatile Wellpoint UnumProvident CIGNA CIGNA Runner-up WellChoice WellChoice Humana UnumProvident Source: Aon Re Services, Inc. Within the property and casualty sectors, earnings volatility in 2004 was the lowest, or second lowest, in specialty lines for three of the four time periods measured in the study. While personal lines enjoyed strong leadership positions in both the 2002 and 2003 studies, they under-performed in 2004 due to hurricane catastrophe losses. Within the life and health industry segment, life insurers enjoyed, on average, across all measured time periods, 45 percent lower earnings volatility than their health insurer counterparts. In total, life insurers recorded 85 percent lower earnings volatility in 2004 when compared to 2003. A complete chart of earnings volatility, by sector and period, is below. 2004 Sector Volatility Study Results One-Year Two-Year Three-Year Five-Year Period Period Period Period Least Volatile Life Life Reinsurance Life Insurance Insurance Insurance 1st Runner-up Specialty Specialty Life Health Lines Lines Insurance Insurance 2nd Runner-up Commercial Personal Specialty Personal Lines Lines Lines Lines 3rd Runner-up Health Health Health Reinsurance Insurance Insurance Insurance 4th Runner-up Personal Reinsurance Personal Specialty Lines Lines Lines Most Volatile Reinsurance Commercial Commercial Commercial Lines Lines Lines Source: Aon Re Services, Inc. The study also included rankings based on return on equity (ROE). More than 75 percent of 2004's earnings-volatility leaders and runners-up also placed in the top half of the ROE rankings for their respective sectors. The weighted-average ROE for all of the insurers and reinsurers in 2004 improved to 10.6 percent from 9.3 percent in 2003 and 8.8 percent in 2002. 2004 Sector ROE Study Results 2004 2003 2002 2001 2000 Commercial Lines 10.9% 2.7 8.0 -5.0 7.9 Specialty Lines 11.1% 9.8 6.4 -0.6 1.9 Personal Lines 16.1% 12.8 9.8 8.1 8.8 Reinsurance 7.2% 9.0 6.6 -0.1 2.8 Life Insurance 11.8% 11.4 10.5 8.2 11.2 Health Insurance 10.6% 12.7 11.6 9.0 10.7 P&C 10.1% 8.0 7.6 0.0 5.6 L&H 11.4% 11.8 10.8 8.4 11.0 All Companies 10.6% 9.3 8.8 3.3 7.3 Source: Aon Re Services, Inc. About Aon Aon Corporation ( http://www.aon.com/ ) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 47,000 employees working in Aon's 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions. For more information, contact: Thaddeus Woosley, Aon Corporation, +1.312.381.2446, This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of regulatory investigations brought by state attorneys general and state insurance regulators related to our compensation arrangements with underwriters and related issues, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, and ERISA class actions, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, is contained in the Company's filings with the Securities and Exchange Commission. http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT: Thaddeus Woosley of Aon Corporation, +1-312-381-2446, Web site: http://www.aon.com/

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