CHICAGO, Aug. 3 /PRNewswire-FirstCall/ -- Aon Corporation
(NYSE:AOC) today reported second quarter and six months 2006
results. Second quarter 2006 net income was $193 million or $0.57
per share, compared to $191 million or $0.57 per share in 2005;
excluding restructuring charges under the company's previously
announced program, net income per share was $0.61 in second quarter
2006. Six months 2006 net income was $391 million or $1.13 per
share, compared to $391 million or $1.16 per share in 2005. For the
quarter, net income from continuing operations was $181 million or
$0.53 per share, compared to $193 million or $0.58 per share a year
ago. Six months 2006 net income from continuing operations was $362
million or $1.05 per share, compared to $381 million or $1.13 per
share a year ago. Second quarter and six months 2005 results from
continuing operations benefited by $0.10 per share from the
favorable resolution of certain tax matters, resulting in unusually
low effective tax rates. Certain items influenced the second
quarter and six month comparisons against the prior year and are
detailed in the reconciliation of the impact of non-GAAP measures
on pages 10 and 11. On that basis, second quarter and six months
2006 earnings per share from continuing operations increased 29%
and 20%, respectively, compared to a year ago. Greg Case, Aon's
president and CEO, said, "This was a solid quarter for Aon. We
achieved good organic revenue growth in Americas Brokerage and
Reinsurance, while maintaining expense discipline across the
company. The result is improvement in Aon's underlying earnings,
margin, and organic growth rate compared to last year. We are
making investments in our Consulting business which hold great
promise, but which are affecting current performance. In the
Insurance Underwriting segment, strong sales of a supplemental
health product contributed to significant profit growth and margin
improvement. With the pending disposition of Aon Warranty Group, we
intend to focus future insurance underwriting activities solely on
the business of Combined Insurance Company of America and its
subsidiaries." Sale of Aon Warranty Group As previously announced,
during the quarter Aon signed a definitive agreement to sell Aon
Warranty Group (AWG) and its worldwide operations, including
Virginia Surety Company. The operating results of this business,
including related Corporate & Other segment investment income,
have been reclassified to discontinued operations for the second
quarter and six month periods ending June 30, 2006 and 2005 (see
"Discontinued Operations"). The sale is expected to be completed in
the fourth quarter of 2006. Aon continues to explore strategic
options with respect to its Specialty Property and Casualty
businesses, which are not included in the AWG transaction. Second
Quarter Segment Review Risk and Insurance Brokerage Services second
quarter revenue increased 5% to $1.4 billion, with 2% organic
revenue growth. Organic revenue in Brokerage-Americas rose 5%,
primarily driven by our U.S. Retail business and growth in Affinity
and Latin America. Brokerage- International organic revenue
declined 1% reflecting the negative impact of soft market
conditions. Reinsurance organic revenue grew 5% in the quarter,
reflecting double-digit growth in the Americas and Asia driven by
new business and improved pricing, partially offset by the impact
of higher risk retention by clients and weaker pricing in the U.K.
and European markets. Second quarter pretax income increased 6% to
$220 million from $208 million in 2005, and the pretax margin
improved to 15.8% in 2006 from 15.6% in 2005. Adjusting for the
items detailed on page 11, the 2006 segment pretax margin improved
by 240 basis points to 17.1% from 14.7%, principally due to revenue
growth and the benefits of operational improvements and cost
reduction initiatives. Six months pretax income increased 5% to
$469 million from $448 million, and the pretax margin improved to
16.8% from 16.7% in 2005. Adjusting for the items detailed on page
11, the pretax margin improved to 17.5% in 2006 from 15.4% in 2005.
Consulting segment revenue of $309 million in the quarter reflects
1% organic growth driven primarily by Compensation Consulting and
the recently established Financial Advisory and Litigation
Consulting (FALC) unit. Second quarter pretax income was $23
million, compared to $29 million in 2005. The pretax income decline
was principally due to investments made in the FALC and Global
Benefits practices, and reduced volumes from certain outsourcing
clients. The pretax margin was 7.4% in 2006 and 9.2% a year ago.
Adjusting for the items detailed on page 11, the pretax margin was
8.4%, compared to 8.9% a year ago. Six months pretax income was $53
million, compared to $55 million, and the pretax margin was 8.6% in
2006, compared to 8.8% in 2005. Excluding the items detailed on
page 11, the consulting margin improved by 150 basis points over
the first six months of 2005. Insurance Underwriting revenue
increased 9% to $556 million in the quarter, with segment organic
revenue growth, which is based on written premiums and fees, of
10%. In the Accident & Health and Life (A&H and Life)
business, organic revenue grew 12% primarily driven by strong
growth in a supplemental health product. Second quarter pretax
income rose 25% to $79 million reflecting improved profitability in
A&H and Life and higher investment income. The pretax margin
improved to 14.2% in 2006 from 12.3% in 2005. Six months pretax
income increased 15.0% to $135 million, and the pretax margin
improved to 12.2% from 11.5% in 2005. Corporate and Other segment
revenue was $18 million in the quarter, compared to $3 million in
2005. The pretax loss in the Corporate and Other segment was $46
million, compared with a loss of $54 million a year ago. The pretax
loss for six months was $103 million, compared to a pretax loss of
$80 million a year ago. Six months 2006 results included a $17
million pretax loss related to the revaluation of Endurance
warrants, compared to a $15 million pretax gain in 2005.
Restructuring Plan The previously announced three-year
restructuring plan is currently expected to result in cumulative
pretax charges of approximately $300 million, including employee
termination and lease consolidation costs, asset impairments, and
other costs associated with the restructuring. The increase from
our previous estimate results primarily from newly identified IT
cost saving initiatives. Annualized cost savings are now targeted
at approximately $195 million by 2008. Certain aspects of the plan
are not finalized, and actual total costs, the timing of the costs,
and ultimate savings may vary from the estimates due to changes in
the scope or assumptions underlying this plan. An analysis of
restructuring-related expenses by segment for the second quarter
and six months of 2006 is presented in the attached reconciliation
of non-GAAP measures. Actual and estimated restructuring costs by
reporting period, by type, and by geographic region are detailed on
page 12. Discontinued Operations The second quarter after-tax
income from discontinued operations was $12 million ($0.04 per
share) in 2006 and a $2 million after-tax loss ($0.01 per share) in
2005, primarily reflecting the reclassification of AWG. Selected
financial information relating to AWG is included on page 13. The
effective tax rates on discontinued operations were unusually high
for 2005 reflecting deferred tax adjustments relating to AWG.
Effective Tax Rate The effective tax rate for continuing operations
was 34.4% for the second quarter of 2006 compared to 21.5% for the
second quarter of 2005. The year- to-date effective tax rates for
the six months ending June 30, 2006 and 2005 were 34.7% and 29.4%,
respectively. The effective tax rates for 2005 were unusually low
reflecting the favorable resolution of certain tax matters. Foreign
Exchange Impact Second quarter 2006 earnings per share were
positively affected by $0.01 related to foreign currency
translation gains relative to the second quarter of 2005. In
addition, second quarter 2006 earnings per share included $0.01 of
currency hedging losses compared to $0.02 of hedging gains in 2005.
Accounting Change As of January 1, 2006, Aon adopted FASB Statement
No.123(R) using the modified prospective transition method, as
permitted. Accordingly, prior period amounts have not been
restated. Stock option-based compensation expense (included in
compensation and benefits expense) related to the adoption of
Statement No.123(R) was $6 million pretax or $0.01 per share in the
second quarter of 2006, and $13 million pretax or $0.02 per share
for the six months of 2006. Financial Condition Total debt and
preferred stock increased $201 million to $2.1 billion at June 30,
2006 from June 30, 2005. Total debt and preferred stock as a
percentage of total capital increased to 28% from 27% over the same
period. Stockholders' equity was $5.4 billion at June 30, 2006.
Compared to December 31, 2005, total debt decreased $9 million.
Approximately 94% of Aon's investment portfolio at quarter end was
in short-term and fixed maturities, with 99% of the fixed income
securities rated investment grade. Stock Repurchase Program During
the second quarter of 2006, Aon completed the repurchase of
approximately 5.6 million shares of common stock for $221 million.
Through June 30, 2006, the Company has repurchased approximately
12.4 million shares for $493 million under the existing $1 billion
buyback authorization announced in November 2005. The Company will
host an audio webcast to discuss second quarter results on Friday,
August 4 at 10:00 a.m. central time that can be accessed at
http://www.aon.com/ . 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 46,000 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. 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, our ability to
implement restructuring initiatives and other initiatives intended
to yield cost savings, our ability to execute the stock repurchase
program, our ability to execute the planned sale of the Aon
Warranty Group, 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 investigations brought by state attorneys
general, state insurance regulators, federal prosecutors, and
federal regulators, 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.
This press release includes supplemental information related to
organic revenue growth, a measure that management believes is
important to evaluate changes in revenue from existing operations.
We believe that this supplemental information is helpful to
investors. Organic revenue growth excludes from reported revenues
the impact of foreign exchange, acquisitions, divestitures,
transfers between business units, investment income, reimbursable
expenses, unusual items, and for the underwriting segment only, an
adjustment between written and earned premium. A reconciliation is
provided in the attached schedules. The supplemental organic
revenue growth information does not affect net income or any other
GAAP reported amounts. It should be viewed in addition to, not in
lieu of, the Company's Consolidated Summary of Operations. Industry
peers provide similar supplemental information regarding their
revenue performance, although they may not make identical
adjustments. This press release also includes supplemental
information related to several measures -- income per share,
expenses, and margins - that exclude the effects of the
restructuring charges and certain other noteworthy items that
impacted revenue and pretax income in the comparable periods.
Management believes that these measures are important to make
meaningful period-to-period comparisons and that this supplemental
information is helpful to investors. The measures that exclude the
effects of the restructuring charges and certain other items do not
affect net income or any other GAAP reported amounts. They should
be viewed in addition to, not in lieu of, the Company's
Consolidated Summary of Operations. Industry peers provide similar
supplemental information regarding their performance, although they
may not make identical adjustments. Investor Contact: Julie Ann
Kotowski Investor Relations 312-381-3983 Media Contact: Al
Orendorff Director, Public Relations 312-381-3153 Aon Corporation
Consolidated Summary of Operations Second Quarter Ended Six Months
Ended ---------------------- ---------------------- (millions
except June June June June per share data) 30, 30, Percent 30, 30,
Percent 2006 2005(1) Change 2006 2005(1) Change ------ --------
------- ------ ------ ------- Revenue Brokerage commissions and
fees $1,657 $1,610 3% $3,277 $3,236 1% Premiums and other 522 482 8
1,041 957 9 Investment income 86 56 54 177 133 33 ------ --------
------- ------ ------ ------- Total revenue 2,265 2,148 5 4,495
4,326 4 ------ -------- ------- ------ ------ ------- Expenses
Compensation and benefits 1,136 1,081 5 2,237 2,167 3 Other general
expenses 471 471 - 946 910 4 Benefits to policyholders 292 258 13
581 520 12 Depreciation and amortization 55 59 (7) 110 121 (9)
Interest expense 34 31 10 65 65 - Provision for New York and other
state settlements 1 2 (50) 2 3 (33) ------ -------- ------- ------
------ ------- Total expenses 1,989 1,902 5 3,941 3,786 4 ------
-------- ------- ------ ------ ------- Income from continuing
operations before provision for income tax 276 246 12 554 540 3
Provision for income tax(3) 95 53 79 192 159 21 ------ --------
------- ------ ------ ------- Income from continuing operations 181
193 (6) 362 381 (5) Discontinued Operations Income from
discontinued operations 20 43 (53) 47 62 (24) Provision for income
tax(4) 8 45 (82) 19 52 (63) ------ -------- ------- ------ ------
------- Income (loss) from discontinued operations 12 (2) N/A 28 10
180 ------ -------- ------- ------ ------ ------- Income before
accounting change 193 191 1 390 391 - Cumulative effect of change
in accounting principle, net of tax(2) - - N/A 1 - N/A ------
-------- ------- ------ ------ ------- Net income $193 $191 1% $391
$391 -% ====== ======== ======= ====== ====== ======= Preferred
stock dividends - - - - (1) (100) ------ -------- ------- ------
------ ------- Net income available for common stockholders $193
$191 1% $391 $390 -% ====== ======== ======= ====== ====== =======
Basic net income (loss) per share: Income from continuing
operations $0.56 $0.60 (7)% $1.13 $1.18 (4)% Discontinued
operations 0.04 (0.01) N/A 0.09 0.03 200 Cumulative effect of
change in accounting principle - - - - - - ------ -------- -------
------ ------ ------- Net income $0.60 $0.59 2% $1.22 $1.21 1%
====== ======== ======= ====== ====== ======= Diluted net income
(loss) per share: Income from continuing operations $0.53 $0.58
(9)% $1.05 $1.13 (7)% Discontinued operations 0.04 (0.01) N/A 0.08
0.03 167 Cumulative effect of change in accounting principle - - -
- - - ------ -------- ------- ------ ------ ------- Net income
$0.57 $0.57 -% $1.13 $1.16 (3)% ====== ======== ======= ======
====== ======= Diluted average common and common equivalent shares
outstanding 344.8 338.5 2% 347.5 337.8 3% ====== ======== =======
====== ====== ======= (1) Certain amounts relating to discontinued
operations have been reclassified to conform to the 2006
presentation. (2) Adoption of FASB Statement No. 123(R),
"Share-Based Payments," effective January 1, 2006. (3) Tax rate
from continuing operations is 34.4% and 21.5% for the second
quarters ended June 30, 2006 and 2005, respectively, and 34.7% and
29.4% for the six month periods ended June 30, 2006 and 2005,
respectively. (4) Tax rate from discontinued operations is 40% and
104.7% for the second quarters ended June 30, 2006 and 2005,
respectively, and 40.4% and 83.9% for the six month periods ended
June 30, 2006 and 2005, respectively. Aon Corporation Revenue From
Continuing Operations Second Quarter Ended
------------------------------------------------------- Less:
Acquisitions, Less: Divest- Less: Organic Curr- itures All Revenue
June 30, June 30, Percent ency & Other Growth (millions) 2006
2005(1) Change Impact Transfers (2) (3) -------- -------- -------
------ --------- ---- ------- Revenue Risk and insurance brokerage
services Risk management and insurance brokerage - Americas $591
$539 10% 2% 3% -% 5% Risk management and insurance brokerage -
International 590 592 - (1) 2 - (1) Reinsurance brokerage and
related services 214 203 5 (1) (3) 4 5 -------- -------- -------
------ --------- ---- ------- Total risk and insurance brokerage
services 1,395 1,334 5 - 2 1 2 -------- -------- ------- ------
--------- ---- ------- Consulting Consulting services 237 244 (3) -
(5) 1 1 Outsourcing 72 71 1 1 2 (2) - -------- -------- -------
------ --------- ---- ------- Total consulting 309 315 (2) - (3) -
1 -------- -------- ------- ------ --------- ---- ------- Insurance
underwriting Accident & health and life 499 450 11 - - (1) 12
Property & casualty 57 61 (7) - - - (7) -------- --------
------- ------ --------- ---- ------- Total insurance underwriting
556 511 9 - - (1) 10 -------- -------- ------- ------ ---------
---- ------- Corporate and other 18 3 500 N/A N/A N/A N/A
Intersegment revenues (13) (15) N/A N/A N/A N/A N/A --------
-------- ------- ------ --------- ---- ------- Total $2,265 $2,148
5% -% 1% -% 4% ======== ======== ======= ====== ========= ====
======= Six Months Ended
------------------------------------------------------- Less:
Acquisitions, Less: Divest- Less: Organic Curr- itures All Revenue
June 30, June 30, Percent ency & Other Growth (millions) 2006
2005(1) Change Impact Transfers (2) (3)
------------------------------------------------------- Revenue
Risk and insurance brokerage services Risk management and insurance
brokerage - Americas $1,121 $991 13% 1% 2% 5% 5% Risk management
and insurance brokerage - International 1,207 1,252 (4) (4) 1 (1) -
Reinsurance brokerage and related services 460 443 4 (2) - 4 2
-------- -------- ------- ------ --------- ---- ------- Total risk
and insurance brokerage services 2,788 2,686 4 (2) 2 2 2 --------
-------- ------- ------ --------- ---- ------- Consulting
Consulting services 475 484 (2) (1) (4) - 3 Outsourcing 142 140 1
(1) 3 (3) 2 -------- -------- ------- ------ --------- ---- -------
Total consulting 617 624 (1) (1) (3) 1 2 -------- -------- -------
------ --------- ---- ------- Insurance underwriting Accident &
health and life 980 890 10 - - (1) 11 Property & casualty 127
126 1 - - (13) 14 -------- -------- ------- ------ --------- ----
------- Total insurance underwriting 1,107 1,016 9 - - (2) 11
-------- -------- ------- ------ --------- ---- ------- Corporate
and other 15 30 (50) N/A N/A N/A N/A Intersegment revenues (32)
(30) N/A N/A N/A N/A N/A -------- -------- ------- ------ ---------
---- ------- Total $4,495 $4,326 4% (1)% 1% -% 4% ======== ========
======= ====== ========= ==== ======= (1) Certain amounts relating
to discontinued operations have been reclassified to conform to the
2006 presentation. (2) Includes the impact of investment income,
reimbursable expenses, adjustment between written and earned
premium and fees in insurance underwriting only, and unusual items.
(3) Organic revenue growth excludes the impact of foreign exchange,
acquisitions, divestitures, transfers and items described in (2).
Written premiums and fees are the basis for organic revenue growth
within the Insurance Underwriting segment. Aon Corporation Risk and
Insurance Brokerage Services - Continuing Operations Second Quarter
Ended Six Months Ended -------------------------
---------------------- June June June June 30, 30, Percent 30, 30,
Percent (millions) 2006 2005(1) Change 2006 2005(1) Change -------
-------- ------ ----- -------- ------ Revenue Operating and other
revenue $1,355 $1,306 4% $2,682 $2,633 2% Investment income 40 28
43 106 53 100 ------- -------- ------ ----- -------- ------ Total
revenue 1,395 1,334 5 2,788 2,686 4 ------- -------- ------ -----
-------- ------ Expenses Compensation and benefits 826 781 6 1,627
1,570 4 Other expenses 349 345 1 692 668 4 ------- -------- ------
----- -------- ------ Total expenses 1,175 1,126 4 2,319 2,238 4
------- -------- ------ ----- -------- ------ Income from
continuing operations before provision for income tax $220 $208 6%
$469 $448 5% ======= ======== ====== ===== ======== ====== Pretax
margin - income from continuing operations before provision for
income tax 15.8% 15.6% 16.8% 16.7% Consulting - Continuing Second
Quarter Ended Six Months Ended ------------------------
-------------------- Operations June June June June 30, 30, Percent
30, 30, Percent (millions) 2006 2005 Change 2006 2005 Change
------- -------- ------ ----- -------- ------ Revenue Operating and
other revenue $308 $314 (2)% $614 $622 (1)% Investment income 1 1 -
3 2 50 ------- -------- ------ ----- -------- ------ Total revenue
309 315 (2) 617 624 (1) ------- -------- ------ ----- --------
------ Expenses Compensation and benefits 202 198 2 396 395 - Other
expenses 84 88 (5) 168 174 (3) ------- -------- ------ -----
-------- ------ Total expenses 286 286 - 564 569 (1) -------
-------- ------ ----- -------- ------ Income from continuing
operations before provision for income tax $23 $29 (21)% $53 $55
(4)% ======= ======== ====== ===== ======== ====== Pretax margin -
income from continuing operations before provision for income tax
7.4% 9.2% 8.6% 8.8% (1) Certain amounts relating to discontinued
operations have been reclassified to conform to the 2006
presentation. Aon Corporation Insurance Underwriting - Continuing
Operations Second Quarter Ended Six Months Ended
------------------------- ---------------------- June June June
June 30, 30, Percent 30, 30, Percent (millions) 2006 2005(1) Change
2006 2005(1) Change ------- -------- ------ ----- -------- ------
Revenue Premiums and other $529 $487 9% $1,054 $968 9% Investment
income 27 24 13 53 48 10 ------- -------- ------ ----- --------
------ Total revenue 556 511 9 1,107 1,016 9 ------- --------
------ ----- -------- ------ Expenses Benefits to policyholders 292
258 13 581 520 12 Compensation and benefits 97 92 5 195 186 5 Other
expenses 88 98 (10) 196 193 2 ------- -------- ------ -----
-------- ------ Total expenses 477 448 6 972 899 8 ------- --------
------ ----- -------- ------ Income from continuing operations
before provision for income tax $79 $63 25% $135 $117 15% =======
======== ====== ===== ======== ====== Pretax margin - income from
continuing operations before provision for income tax 14.2% 12.3%
12.2% 11.5% Corporate and Other - Continuing Operations Second
Quarter Ended Six Months Ended -------------------------
---------------------- June June June June 30, 30, Percent 30, 30,
Percent (millions) 2006 2005(1) Change 2006 2005(1) Change -------
-------- ------ ----- -------- ------ Revenue Income from
marketable equity securities and other investments (2) $17 $10 70%
$20 $38 (47)% Limited partnership investments 1 - N/A 1 1 - Net
loss on disposals and related expenses - (7) N/A (6) (9) N/A
------- -------- ------ ----- -------- ------ Total revenue 18 3
500 15 30 (50) ------- -------- ------ ----- -------- ------
Expenses Compensation and benefits 11 10 10 19 16 19 Other general
expenses 19 16 19 34 29 17 Interest expense 34 31 10 65 65 -
------- -------- ------ ----- -------- ------ Total expenses 64 57
12 118 110 7 ------- -------- ------ ----- -------- ------ Loss
from continuing operations before provision for income tax $(46)
$(54) N/A% $(103) $(80) N/A% ======= ======== ====== ===== ========
====== (1) Certain amounts related to discontinued operations have
been reclassified to conform to the 2006 presentation. (2) Includes
gain (loss) from Endurance warrants of ($17) million for the six
months ended June 30, 2006 and ($1) million and $15 million for the
second quarter and six months ended June 30, 2005, respectively.
Aon Corporation Reconciliation of the Impact of Non-GAAP Measures
on Diluted Earnings Per Share Second Quarter and Six Months Ended
June 30, 2006 and 2005 Second Quarter Ended Six Months Ended
------------------------- ---------------------- June June June
June 30, 30, Percent 30, 30, Percent 2006 2005 Change 2006 2005
Change ------- -------- ------ ----- -------- ------ Diluted
earnings per share from continuing operations - as reported $0.53
$0.58 (9)% $1.05 $1.13 (7)% After tax earnings per share
adjustments: Restructuring charges 0.04 - 0.10 - Contingent
commissions (0.01) (0.01) (0.02) (0.03) Stock option expense 0.01 -
0.02 - Hedging (gains) losses 0.01 (0.02) 0.01 (0.04) Favorable
resolution of tax contingencies and deferred tax adjustments -
(0.10) - (0.10) Gain on sale of Cambridge preferred stock
investment - - (0.07) - Endurance warrants - - 0.03 (0.03) -------
-------- ------- ------ Total after tax earnings per share
adjustments 0.05 (0.13) 0.07 (0.20) ------- -------- ------- ------
Diluted earnings per share from continuing operations - as adjusted
0.58 0.45 29 1.12 0.93 20 Diluted earnings per share from
discontinued operations - as reported 0.04 (0.01) 0.08 0.03
Deferred tax adjustments attributable to Aon Warranty Group - 0.09
- 0.09 ------- -------- ------- ------ Diluted earnings per share
from discontinued operations - as adjusted 0.04 0.08 (50) 0.08 0.12
(33) Total diluted earnings per share - as adjusted $0.62 $0.53 17%
$1.20 $1.05 14% ======= ======== ======= ====== Diluted average
common and common equivalent shares outstanding (millions) 344.8
338.5 347.5 337.8 ======= ======== ======= ====== Aon Corporation
Reconciliation of Non-GAAP Measures - Segments Second Quarter and
Six Months Ended June 30, 2006 and 2005 (1) Second Quarter Ended
June 30, 2006 ----------------------------------------- Risk and
Insur- Insurance ance Brokerage Consult- Under- Corporate
(millions) Services ing writing & Other Total --------- -------
---------------- ------ Revenue as reported $1,395 $309 $556 $5
$2,265 Gain on sale of Cambridge preferred stock investment - - - -
- Contingent commissions (7) - - - (7) Endurance warrants - - - - -
--------- ------- ------- -------- ------ Revenue as adjusted
$1,388 $309 $556 $5 $2,258 ========= ======= ======= ========
====== Income (loss) from continuing operations before provision
for income tax - as reported $220 $23 $79 $(46) $276 Restructuring
charges 17 2 - - 19 Contingent commissions (7) - - - (7) Stock
option expense 4 1 1 - 6 Hedging losses 3 - - - 3 Gain on sale of
Cambridge preferred stock investment - - - - - Endurance warrants -
- - - - --------- ------- ------- -------- ------ Income (loss)
from continuing operations before provision for income tax - as
adjusted $237 $26 $80 $(46) $297 ========= ======= ======= ========
====== Income from continuing operations before provision for
income tax - margins as adjusted 17.1% 8.4% 14.4% N/A 13.2%
========= ======= ======= ======== ====== Six Months Ended June 30,
2006 ----------------------------------------- Risk and Insur-
Insurance ance Brokerage Consult- Under- Corporate (millions)
Services ing writing & Other Total --------- -------
---------------- ------ Revenue as reported $2,788 $617 $1,107
$(17) $4,495 Gain on sale of Cambridge preferred stock investment
(35) - - - (35) Contingent commissions (13) - - - (13) Endurance
warrants - - - 17 17 --------- ------- ------- -------- ------
Revenue as adjusted $2,740 $617 $1,107 $- $4,464 ========= =======
======= ======== ====== Income (loss) from continuing operations
before provision for income tax - as reported $469 $53 $135 $(103)
$554 Restructuring charges 43 8 - 1 52 Contingent commissions (13)
- - - (13) Stock option expense 9 2 2 - 13 Hedging losses 6 - - - 6
Gain on sale of Cambridge preferred stock investment (35) - - -
(35) Endurance warrants - - - 17 17 --------- ------- -------
-------- ------ Income (loss) from continuing operations before
provision for income tax - as adjusted $479 $63 $137 $(85) $594
========= ======= ======= ======== ====== Income from continuing
operations before provision for income tax - margins as adjusted
17.5% 10.2% 12.4% N/A 13.3% ========= ======= ======= ========
====== Second Quarter Ended June 30, 2005
----------------------------------------- Risk and Insur- Insurance
ance Brokerage Consult- Under- Corporate (millions) Services ing
writing & Other Total --------- ------- ---------------- ------
Revenue as reported $1,334 $315 $511 $(12) $2,148 Contingent
commissions (3) (1) - - (4) Endurance warrants - - - 1 1 ---------
------- ------- -------- ------ Revenue as adjusted $1,331 $314
$511 $(11) $2,145 ========= ======= ======= ======== ====== Income
(loss) from continuing operations before provision for income tax -
as reported $208 $29 $63 $(54) $246 Contingent commissions (3) (1)
- - (4) Hedging gains (9) - - - (9) Endurance warrants - - - 1 1
--------- ------- ------- -------- ------ Income (loss) from
continuing operations before provision for income tax - as adjusted
$196 $28 $63 $(53) $234 ========= ======= ======= ======== ======
Income from continuing operations before provision for income tax -
margins as adjusted 14.7% 8.9% 12.3% N/A 10.9% ========= =======
======= ======== ====== Six Months Ended June 30, 2005
----------------------------------------- Risk and Insur- Insurance
ance Brokerage Consult- Under- Corporate (millions) Services ing
writing & Other Total --------- ------- ---------------- ------
Revenue as reported $2,686 $624 $1,016 $- $4,326 Contingent
commissions (16) (1) - - (17) Endurance warrants - - - (15) (15)
--------- --------------- -------- ------ Revenue as adjusted
$2,670 $623 $1,016 $(15) $4,294 ========= ======= ======= ========
====== Income (loss) from continuing operations before provision
for income tax - as reported $448 $55 $117 $(80) $540 Contingent
commissions (16) (1) - - (17) Hedging gains (20) - - - (20)
Endurance warrants - - - (15) (15) Income (loss) from continuing
operations before provision --------- ------- ------- --------
------ for income tax - as adjusted $412 $54 $117 $(95) $488
========= ======= ======= ======== ====== Income from continuing
operations before provision for income tax - margins as adjusted
15.4% 8.7% 11.5% N/A 11.4% ========= ======= ======= ========
====== (1) Certain noteworthy items impacted revenue and pretax
income in 2006 and 2005, which are described in this schedule. The
pretax income (loss) amounts and related margins shown in the
captions "Income (loss) from continuing operations before provision
for income tax - as adjusted" are non-GAAP measures. Aon
Corporation 2005 Restructuring Plan By Type: Actual Estimated
------------------------------------------------ Total Full First
Second Incurred Remainder Year Quarter Quarter to of (millions)
2005 2006 2006 Date 2006 2007 Total
------------------------------------------------ Workforce
reduction $116 $25 $7 $148 $32 $7 $187 Lease consolidation 20 5 7
32 22 10 64 Asset impairments 17 1 1 19 6 - 25 Other costs
associated with restructuring 5 2 4 11 9 4 24
------------------------------------------------ Total
restructuring and related expenses $158 $33 $19 $210 $69 $21 $300
================================================ By Region: United
United Continent Rest of (millions) States Kingdom of Europe World
Total ------------------------------------------------ 2005
(incurred) $28 $92 $30 $8 $158 2006 (incurred - 1st Qtr.) 12 13 5 3
33 2006 (incurred - 2nd Qtr.) 3 15 - 1 19 2006 remaining
(estimated) 15 36 14 4 69 2007 (estimated) 16 2 2 1 21
------------------------------------------------ Total incurred and
remaining estimated $74 $158 $51 $17 $300
================================================ Aon Corporation
Aon Warranty Group (millions except 2005 2006 per
--------------------------------------- ----------------------
share 4th data) 1st 2nd 3rd Quarter Full 1st 2nd Six Quarter
Quarter Quarter (1) Year Quarter Quarter Months
--------------------------------------- ----------------------
Revenue Brokerage commissions and fees $49 $54 $52 $8 $163 $44 $46
$90 Premiums and other 223 236 246 196 901 230 243 473 Investment
income - from Insurance Under- writing segment 12 15 15 15 57 16 18
34 Investment income - from Corporate & Other segment 2 3 3 3
11 3 3 6 ------ ------ ------- ----- ------ ----- ----- ----- Total
revenue 286 308 316 222 1,132 293 310 603 ----- ------ -------
----- ------ ----- ----- ----- Expenses General expenses 134 159
152 67 512 135 145 280 Benefits to policy- holders 131 123 130 119
503 130 141 271 Deprec- iation & amort- ization 5 3 3 6 17 2 3
5 ------ ------- ------ ----- ------- ----- ------ ----- Total
expen- ses 270 285 285 192 1,032 267 289 556 ------ ------- ------
----- ------- ----- ------ ----- Income before provision for income
tax 16 23 31 30 100 26 21 47 Provision for income tax 6 36 11 10 63
9 7 16 ------ ------- ------ ----- ------ ----- ----- ----- Net
income (loss) $10 $(13) $20 $20 $37 $17 $14 $31 ======= =======
====== ===== ====== ===== ===== ===== Basic net income (loss) per
share $0.03 $(0.04) $0.06 $0.06 $0.11 $0.05 $0.04 $0.10 ======
======= ====== ====== ====== ====== ====== ===== Dilutive net
income (loss) per share $0.03 $(0.04) $0.06 $0.06 $0.11 $0.05 $0.04
$0.09 ====== ======= ====== ====== ====== ====== ====== =====
Dilutive average common and common equiv- alent shares outstan-
ding 337.1 338.5 342.7 347.5 341.5 350.2 344.8 347.5 ====== ======
====== ====== ======= ====== ====== ===== (1) The change in the
quarterly pattern of revenue and expense primarily reflects
cumulative reclassifications. Aon Corporation Consolidated Summary
of Operations - Reclassified for Discontinued Operations (millions
except per share data) 2005 2006
-------------------------------------- ----------------------- 1st
2nd 3rd 4th Full 1st 2nd Six Quarter Quarter Quarter Quarter Year
Quarter Quarter Months ------- -----------------------------
----------------------- Revenue Brokerage commissions and fees
$1,626 $1,610 $1,530 $1,717 $6,483 $1,620 $1,657 $3,277 Premiums
and other 475 482 486 504 1,947 519 522 1,041 Investment income 77
56 55 87 275 91 86 177 ------- ------ ------ ------ ------ ------
------ ------ Total revenue 2,178 2,148 2,071 2,308 8,705 2,230
2,265 4,495 ------- ------ ------ ------ ------ ------ ------
------ Expenses General expenses 1,525 1,552 1,543 1,782 6,402
1,576 1,607 3,183 Benefits to policy- holders 262 258 272 256 1,048
289 292 581 Depreciation & amort- ization 62 59 77 62 260 55 55
110 Interest expense 34 31 29 31 125 31 34 65 Provision for New
York and other state settlements 1 2 1 1 5 1 1 2 ------- ------
------ ------ ------ ------ ------ ------ Total expenses 1,884
1,902 1,922 2,132 7,840 1,952 1,989 3,941 ------- ------ ------
------ ------ ------ ------ ------ Income from continuing
operations before provision for income tax 294 246 149 176 865 278
276 554 Provision for income tax 106 53 49 52 260 97 95 192 -------
------ ------ ------ ------ ------ ------ ------ Income from
continuing operations 188 193 100 124 605 181 181 362 Discontinued
Operations Income from Discontinued Operations 19 43 34 234 330 27
20 47 Provision for income tax 7 45 12 134 198 11 8 19 -------
------ ------ ------ ------ ------ ------ ------ Income (loss) from
discontinued operations 12 (2) 22 100 132 16 12 28 ------- ------
------ ------ ------ ------ ------ ------ Income before accounting
change 200 191 122 224 737 197 193 390 Cumulative effect of change
in accounting principle, net of tax - - - - - 1 - 1 ------- ------
------ ------ ------ ------ ------ ------ Net income $200 $191 $122
$224 $737 $198 $193 $391 ======= ====== ====== ====== ====== ======
====== ====== Preferred stock dividends (1) - (1) - (2) - - -
------- ------ ------ ------ ------ ------ ------ ------ Net income
available for common stockholders $199 $191 $121 $224 $735 $198
$193 $391 ======= ====== ====== ====== ====== ====== ====== ======
Basic net income (loss) per share: Income from continuing
operations $0.58 $0.60 $0.30 $0.38 $1.87 $0.56 $0.56 $1.13
Discontinued operations 0.04 (0.01) 0.07 0.31 0.41 0.05 0.04 0.09
Cumulative effect of change in accounting principle - - - - - - - -
------- ------ ------ ------ ------ ------ ------ ------ Net income
$0.62 $0.59 $0.37 $0.69 $2.28 $0.61 $0.60 $1.22 ======= ======
====== ====== ====== ====== ====== ====== Dilutive net income
(loss) per share: Income from continuing operations $0.55 $0.58
$0.30 $0.36 $1.78 $0.52 $0.53 $1.05 Discontinued operations 0.04
(0.01) 0.06 0.29 0.39 0.05 0.04 0.08 Cumulative effect of change in
accounting principle - - - - - - - - ------- ------ ------ ------
------ ------ ------ ------ Net income $0.59 $0.57 $0.36 $0.65
$2.17 $0.57 $0.57 $1.13 ======= ====== ====== ====== ====== ======
====== ====== Dilutive average common and common equivalent shares
outstanding 337.1 338.5 342.7 347.5 341.5 350.2 344.8 347.5 =======
====== ====== ====== ====== ====== ====== ====== Aon Corporation
Segments - Reclassification for Discontinued Operations 2005 2006
------------------------------------------- ------ 1st 2nd 3rd 4th
Full 1st (millions) Quarter Quarter Quarter Quarter Year Quarter
----------- ------- ------- -------- ---- ------- Revenue Risk and
insurance brokerage services $1,352 $1,334 $1,280 $1,434 $5,400
$1,393 Consulting 309 315 295 336 1,255 308 Insurance underwriting
: As reported 789 816 827 756 3,188 841 Less: reclassification to
discontinued operations (284) (305) (313) (219) (1,121) (290)
----------- ------- ------- -------- ---- ------- As reclassified
505 511 514 537 2,067 551 Corporate and other: As reported 29 6 -
21 56 - Less: reclassification to discontinued operations (2) (3)
(3) (3) (11) (3) ----------- ------- ------- -------- ---- -------
As reclassified 27 3 (3) 18 45 (3) Intersegment revenues (15) (15)
(15) (17) (62) (19) ----------- ------- ------- -------- ----
------- Total $2,178 $2,148 $2,071 $2,308 $8,705 $2,230 ===========
======= ======= ======== ==== ======= Income (Loss) Before Income
Tax Risk and insurance brokerage services $240 $208 $137 $134 $719
$249 Consulting 26 29 15 40 110 30 Insurance underwriting: As
reported 68 83 84 79 314 79 Less: reclassification to discontinued
operations (14) (20) (28) (27) (89) (23) ----------- -------
------- -------- ---- ------- As reclassified 54 63 56 52 225 56
Corporate and other: As reported (24) (51) (56) (47) (178) (54)
Less: reclassification to discontinued operations (2) (3) (3) (3)
(11) (3) ----------- ------- ------- -------- ---- ------- As
reclassified (26) (54) (59) (50) (189) (57) ----------- -------
------- -------- ---- ------- Total $294 $246 $149 $176 $865 $278
=========== ======= ======= ======== ==== ======= Income from
continuing operations before income tax - margins Risk and
insurance brokerage services 17.8% 15.6% 10.7% 9.3% 13.3% 17.9%
Consulting 8.4% 9.2% 5.1% 11.9% 8.8% 9.7% Insurance Underwriting As
reported 8.6% 10.2% 10.2% 10.4% 9.8% 9.4% As reclassified 10.7%
12.3% 10.9% 9.7% 10.9% 10.2% Total As reported 12.6% 11.0% 7.5%
8.1% 9.8% 12.0% As reclassified 13.5% 11.5% 7.2% 7.6% 9.9% 12.5%
Aon Corporation Preliminary Condensed Consolidated Statements of
Financial Position As of ---------------------------- (billions)
Jun. 30, Dec. 31, 2006 2005 ------------ ---------- (Unaudited)
ASSETS Investments Fixed maturities at fair value $2.8 $2.8
Short-term investments 4.1 4.0 Other investments 0.5 0.5
------------ ---------- Total investments 7.4 7.3 Cash 0.4 0.5
Receivables 10.3 9.1 Deferred Policy Acquisition Costs 0.6 0.5
Goodwill 4.4 4.2 Other Intangible Assets 0.1 0.1 Property and
Equipment, net 0.5 0.5 Assets Held for Sale 4.1 3.9 Other Assets
2.2 1.7 ------------ ---------- TOTAL ASSETS $30.0 $27.8
============ ========== LIABILITIES AND STOCKHOLDERS' EQUITY
Insurance Premiums Payable $11.0 $9.4 Policy Liabilities Future
policy benefits 1.8 1.7 Policy and contract claims 1.6 1.6 Unearned
and advance premiums and contract fees 0.5 0.5 ------------
---------- Total Policy Liabilities 3.9 3.8 General Liabilities
General expenses 1.5 1.6 Notes payable 2.1 2.1 Pension,
post-employment and post-retirement liabilities 1.6 1.5 Liabilities
held for sale 3.5 3.3 Other liabilities 1.0 0.8 ------------
---------- TOTAL LIABILITIES 24.6 22.5 Stockholders' Equity 5.4 5.3
------------ ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$30.0 $27.8 ============ ========== DATASOURCE: Aon Corporation
CONTACT: Investor Contact, Julie Ann Kotowski, Investor Relations,
+1-312-381-3983, or Media Contact, Al Orendorff, Director, Public
Relations, +1-312-381-3153, both of Aon Corporation Web site:
http://www.aon.com/
Copyright
Grafico Azioni AON (NYSE:AOC)
Storico
Da Lug 2024 a Ago 2024
Grafico Azioni AON (NYSE:AOC)
Storico
Da Ago 2023 a Ago 2024