U.S. Pension Plans Have More Aggressive Approach to Investment Than U.K. Counterparts
16 Novembre 2006 - 4:30PM
PR Newswire (US)
CHICAGO, Nov. 16 /PRNewswire-FirstCall/ -- Aon Consulting, the
human capital consulting organization of Aon Corporation
(NYSE:AOC), found that U.S. pension plan managers have been more
aggressive than their U.K. counterparts when it comes to investing
in equities. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) According
to a new analysis by Aon Consulting, 62 percent of pension plan
assets for U.S. Fortune 100 companies were invested in equities at
the end of 2005, compared to 58 percent of the 200 largest pension
plans in the U.K. (including those in the FTSE100). This is similar
to the total proportion of pension plan assets invested in equities
in 2004, when the U.S. and U.K. were at 62 percent and 59 percent,
respectively. However, Aon Consulting believes these total figures
disguise a trend in the U.K. With stock markets performing well
relative to most other markets in 2005, one would expect the total
proportion of equities in pension plans to increase (all things
being equal). However, in the U.K., this has been offset by 12
percent of companies in this analysis reducing their allocation to
equities by more than 5 percent. Nearly all of these switches were
from equities to bonds. "Our data indicates that the average U.S.
pension plan exposure to equities -- net of the impact of market
movements -- has remained relatively stable over the last few
years, suggesting plan sponsor risk tolerance has not changed much
despite the market downturn of 2001 and 2002," said Jim Scott,
senior vice president with Aon Consulting. "However, the allocation
to traditional domestic equity has reduced modestly in favor of
international equities, alternatives and real estate, as sponsors
seek higher returns and better diversification." "Historically,
many U.K. pension funds have had a very high exposure to equities
and it makes sense to consider whether this is still appropriate,"
said Andrew Claringbold, principal at Aon Consulting U.K.
"Increasing the exposure to bonds is obviously one way of reducing
risk, albeit with a lower expected return. However, there are also
opportunities for pension plans to invest in other assets with
similar return expectations to equities, but with different risks
such as properties or hedge funds." Aon Consulting also analyzed
the impact pension plans have on company balance sheets in the U.S.
and U.K. For U.S. companies analyzed, overall pension plan assets
are, on average, approximately 15 percent of the market
capitalization of the company, which is comparable to 16 percent in
2005. However, this is less than U.K. companies analyzed, where the
overall pension plan assets are, on average, about 23 percent of
the market capitalization, down 1 percent from the end of 2005.
When combined with the somewhat lower allocation to equities, this
shows U.K. companies were exposed to slightly less pension plan
risk during the last year. "The U.S. market has been anticipating
pension reform for some time and it finally happened this year,"
said Scott. "It will be interesting to see if sponsors will now
begin to change the allocation of assets more in favor of fixed
income in order to better match liabilities with assets, but at the
expense of higher expected returns." For more information, contact:
Joe Micucci, Aon Consulting, 312-381-4786, . About Aon Aon
Corporation ( http://www.aon.com/ ) provides more insurance
brokerage, reinsurance brokerage and risk management services than
any other company in the world, and is a leader in human capital
and management consulting and specialty insurance underwriting. Aon
has 45,000 employees in 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. Aon
Consulting Worldwide ( http://www.aon.com/hcc ) is among the top
global human capital consulting firms, with 2005 revenues of $1.255
billion and 6,800 professionals in 117 offices worldwide. Aon
Consulting is reshaping the workplace of the future through
benefits, talent management and rewards strategies and solutions.
In August 2006, Aon Consulting was named the best employee benefit
consulting firm by the readers of Business Insurance magazine. 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 consummate the pending
sale of the Aon Warranty Group, our ability to obtain regulatory or
legislative changes to permit continuous sales of our supplemental
Medicare health product, 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.
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Joe Micucci, Aon Consulting, +1-312-381-4786, or Web site:
http://www.aon.com/ http://www.aon.com/hcc
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