AOC Aon Corp.

CHICAGO, March 21 /PRNewswire-FirstCall/ -- The Homeowners insurance line was the most volatile major insurance line in the 14-year period 1992-2005, due in large part to the active 2004 and 2005 Atlantic hurricane seasons. Homeowners was three times more volatile than the Private Passenger Auto line, according to an Aon Re Global study. (Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO ) The study shows that the Private Passenger Auto line experienced the lowest volatility during that period, followed by the Auto Physical Damage, Commercial Auto and Workers Compensation lines. Excluding catastrophe losses, the Homeowners line has a risk level comparable to the Commercial Auto line. Liability lines and Medical Malpractice also have significantly above average volatility. Aon Re's Insurance Risk Study quantifies the systemic risk for each line of business, representing the risk to a large portfolio from non-diversifiable risk sources such as: -- changes to market rate adequacy and underwriting terms and conditions; -- misestimating plan loss ratios; -- frequency and severity trends; -- weather-related losses; -- legal reforms and court decisions; -- level of economic activity and macroeconomic factors. For large books of non-cat-exposed business, systemic risk is the major component of underwriting volatility. The report examined volatility in nearly two dozen lines including Commercial Multi Peril, Other Liability (Occurrence and Claims Made), Fidelity and Surety, and Medical Malpractice. "The study provides objective, data-driven underwriting volatility benchmarks by line of business to help insurers provide detailed assessments of their risk profile and quantification of the adequacy of their economic capital," said Stephen Mildenhall, Aon Re Services executive vice president and chief actuary. "Insurers can use the factors as a basis for their internal capital modeling to ensure that simulation modeling tools produce credible results. The factors also will help insurers address recent rating agency requirements for robust underwriting risk modeling." The Insurance Risk Study applies sophisticated techniques from risk theory to a database of NAIC Annual Statement data from accounting years 2001-2005 for 1875 individual U.S. groups and companies. The database, covering all 21 Schedule P lines of business, contains more than 800,000 observations. Aon Re introduced the Insurance Risk Study in 2003 to help parameterize its Prime/Re insurance simulation software, and has updated it each year since. The next update, including data from 2006 annual statements, will be made available in August 2007. About Aon Re Global Aon Re Global provides its clients with a full range of services in the design, structure and implementation of their risk-transfer programs through a network of offices in more than 40 countries. In addition to traditional treaty and facultative placement services, Aon Re Global offers clients a range of advisory and consulting services -- such as catastrophe information forecasting and financial analysis. Aon Re Global, a subsidiary of Aon Corporation, was named best reinsurance broker in 2006 by readers of Business Insurance and Reinsurance. About Aon Aon Corporation (NYSE:AOC) ( 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 43,000 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 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, ERISA class actions, the impact of the analysis of practices relating to stock options, 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. Media Contact: Rahsaan Johnson 312.381.2684 http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT: Rahsaan Johnson of Aon, +1-312-381-2684, Web site: http://www.aon.com/

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