-- Revenue grew 10% to $2.4 billion with organic revenue growth of
5% -- CHICAGO, May 3 /PRNewswire-FirstCall/ -- Aon Corporation
(NYSE:AOC) today reported results for the first quarter ended March
31, 2007. Net income increased 8% to $213 million or $0.66 per
share, compared to $198 million or $0.57 per share for the prior
year quarter. Net income from continuing operations increased 23%
to $212 million or $0.66 per share, compared to $173 million or
$0.50 per share for the prior year quarter. Certain items that
impacted first quarter results and comparisons with the prior year
quarter are detailed in the reconciliations of non-GAAP measures on
pages 12 and 13 of this press release. Net income from continuing
operations per share, excluding certain items, increased 37% to
$0.70 compared to $0.51 for the prior year quarter. "Our first
quarter results reflect a strong start to the year highlighted by
organic revenue growth of 8% in Brokerage Americas, excluding
contingent commissions, despite soft market conditions. The
strength of our industry- leading global network of resources and
capabilities, combined with efforts focused on productivity and
expense management, led to improvement in all three of our key
financial metrics: organic growth, margin expansion and earnings
improvement," said Greg Case, president and chief executive
officer, Aon Corporation. "We continue to make investments in new
markets and talent that will drive future growth. Our balance sheet
is strong and we repurchased $345 million of stock during the
quarter, highlighting our commitment to creating long-term
shareholder value and a belief in the underlying strength of Aon."
FIRST QUARTER FINANCIAL SUMMARY Total revenue increased 10% to $2.4
billion with organic revenue growth of 5%. Total expenses increased
9% or $171 million to $2.1 billion due primarily to a $69 million
increase in benefits to policyholders, a $61 million unfavorable
impact from foreign exchange and a $21 million settlement of
litigation for acquired employees in the Reinsurance business,
partially offset by a $23 million decrease in restructuring
expense. Restructuring expense was $10 million in the first quarter
compared to $33 million for the prior year quarter. The previously
announced three-year restructuring plan is anticipated to result in
cumulative pretax charges of $365 million and annualized cost
savings of approximately $235 million in 2007 and $280 million in
2008, on track with previous estimates. An analysis of
restructuring related expenses by segment, type and geographic
region are detailed on pages 13 and 14 of this release.
Restructuring savings realized in the first quarter are estimated
at $46 million compared to $18 million in the prior year quarter.
Of the estimated restructuring savings in the first quarter, $35
million was related to the Brokerage segment, primarily for
workforce reduction. Foreign currency translation gains positively
impacted net income by $0.01 per share compared to the prior year
quarter due to a weaker U.S. dollar. Effective tax rate on
continuing operations was 31.8% for the first quarter compared to
35.0% for the prior year quarter. The effective tax rate for the
first quarter was impacted by favorable resolution of certain tax
items. Compared to an anticipated effective tax rate of 34%, these
items favorably impacted net income from continuing operations by
$0.02 per share as highlighted on page 12 of this press release.
The company expects a normal effective tax rate on continuing
operations of 34% for 2007. Diluted average shares outstanding were
324 million for the first quarter compared to 350 million in the
prior year quarter. During the first quarter, the Company
repurchased approximately 9.5 million shares of common stock for
$345 million at an average price of $36.35 per share. As of March
31, 2007, the company had approximately $582 million available for
repurchase under the existing two billion dollar share repurchase
program. Discontinued operations after-tax income in the first
quarter was $1 million compared to $24 million or $0.07 per share
in the prior year quarter. Income from discontinued operations in
the prior year quarter primarily reflects the reclassification of
Aon Warranty Group and Construction Program Group into discontinued
operations. FIRST QUARTER SEGMENT REVIEW Certain noteworthy items
impacted revenue, pretax income and pretax margins in the first
quarter 2007 and 2006. The first quarter segment reviews provided
below include supplemental information related to adjusted pretax
income and pretax margin which is described in detail on the
"Reconciliation of Non-GAAP Measures - Segments" on page 13 of this
press release. RISK AND INSURANCE BROKERAGE SERVICES Organic
Revenue Less: Growth Acquisi- ex- First Quarter Ended tions,
cluding (millions) ------------------- Less: Divest- Con- Mar. Mar.
Cur- itures, Less: Organic tingent 31, 31, % rency Tran- All
Revenue Comm- Revenue 2007 2006 Change Impact sfers Other Growth
issions ------------ ------- ------ ------- ------ ----- -----
------- -------- Americas $519 $517 -% -% -% (7)% 7% 8% U.K. 156
155 1 7 6 (1) (11) (11) EMEA 434 374 16 8 2 3 3 3 Asia Pacific 100
88 14 5 (2) 3 8 8 Reinsurance 247 246 - 3 (2) (1) - - -------
------ ------- ------ ----- ----- ------- -------- Total $1,456
$1,380 6% 4% 1% (2)% 3% 3% ======= ====== ======= ====== =====
===== ======= ======== Risk and Insurance Brokerage Services
revenue increased 6% compared to the prior year quarter with
organic revenue growth of 3%. The prior year quarter included $35
million of revenue in the Americas related to the contribution of
Cambridge preferred stock to a U.K. pension plan, which is excluded
from the calculation of organic revenue growth. Americas organic
revenue, excluding contingent commissions, increased 8% due
primarily to strong new business in U.S. retail and effective
renewal book management in both U.S. retail and Latin America. U.K.
organic revenue declined 11% due primarily to lower new business
and soft market conditions, partially offset by an improved
retention rate. EMEA organic revenue increased 3% due primarily to
a higher retention rate in Europe and strong growth in emerging
markets. Asia Pacific organic revenue increased 8% reflecting
strong new business in emerging markets in Asia, partially offset
by soft market conditions in Australia. Reinsurance organic revenue
increased in Canada and Latin America, offset by soft market
conditions and higher cedant retentions. First Quarter Ended
-------------------------- (millions) Mar. 31, Mar. 31, % 2007 2006
Change ----------- ---------- --------- Revenue $1,456 $1,380 6%
Expenses Compensation and benefits 840 799 5 Other expenses 374 341
10 ----------- ---------- --------- Total expenses 1,214 1,140 6
----------- ---------- --------- Pretax income $242 $240 1%
=========== ========== ========= Pretax margin 16.6% 17.4% Pretax
income - adjusted $270 $225 20% Pretax margin - adjusted 18.5%
16.8% Compensation and benefits increased 5% compared to the prior
year quarter due primarily to a $36 million unfavorable impact from
foreign exchange. Investments in new talent were largely offset by
lower restructuring costs and pension expense. Other expenses
increased 10% due primarily to a $21 million settlement of
litigation in Reinsurance and a $12 million unfavorable impact from
foreign exchange. First quarter pretax income was $242 million.
Adjusting for certain items detailed on page 13 of this press
release, pretax income increased 20% to $270 million and pretax
margin increased 170 basis points to 18.5% versus the prior year
quarter. CONSULTING Less: (millions) First Quarter Ended Acqui-
-------------------- sitions, Less: Dives- Less: Organic Mar. 31,
Mar. 31, % Currency titures, All Revenue Revenue 2007 2006 Change
Impact Transfers Other Growth ----------- -------- ------- ------
-------- --------- ----- ------- Services $264 $238 11% 4% 4% (1)%
4% Outsourcing 65 70 (7) 3 - 1 (11) -------- ------- ------
-------- --------- ----- ------- Total $329 $308 7% 4% 2% -% 1%
======== ======= ====== ======== ========= ===== ======= Consulting
revenue increased 7% to $329 million compared to the prior year
quarter with organic revenue growth of 1%. Organic revenue in
Consulting Services grew 4% attributable to Financial Advisory and
Litigation Consulting (FALC), retirement consulting and Asia
Pacific. Organic revenue in Outsourcing decreased 11% due primarily
to the previously announced termination of an outsourcing contract.
First Quarter Ended -------------------------- (millions) Mar. 31,
Mar. 31, % 2007 2006 Change ----------- ---------- ---------
Revenue $329 $308 7% Expenses Compensation and benefits 197 194 2
Other expenses 85 84 1 ----------- ---------- --------- Total
expenses 282 278 1 ----------- ---------- --------- Pretax income
$47 $30 57% =========== ========== ========= Pretax margin 14.3%
9.7% Pretax income - adjusted $49 $36 36% Pretax margin - adjusted
14.9% 11.7% Compensation and benefits and other expenses were both
unfavorably impacted by foreign exchange, largely offset by
benefits related to the restructuring program and other operational
improvements. First quarter pretax income increased 57% to $47
million and the pretax margin increased 460 basis points to 14.3%
versus the prior year quarter. Adjusting for certain items detailed
on page 13, pretax income increased 36% to $49 million and the
pretax margin increased 320 basis points to 14.9%. INSURANCE
UNDERWRITING Less: (millions) First Quarter Ended Acqui-
-------------------- sitions, Less: Dives- Less: Organic Mar. 31,
Mar. 31, % Currency titures, All Revenue Revenue 2007 2006 Change
Impact Transfers Other Growth ------------ -------- ------- ------
-------- --------- ----- ------- Accident & Health and Life
$573 $481 19% 2% -% 2% 15% Property & Casualty 1 14 (93) N/A
N/A N/A N/A -------- ------- ------ -------- --------- -----
------- Total $574 $495 16% 2% -% 1% 13% ======== ======= ======
======== ========= ===== ======= Insurance Underwriting revenue
increased 16% to $574 million compared to $495 million in the prior
year quarter. A&H and Life organic revenue, which is based on
written premiums and fees, increased 15% attributable to strong
growth of a health product provided by the Sterling Life Insurance
subsidiary (Sterling). All remaining Property & Casualty
(P&C) business was placed into run-off in the fourth quarter
2006. As organic growth calculations are based on written premium,
organic growth comparisons in P&C are not meaningful. First
Quarter Ended -------------------------- (millions) Mar. 31, Mar.
31, % 2007 2006 Change ----------- ---------- --------- Revenue
$574 $495 16% Expenses Benefits to policyholders 323 254 27
Compensation and benefits 102 96 6 Other expenses 90 92 (2)
----------- ---------- --------- Total expenses 515 442 17
----------- ---------- --------- Pretax income $59 $53 11%
=========== ========== ========= Pretax margin 10.3% 10.7% Pretax
income - adjusted $60 $53 13% Pretax margin - adjusted 10.5% 10.7%
Benefits to policyholders increased 27% to $323 million versus the
prior year quarter due primarily to strong growth in Sterling.
Compensation and benefits increased 6% to $102 million versus the
prior year quarter due primarily to commissions associated with
growth in Sterling. Other expenses decreased 2% to $90 million
versus the prior year quarter principally reflecting the runoff of
remaining P&C businesses. First quarter pretax income increased
11% to $59 million and the pretax margin was 10.3%. Included in the
Underwriting segment is a $2 million pretax loss attributable to
the P&C runoff business. Adjusting for certain items detailed
on page 13, pretax income increased 13% to $60 million and the
pretax margin was 10.5%. UNALLOCATED INCOME AND EXPENSE Unallocated
investment income was $32 million in the first quarter compared to
a loss of $3 million in the prior year quarter. The first quarter
included dividends received from holdings in certain private equity
investments. The prior year quarter included a loss related to the
revaluation of Endurance warrants. Unallocated expenses increased
$11 million to $34 million in the first quarter due primarily to
higher professional fees, including the accounting and legal
expenses associated with a review of historical equity compensation
practices. Interest expense was $35 million in the first quarter
compared to $31 million in the prior year quarter. Conference Call
and Webcast Details The Company will host a conference call on
Friday, May 4, 2007, at 10:00 a.m. central time. Interested parties
can listen to the conference call via a live audio webcast at
http://www.aon.com/. 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 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. Safe Harbor Statement 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, potential regulatory or legislative changes that would
affect our ability to sell, and be reimbursed at current levels
for, our Sterling subsidiary's 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. 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: Scott Malchow Vice President, Investor Relations
312-381-3983 Media Contact: Al Orendorff Director, Public Relations
312-381-3153 Aon Corporation Consolidated Summary of Operations
First Quarter Ended --------------------------------- Mar. 31, Mar.
31, Percent (millions except per share data) 2007 2006 (1) Change
--------- ---------- --------- Revenue Commissions and fees $1,735
$1,612 8 % Premiums and other 539 464 16 Investment income 107 89
20 --------- ---------- --------- Total revenue 2,381 2,165 10
--------- ---------- --------- Expenses Compensation and benefits
1,152 1,097 5 Other general expenses 510 461 11 Benefits to
policyholders 323 254 27 Depreciation and amortization 50 55 (9)
Interest expense 35 31 13 Provision for New York and other state
settlements - 1 (100) --------- ---------- --------- Total expenses
2,070 1,899 9 --------- ---------- --------- Income from continuing
operations before provision for income tax 311 266 17 Provision for
income tax (3) 99 93 6 --------- ---------- --------- Income from
continuing operations 212 173 23 Discontinued operations Income
from discontinued operations 2 39 (95) Provision for income tax (4)
1 15 (93) --------- ---------- --------- Income from discontinued
operations 1 24 (96) --------- ---------- --------- Income before
accounting change 213 197 8 Cumulative effect of change in
accounting principle, net of tax (2) - 1 (100) --------- ----------
--------- Net income $213 $198 8 % ========= ========== =========
Basic net income per share: Continuing operations $0.71 $0.54 31 %
Discontinued operations - 0.07 (100) Cumulative effect of change in
accounting principle - - - --------- ---------- --------- Net
income $0.71 $0.61 16 % ========= ========== ========= Diluted net
income per share: Continuing operations $0.66 $0.50 32 %
Discontinued operations - 0.07 (100) Cumulative effect of change in
accounting principle - - - --------- ---------- --------- Net
income $0.66 $0.57 16 % ========= ========== ========= Diluted
average common and common equivalent shares outstanding 324.4 350.2
(7)% ========= ========== ========= (1) Certain amounts relating to
discontinued operations have been reclassified to conform to the
2007 presentation. (2) Adoption of FASB Statement No. 123(R),
"Share-Based Payments," effective January 1, 2006. (3) Tax rate
from continuing operations is 31.8% and 35.0% for the first
quarters ended March 31, 2007 and 2006, respectively. (4) Tax rate
from discontinued operations is 50.0% and 38.5% for the first
quarters ended March 31, 2007 and 2006, respectively. Aon
Corporation Revenue from Continuing Operations First Quarter Ended
------------------------------------------------------------
Organic Less: Revenue Acquisi- Growth tions, ex- Divest- cluding
Less: itures Less: Organic Con- Mar. Mar. Cur- & All Revenue
tingent 31, 31, Percent rency Tran- Other Growth Comm- (millions)
2007 2006(1) Change Impact sfers (2) (3) issions ------ -------
------- ------ ----- ----- ------- ------- Revenue Risk and
insurance brokerage services: Americas $519 $517 - % - % - % (7)% 7
% 8 % United Kingdom 156 155 1 7 6 (1) (11) (11) Europe, Middle
East & Africa 434 374 16 8 2 3 3 3 Asia Pacific 100 88 14 5 (2)
3 8 8 Reinsurance brokerage and related services 247 246 - 3 (2)
(1) - - ------ ------- ------- ------ ----- ----- ------- -------
Total risk and insurance brokerage services 1,456 1,380 6 4 1 (2) 3
3 ------ ------- ------- ------ ----- ----- ------- -------
Consulting Consulting services 264 238 11 4 4 (1) 4 4 Outsourcing
65 70 (7) 3 - 1 (11) (11) ------ ------- ------- ------ ----- -----
------- ------- Total consulting 329 308 7 4 2 - 1 1 ------ -------
------- ------ ----- ----- ------- ------- Insurance underwriting
Accident & health and life 573 481 19 2 - 2 15 15 Property
& casualty 1 14 (93) N/A N/A N/A N/A N/A ------ ------- -------
------ ----- ----- ------- ------- Total insurance under- writing
574 495 16 2 - 1 13 13 ------ ------- ------- ------ ----- -----
------- ------- Unallocated revenue 32 (3) N/A N/A N/A N/A N/A N/A
Intersegment revenues (10) (15) N/A N/A N/A N/A N/A N/A ------
------- ------- ------ ----- ----- ------- ------- Total $2,381
$2,165 10 % 3 % 1 % 1 % 5 % 5 % ====== ======= ======= ====== =====
===== ======= ======= (1) Certain amounts relating to discontinued
operations have been reclassified to conform to the 2007
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-
Segments Risk and Insurance Brokerage Services - Continuing
Operations First Quarter Ended ---------------------------------
Mar. 31, Mar. 31, Percent (millions) 2007 2006 (1) Change ---------
----------- --------- Revenue Operating and other revenue $1,411
$1,315 7 % Investment income 45 65 (31) --------- -----------
--------- Total revenue 1,456 1,380 6 --------- -----------
--------- Expenses Compensation and benefits 840 799 5 Other
expenses 374 341 10 --------- ----------- --------- Total expenses
1,214 1,140 6 --------- ----------- --------- Income before
provision for income tax $242 $240 1 % ========= ===========
========= Pretax margin - income before provision for income tax
16.6% 17.4% Consulting - Continuing Operations First Quarter Ended
--------------------------------- Mar. 31, Mar. 31, Percent
(millions) 2007 2006 Change --------- ----------- --------- Revenue
Operating and other revenue $328 $306 7 % Investment income 1 2
(50) --------- ----------- --------- Total revenue 329 308 7
--------- ----------- --------- Expenses Compensation and benefits
197 194 2 Other expenses 85 84 1 --------- ----------- ---------
Total expenses 282 278 1 --------- ----------- --------- Income
before provision for income tax $47 $30 57 % ========= ===========
========= Pretax margin - income before provision for income tax
14.3% 9.7% (1) Certain amounts relating to discontinued operations
have been reclassified to conform to the 2007 presentation. Aon
Corporation- Segments Insurance Underwriting - Continuing
Operations First Quarter Ended ---------------------------------
Mar. 31, Mar. 31, Percent (millions) 2007 2006 (1) Change ---------
----------- --------- Revenue Premiums and other $545 $470 16 %
Investment income 29 25 16 --------- ----------- --------- Total
revenue 574 495 16 --------- ----------- --------- Expenses
Benefits to policyholders 323 254 27 Compensation and benefits 102
96 6 Other expenses 90 92 (2) --------- ----------- --------- Total
expenses 515 442 17 --------- ----------- --------- Income before
provision for income tax $59 $53 11 % ========= ===========
========= Pretax margin - income before provision for income tax
10.3% 10.7% Reconciliation of operating segment income before
provision for income tax to income from continuing operations
before provision for income tax: First Quarter Ended
--------------------------------- Mar. 31, Mar. 31, Percent
(millions) 2007 2006 (1) Change --------- ----------- ---------
Operating segment income Risk and insurance brokerage services $242
$240 1 % Consulting 47 30 57 Insurance underwriting 59 53 11
--------- ----------- --------- Operating segment income before
provision for income tax 348 323 8 Unallocated investment income 32
(3) N/A Unallocated expenses (34) (23) 48 Interest expense (35)
(31) 13 --------- ----------- --------- Income from continuing
operations before provision for income tax $311 $266 17 % =========
=========== ========= (1) Certain amounts related to discontinued
operations have been reclassified to conform to the 2007
presentation. Aon Corporation Reconciliation of the Impact of
Non-GAAP Measures on Diluted Earnings Per Share First Quarter Ended
March 31, 2007 and 2006 First Quarter Ended
----------------------------- Mar. 31, Mar. 31, Percent 2007 2006
Change ---------- --------- -------- Diluted earnings per share
from continuing operations - as reported $0.66 $0.50 32 % After tax
earnings per share adjustments: Restructuring charges 0.02 0.06
Reinsurance litigation 0.04 - Nonrecurring tax adjustments (0.02) -
Gain on Cambridge preferred stock investment - (0.07) Endurance
warrants - 0.03 Contingent commissions - (0.01) ----------
--------- Total after tax earnings per share adjustments 0.04 0.01
---------- --------- Diluted earnings per share from continuing
operations - as adjusted $0.70 $0.51 37 % ---------- ---------
Diluted average common and common equivalent shares outstanding
(millions) 324.4 350.2 ========== ========= Aon Corporation
Reconciliation of Non-GAAP Measures - Segments First Quarter Ended
March 31, 2007 and 2006 (1) First Quarter Ended March 31, 2007
--------------------------------------------- Risk and Unallo-
Insurance Insurance cated Brokerage Under- Income & (millions)
Services Consulting writing Expense Total ---------- ----------
------- ------- ------- Revenue as reported $1,456 $329 $574 $22
$2,381 Income (loss) from continuing operations before provision
for income tax - as reported $242 $47 $59 $(37) $311 Restructuring
charges 7 2 1 - 10 Reinsurance litigation 21 - - - 21 ----------
---------- ------- ------- ------- Income (loss) from continuing
operations before provision for income tax - as adjusted $270 $49
$60 $(37) $342 ========== ========== ======= ======= ======= Income
from continuing operations before provision for income tax -
margins as adjusted 18.5% 14.9% 10.5% N/A 14.4% ==========
========== ======= ======= ======= First Quarter Ended March 31,
2006 --------------------------------------------- Risk and Unallo-
Insurance Insurance cated Brokerage Under- Income & (millions)
Services Consulting writing Expense Total ---------- ----------
------- ------- ------- Revenue as reported $1,380 $308 $495 $(18)
$2,165 Gain on Cambridge preferred stock investment (35) - - - (35)
Contingent commissions (6) - - - (6) Endurance warrants - - - 17 17
---------- ---------- ------- ------- ------- Revenue as adjusted
$1,339 $308 $495 $(1) $2,141 ========== ========== ======= =======
======= Income (loss) from continuing operations before provision
for income tax - as reported $240 $30 $53 $(57) $266 Restructuring
charges 26 6 - 1 33 Gain on Cambridge preferred stock investment
(35) - - - (35) Contingent commissions (6) - - - (6) Endurance
warrants - - - 17 17 ---------- ---------- ------- ------- -------
Income (loss) from continuing operations before provision for
income tax - as adjusted $225 $36 $53 $(39) $275 ==========
========== ======= ======= ======= Income from continuing
operations before provision for income tax - margins as adjusted
16.8% 11.7% 10.7% N/A 12.8% ========== ========== ======= =======
======= (1) Certain noteworthy items impacted revenue and pretax
income in 2007 and 2006, 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
--------------------------------- --------------- Full Full First
Total Year Year Quarter Incurred Remainder (millions) 2005 2006
2007 to Date of 2007 Total ---------------------------------
--------------- Workforce reduction $116 $116 $3 $235 $9 $244 Lease
consolidation 20 27 3 50 16 66 Asset impairments 17 12 2 31 3 34
Other costs associated with restructuring 5 12 2 19 2 21
--------------------------------- --------------- Total
restructuring and related expenses $158 $167 $10 $335 $30 $365
================================= =============== By Region:
Continent Rest United United of of (millions) States Kingdom Europe
World Total ----------------------------------------- 2005 $28 $92
$30 $8 $158 2006 66 56 34 11 167 1st quarter 2007 4 5 1 - 10
----------------------------------------- Incurred to date 98 153
65 19 335 Estimated remaining 2007 21 3 6 - 30
----------------------------------------- Total incurred and
remaining estimated $119 $156 $71 $19 $365
========================================= Aon Corporation
Preliminary Condensed Consolidated Statements of Financial Position
As of --------------------------------- (billions) Mar. 31, 2007
Dec. 31, 2006 --------------- -------------- (Unaudited) ASSETS
Investments Fixed maturities at fair value $2.9 $2.8 Short-term
investments 4.3 4.3 Other investments 0.5 0.5 ---------------
-------------- Total investments 7.7 7.6 Cash 0.3 0.3 Receivables
9.0 9.0 Deferred Policy Acquisition Costs 0.6 0.5 Goodwill 4.7 4.5
Other Intangible Assets 0.2 0.2 Property and Equipment, net 0.5 0.5
Other Assets 1.6 1.7 --------------- -------------- TOTAL ASSETS
$24.6 $24.3 =============== ============== LIABILITIES AND
STOCKHOLDERS' EQUITY Insurance Premiums Payable $10.4 $9.7 Policy
Liabilities Future policy benefits 1.8 1.8 Policy and contract
claims 0.7 0.6 Unearned and advance premiums and other 0.4 0.4
--------------- -------------- Total Policy Liabilities 2.9 2.8
General Liabilities General expenses 1.6 1.9 Notes payable and
short-term borrowings 2.1 2.3 Pension, post-employment and
post-retirement liabilities 1.4 1.5 Other liabilities 1.0 0.9
--------------- -------------- TOTAL LIABILITIES 19.4 19.1
Stockholders' Equity 5.2 5.2 --------------- -------------- TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $24.6 $24.3 ===============
============== DATASOURCE: Aon Corporation CONTACT: Investors,
Scott Malchow, Vice President, Investor Relations, +1-312-381-3983,
or Media, Al Orendorff, Director, Public Relations,
+1-312-381-3153, both of Aon Corporation Web site:
http://www.aon.com/
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