AOC Aon Corp.

Increased housing growth in California likely to drive future industry losses CHICAGO, Oct. 26 /PRNewswire-FirstCall/ -- This week's wildfires in California are expected to produce insured losses between $1.2 billion and $1.6 billion, according to Impact Forecasting LLC, a unit of Aon Corporation (NYSE:AOC). More than 80 percent of the losses are expected to occur from the Witch Creek fire that merged with the Guejito and Poomacha fires. (Logo: http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) "Our analysis of housing trends in California have shown that growth in the more fire-prone wildland-urban areas is greater than in traditional urban regions," says Steven Jakubowski, chief operating officer of Impact Forecasting. "Unfortunately, we are likely to see more catastrophic events in the future as a result of the increased housing growth." More than two dozen fires have burned from Santa Barbara County to San Diego County, the largest of which is the Witch Creek fire in San Diego County that forced the evacuation of hundreds of thousands of people from their homes. The Witch Creek fire was unusual in that it burned beyond historical bounds seen in previous events and into densely populated areas, including Rancho Bernardo, Poway and Rancho Santa Fe, after crossing a likely firebreak at the I-15 interstate freeway. The magnitude of the Witch Creek Fire demonstrates that commercial properties face greater exposure than had been previously seen. "California was set for a difficult year because of an extended drought that brought moisture conditions in vegetation to troublingly low levels," Jakubowski said. "Indeed, California has already seen difficult fires in Griffith Park, Catalina Island, and Lake Tahoe this year. The drought combined with high temperatures, very low humidity, and extreme wind gusts which at times reached hurricane strengths combined to form a disastrous scenario." This week's catastrophe follows other California losses including outbreaks in 2003, 1993, and 1991. The fire siege in 2003 produced the Cedar and Old Fires, resulting in losses in excess of $2 billion. While these catastrophic losses are closely tied to extreme weather conditions and recurring droughts throughout California, the explosion in the growth of housing greatly affects likely future losses, as well. Aon Re Global works with insurance and reinsurance company clients to manage and mitigate risks of catastrophic events such as these. About Aon Impact Forecasting is a center of excellence within Aon Re Global, the world's leading and most preferred reinsurance intermediary. Impact Forecasting produces catastrophe analysis and modeling services. Models include hurricane wind and surge, earthquake, tornado and hail, wildfire, and terrorism perils. Aon Corporation (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. Through its 43,000 professionals worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/. 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, +1-312-381-2684, , for Aon Corporation Web site: http://www.aon.com/

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