Transaction Creates Premier Reinsurance Franchise with Global
Reach, Diverse Product Capability and World Class Colleagues to
Serve Clients' Evolving Needs CHICAGO and LONDON, Aug. 22
/PRNewswire-FirstCall/ -- Aon Corporation (NYSE:AOC) and Benfield
Group Limited (LSE:BFD) announced today that the boards of
directors of both companies have unanimously approved a definitive
agreement under which Aon will acquire Benfield for 3.50 pounds
Sterling ($6.55) per share in cash and assume 91 million pounds
($170 million) of Benfield net debt, representing an enterprise
value of approximately 935 million pounds ($1.75 billion) on a
fully diluted basis. The consideration represents a 29 percent
premium to Benfield's closing stock price on August 21, 2008, the
last trading day prior to the announcement of the agreement.
Benfield is a leading independent reinsurance intermediary in terms
of reputation and standing. The Benfield business is renowned in
the industry for its excellent client service, leading analytics
capability and record of innovation. Aon believes that, as part of
Aon Re Global, Benfield can continue to build upon these strengths,
creating an unparalleled reinsurance franchise with global reach,
diverse product capability and world class colleagues to
effectively serve clients' evolving needs. Following the close of
the transaction, Aon intends to integrate the Benfield business
with its existing reinsurance operations (Aon Re Global) and
operate the division globally under the newly created Aon Benfield
Re brand. "This agreement reflects our ongoing efforts to ensure
that Aon's colleagues, capabilities and technology remain at the
forefront of our industry and that we provide the best value for
our clients," said Greg Case, president and chief executive officer
of Aon Corporation. "Over the past several years, we have made
significant progress in strengthening Aon's operational platform
and global network, becoming a more client-focused organization
with a broader portfolio of innovative products and services. With
Aon Benfield Re, we will build on this progress to further enhance
organic growth, expand margins, and drive shareholder value." Mr.
Case continued, "Aon and Benfield share a common focus on
excellence in client service, and both recognize the importance of
being the destination of choice for the best talent in our
industry. The strong cultural fit between our firms will enable us
to quickly realize the benefits of this transaction, and the value
added for our clients and shareholders, in a seamless fashion
following the close of our transaction." Grahame Chilton, chief
executive officer of Benfield, commented, "We are excited by this
unique opportunity to create a powerful global franchise capable of
expanding and redefining innovative reinsurance and capital market
solutions. At the same time, the Benfield board believes that the
offer provides Benfield's shareholders with fair and certain value.
We look forward to joining the Aon team and working with them as
Aon Benfield Re to expand our joint expertise and local reach to
customers around the world." "I have significant respect and
admiration for the Benfield organization," noted Michael
O'Halleran, executive chairman of Aon Re Global. "I look forward to
working with Grahame, Andrew and our colleagues and team members as
we combine the strengths of our two organizations into the leading
reinsurance and capital management advisor in the world." Andrew
Appel, chief executive officer of Aon Re Global, added, "The
combination of our two firms will create an unparalleled set of
capabilities to deliver distinctive client value, drive innovation
in analytics and capital management, and enhance the value
proposition for colleagues and team members in both businesses."
Benefits of the Transaction Aon's and Benfield's reinsurance
operations are highly complementary. Through the transaction,
Benfield will add significantly to capabilities in: -- Developing
markets around the world that both firms have targeted for growth,
including Asia, Central and Eastern Europe, Africa and Latin
America. Benfield's reputation for its long-standing client
relationships in Japan and other Asian markets, in particular, is
extremely strong; -- Global analytics, modelling and client facing
technology, which have enabled Benfield to differentiate itself in
the marketplace, as demonstrated by its achievement of significant
market share as well as the receipt of numerous industry awards,
including 12 awards received in 2007 and 2008 alone; -- The U.S.
Florida and South East property-catastrophe markets, where
Benfield's pioneering ReMetrics capability, together with its
long-standing market experience, deliver to clients a uniquely
attractive risk analysis proposition; -- Key major accounts. On a
pro forma basis, Aon Benfield Re will serve the majority of
insurance and reinsurance carriers globally. Aon expects the new
and expanded client relationships afforded by the combination to
support continued growth; -- Cost savings and operational
efficiencies. The transaction is expected to generate approximately
65 million pounds ($122 million) in annual cost savings fully
phased-in in 2011, primarily from shared administrative and support
services across both Aon Re Global and Benfield; -- Strong
operating cash flows. Aon expects strong operating cash flows
following the transaction to continue to support the Company's
capital allocation priorities including, among others, its share
repurchase program. As of August 7, 2008, Aon has repurchased 89.8
million of its shares for $3.7 billion and had approximately $900
million remaining under its share repurchase authorization. Aon
plans to complete the remaining share buyback by year-end 2009. The
return on invested capital (ROIC) on the acquisition is 13.8
percent compared to 12 percent on the share repurchase program.
Transaction Summary The transaction is expected to close by the end
of 2008, subject to customary closing conditions and regulatory
approvals as well as approval by Benfield shareholders. Aon has
received commitments from Benfield shareholders representing
approximately 25.4 percent of Benfield's outstanding shares to vote
their shares in favor of the transaction. Aon intends to fund the
transaction through cash on hand. The transaction is not subject to
a financing contingency. Aon expects the acquisition to be
accretive to earnings per share in the first year after closing,
excluding one-time items, and meaningfully accretive thereafter.
Following the close of the transaction, Grahame Chilton, chief
executive officer of Benfield, will serve as vice chairman of Aon
Group, reporting to Greg Case, chief executive officer, Aon
Corporation. Mr. Chilton will join the Aon Corporation executive
committee and the Aon Benfield Re executive committee. Michael
O'Halleran and Andrew Appel will serve as executive chairman and
chief executive officer, respectively, of Aon Benfield Re. Mr.
Appel will continue to serve as chairman, Aon Consulting Worldwide.
Exchange Rate GBP/USD: 1.87. Advisors Credit Suisse acted as
financial advisor to Aon, and Clifford Chance LLP is serving as
legal counsel. Merrill Lynch acted as financial advisor to
Benfield, and Debevoise & Plimpton LLP is serving as legal
counsel. Newswire Conference Call Aon and Benfield will host a
conference call for newswires today, Friday, August 22, 2008, at
8:15 a.m. (London), 3:15 a.m. (New York), 2:15 a.m. (Chicago).
Journalists can join the conference call by dialing 08452450224
(within the UK) or + 44 (0) 1452542309 (outside of the UK),
passcode 151159 followed by #. Analyst and Investor Conference Call
and Webcast Details Aon and Benfield will host a conference call
today, Friday, August 22, 2008, at 8:30 a.m. (New York), 7:30 a.m.
(Chicago), 1:30 p.m. (London). Interested parties can listen to the
conference call by dialing 1-(888) 423-3275 (within the U.S.) or
+1-(612) 332-0820 (outside of the U.S), or via a live audio webcast
at http://www.aon.com/ and http://www.benfieldgroup.com/.
Presentation slides that provide an overview of the transaction
will be made available at both http://www.aon.com/ and
http://www.benfieldgroup.com/ approximately one hour prior to the
start of the conference call. A replay of the conference call will
be available through September 5, 2008, and can be accessed by
dialing 1-(800) 475-6701 (within the U.S.) or +1-(320) 365-3844
(outside of the U.S.), access code: 958397. The replay will also be
available at http://www.aon.com/ and http://www.benfieldgroup.com/.
About Benfield Benfield is the world's leading specialist
reinsurance and risk intermediary. Its customers include many of
the world's major insurance and reinsurance companies as well as
government entities and global corporations. Benfield operates from
more than 50 locations worldwide. Benfield is listed on the London
Stock Exchange under the ticker symbol BFD. For more information on
Benfield, please log onto http://www.benfieldgroup.com/. About Aon
Aon Corporation is the leading global provider of risk management
services, insurance and reinsurance brokerage, human capital and
management consulting. Through its 36,000 colleagues 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 named the world's best broker by
Euromoney magazine's 2008 Insurance Survey. In 2008, Aon ranked
highest on the Business Insurance ranking of the world's largest
insurance brokers based on commercial retail, wholesale,
reinsurance and personal lines brokerage revenues. Aon also was
ranked by A.M. Best as the number one global insurance brokerage in
2007 and 2008 based on brokerage revenues, and voted best insurance
intermediary, best reinsurance intermediary, and best employee
benefits consulting firm in 2007 and 2008 by the readers of
Business Insurance. For more information on Aon, log onto
http://www.aon.com/. 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, changes in commercial property and casualty
markets and commercial premium rates that could impact revenues,
the outcome of inquiries from regulators and investigations related
to compliance with the U.S. Foreign Corrupt Practices Act and
non-U.S. anti-corruption laws, the impact of investigations brought
by U.S. state attorneys general, U.S. state insurance regulators,
U.S. federal prosecutors, U.S. federal regulators, and regulatory
authorities in the U.K. and other countries, the impact of class
actions and individual lawsuits including client class actions,
securities class actions, derivative actions, ERISA class actions,
and the cost of resolution of other contingent liabilities and loss
contingencies. 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.
Contacts: Aon Corporation Benfield Group Limited Investors Analysts
& Investors Scott Malchow Julianne Jessup Vice President,
Investor Relations T: +44 (0)20 7578 7425 T: +1-312-381-3983 Rob
Bailhache Media Financial Dynamics David Prosperi T: +44 (0)20 7269
7200 Vice President, Global Public Relations T: +1-312-381-2485
Media David Bogg T: +44 (0)20 7522 4016 David Haggie Haggie
Financial T: +44 (0)20 7417 8989 DATASOURCE: Aon Corporation
CONTACT: Investors, Scott Malchow, Vice President, Investor
Relations, +1-312-381-3983, or Media, David Prosperi, Vice
President, Global Public Relations, +1-312-381-2485, both of Aon
Corporation; Analysts & Investors, Julianne Jessup,
+44(0)20-7578-7425, or Rob Bailhache, Financial Dynamics,
+44(0)20-7269-7200, or Media, David Bogg, +44(0)20-7522-4016, or
David Haggie, Haggie Financial, +44(0)20-7417-8989, all for
Benfield Group Limited Web site: http://www.aon.com/
http://www.benfieldgroup.com/
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