AOC Aon Corp.

- Total Revenue was $1.9 billion with Organic Growth of 1% CHICAGO, May 1 /PRNewswire-FirstCall/ -- Aon Corporation (NYSE:AOC) today reported results for the first quarter ended March 31, 2009. Net income attributable to Aon stockholders increased 28% to $280 million or $0.97 per share, compared to $218 million or $0.68 per share for the prior year quarter. Net income attributable to Aon stockholders from continuing operations increased 30% to $230 million or $0.80 per share, compared to $177 million or $0.55 per share for the prior year quarter. Net income attributable to Aon stockholders from continuing operations per share, excluding certain items, increased 9% to $0.76 compared to $0.70 for the prior year quarter. Certain items that impacted first quarter results and comparisons with the prior year quarter are detailed in the reconciliation of non-GAAP measures on page 10 of this press release. "Our first quarter results reflect continued progress in the face of soft market conditions and a very challenging economic environment. Organic revenue was one percent, adjusted pretax margin in Brokerage increased 100 basis points and adjusted earnings per share from continuing operations increased nine percent," said Greg Case, president and chief executive officer, Aon Corporation. "Despite these challenges, we continue to strengthen the underlying foundation of Aon and invest heavily in the fundamental client-serving capabilities of our firm through the merger with Benfield and the introduction of both 'Client Promise' and our Global Risk Insight Platform in Brokerage. Additionally, the 2007 and Aon Benfield restructuring programs are on-track and just beginning to deliver cost savings while our balance sheet provides significant financial flexibility to effectively allocate capital and deliver long-term shareholder value." FIRST QUARTER FINANCIAL SUMMARY Total revenue decreased 3% to $1.9 billion due to a 10% decline from foreign currency translation and a 44% decline in investment income, partially offset by a 7% increase from acquisitions, primarily Benfield, net of dispositions and organic revenue growth in commissions and fees of 1%. Total operating expenses decreased 9% or $147 million to $1.5 billion, including a $176 million favorable impact from foreign currency translation and an $83 million gain related to the U.S. pension curtailment, partially offset by the inclusion of operating expenses from the recent Benfield merger and a $13 million increase in pension expense. Restructuring expense was $43 million in the first quarter compared to $60 million in the prior year quarter. An analysis of restructuring-related expenses by segment and type for both the 2007 and Aon Benfield restructuring programs are detailed on page 11 of this release. Restructuring savings in the first quarter related to the 2007 restructuring program are estimated at $41 million compared to no material savings in the prior year quarter. Of the estimated restructuring savings in the first quarter, $36 million were related to the Brokerage segment primarily for workforce reduction. The 2007 restructuring program is currently expected to deliver cumulative run-rate cost savings of approximately $240-265 million in 2009 and $370 million in 2010. Restructuring savings in the first quarter related to the Aon Benfield restructuring program are estimated at $4 million. Before any potential reinvestment of savings, the Benfield restructuring program is currently expected to deliver cumulative cost savings of $33-41 million in 2009, $84-94 million in 2010 and $122 million in 2011. Foreign currency translation decreased net income by $0.02 per share compared to the prior year quarter due primarily to fluctuations in the U.S. dollar against most major currencies. Excluding certain items highlighted on page 10 of this press release, the impact of foreign currency translation decreased net income by $0.04 per share. Effective tax rate on continuing operations increased to 31.5% in the first quarter, reflecting an underlying tax rate on operations of approximately 29%, plus the impact of a non-cash deferred tax expense on the U.S. pension curtailment gain. The prior year quarter effective tax rate on operations was 29.5%. Average diluted shares outstanding decreased to 289 million in the first quarter compared to 320 million in the prior year quarter, due primarily to share repurchases in prior quarters. The Company has approximately $850 million of remaining share repurchase authorization. Discontinued Operations after-tax income was $50 million or $0.17 per share compared to after-tax income of $41 million or $0.13 per share for the prior year quarter. Discontinued operations primarily include a $43 million after-tax gain on the sale of Automobile Insurance Specialists (AIS). The prior year quarter includes the results of AIS, the run-off property and casualty insurance operations, Combined Insurance Company of America and Sterling Life Insurance. FIRST QUARTER SEGMENT REVIEW Certain noteworthy items impacted revenue, pretax income and pretax margins in the first quarter of 2009 and 2008. 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 the Impact of Non-GAAP Measures on Segments and Diluted Earnings Per Share" on page 10 of this press release. RISK AND INSURANCE BROKERAGE SERVICES First Quarter Ended Less: (millions) ------------------ Less: Acquisitions, Organic Commissions, Mar 31, Mar 31, % Currency Divestitures, Revenue Fees, Other 2009 2008 Change Impact Other Growth ----------- ---- ---- ---- ---- ---- ---- Americas $477 $493 (3)% (5)% -% 2% U.K. 116 150 (23) (19) 1 (5) EMEA 448 510 (12) (12) -- -- Asia Pacific 84 106 (21) (18) (1) (2) Reinsurance 395 256 54 (8) 61 1 ---- ---- ---- ---- ---- ----- Sub-Total $1,520 $1,515 -% (10)% 9% 1% ---- ---- ---- ---- ---- ---- Investment Income 30 51 (41)% ------ ------ ---- Total Revenue $1,550 $1,566 (1)% ====== ====== ==== Risk and Insurance Brokerage Services total revenue decreased 1% to $1.6 billion compared to the prior year quarter due to a 10% unfavorable impact from foreign currency translation on commissions and fees and a 41% decline in investment income, partially offset by a 9% increase from acquisitions, primarily Benfield, net of dispositions and 1% organic revenue growth. Americas organic revenue increased 2% reflecting strong growth in Latin America and solid growth in Canada and in our Affinity business. U.K. organic revenue decreased 5% due primarily to soft market conditions and lower new business. EMEA organic revenue was unchanged as strong growth in emerging markets was offset by weak economic conditions in continental Europe. Asia Pacific organic revenue decreased 2% reflecting the impact of economic weakness in Asia and the impact from exiting certain businesses in Japan. Reinsurance organic revenue increased 1% due primarily to growth in global treaty placements. First Quarter Ended ------------------- (millions) Mar 31, Mar 31, % 2009 2008 Change ------ ------ ------ Revenue $1,550 $1,566 (1)% Expenses Compensation and benefits 837 940 (11) Other expenses 374 387 (3) ---- ---- ---- Total operating expenses 1,211 1,327 (9) Operating income $339 $239 42% Other (income) expense 11 (4) N/A ---- ---- --- Pretax income $328 $243 35% ==== ==== === Pretax margin 21.2% 15.5% Pretax income - adjusted $321 $309 4% Pretax margin - adjusted 20.7% 19.7% Compensation and benefits for the first quarter decreased $103 million from the prior year quarter including a $103 million favorable impact from foreign currency translation, a $58 million pension curtailment gain and $31 million of cost savings related to the restructuring programs, primarily offset by the inclusion of operating expense from the recent Benfield merger and a $7 million increase in pension expense. Other expenses for the first quarter decreased $13 million from the prior year quarter including a $44 million favorable impact from foreign currency translation and a $13 million decrease for the previously disclosed reviews under the Foreign Corrupt Practices Act (FCPA) and similar laws in other countries and related compliance initiatives, partially offset by the inclusion of Benfield operating expenses and a $9 million increase in intangible amortization primarily related to the merger with Benfield. First quarter pretax income increased 35% to $328 million. Adjusting for certain items detailed on page 10 of this press release, pretax income increased 4% or $12 million to $321 million and pretax margin increased 100 basis points to 20.7% versus the prior year quarter due primarily to benefits of the 2007 and Aon Benfield restructuring programs and the inclusion of pretax income from the merger with Benfield, partially offset by a $21 million decrease in investment income and higher intangible amortization and pension expenses. CONSULTING First Quarter Ended Less: (millions) ------------------ Less: Acquisitions, Organic Commissions, Mar 31, Mar 31, % Currency Divestitures, Revenue Fees, Other 2009 2008 Change Impact Other Growth ----------- ---- ---- ---- ---- ---- ---- Services $263 $288 (9)% (10)% (1)% 2% Outsourcing 45 54 (17) (13) - (4) ---- ---- ---- ---- ---- ---- Sub-Total $308 $342 (10)% (10)% (2)% 2% ---- ---- ---- ---- ---- ---- Investment Income 1 1 -% ---- ---- ---- Total Revenue $309 $343 (10)% ==== ==== ==== Consulting total revenue decreased 10% to $309 million compared to the prior year quarter due to a 10% unfavorable impact from foreign currency translation, a 2% decrease from dispositions net of acquisitions, partially offset by 2% organic growth in commissions and fees. Organic revenue in Consulting Services increased 2% reflecting growth in health and benefits consulting, partially offset by a decline in human capital consulting, including a significant decline in compensation consulting. Organic revenue in Outsourcing declined 4% as a previously announced outsourcing contract winds down, partially offset by modest growth in benefits outsourcing. First Quarter Ended ------------------- (millions) Mar 31, Mar 31, % 2009 2008 Change ------- ------- ------ Revenue $309 $343 (10)% Expenses Compensation and benefits 162 201 (19) Other expenses 77 79 (3) ------- ------- ------ Total operating expenses 239 280 (15) Operating income $70 $63 11% Other (income) expense - - - ------- ------- ------ Pretax income $70 $63 11% ======= ======= ====== Pretax margin 22.7% 18.4% Pretax income - adjusted $52 $66 (21)% Pretax margin - adjusted 16.8% 19.2% Compensation and benefits for the first quarter decreased 19% or $39 million from the prior year quarter including a $21 million pension curtailment gain, $20 million favorable impact from foreign currency translation and benefits related to the 2007 restructuring program. Other expenses decreased 3% or $2 million compared to the prior year quarter including a $9 million favorable impact from foreign currency translation. First quarter pretax income increased 11% to $70 million. Adjusting for certain items detailed on page 10 of this press release, pretax income decreased 21% or $14 million to $52 million and pretax margin decreased 240 basis points to 16.8% versus the prior year quarter due primarily to a 160 basis point impact from compensation consulting. UNALLOCATED INCOME AND EXPENSE First Quarter Ended ------------------- (millions) Mar 31, Mar 31, % 2009 2008 Change ------- ------- ------ Operating segment income before tax $398 $306 30% Unallocated investment income 1 5 (80) Unallocated expenses (27) (20) 35 Interest expense (29) (33) (12) ------- ------- ------ Income from continuing operations before tax $343 $258 33% ======= ======= ======= Unallocated investment income for the first quarter decreased $4 million to $1 million compared to the prior year quarter due primarily to the timing of distributions in certain private equity holdings and a decline in average interest rates. Unallocated expenses increased $7 million to $27 million versus the prior year quarter due primarily to a $5 million increase in pension expense. Interest expense decreased $4 million to $29 million from the prior year quarter due to fluctuations in foreign currency and a decline in average interest rates on outstanding debt. Conference Call and Webcast Details The Company will host a conference call on Friday, May 1, 2009 at 7:30 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 (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 37,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008 and 2009 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007 and 2008, and Aon was 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, the cost of resolution of other contingent liabilities and loss contingencies, our ability to integrate Benfield successfully and to realize the anticipated benefits of the Benfield merger. 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 and several additional measures including expenses, margins and income per share, that exclude the effects of restructuring charges and certain other noteworthy items that affected results for the comparable periods. Organic revenue growth excludes from reported revenues the impact of foreign exchange, acquisitions, divestitures, transfers between business units, investment income, reimbursable expenses and unusual items. Reconciliation is provided in the attached schedules. Supplemental organic revenue growth information and additional measures that exclude the effects of the restructuring charges and certain other items do not affect net income or any other GAAP reported amounts. Management believes that these measures are important to make meaningful period-to-period comparisons and that this supplemental information is helpful to investors. 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: Media Contact: Scott Malchow David Prosperi Vice President, Vice President, Investor Relations Global Public Relations 312-381-3983 312-381-2485 Aon Corporation Consolidated Summary of Operations (Unaudited) First Quarter Ended ------------------------------- (millions except per share Mar. 31, Mar. 31, Percent data) 2009 2008 Change -------- -------- ------- Revenue ------- Commissions, fees and other $1,822 $1,848 (1)% Investment income 32 57 (44) ----- ----- --- Total revenue 1,854 1,905 (3) ----- ----- --- Expenses -------- Compensation and benefits 1,014 1,154 (12) Other general expenses 397 414 (4) Depreciation and amortization 60 50 20 ----- ----- --- Total operating expenses 1,471 1,618 (9) ----- ----- --- Operating income 383 287 33 Interest expense 29 33 (12) Other expense (income) 11 (4) N/A ----- ----- --- Income from continuing operations before provision for income tax 343 258 33 Provision for income tax (1) 108 76 42 ----- ----- --- Income from continuing operations 235 182 29 ----- ----- --- Discontinued operations Income from discontinued operations 91 66 38 Provision for income tax (2) 41 25 64 ----- ----- --- Income from discontinued operations 50 41 22 ----- ----- --- Net income 285 223 28 Less: Net income attributable to the noncontrolling interests 5 5 - ----- ----- --- Net income attributable to Aon stockholders $280 $218 28% ==== ==== === Basic net income per share attributable to Aon stockholders (3): Income from continuing operations $0.81 $0.57 42% Income from discontinued operations 0.18 0.13 38 ----- ----- --- Net income $0.99 $0.70 41% ===== ===== == Diluted net income per share attributable to Aon stockholders: Income from continuing operations $0.80 $0.55 45% Income from discontinued operations 0.17 0.13 31 ----- ----- -- Net income $0.97 $0.68 43% ===== ===== == Weighted average common shares outstanding - diluted 288.8 319.8 (10)% ===== ===== == Net income attributable to Aon stockholders: Income from continuing operations $230 $177 30% Income from discontinued operations 50 41 22 ---- ---- -- Net income $280 $218 28% ==== ==== == (1) Tax rate from continuing operations is 31.5% and 29.5% for the first quarters ended March 31, 2009 and 2008, respectively. The underlying tax rate on continuing operations for 2009 is approximately 29%. (2) Tax rate from discontinued operations is 45.1% and 37.9% for the first quarters ended March 31, 2009 and 2008, respectively. (3) In accordance with FSP EITF 03-6-1, the basic net income per share calculation for the first quarters ended March 31, 2009 and 2008 includes 7.3 million and 7.6 million additional shares related to unvested share-based payment awards that have a right to receive nonforfeitable dividends. Aon Corporation Revenue from Continuing Operations (Unaudited) First Quarter Ended ---------------------------------------------------- Less: Orga- Acqui- nic Less: sitions, Reve- Mar. Mar. Curr- Divest- nue 31, 31, Percent ency itures Growth (millions) 2009 2008 Change Impact & Other (1) ---- ---- ------- ------ -------- ------ Commissions, Fees and Other ------------ Risk and Insurance Brokerage Services: Americas $477 $493 (3)% (5)% -% 2% United Kingdom 116 150 (23) (19) 1 (5) Europe, Middle East & Africa 448 510 (12) (12) - - Asia Pacific 84 106 (21) (18) (1) (2) Reinsurance brokerage and related services 395 256 54 (8) 61 1 ----- ----- --- --- -- -- Total Risk and Insurance Brokerage Services 1,520 1,515 - (10) 9 1 ----- ----- --- --- --- -- Consulting: Consulting services 263 288 (9) (10) (1) 2 Outsourcing 45 54 (17) (13) - (4) ----- ----- --- --- --- -- Total Consulting 308 342 (10) (10) (2) 2 --- --- --- --- --- -- Total Operating Segments $1,828 $1,857 (2)% (10)% 7% 1% ====== ====== === === == == Investment Income ---------- Risk and Insurance Brokerage Services $30 $51 (41)% Consulting 1 1 - Unallocated 1 5 (80) -- -- --- Total $32 $57 (44)% === === === Total Revenue -------- Risk and Insurance Brokerage Services $1,550 $1,566 (1)% Consulting 309 343 (10) Unallocated 1 5 (80) Intersegment (6) (9) N/A ----- ----- ----- Total $1,854 $1,905 (3)% ===== ===== ===== (1) Organic revenue growth excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items. Aon Corporation - Segments (Unaudited) Risk and Insurance Brokerage Services - Continuing Operations First Quarter Ended ---------------------------- -------------------------------- Mar. 31, Mar. 31, Percent (millions) 2009 2008 Change -------- -------- ------- Revenue ------- Commissions, fees and other $1,520 $1,515 -% Investment income 30 51 (41) ----- ----- --- Total revenue 1,550 1,566 (1) ----- ----- --- Expenses -------- Compensation and benefits 837 940 (11) Other general expenses 374 387 (3) ----- ----- --- Total operating expenses 1,211 1,327 (9) ----- ----- --- Operating income 339 239 42 Other expense (income) 11 (4) N/A ----- ----- ----- Income before provision for income tax $328 $243 35% ===== ===== ===== Pretax income margin 21.2% 15.5% Consulting - Continuing Operations First Quarter Ended ------------------------ -------------------------------- Mar. 31, Mar. 31, Percent (millions) 2009 2008 Change -------- -------- ------- Revenue ------- Commissions, fees and other $308 $342 (10)% Investment income 1 1 - --- --- --- Total revenue 309 343 (10) --- --- --- Expenses -------- Compensation and benefits 162 201 (19) Other general expenses 77 79 (3) --- --- --- Total operating expenses 239 280 (15) --- --- --- Operating income 70 63 11 Other expense (income) - - - --- --- --- Income before provision for income tax $70 $63 11% === === === Pretax income margin 22.7% 18.4% Reconciliation of 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) 2009 2008 Change -------- -------- ------- Segment income before provision for income tax Risk and Insurance Brokerage Services $328 $243 35% Consulting 70 63 11 ---- ---- --- Total segment income before provision for income tax 398 306 30 Unallocated investment income 1 5 (80) Unallocated expenses (27) (20) 35 Interest expense (29) (33) (12) ---- ---- --- Income from continuing operations before provision for income tax $343 $258 33% ==== ==== === Pretax income margin 18.5% 13.5% Aon Corporation Reconciliation of the Impact of Non-GAAP Measures on Segments and Diluted Earnings Per Share (Unaudited) (1) First Quarter Ended March 31, 2009 --------------------------------------------- Risk and Insurance Unallocated (millions except Brokerage Income & per share data) Services Consulting Expense Total ---------- ---------- ----------- ----- Revenue as reported $1,550 $309 $(5) $1,854 ====== ==== === ====== Income (loss) from continuing operations before provision for income tax - as reported $328 $70 $(55) $343 Restructuring charges (Aon Benfield and 2007 plan) 40 3 - 43 Pension curtailment (58) (21) (4) (83) Anti-bribery and compliance initiatives 1 - - 1 Benfield integration costs 10 - - 10 ---- ---- ---- ---- Income (loss) from continuing operations before provision for income tax - as adjusted $321 $52 $(59) 314 ==== === ==== Provision for income taxes (2) 90 --- Income from continuing operations - as adjusted 224 Less: Net income attributable to noncontrolling interests 5 --- Income from continuing operations - as adjusted $219 ==== Diluted earnings per share from continuing operations - as adjusted $0.76 ===== Weighted average common shares outstanding - diluted 288.8 ===== Pretax income margins - as adjusted 20.7% 16.8% N/A 16.9% ==== ==== === ==== First Quarter Ended March 31, 2008 --------------------------------------------- Risk and Insurance Unallocated (millions except Brokerage Income & per share data) Services Consulting Expense Total ---------- ---------- ----------- ----- Revenue as reported $1,566 $343 $(4) $1,905 ====== ==== === ====== Income (loss) from continuing operations before provision for income tax - as reported $243 $63 $(48) $258 Restructuring charges (2005 and 2007 plans) 57 3 - 60 Anti-bribery and compliance initiatives 14 - - 14 Gain on sale of land (5) - - (5) ---- ---- ---- ---- Income (loss) from continuing operations before provision for income tax - as adjusted $309 $66 $(48) 327 ==== === ==== Provision for income taxes (2) 97 ---- Income from continuing operations - as adjusted 230 Less: Net income attributable to noncontrolling interests 5 ---- Income from continuing operations - as adjusted $225 ==== Diluted earnings per share from continuing operations - as adjusted $0.70 ===== Weighted average common shares outstanding - diluted 319.8 ===== Pretax income margins - as adjusted 19.7% 19.2% N/A 17.2% ==== ==== === ==== (1) Certain noteworthy items impacting revenue and pretax income in 2009 and 2008 are described in this schedule. The revenue, income (loss) from continuing operations before provision for income tax, diluted earnings per share from continuing operations and related margins shown with the caption "as adjusted" are non-GAAP measures. (2) Tax rate from continuing operations is 28.7% and 29.7% for the first quarters ended March 31, 2009 and 2008, respectively. Aon Corporation 2007 Restructuring Plan (Unaudited) Estim- By Type: Actual ated ------------------------------------ ----- Full Full First Total Year Year Quarter Incurred to (millions) 2007 2008 2009 Date Total ---- ---- -------- ------------ ------ Workforce reduction $17 $166 $27 $210 $340 Lease consolidation 22 38 5 65 123 Asset impairments 4 18 - 22 45 Other costs associated with restructuring 3 29 2 34 42 --- ---- --- ---- ---- Total restructuring and related expenses $46 $251 $34 $331 $550 === ==== === ==== ==== By Segment: Risk and Insurance Brokerage Services $41 $234 $31 $306 $505 Consulting 5 17 3 25 45 --- ---- --- ---- ---- Total restructuring and related expenses $46 $251 $34 $331 $550 === ==== === ==== ==== Benfield Restructuring Plan (Unaudited) By Type: Opera- tions Purchase First Estim- Price Quarter ated Allocation 2009 Total (millions) ---------- ----- --------- Workforce reduction $74 $8 $126 Lease consolidation 28 - 49 Asset impairments - 1 8 Other costs associated with restructuring 2 - 2 ---- --- ---- Total restructuring and related expenses $104 $9 $185 ==== === ==== Note: In the Consolidated Summary of Operations, workforce reductions are included in "Compensation and benefits," lease consolidations and other costs associated with restructuring are included in "Other general expenses," and asset impairments are included in "Depreciation and amortization." Aon Corporation Consolidated Summary of Operations - Reflects the adoption of FSP EITF 03-6-1 and the reclassification of noncontrolling interests (unaudited) (millions except per share data) 2007 2008 -------------------------------- ------------------------------- 1st 2nd 3rd 4th 1st 2nd 3rd 4th Quar- Quar- Quar- Quar- Full Quar- Quar- Quar- Quar- Full ter ter ter ter Year ter ter ter ter Year -------------------------------- ------------------------------- Revenue Comm- issions, fees and oth- er $1,702 $1,750 $1,671 $1,943 $7,066 $1,848 $1,889 $1,756 $1,873 $7,366 Inv- est- ment in- come 67 88 75 63 293 57 67 90 51 265 -------------------------------- ---------------------------------- Total reven- ue 1,769 1,838 1,746 2,006 7,359 1,905 1,956 1,846 1,924 7,631 -------------------------------- ---------------------------------- Expenses Comp- ensa- tion and benef- its 1,040 1,097 1,047 1,157 4,341 1,154 1,143 1,131 1,153 4,581 Other gene- ral expen- ses 409 410 387 493 1,699 414 500 419 451 1,784 Depre- cia- tion and amort- iza- tion 47 46 48 52 193 50 58 49 65 222 -------------------------------- ---------------------------------- Total oper- ating expens- es 1,496 1,553 1,482 1,702 6,233 1,618 1,701 1,599 1,669 6,587 -------------------------------- ---------------------------------- Oper- ating in- come 273 285 264 304 1,126 287 255 247 255 1,044 Inter- est expen- se 35 34 33 36 138 33 31 32 30 126 Other ex- pense (in- come) - (29) - (6) (35) (4) (2) (3) 48 39 -------------------------------- ---------------------------------- Income from cont- inuing oper- ations before provision for income tax 238 280 231 274 1,023 258 226 218 177 879 Prov- ision for income tax 73 97 95 83 348 76 57 59 50 242 -------------------------------- ---------------------------------- Income from cont- inuing opera- tions 165 183 136 191 675 182 169 159 127 637 -------------------------------- ---------------------------------- Discon- tinued oper- ations Income (loss) from discon- tinued opera- tions 79 91 83 77 330 66 1,431 (57) (184) 1,256 Prov- ision for (bene- fit from) income tax 27 31 12 58 128 25 464 (19) (55) 415 -------------------------------- ---------------------------------- Income (loss) from discon- tinued opera- tions 52 60 71 19 202 41 967 (38) (129) 841 -------------------------------- ---------------------------------- Net income (loss) 217 243 207 210 877 223 1,136 121 (2) 1,478 Less: Net income attribu- table to the noncon- troll- ing inter- ests 4 3 3 3 13 5 3 4 4 16 -------------------------------- ---------------------------------- Net income (loss) attrib- utable to Aon stock- hold- ers $213 $240 $204 $207 $864 $218 $1,133 $117 $(6) $1,462 ================================ ================================== Basic net income (loss) per share attri- butable to Aon stock- hold- ers: Income from cont- inuing opera- tio- ns $0.53 $0.60 $0.44 $0.61 $2.19 $0.57 $0.56 $0.55 $0.44 $2.14 Income (loss) from discon- tinued opera- tio- ns 0.17 0.20 0.24 0.06 0.66 0.13 3.26 (0.13) (0.46) 2.87 -------------------------------- ---------------------------------- Net income (lo- ss) $0.70 $0.80 $0.68 $0.67 $2.85 $0.70 $3.82 $0.42 $(0.02) $5.01 ================================ ================================== Dilu- tive net income (loss) per share attribut- able to Aon stock- hold- ers: Income from contin- uing opera- tio- ns $0.50 $0.57 $0.42 $0.58 $2.07 $0.55 $0.54 $0.53 $0.43 $2.06 Income (loss) from discon- tinued opera- tio- ns 0.16 0.18 0.22 0.06 0.62 0.13 3.17 (0.13) (0.45) 2.80 -------------------------------- ---------------------------------- Net income (lo- ss) $0.66 $0.75 $0.64 $0.64 $2.69 $0.68 $3.71 $0.40 $(0.02) $4.86 ================================ ================================== Weigh- ted aver- age comm- on shares outstand- ing -dilu- ted 324.4 321.9 321.5 324.1 323.0 319.8 305.3 290.3 288.1 300.9 ================================ ================================== Net income (loss) attribu- table to Aon stock- hold- ers: Income from contin- uing oper- atio- ns $161 $180 $133 $188 $662 $177 $166 $155 $123 $621 Income (loss) from discon- tinued oper- atio- ns 52 60 71 19 202 41 967 (38) (129) 841 -------------------------------- ---------------------------------- Net in- come (lo- ss) $213 $240 $204 $207 $864 $218 $1,133 $117 $(6) 1,462 ================================ ================================== Aon Corporation Segments - Reclassified for the change in the presentation of noncontrolling interests (unaudited) (millions) 2007 2008 -------------------------------- ------------------------------- 1st 2nd 3rd 4th 1st 2nd 3rd 4th Quar- Quar- Quar- Quar- Full Quar- Quar- Quar- Quar- Full ter ter ter ter Year ter ter ter ter Year -------------------------------- ------------------------------- Revenue ------- Risk and ins- urance brok- erage serv- ices $1,429 $1,490 $1,411 $1,627 $5,957 $1,566 $1,610 $1,473 $1,581 $6,230 Con- sulting 329 325 325 373 1,352 343 336 337 342 1,358 Unall- ocat- ed 21 29 18 11 79 5 17 40 6 68 Interseg- ment (10) (6) (8) (5) (29) (9) (7) (4) (5) (25) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ To- tal $1,769 $1,838 $1,746 $2,006 $7,359 $1,905 $1,956 $1,846 $1,924 $7,631 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Income (loss) before prov- ision for in- come tax --- Risk and Ins- urance brok- erage services As repor- ted $234 $272 $228 $276 $1,010 $238 $231 $188 $217 $874 Add: impact of the change in the presen- tation of noncont- rolling inter- ests 4 3 3 3 13 5 3 4 3 15 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ As reclass- ified 238 275 231 279 1,023 243 234 192 220 889 Con- sult ing As repor- ted 47 44 38 60 189 63 43 52 55 213 Add: impact of the change in the presen- tation of noncont- rolling inter- ests - - - - - - - - 1 1 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ As Re- class- ified 47 44 38 60 189 63 43 52 56 214 Unallo- cated (47) (39) (38) (65) (189) (48) (51) (26) (99) (224) ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total $238 $280 $231 $274 $1,023 $258 $226 $218 $177 $879 ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== Income from cont- inuing oper- ations before prov- ision for in- come tax - mar- gins ---- Risk and ins- urance brok- erage serv- ices As repor- ted 16.4% 18.3% 16.2% 17.0% 17.0% 15.2% 14.3% 12.8% 13.7% 14.0% As reclass- ified 16.7% 18.5% 16.4% 17.1% 17.2% 15.5% 14.5% 13.0% 13.9% 14.3% Consulting As repor- ted 14.3% 13.5% 11.7% 16.1% 14.0% 18.4% 12.8% 15.4% 16.1% 15.7% As reclass- ified 14.3% 13.5% 11.7% 16.1% 14.0% 18.4% 12.8% 15.4% 16.4% 15.8% Total As repor- ted 13.2% 15.1% 13.1% 13.5% 13.7% 13.3% 11.4% 11.6% 9.0% 11.3% As reclass- ified 13.5% 15.2% 13.2% 13.7% 13.9% 13.5% 11.6% 11.8% 9.2% 11.5% Tax rate from cont- inuing oper- ations ------ As repor- ted 31.2% 35.0% 41.7% 30.6% 34.5% 30.0% 25.6% 27.6% 28.9% 28.0% As reclass- ified 30.7% 34.6% 41.1% 30.3% 34.0% 29.5% 25.2% 27.1% 28.2% 27.5% Aon Corporation Condensed Consolidated Statements of Financial Position As of ------- (millions) Mar. 31, 2009 Dec. 31, 2008 (2) ------------ ------------- ----------------- (Unaudited) ASSETS -------- CURRENT ASSETS Cash and cash equivalents $501 $582 Short-term investments 879 684 Receivables 1,795 1,990 Fiduciary assets (1) 11,239 10,678 Other current assets 307 355 Assets held for sale 188 237 ------ ------ Total Current Assets 14,909 14,526 Goodwill 5,546 5,637 Other intangible assets 738 779 Fixed assets, net 430 451 Investments 313 332 Other non-current assets 1,172 1,215 ------ ------ TOTAL ASSETS $23,108 $22,940 ======= ======= LIABILITIES -------------- CURRENT LIABILITIES Fiduciary liabilities $11,239 $10,678 Short-term debt 104 105 Accounts payable and accrued liabilities 1,336 1,560 Other current liabilities 308 314 Liabilities held for sale 124 146 ------ ------ Total Current Liabilities 13,111 12,803 Long-term debt 1,848 1,872 Pension, post employment and post retirement liabilities 1,446 1,694 Other non-current liabilities 1,041 1,156 ------ ------ TOTAL LIABILITIES 17,446 17,525 ------ ------ TOTAL STOCKHOLDERS' EQUITY 5,553 5,310 Noncontrolling interest 109 105 ------ ------ TOTAL EQUITY 5,662 5,415 ------ ------ TOTAL LIABILITIES AND EQUITY $23,108 $22,940 ======= ======= (1) Includes short-term investments: 2009 - $3,690; 2008 - $3,178. (2) Certain amounts have been reclassified to conform to the 2009 presentation. 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 Web Site: http://www.aon.com/

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