-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TRgSFEX4MWgnWSEIMkUd4OhEusPkPDsXFB8W5FrWW1/BOM+f1G8qUttrm20JTftB CzWfJgMXpobnhsFjqYErrA== 0001104659-04-022406.txt : 20040805 0001104659-04-022406.hdr.sgml : 20040805 20040805062110 ACCESSION NUMBER: 0001104659-04-022406 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040804 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AON CORP CENTRAL INDEX KEY: 0000315293 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 363051915 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07933 FILM NUMBER: 04953094 BUSINESS ADDRESS: STREET 1: 200 EAST RANDOLPH STREET CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3123811000 MAIL ADDRESS: STREET 1: 200 EAST RANDOLPH STREET CITY: CHICAGO STATE: IL ZIP: 60601 FORMER COMPANY: FORMER CONFORMED NAME: COMBINED INTERNATIONAL CORP DATE OF NAME CHANGE: 19870504 8-K 1 a04-8711_28k.htm 8-K

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): August 4, 2004

 


 

Aon CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

1-7933

 

36-3051915

(State or Other Jurisdiction
of Incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

 

 

 

 

 

200 East Randolph Street, Chicago, Illinois

 

60601

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (312) 381-1000

 

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

 

 



 

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

 

(a)—(b)                Not applicable.

 

(c)                                            Exhibits:

 

Exhibit
Number

 

Description of Exhibit

 

 

 

99.1

 

Press Release issued by the Company on August 4, 2004.

 

Item 12. Results of Operations and Financial Condition.

 

On August 4, 2004, Aon Corporation (the “Company”) issued a press release (the “Press Release”) announcing its results of operations for the quarter and six months ended June 30, 2004.  A copy of the Press Release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Aon CORPORATION

 

 

 

By:

/s/ David P. Bolger

 

 

David P. Bolger

 

 

Executive Vice President and Chief Financial Officer

 

 

 

Date: August 4, 2004

 

 

 

3



 

EXHIBIT INDEX

 

The following is a list of the exhibits filed herewith.

 

Exhibit
Number

 

Description of Exhibit

 

 

 

99.1

 

Press Release issued by the Company on August 4, 2004.

 

4


EX-99.1 2 a04-8711_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Aon Reports Second Quarter and Six Months 2004 Results

 

CHICAGO, IL — August 4, 2004 - Aon Corporation (NYSE: AOC) today reported second quarter and six months 2004 results.

 

Second Quarter and Six Months Review

Net income per share for the second quarter was $0.52 compared to $0.46 in 2003.  Net income from continuing operations rose to $180 million or $0.54 per share from $155 million or $0.49 per share a year ago.

 

Six months net income per share for 2004 and 2003 were $1.04 and $0.94, respectively.  Net income from continuing operations and the related per share amounts for six months increased to $371 million or $1.13 from $316 million or $1.00, respectively.

 

Patrick G. Ryan, chairman and CEO of Aon Corporation, said, “The risk and insurance brokerage and consulting segments showed improved expense discipline in the second quarter and their six month profit margins increased year-over-year.  Organic revenue in risk and insurance brokerage did not grow as expected in the second quarter, however, pressuring the profit margin.  A more rapid decrease in property and casualty premium rates contributed to the decline.  We are working diligently to enhance our profitability through better organic growth and tighter expense management.”

 

Mr. Ryan added, “We completed an outsourcing contract for IT infrastructure in the U.S. and we have an agreement in principle to sell a majority interest of our Cambridge Integrated Services claims business.  Both of these actions will increase our profit margins.”

 

In first quarter 2004, Aon accelerated the process for determining and approving certain discretionary incentive compensation.  This had no effect on the six months comparisons at either the consolidated or segment level.  However, approximately $43 million of discretionary incentive compensation was accrued in first quarter 2004 that would have been expensed in second quarter 2004 under the year ago process.

 

Endurance Specialty warrant gains were zero and $0.04 per share for second quarter 2004 and 2003, respectively, and $0.01 per share and $0.13 per share for the comparable six month periods.  Second quarter and six months 2003 results included a $0.02 per share and a $0.09 per share World Trade Center (WTC) unusual charge, respectively.  A reinsurance brokerage runoff unit was added to discontinued operations during second quarter 2004 as described below.

 



 

Consolidated revenues grew 6% for the second quarter and 7% for six months compared with the year ago periods.  Foreign exchange translation accounted for 3% and 5% of the growth for the second quarter and first half 2004, respectively.

 

Second Quarter and Six Months Segment Review

This press release contains references to organic revenue growth that management believes is an important measure to evaluate new business production from existing operations. Please see additional information below regarding organic revenue growth.

Prior period segment results were reclassified in conjunction with certain non-core businesses being placed into discontinued operations.

 

Risk and Insurance Brokerage Services second quarter revenue grew 2% to $1.4 billion.  Organic revenue growth for the total segment was negative 1% partly from declining premium rates charged by insurance companies.  Positive organic revenue growth in the Americas and International risk management and insurance brokerage groups was more than offset by the decline in reinsurance brokerage and claims services.

 

Pretax income increased 18% to $212 million in the quarter and the pretax margin was 14.8% versus 12.8% a year ago.  Second quarter 2004 pretax income and margin comparisons versus the prior year were positively influenced by the accelerated approval process for certain discretionary incentive compensation ($33 million).

 

Six months pretax income increased 9% to $454 million and the pretax margin improved 70 basis points to 15.7%.

 

Consulting revenue rose 4% to $305 million.  Although organic revenue growth was nil in the quarter, pretax income increased 27% to $28 million and the pretax margin grew to 9.2% from 7.5% in 2003.  The pretax margin improvement was driven by better human resource outsourcing results, disciplined expense management and the accelerated approval process for certain discretionary incentives.

 

Six months pretax income rose 26% to $54 million and the pretax margin grew 140 basis points to 8.9%.

 

Insurance Underwriting revenue increased 16% to $805 million.  Total underwriting segment organic revenue growth was 2%, driven by written premiums within the warranty, credit and select property/casualty group.  Accident and health (A&H) insurance premiums were lower on an organic basis due to the runoff of certain Latin American and non-core businesses as planned.  On a reported basis, revenue growth was positively influenced by a reinsurance program review for a specialty A&H line, which  is now being accounted for under deposit accounting.  This had no effect on pretax income.  In addition, a book of U.K. specialty A&H business ceded to a third party in second quarter 2003 was later reversed influencing the year-to-year comparisons.

 

Pretax income grew to $73 million from $64 million in 2003.  Pretax margins were 9.1% for 2004 and 9.2% for 2003.  The accelerated process for approving certain discretionary incentive plans benefited pretax income by $5 million.

 



 

Six months pretax income was $126 million compared with $127 million in 2003, and the pretax margin was 7.9% versus 9.1% a year ago.

 

Corporate and Other segment revenue was $18 million compared to $40 million last year.  Second quarter 2003 revenue included a gain on Endurance warrants of $21 million with no comparable amount in 2004.

 

The pretax loss in the quarter was $32 million compared with a loss of $6 million a year ago.  Debt reduction and lower interest rates reduced interest expense but were more than offset by a $15 million increase in pretax interest expense from the reclassification of the trust preferred after tax minority interest (as of first quarter 2004 under the adoption of FIN 46).  Prior periods were not restated.

 

Second quarter 2003 results included a $9 million pretax WTC unusual charge and second quarter 2004 benefited from the accelerated approval process for certain discretionary incentives ($3 million).

 

The pretax loss for six months was $54 million compared to a pretax loss of $56 million a year ago.

 

Financial Strength Highlights

Total debt and preferred stock decreased $405 million to $2.1 billion at June 30, 2004 from June 30, 2003.  Total debt and preferred stock as a percentage of total capital improved to 31% from 37% over the same period.  Stockholders’ equity increased to

$4.7 billion.

 

Approximately 90% of Aon’s investment portfolio at quarter end was in short-term and fixed maturities.  More than 96% of the fixed income securities were investment grade.

 

Discontinued Operations

Second quarter after tax losses from discontinued operations were $7 million ($0.02 per share) in 2004 and $9 million ($0.03 per share) in 2003.  During second quarter 2004, a non-core reinsurance brokerage runoff unit in the U.K was added to discontinued operations.  The net loss in the quarter from this discontinued reinsurance business was $2 million after tax ($0.01 per share) for 2004 with a nominal loss in 2003.  Revenues for this unit were $6 million and $7 million for the comparable periods.

 

Other Items

Second quarter and six months 2004 dilutive net income per share calculations include approximately 14 million and 7 million additional shares, respectively, for the potential conversion of the 3½% Senior Convertible Debentures.  This diluted earnings in the second quarter by approximately $0.02 per share.  Approximately $2 million of after-tax interest expense from the assumed conversion of this convertible debt was added back to net income to calculate earnings per share.

 

After netting the effect of currency hedges, the positive impact of foreign exchange was approximately $0.02 per share for second quarter 2004 and $0.03 per share for second quarter 2003.

 



 

Future Outlook   

Mr. Ryan commented, “Given our current outlook, we remain comfortable that Aon can achieve or exceed earnings per share of $2.20 from continuing operations in 2004.   Future gains/losses from divestitures and Endurance Specialty warrants are not included in this outlook.”

 

Mr. Ryan added, “Earlier this year I challenged our employees to attain brokerage margin goals of the high teens for 2004 and 20% or greater in the year 2005.  Our employees have enthusiastically rallied around these goals.  In light of our second quarter brokerage results and the softening premium rate environment, however, it will clearly be more difficult to achieve our brokerage margin goals as soon as we had hoped.  Still, we remain focused on improving our margin.  The difficult premium rate environment has only increased our resolve to improve our margins through new business development, greater penetration of our many existing client relationships, and strict control of our expenses.”

 

The Company will host an audio webcast on Thursday, August 5 at 10:00 a.m. central time that can be accessed at www.aon.com.

 

Aon Corporation (www.aon.com) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. The company employs approximately 52,000 professionals in its 600 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 relating to future results, 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 the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, resolution of regulatory issues, including those related to compensation arrangements with underwriters, pension funding, ultimate paid claims may be different from actuarial estimates and actuarial estimates may change over time, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual costs of resolution of contingent liabilities and other loss contingencies, and the heightened level of potential errors and omissions liability arising from placements of complex policies and sophisticated reinsurance arrangements in an insurance market in which insurer reserves are under pressure.  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 that management believes is an important measure to evaluate new business production from existing operations.  We also 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 do not make identical adjustments.

###

 

Investor Contact:

Sean P. O’Neill

 

Corporate Vice President, Financial Relations

 

312-381-3983

 

 

Media Contact:

Al Orendorff

 

Director, Public Relations

 

312-381-3153

 



 

Aon Corporation

Consolidated Summary of Operations

 

 

 

Second Quarter Ended

 

Six Months Ended

 

(millions except per share data)

 

June 30,
2004

 

June 30,
2003 (1)

 

Percent
Change

 

June 30,
2004

 

June 30,
2003 (1)

 

Percent
Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage commissions and fees

 

$

1,760

 

$

1,688

 

4

%

$

3,552

 

$

3,341

 

6

%

Premiums and other

 

716

 

635

 

13

 

1,408

 

1,267

 

11

 

Investment income

 

69

 

89

 

(22

)

150

 

168

 

(11

)

Total revenue

 

2,545

 

2,412

 

6

 

5,110

 

4,776

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

General expenses

 

1,822

 

1,776

 

3

 

3,657

 

3,448

 

6

 

Benefits to policyholders

 

392

 

325

 

21

 

775

 

670

 

16

 

Interest expense (2)

 

35

 

27

 

30

 

69

 

55

 

25

 

Amortization of intangible assets

 

15

 

15

 

 

29

 

28

 

4

 

Unusual charges - World Trade Center

 

 

9

 

(100

)

 

46

 

(100

)

Total expenses

 

2,264

 

2,152

 

5

 

4,530

 

4,247

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax and minority interest

 

281

 

260

 

8

 

580

 

529

 

10

 

Provision for income tax (36% in 2004 and 37% in 2003)

 

101

 

96

 

5

 

209

 

195

 

7

 

Income from continuing operations before minority interest

 

180

 

164

 

10

 

371

 

334

 

11

 

Minority interest - 8.205% trust preferred capital securities (2)

 

 

(9

)

N/A

 

 

(18

)

N/A

 

Income from continuing operations

 

180

 

155

 

16

 

371

 

316

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of tax

 

(7

)

(9

)

N/A

 

(28

)

(18

)

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

173

 

$

146

 

18

%

$

343

 

$

298

 

15

%

Preferred stock dividends

 

 

 

 

(1

)

(1

)

 

Net income available for common stockholders

 

$

173

 

$

146

 

18

%

$

342

 

$

297

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.56

 

$

0.49

 

14

%

$

1.16

 

$

1.00

 

16

%

Discontinued operations

 

(0.02

)

(0.03

)

N/A

 

(0.09

)

(0.06

)

N/A

 

Net income

 

$

0.54

 

$

0.46

 

17

%

$

1.07

 

$

0.94

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.54

 

$

0.49

 

10

%

$

1.13

 

$

1.00

 

13

%

Discontinued operations

 

(0.02

)

(0.03

)

N/A

 

(0.09

)

(0.06

)

N/A

 

Net income

 

$

0.52

 

$

0.46

 

13

%

$

1.04

 

$

0.94

 

11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive average common and common equivalent shares outstanding (3)

 

337.1

 

318.2

 

6

%

329.2

 

316.7

 

4

%

 


(1)          Certain amounts relating to discontinued operations have been reclassified to conform to the 2004 presentation.

(2)          Upon the adoption of FIN 46 on December 31, 2003, Aon was required to deconsolidate its trust preferred capital securities, which was offset by an increase in notes payable.  Beginning in 2004, no after-tax interest on the capital securities will be reported; however, pretax interest expense on the notes payable of $15 million and $29 million for second quarter and six months ended June 30, 2004, respectively, is reported as part of interest expense.

(3)          The dilutive net income per share calculation for second quarter and six months 2004 includes 14 million and 7 million additional shares, respectively, for the potential conversion of the 3.5% Senior Convertible Debentures.  In addition, the net income used in the calculation includes approximately $2 million of after-tax interest expense from the assumed conversion of this debt for both the second quarter and six months ended June 30, 2004.

 



 

Aon Corporation
Segments - Second Quarter Continuing Operations

 

 

 

Second Quarter Ended

 

(millions)

 

June 30,
2004

 

June 30,
2003 (1)

 

Percent
Change

 

Less:
Currency
Impact

 

Less:
Acquisitions,
Divestitures &
Transfers

 

Less:  All
Other (2)

 

Organic
Revenue
Growth (3)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk management and insurance brokerage - Americas

 

$

598

 

$

590

 

1

%

%

%

%

1

%

Risk management and insurance brokerage - International

 

574

 

507

 

13

 

8

 

2

 

1

 

2

 

Reinsurance brokerage and related services

 

204

 

219

 

(7

)

3

 

 

(2

)

(8

)

Claims services

 

57

 

88

 

(35

)

 

(24

)

2

 

(13

)

Total risk and insurance brokerage services

 

1,433

 

1,404

 

2

 

3

 

(1

)

1

 

(1

)

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits, compensation, management and communications consulting

 

230

 

224

 

3

 

3

 

(2

)

1

 

1

 

Human resource outsourcing

 

75

 

68

 

10

 

3

 

9

 

(2

)

 

Total consulting

 

305

 

292

 

4

 

3

 

1

 

 

 

Insurance underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & health and life

 

441

 

377

 

17

 

2

 

 

23

 

(8

)

Warranty, credit and property & casualty

 

364

 

315

 

16

 

3

 

 

(1

)

14

 

Total insurance underwriting

 

805

 

692

 

16

 

3

 

 

11

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

18

 

40

 

(55

)

N/A

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment revenues

 

(16

)

(16

)

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

Total

 

$

2,545

 

$

2,412

 

6

%

3

%

%

3

%

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income (included in Revenue above)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

$

18

 

$

19

 

(5%

)

 

 

 

 

 

 

 

 

Consulting

 

1

 

 

N/A

 

 

 

 

 

 

 

 

 

Insurance underwriting, excluding deposit-type contracts

 

32

 

29

 

10

 

 

 

 

 

 

 

 

 

Insurance underwriting - deposit-type contracts

 

 

1

 

(100

)

 

 

 

 

 

 

 

 

Corporate and other

 

18

 

40

 

(55

)

 

 

 

 

 

 

 

 

Total

 

$

69

 

$

89

 

(22%

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income tax and minority interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

$

212

 

$

180

 

18

%

 

 

 

 

 

 

 

 

Consulting

 

28

 

22

 

27

 

 

 

 

 

 

 

 

 

Insurance underwriting

 

73

 

64

 

14

 

 

 

 

 

 

 

 

 

Corporate and other

 

(32

)

(6

)

N/A

 

 

 

 

 

 

 

 

 

Total

 

$

281

 

$

260

 

8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax - margins

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

14.8

%

12.8

%

 

 

 

 

 

 

 

 

 

 

Consulting

 

9.2

%

7.5

%

 

 

 

 

 

 

 

 

 

 

Insurance underwriting

 

9.1

%

9.2

%

 

 

 

 

 

 

 

 

 

 

Total

 

11.0

%

10.8

%

 

 

 

 

 

 

 

 

 

 

 


(1)          Certain amounts relating to discontinued operations have been reclassified to conform to the 2004 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 - Year-to-date Continuing Operations

 

 

 

Six Months Ended

 

(millions)

 

June 30,
2004

 

June 30,
2003 (1)

 

Percent
Change

 

Less:
Currency
Impact

 

Less:
Acquisitions,
Divestitures &
Transfers

 

Less:  All
Other (2)

 

Organic
Revenue
Growth (3)

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk management and insurance brokerage - Americas

 

$

1,130

 

$

1,097

 

3

%

1

%

%

(1%

)

3

%

Risk management and insurance brokerage - International

 

1,207

 

1,031

 

17

 

11

 

1

 

1

 

4

 

Reinsurance brokerage and related services

 

443

 

456

 

(3

)

5

 

 

(3

)

(5

)

Claims services

 

118

 

176

 

(33

)

1

 

(24

)

2

 

(12

)

Total risk and insurance brokerage services

 

2,898

 

2,760

 

5

 

5

 

(1

)

 

1

 

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefits, compensation, management and communications consulting

 

455

 

433

 

5

 

5

 

(1

)

1

 

 

Human resource outsourcing

 

151

 

139

 

9

 

3

 

6

 

(2

)

2

 

Total consulting

 

606

 

572

 

6

 

5

 

1

 

(1

)

1

 

Insurance underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accident & health and life

 

866

 

776

 

12

 

4

 

 

14

 

(6

)

Warranty, credit and property & casualty

 

720

 

625

 

15

 

4

 

 

(1

)

12

 

Total insurance underwriting

 

1,586

 

1,401

 

13

 

4

 

 

7

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

54

 

71

 

(24

)

N/A

 

N/A

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment revenues

 

(34

)

(28

)

N/A

 

N/A

 

N/A

 

N/A

 

N/A

 

Total

 

$

5,110

 

$

4,776

 

7

%

5

%

%

1

%

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income (included in Revenue above)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

$

32

 

$

38

 

(16%

)

 

 

 

 

 

 

 

 

Consulting

 

1

 

1

 

 

 

 

 

 

 

 

 

 

Insurance underwriting, excluding deposit-type contracts

 

63

 

55

 

15

 

 

 

 

 

 

 

 

 

Insurance underwriting - deposit-type contracts

 

 

3

 

(100

)

 

 

 

 

 

 

 

 

Corporate and other

 

54

 

71

 

(24

)

 

 

 

 

 

 

 

 

Total

 

$

150

 

$

168

 

(11%

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income tax and minority interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

$

454

 

$

415

 

9

%

 

 

 

 

 

 

 

 

Consulting

 

54

 

43

 

26

 

 

 

 

 

 

 

 

 

Insurance underwriting

 

126

 

127

 

(1

)

 

 

 

 

 

 

 

 

Corporate and other

 

(54

)

(56

)

N/A

 

 

 

 

 

 

 

 

 

Total

 

$

580

 

$

529

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax - margins

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

15.7

%

15.0

%

 

 

 

 

 

 

 

 

 

 

Consulting

 

8.9

%

7.5

%

 

 

 

 

 

 

 

 

 

 

Insurance underwriting

 

7.9

%

9.1

%

 

 

 

 

 

 

 

 

 

 

Total

 

11.4

%

11.1

%

 

 

 

 

 

 

 

 

 

 

 


(1)          Certain amounts relating to discontinued operations have been reclassified to conform to the 2004 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
Corporate and Other - Continuing Operations

 

 

 

Second Quarter Ended

 

Six Months Ended

 

(millions)

 

June 30,
2004

 

June 30,
2003 (1)

 

Percent
Change

 

June 30,
2004

 

June 30,
2003 (1)

 

Percent
Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from marketable equity securities and other investments (2)

 

$

21

 

$

36

 

(42

)%

$

43

 

$

89

 

(52

)%

Limited partnership investments

 

2

 

 

N/A

 

6

 

 

N/A

 

Net gain (loss) on disposals and related expenses (3)

 

(5

)

4

 

N/A

 

5

 

(18

)

N/A

 

Total revenue

 

18

 

40

 

(55

)

54

 

71

 

(24

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

General expenses

 

15

 

10

 

50

 

39

 

26

 

50

 

Interest expense (4)

 

35

 

27

 

30

 

69

 

55

 

25

 

Unusual charges - World Trade Center

 

 

9

 

(100

)

 

46

 

(100

)

Total expenses

 

50

 

46

 

9

 

108

 

127

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income tax

 

$

(32

)

$

(6

)

N/A

%

$

(54

)

$

(56

)

N/A

%

 


Notes:

(1)

Certain amounts relating to discontinued operations have been reclassified to conform to the 2004 presentation.

 

 

 

Second Quarter Ended

 

Six Months Ended

 

 

 

June 30,
2004

 

June 30,
2003

 

Percent
Change

 

June 30,
2004

 

June 30,
2003

 

Percent
Change

 

(2)

Includes (millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Endurance warrants

 

$

 

$

21

 

(100

)%

$

4

 

$

66

 

(94

)%

 

Equity earnings - Endurance

 

18

 

13

 

38

 

34

 

20

 

70

 

 

Total

 

$

18

 

$

34

 

(47

)%

$

38

 

$

86

 

(56

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

Includes (millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of Endurance stock

 

$

 

$

 

%

$

11

 

$

 

N/A

%

 

Impairment writedowns

 

(1

)

(5

)

N/A

 

(2

)

(33

)

N/A

 

 

(4)

Upon the adoption of FIN 46 on December 31, 2003, Aon was required to deconsolidate its trust preferred capital securities, which was offset by an increase in notes payable. Interest expense for second quarter and six months 2004 includes $15 million and $29 million, respectively, on these notes payable.

 



 

Aon Corporation
Consolidated Summary of Operations - Reclassified for Discontinued Operations

 

 

 

2003

 

2004

 

(millions except per share data)

 

1st
Quarter

 

2nd
Quarter

 

3rd
Quarter

 

4th
Quarter

 

Full Year

 

1st
Quarter

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokerage commissions and fees

 

$

1,653

 

$

1,688

 

$

1,639

 

$

1,822

 

$

6,802

 

$

1,792

 

Premiums and other

 

632

 

635

 

673

 

669

 

2,609

 

692

 

Investment income

 

79

 

89

 

57

 

87

 

312

 

81

 

Total revenue

 

2,364

 

2,412

 

2,369

 

2,578

 

9,723

 

2,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

General expenses

 

1,672

 

1,776

 

1,719

 

1,851

 

7,018

 

1,835

 

Benefits to policyholders

 

345

 

325

 

367

 

390

 

1,427

 

383

 

Interest expense

 

28

 

27

 

24

 

22

 

101

 

34

 

Amortization of intangible assets

 

13

 

15

 

18

 

17

 

63

 

14

 

Unusual charges (credits) - World Trade Center

 

37

 

9

 

 

(60

)

(14

)

 

Total expenses

 

2,095

 

2,152

 

2,128

 

2,220

 

8,595

 

2,266

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax and minority interest

 

269

 

260

 

241

 

358

 

1,128

 

299

 

Provision for income tax

 

99

 

96

 

90

 

133

 

418

 

108

 

Income from continuing operations before minority interest

 

170

 

164

 

151

 

225

 

710

 

191

 

Minority interest - 8.205% trust preferred capital securities

 

(9

)

(9

)

(9

)

(9

)

(36

)

 

Income from continuing operations

 

161

 

155

 

142

 

216

 

674

 

191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of tax

 

(9

)

(9

)

(27

)

(1

)

(46

)

(21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

152

 

$

146

 

$

115

 

$

215

 

$

628

 

$

170

 

Preferred stock dividends

 

(1

)

 

(1

)

(1

)

(3

)

(1

)

Net income available for common stockholders

 

$

151

 

$

146

 

$

114

 

$

214

 

$

625

 

$

169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.51

 

$

0.49

 

$

0.45

 

$

0.67

 

$

2.12

 

$

0.60

 

Discontinued operations

 

(0.03

)

(0.03

)

(0.09

)

 

(0.15

)

(0.07

)

Net income

 

$

0.48

 

$

0.46

 

$

0.36

 

$

0.67

 

$

1.97

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.51

 

$

0.49

 

$

0.44

 

$

0.67

 

$

2.11

 

$

0.59

 

Discontinued operations

 

(0.03

)

(0.03

)

(0.08

)

 

(0.14

)

(0.06

)

Net income

 

$

0.48

 

$

0.46

 

$

0.36

 

$

0.67

 

$

1.97

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive average common and common equivalent shares outstanding

 

315.2

 

318.2

 

318.6

 

319.3

 

317.8

 

321.3

 

 



 

Aon Corporation
Segments  - Reclassification for Discontinued Operations

 

 

 

2003

 

2004

 

(millions)

 

1st
Quarter

 

2nd
Quarter

 

3rd
Quarter

 

4th
Quarter

 

Full Year

 

1st
Quarter

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

1,361

 

$

1,411

 

$

1,357

 

$

1,498

 

$

5,627

 

$

1,473

 

Less: reclassification to discontinued operations

 

(5

)

(7

)

(7

)

(10

)

(29

)

(8

)

As reclassified

 

1,356

 

1,404

 

1,350

 

1,488

 

5,598

 

1,465

 

Consulting

 

280

 

292

 

284

 

329

 

1,185

 

301

 

Insurance underwriting

 

709

 

692

 

742

 

740

 

2,883

 

781

 

Corporate and other

 

31

 

40

 

14

 

40

 

125

 

36

 

Intersegment revenues

 

(12

)

(16

)

(21

)

(19

)

(68

)

(18

)

Total

 

$

2,364

 

$

2,412

 

$

2,369

 

$

2,578

 

$

9,723

 

$

2,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Tax and Minority Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

234

 

$

180

 

$

192

 

$

243

 

$

849

 

$

243

 

Less: reclassification to discontinued operations

 

1

 

 

(1

)

(4

)

(4

)

(1

)

As reclassified

 

235

 

180

 

191

 

239

 

845

 

242

 

Consulting

 

21

 

22

 

20

 

47

 

110

 

26

 

Insurance underwriting

 

63

 

64

 

58

 

11

 

196

 

53

 

Corporate and other

 

(50

)

(6

)

(28

)

61

 

(23

)

(22

)

Total

 

$

269

 

$

260

 

$

241

 

$

358

 

$

1,128

 

$

299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax - margins

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

17.2

%

12.8

%

14.1

%

16.2

%

15.1

%

16.5

%

As reclassified

 

17.3

%

12.8

%

14.1

%

16.1

%

15.1

%

16.5

%

Consulting

 

7.5

%

7.5

%

7.0

%

14.3

%

9.3

%

8.6

%

Insurance underwriting

 

8.9

%

9.2

%

7.8

%

1.5

%

6.8

%

6.8

%

Total

 

11.4

%

10.8

%

10.2

%

13.9

%

11.6

%

11.7

%

 


-----END PRIVACY-ENHANCED MESSAGE-----