8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWashington, 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): December 14, 2007

Aon Corporation(Exact Name of Registrant as Specified in 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
(Address of Principal Executive Offices) 60601
(Zip Code)

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

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

                Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On December 14, 2007, Aon Corporation (“Aon”) entered into separate stock purchase agreements for the sale of certain of its subsidiaries including Combined Insurance Company of America (“CICA”), a provider of Supplemental Accident & Health and Life insurance products targeted primarily to middle-income consumers in North America, Europe and Asia (the “CICA Purchase Agreement”), and Sterling Life Insurance Company (“Sterling”), a provider of private Medicare-related insurance products targeted specifically to the U.S. Senior market (the “Sterling Purchase Agreement”).

a.Aon has agreed to sell CICA to ACE Limited (“ACE”) on the following material terms:

Structure of Transaction:	·ACE will purchase 100% of the capital stock of CICA.
Purchase Price:	·$2,400,000,000.
Post-Closing Net Worth Adjustment:	·The purchase price will be adjusted post-closing on a dollar-for-dollar basis to the extent the closing date net worth of CICA exceeds or is less than the target closing date net worth amount of $1,174,000,000.
Representations and Warranties, Covenants and Indemnification:	·The CICA Purchase Agreement contains customary representations, warranties and covenants. Aon’s representations and warranties will generally survive for 12 months. ·Aon’s indemnification obligation for breach of representations and warranties and pre-closing covenants will be subject to (1) a $50,000 per claim deductible with the claims above such amount being subject to an aggregate deductible equal to 1.5% of the purchase price, and (2) an aggregate cap of 15% of the purchase price. ·Each of Aon and ACE are subject to employee non-solicitation provisions for a two-year period post-closing. ·Aon is subject to a two-year worldwide non-compete with respect to the underwriting of Supplemental Accident & Health and Life insurance products as conducted by CICA as of the closing or for the 12-months prior to closing. ·At or prior to the closing, (1) Aon and CICA shall settle all intercompany indebtedness, and (2) CICA expects to declare and pay to Aon a $325 million special dividend of cash and non-cash assets (plus the proceeds from the Sterling sale).
Closing Conditions:	·The sale of CICA is anticipated to be completed by the end of the second quarter of 2008, subject to the satisfaction of certain conditions. The CICA Purchase Agreement contains customary closing conditions for a transaction of this type, including obtaining applicable domestic and foreign antitrust and insurance regulatory governmental approvals, and, other than certain agreed upon events, the absence of any events occurring after the date of the agreement that would have or be reasonably expected to have a material adverse effect on CICA.

2

Ancillary Agreements:	·Aon will enter into a transition services agreement with ACE for the provision of various transition services to CICA. ·CICA will enter into a transition services agreement with Aon (as subcontractor) for the provision of various transition services to Sterling. ·ACE will enter into a 10-year sublease covering CICA’s corporate headquarters in Glenview, Illinois.
Termination:	·Either Aon or ACE may terminate if the closing does not occur by July 31, 2008; however, either party may extend the termination date up to September 30, 2008 if the delay in closing has resulted from failure to obtain certain governmental approvals.

                b.             Aon has agreed to sell Sterling, a wholly-owned subsidiary of CICA, and Olympic Health Management Systems, Inc, an indirect, wholly-owned subsidiary of Aon (“Olympic”), to Munich-American Holding Corporation (“Munich”) on the following material terms:

Structure of Transaction:	·Munich will purchase 100% of the capital stock of Sterling and Olympic.
Purchase Price:	·$352,000,000. ·The purchase price will be reduced by $10,000,000 if prior to closing Medicare legislation is enacted that adversely affects Medicare Advantage policies in a specific way.
Post-Closing Net Worth Adjustment:	·The purchase price will be adjusted post-closing on a dollar-for-dollar basis to the extent the closing date net worth of Sterling and Olympic exceeds or is less than the target closing date net worth amount of $202,000,000.
Representations and Warranties, Covenants and Indemnification:	·The Sterling Purchase Agreement contains customary representations, warranties and covenants. Aon’s representations and warranties will generally survive for 18 months. ·Aon’s indemnification obligation for breach of representations and warranties will be subject to (1) a $50,000 per claim deductible with the claims above such amount being subject to an aggregate deductible equal to 1% of the purchase price, and (2) an aggregate cap of 15% of the purchase price. ·Aon and Munich are subject to employee non-solicitation provisions for a two-year period post-closing. ·Aon agrees to a five-year non-compete with respect to the underwriting and administration of Medicare Advantage, Medicare Part D Prescription Drug and Medicare Supplemental insurance products in any area in which Sterling engages in business as of closing. ·At or prior to the closing, (1) Aon and CICA shall settle all intercompany indebtedness, and (2) Olympic shall transfer to Aon or CICA its minority interest in a specific CICA subsidiary.

3

Closing Conditions:	·The sale of Sterling and Olympic is anticipated to be completed by the end of the first quarter of 2008, subject to the satisfaction of certain conditions. The Sterling Purchase Agreement contains customary closing conditions for a transaction of this type, including obtaining applicable antitrust and insurance regulatory governmental approvals. ·The closing is also conditioned upon the absence of any events occurring that would have or be reasonably expected to have a material adverse effect on Sterling and Olympic. Certain agreed upon events, including any change or prospective change in requirements of law, will not constitute such a material adverse effect.
Ancillary Agreements:	·Sterling entered into employment agreements with three key Sterling executives at the time the Sterling Purchase Agreement was executed. ·Aon will enter into a transition services agreement with Munich for the provision of various transition services to Sterling (which will also include services to be provided by CICA).
Termination:	·Either Aon or Munich may terminate if the closing does not occur by June 30, 2008; however, either party may extend the termination date up to August 31, 2008 if the delay in closing has resulted from failure to obtain certain governmental approvals.

Item 8.01 Other Events.

On December 17, 2007, Aon issued a press release announcing its entry into the CICA Purchase Agreement and the Sterling Purchase Agreement (the “Press Release”).  As described in the Press Release, Aon intends to extract a one-time cash dividend of $325 million from CICA prior to the close of its sale of CICA.  Total after-tax cash proceeds and dividends to Aon after closing of both the CICA and Sterling Business sales are expected to be approximately $2.6 billion, subject to final transaction costs and certain closing adjustments.  Aon will devote the proceeds of these transactions to an increase in its previously authorized share repurchase program.

As announced in the Press Release, Aon’s board of directors has increased Aon’s authorized share repurchase program by $2.6 billion, bringing the total current authorization available under the share repurchase program to $2.78 billion, after taking into account Aon’s previous repurchases under the program.  A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(a) - (c)   Not applicable.

(d)           Exhibits:

Exhibit Number	Description of Exhibit
99.1	Press Release issued by Aon on December 17, 2007.

4

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/ D. Cameron Findlay
		D. Cameron Findlay
		Executive Vice President and General Counsel
Date: December 19, 2007

5

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	Press Release issued by Aon on December 17, 2007.

6

EX-99.1

Exhibit 99.1

News from Aon

Aon Signs Definitive Agreements to Sell

 Combined Insurance Co. and Sterling Life Insurance

ACE Limited to Acquire Combined Insurance Co. for $2.4 billion and Munich Re Group to Purchase Sterling Life Insurance for $352 million

- Strategic divestiture of Insurance Underwriting business further aligns core assets

- Company expects to receive after-tax cash proceeds and dividends of approximately $2.6 billion

- Company increases authorized share repurchase program by $2.6 billion

CHICAGO, IL — December 17, 2007 - Aon Corporation (NYSE: AOC) today announced that it has signed separate definitive agreements to sell its Combined Insurance Company of America (CICA) and Sterling Life Insurance Company (Sterling). The Sterling transaction is expected to be completed by the end of the first quarter 2008 and CICA is expected to be completed by the end of the second quarter 2008.

Aon also announced that it will devote the proceeds of these transactions to an increase in its previously authorized share repurchase program.  The program will increase by $2.6 billion, bringing the total amount currently available for repurchase to approximately $2.78 billion.

“Through these divestitures, we have further simplified our global organization and successfully executed our strategy to exit the lower margin and more capital intensive insurance underwriting business,” said Greg Case, president and chief executive officer, Aon Corporation.  “Our core assets will now be more strategically aligned as we expand our capabilities to better serve our risk brokerage and consulting clients. At the same time, the increased share repurchase program reflects our ongoing belief in the underlying positive momentum of the business and is an effective use of capital to maximize long-term shareholder value.”

Aon signed separate definitive agreements to sell its CICA business to ACE Limited for cash consideration of $2.4 billion and its Sterling business to Munich Re Group for cash consideration of $352 million, in each case subject to closing adjustments.  Additionally, the Company expects to extract a one-time cash dividend of $325 million from CICA prior to the close of the transaction.  Total after-tax cash proceeds and dividends are expected to be approximately $2.6 billion and are subject to final transaction costs.

Results of both CICA and Sterling will be placed into discontinued operations in the fourth quarter of 2007.

The purchase of shares will be dependent on prevailing market conditions, alternative uses of capital and other factors.  Through the close of trading on December 17, 2007, the Company had repurchased 48.1 million shares for $1.82 billion under the previously existing $2.0 billion share repurchase program authorized in November 2005 and increased in November 2006.

Aon Capital Markets, Credit Suisse Securities (USA) LLC and Merrill Lynch & Co. acted as advisors on the separate transactions.

About Aon

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 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, our ability to successfully close the sales our Combined Insurance and Sterling Life Insurance businesses, the impact of current, pending and future regulatory and legislative actions that affect our ability to market and sell, and be reimbursed at current levels for, our Sterling subsidiary’s Medicare Advantage health plans, 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.

###

Investor Contact:	Media Contact:
Scott Malchow	David Prosperi
Vice President, Investor Relations	Vice President, Global Public Relations
312-381-3983	312-381-2485