8-K

UNITED STATES

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): April 1, 2008

Aon Corporation

(Exact name of registrant as specified in its charter)

Delaware

(State or Other Jurisdiction of Incorporation)

1-7933	36-3051915
(Commission File Number)	(IRS Employer Identification No.)

200 East Randolph Street

Chicago, Illinois 60601

(Address of principal executive offices) (zip code)

(312) 381-1000

(Registrant’s telephone number, including area code)

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):

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

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

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

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

Item 2.01.  Completion of Acquisition or Disposition of Assets.

On April 1, 2008, Aon Corporation (“Aon”) consummated the previously announced sale of 100% of the issued and outstanding capital stock of Combined Insurance Company of America (“CICA”) to ACE Limited (“ACE”).  CICA is a provider of Supplemental Accident & Health and Life insurance products targeted primarily to middle-income consumers in North America, Europe and Asia.  The consideration received from ACE at the closing consisted of $2,400,000,000 in cash, plus an additional $161,000,000 in cash based on Aon’s preliminary calculation of CICA’s net worth as of the closing.  Pursuant to the terms of the previously disclosed Stock Purchase Agreement, dated as of December 14, 2007, between Aon and ACE (the “CICA Purchase Agreement”), the final purchase price is subject to a post-closing adjustment based upon the net worth of CICA as of the closing compared to a target level of $1,174,000,000.  Immediately prior to the consummation of the transactions contemplated by the CICA Purchase Agreement, Aon caused CICA to pay a one-time dividend of $325,000,000 to Aon consisting of (1) cash, and (2) certain non-cash financial assets (collectively, the “Special Dividend”).

On April 1, 2008, Aon also consummated the previously announced sale of 100% of the issued and outstanding capital stock of Sterling Life Insurance Company, a wholly owned subsidiary of CICA (“Sterling”), and Olympic Health Management Systems, Inc., an indirect, wholly owned subsidiary of Aon (“Olympic”), to Munich-American Holding Corporation (“Munich”).  Sterling is a provider of private Medicare-related insurance products targeted specifically to the U.S. Senior market.  Olympic serves as the third party administrator principally for the Sterling business.  The consideration received from Munich at the closing consisted of $352,000,000 in cash.  Pursuant to the terms of the previously disclosed Stock Purchase Agreement, dated as of December 14, 2007, between Aon and Munich (the “Sterling Purchase Agreement”), the final purchase price is subject to a post-closing adjustment based upon the net worth of Sterling and Olympic as of the closing compared to a target level of $202,000,000.

The descriptions of the CICA Purchase Agreement and Sterling Purchase Agreement contained in this Current Report on Form 8-K are qualified in their entirety by reference to the text of the CICA Purchase Agreement and Sterling Purchase Agreement, respectively, which are incorporated by reference herein from Exhibits 2.4 and 2.5 to Aon’s Annual Report on Form 10-K filed on February 28, 2008.

On April 1, 2008, Aon issued a press release announcing the closing of the sales contemplated by the CICA Purchase Agreement and the Sterling Purchase Agreement and the payment of the Special Dividend (the “Press Release”).  A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

Item 9.01.  Financial Statements and Exhibits.

(b)           Pro Forma Financial Information.

The following unaudited, pro forma condensed consolidated financial statements are based on the historical financial statements of Aon and are adjusted to give effect to the April 1, 2008 sale of CICA, Sterling and Olympic. No adjustments are necessary to reflect the payment of the Special Dividend in these pro forma condensed consolidated financial statements as the Special Dividend was not reclassified to “Assets held for sale” in the financial statements and related notes included in Aon’s Annual Report on Form 10-K for the year ended December 31, 2007.  The pro forma consolidated balance sheet as of December 31, 2007 is presented as if the disposition of CICA, Sterling and Olympic had occurred on December 31, 2007.  The pro forma statement of income for the year ended December 31, 2007 is presented as if the disposition of CICA, Sterling and Olympic had occurred on January 1, 2007.  The pro forma information does not purport to present the financial position or results of operations of Aon had the transactions and events assumed therein occurred on the dates specified, nor are they necessarily indicative of the results of operations in the future.  The pro forma financial information is based on certain assumptions and adjustments described in the Notes to Pro Forma Financial Information and should be read in conjunction therewith and with the financial statements and related notes included in Aon’s Annual Report on Form 10-K for the year ended December 31, 2007.

2

The unaudited pro forma condensed consolidated financial statements of Aon are filed as Exhibit 99.2 hereto and incorporated by reference herein.

(d)           Exhibits.

Exhibit Number	Description of Exhibit
2.1	Stock Purchase Agreement, dated as of December 14, 2008, between Aon Corporation and ACE Limited (incorporated by reference to Exhibit 2.4 of Aon Corporation’s Annual Report on Form 10-K filed on February 28, 2008).*
2.2	Stock Purchase Agreement, dated as of December 14, 2008, between Aon Corporation and Munich-American Holding Corporation (incorporated by reference to Exhibit 2.5 of Aon Corporation’s Annual Report on Form 10-K filed on February 28, 2008).*
99.1	Press Release issued by Aon Corporation on April 1, 2008.
99.2	Unaudited Pro Forma Condensed Consolidated Financial Statements of Aon Corporation.

* The exhibits and schedules to the Purchase Agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K.  The registrant will furnish copies of any exhibits or schedules to the Securities and Exchange Commission upon request.

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SIGNATURE

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 thereunto duly authorized.

	AON CORPORATION
	By:	/s/ Christa Davies
	Name:		Christa Davies
	Title:		Executive Vice President and Chief Financial Officer
Date: April 7, 2008

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EXHIBIT INDEX

Exhibit Number	Description of Exhibit
2.1	Stock Purchase Agreement, dated as of December 14, 2008, between Aon Corporation and ACE Limited (incorporated by reference to Exhibit 2.4 of Aon Corporation’s Annual Report on Form 10-K filed on February 28, 2008).*
2.2	Stock Purchase Agreement, dated as of December 14, 2008, between Aon Corporation and Munich-American Holding Corporation (incorporated by reference to Exhibit 2.5 of Aon Corporation’s Annual Report on Form 10-K filed on February 28, 2008).*
99.1	Press Release issued by Aon Corporation on April 1, 2008.
99.2	Unaudited Pro Forma Condensed Consolidated Financial Statements of Aon Corporation.

* The exhibits and schedules to the Purchase Agreement have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K.  The registrant will furnish copies of any exhibits or schedules to the Securities and Exchange Commission upon request.

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EX-99.1

Exhibit 99.1

News from Aon

Media Contact	Investor Contact
David Prosperi	Scott Malchow
312.381.2485	312.381.3983
David_Prosperi@aon.com	Scott_Malchow@aon.com

For immediate release

Aon Corp. Completes Sale of Combined Insurance, Sterling Life

CHICAGO, April 1, 2008 — Aon Corporation (NYSE: AOC) today announced that it has completed the sale of Combined Insurance Companies of America to the ACE Group of Companies for $2.56 billion, and of Sterling Life Insurance Companies to Munich Re for $352 million. The company also extracted a one-time dividend of $325 million from CICA prior to the close of the transaction. The purchase price reflects on a dollar-for-dollar basis an increase to Combined’s net worth that occurred between the signing and the close of the transaction.

After-tax proceeds are approximately $2.7 billion, and the company expects to record a pretax gain of approximately $1.3 billion in the second quarter.

“With the completed sales of both Combined and Sterling, we have executed on our strategy to exit our more capital intensive insurance underwriting businesses,” said Aon President and Chief Executive Officer Greg Case.  “Our team is excited about the prospect of our increased focus on our risk advice and human capital consulting businesses.”

Aon Capital Markets, Credit Suisse and Merrill Lynch acted as advisers on the transaction.

About Aon Corporation

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.

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 of 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 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 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.

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Risk Management  ·  Insurance and Reinsurance Brokerage  ·  Human Capital & Management Consulting  ·  Outsourcing

EX-99.2

Exhibit 99.2

Aon Corporation

Pro Forma Statement of Financial Position

Twelve Months Ended December 31, 2007

(Unaudited)

(millions)	Historical		Pro Forma Adjustments			Pro Forma Adjusted
ASSETS
CURRENT ASSETS
Cash	$	584	$	2,913	(2)	$	3,497
Short-term investments	4,331		—			4,331
Receivables	8,378		—			8,378
Other current assets	292		—			292
Assets held for sale	4,388		(4,388		)(1)	—
Total Current Assets	17,973		(1,475		)	16,498
Goodwill	4,935		—			4,935
Other intangible assets	204		—			204
Fixed assets, net	498		—			498
Long-term investments	417		—			417
Other non-current assets	921		—			921
TOTAL ASSETS	$	24,948	$	(1,475	)	$	23,473
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Insurance premiums payable	$	9,498	$	—		$	9,498
Short-term debt	252		—			252
Accounts payable and accrued liabilities	1,418		78		(4)	1,496
Other current liabilities	360		499		(3)	859
Liabilities held for sale	3,025		(3,025		)(1)	—
Total Current Liabilities	14,553		(2,448		)	12,105
Long-term debt	1,893		—			1,893
Pension, post employment and post retirement liabilities	1,251		(13		)(4)	1,238
Other non-current liabilities	1,030		—			1,030
TOTAL LIABILITIES	18,727		(2,461		)	16,266
STOCKHOLDERS’ EQUITY	6,221		986		(5)	7,207
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	24,948	$	(1,475	)	$	23,473

Aon Corporation

Pro Forma Statement of Income

Twelve Months Ended December 31, 2007

(Unaudited)

(millions except per share data)	Historical		Pro Forma Adjustments			Pro Forma Adjusted
Revenue
Commissions and fees and other	$	7,170	$	—		$	7,170
Investment income	301		—			301
Total revenue	7,471		—			7,471
Expenses
Compensation and benefits	4,388		—			4,388
Other general expenses	1,726		—			1,726
Depreciation and amortization	194		—			194
Interest expense	138		—			138
Provision for New York and other state settlements	1		—			1
Total expenses	6,447		—			6,447
Income from continuing operations before provision for income tax	1,024		—			1,024
Provision for income tax	352		—			352
Income from continuing operations	672		—			672
Discontinued operations
Income from discontinued operations	316		(323		)(6)	(7		)
Provision for income tax	124		(137		)(6)	(13		)
Income from discontinued operations	192		(186		)	6
Net income	$	864	$	(186	)	$	678
Basic net income per share
Continuing operations	$	2.25				$	2.25
Discontinued operations	0.65					0.03
Net income	$	2.90				$	2.28
Diluted net income per share
Continuing operations	$	2.10				$	2.10
Discontinued operations	0.59					0.01
Net income	$	2.69				$	2.11
Weighted average number of common shares:
Basic	297.5					297.5
Diluted	323.0					323.0

Aon Corporation

Notes to Pro Forma Financial Information

(1) - Reflects book value of assets and liabilities of CICA, Sterling and Olympic.

(2) - Reflects cash proceeds received at closing.  The proceeds are subject to post-closing adjustments as described in Item 2.01 of this Current Report on Form 8-K.

(3) - Reflects the estimated income tax effect of the transaction.

(4) - Reflects the estimated transaction costs and benefits.

(5) - Reflects estimated after-tax gain of the transaction.

(6) - Reflects elimination of the results of operations of CICA, Sterling and Olympic.