EX-99.1 2 a08-25372_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Investor Relations

 

Aon Reports Third Quarter 2008 Results

 

· Total Revenue grew 6% to $1.8 billion with Organic Revenue growth of 2%

· EPS from Continuing Operations increased 27% to $0.52

 

Third Quarter Highlights

 

·                  EPS from continuing operations, excluding certain items, increased 33% to $0.69

·                  Total pretax margin was 11.5% and the adjusted pretax margin, excluding certain items, increased 140 bps to 15.1%

·                  Consulting revenue grew 4% with organic growth in commissions, fees and other of 6%

·                  Consulting pretax margin was 15.4% and the adjusted pretax margin, excluding certain items, increased 370 basis points to 15.7%

·                  Repurchased $426 million or 9.3 million shares of common stock

·                  Increased total annual savings related to the 2007 restructuring program by $60 million to $300 million, and costs necessary to achieve savings by $90 million to $450 million

·                  As previously announced, entered into a definitive agreement to acquire Benfield Group for £844 million in cash, and assume £91 million of Benfield Group debt

 

CHICAGO, IL – October 31, 2008 - Aon Corporation (NYSE: AOC) today reported results for the third quarter ended September 30, 2008.

 

Net income decreased 43% to $117 million or $0.40 per share, compared to $204 million or $0.64 per share for the prior year quarter, including the impact of businesses moved to discontinued operations.  Net income from continuing operations increased 18% to $153 million or $0.52 per share, compared to $130 million or $0.41 per share for the prior year quarter.  Net income from continuing operations per share, excluding certain items, increased 33% to $0.69 compared to $0.52 for the prior year quarter.  Certain items that impacted third quarter results and comparisons with the prior year quarter are detailed in the reconciliation of non-GAAP measures on page 11 of this press release.

 

“We are pleased to deliver results that demonstrate continued progress in each of our key metrics: organic growth was two percent, adjusted pretax margin increased 140 basis points and adjusted earnings per share from continuing operations increased 33%.  These results were achieved despite soft market conditions globally and unprecedented turmoil in the insurance industry,” said Greg Case, president and chief executive officer, Aon Corporation.  “Driven by a commitment to expense discipline, we increased savings related to our 2007 restructuring program by $60 million, enabling further investment in our industry-leading platform and concurrent margin improvement.  Additionally, our balance sheet provides solid financial flexibility as we continue to make strategic investments including the acquisition of Benfield, while streamlining our core focus with the announced sale of AIS and returning more than $400 million of excess capital to shareholders.”

 


 

THIRD QUARTER FINANCIAL SUMMARY

 

Total revenue increased 6% to $1.8 billion with organic revenue growth of 2%.  Total operating expenses increased 8% or $113 million to $1.6 billion, including a $37 million increase in restructuring expense and a $28 million unfavorable impact from foreign currency translation.

 

Restructuring expense was $54 million in the third quarter compared to $17 million in the prior year quarter.  An analysis of restructuring-related expenses by segment and type for the 2007 restructuring program is detailed on page 12 of this release.

 

Restructuring savings in the third quarter related to the 2005 restructuring program are estimated at $67 million compared to $61 million in the prior year quarter.  Of the estimated restructuring savings in the third quarter, $57 million were related to the Brokerage segment, primarily due to workforce reduction.  The 2005 restructuring program resulted in cumulative cost savings of approximately $225 million in 2007 and is on track to achieve $270 million of cumulative cost savings in 2008.

 

Restructuring savings in the third quarter related to the 2007 restructuring program are estimated at $29 million compared to no material savings in the prior year quarter.  Of the estimated restructuring savings in the third quarter, $23 million were related to the Brokerage segment primarily for workforce reduction.  Before any potential reinvestment of savings, the 2007 restructuring program is now expected to result in cumulative cost savings of approximately $75-80 million in 2008, $220-245 million in 2009 and $300 million in 2010, primarily as a result of additional cost savings opportunities to streamline non-client facing support functions globally.

 

Foreign currency translation increased net income by $0.04 per share compared to the prior year quarter due primarily to fluctuations in the U.S. dollar versus the Euro and British pound.

 

Effective tax rate on continuing operations was 27.8% for the third quarter compared to 41.7% for the prior year quarter.  The rate in the third quarter includes an underlying tax rate on operations of 29.0%.  The prior year quarter reflected an underlying tax rate of 33.5% and a $22 million non-cash adjustment related to the revaluation of deferred tax assets in the Company’s UK operations resulting from a reduction in the statutory rate.

 

Average diluted shares outstanding declined to 290 million in the third quarter compared to 322 million in the prior year quarter, due primarily to the Company’s share repurchase program.  During the third quarter, the Company repurchased 9.3 million shares of common stock for $426 million, at an average price of $45.90 per share.  As of September 30, the Company had approximately $850 million of remaining share repurchase authorization.

 

Discontinued Operations after-tax loss was $36 million or ($0.12) per share compared to after-tax income of $74 million or $0.23 per share for the prior year quarter.  Discontinued operations include the results of Automobile Insurance Specialists (AIS) and post-close adjustments related to the sale of Combined Insurance Companies of America (CICA) and Sterling Life Insurance (Sterling).  The prior year quarter includes the results of CICA, Sterling, and AIS.

 

THIRD QUARTER SEGMENT REVIEW

 

Certain noteworthy items impacted revenue, pretax income and pretax margins in the third quarter of 2008 and 2007.  The third quarter segment reviews provided below include

 

2


 

supplemental information related to adjusted pretax income and pretax margin which is described in detail on the “Reconciliation of Non-GAAP Measures – Segments and Diluted Earnings Per Share” on page 11 of this press release.

 

RISK AND INSURANCE BROKERAGE SERVICES

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

(millions)

 

Third Quarter Ended

 

 

 

Less:

 

Acquisitions,

 

Organic

 

Commissions,

 

Sep 30,

 

Sep 30,

 

%

 

Currency

 

Divestitures,

 

Revenue

 

Fees, Other

 

2008

 

2007

 

Change

 

Impact

 

Other

 

Growth

 

Americas

 

$

557

 

$

546

 

2

%

1

%

—

%

1

%

U.K.

 

182

 

193

 

(6

)

(2

)

(3

)

(1

)

EMEA

 

314

 

268

 

17

 

10

 

2

 

5

 

Asia Pacific

 

120

 

116

 

3

 

3

 

(1

)

1

 

Reinsurance

 

252

 

232

 

9

 

4

 

4

 

1

 

Sub-Total

 

$

1,425

 

$

1,355

 

5

%

3

%

—

%

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income

 

$

48

 

$

56

 

(14

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

1,473

 

$

1,411

 

4

%

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services total revenue increased 4% to $1.5 billion compared to the prior year quarter including 2% organic revenue growth in commissions, fees and other and a 14% decline in investment income.  Americas organic revenue increased 1% reflecting strong growth in Latin America and solid growth in Canada, partially offset by a significant decline in the Company’s Cananwill premium financing business.  U.K. organic revenue decreased 1% due primarily to soft market conditions.  EMEA organic revenue increased 5% due to solid growth in continental Europe and strong growth in emerging markets.  Asia Pacific organic revenue increased 1% reflecting solid growth in most Asian markets, primarily offset by the impact of certain regulatory changes in Japan.  Reinsurance organic revenue increased 1% due primarily to growth in global facultative and treaty placements, partially offset by soft market conditions.

 

 

 

Third Quarter Ended

 

 

 

 

 

Sep 30,

 

Sep 30,

 

%

 

(millions)

 

2008

 

2007

 

Change

 

Revenue

 

$

1,473

 

$

1,411

 

4

%

Expenses

 

 

 

 

 

 

 

Compensation and benefits

 

910

 

832

 

9

 

Other expenses

 

384

 

351

 

9

 

Total operating expenses

 

1,294

 

1,183

 

9

 

 

 

 

 

 

 

 

 

Operating income

 

$

179

 

$

228

 

(21

)%

Other (income) expense

 

(9

)

—

 

N/A

 

Pretax income

 

$

188

 

$

228

 

(18

)%

Pretax margin

 

12.8

%

16.2

%

 

 

 

 

 

 

 

 

 

 

Pretax income - adjusted

 

$

247

 

$

244

 

1

%

Pretax margin - adjusted

 

16.8

%

17.3

%

 

 

 

3


 

Compensation and benefits for the third quarter increased 9% or $78 million from the prior year quarter including a $27 million increase in restructuring costs, a $19 million unfavorable impact from foreign currency translation and investments in key talent, partially offset by benefits related to the 2005 and 2007 restructuring programs.  Other expenses increased 9% or $33 million compared to the prior year quarter including a $10 million increase in restructuring costs, an $8 million unfavorable impact from foreign currency translation and $6 million for the previously disclosed reviews under the Foreign Corrupt Practices Act (FCPA) and similar laws in other countries and related compliance initiatives.

 

Third quarter pretax income decreased 18% to $188 million.  Adjusting for certain items detailed on page 11 of this press release, pretax income increased 1% or $3 million to $247 million and pretax margin decreased 50 basis points to 16.8% versus the prior year quarter due primarily to lower investment income and a decline in Cananwill pretax income, which negatively impacted adjusted pretax margin by 80 basis points.

 

CONSULTING

 

 

 

 

 

 

 

 

 

 

 

Less:

 

 

 

(millions)

 

Third Quarter Ended

 

 

 

Less:

 

Acquisitions,

 

Organic

 

Commissions,

 

Sep 30,

 

Sep 30,

 

%

 

Currency

 

Divestitures,

 

Revenue

 

Fees, Other

 

2008

 

2007

 

Change

 

Impact

 

Other

 

Growth

 

Services

 

$

284

 

$

269

 

6

%

1

%

(3

)%

8

%

Outsourcing

 

51

 

55

 

(7

)

(2

)

(1

)

(4

)

Sub-Total

 

$

335

 

$

324

 

3

%

1

%

(4

)%

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income

 

$

2

 

$

1

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

337

 

$

325

 

4

%

 

 

 

 

 

 

 

Consulting total revenue increased 4% to $337 million compared to the prior year quarter including 6% organic revenue growth in commissions, fees and other.  Organic revenue in Consulting Services increased 8% reflecting growth in compensation and health and benefits consulting.  Organic revenue in Outsourcing declined 4% due to the previously announced termination of a significant outsourcing contract, partially offset by modest growth in benefits outsourcing.

 

 

 

Third Quarter Ended

 

 

 

 

 

Sep 30,

 

Sep 30,

 

%

 

(millions)

 

2008

 

2007

 

Change

 

Revenue

 

$

337

 

$

325

 

4

%

Expenses

 

 

 

 

 

 

 

Compensation and benefits

 

206

 

209

 

(1

)

Other expenses

 

79

 

78

 

1

 

Total operating expenses

 

285

 

287

 

(1

)

 

 

 

 

 

 

 

 

Operating income

 

$

52

 

$

38

 

37

%

Other (income) expense

 

—

 

—

 

—

 

Pretax income

 

$

52

 

$

38

 

37

%

Pretax margin

 

15.4

%

11.7

%

 

 

 

 

 

 

 

 

 

 

Pretax income - adjusted

 

$

53

 

$

39

 

36

%

Pretax margin - adjusted

 

15.7

%

12.0

%

 

 

 

4


 

Total operating expenses for the third quarter decreased 1% or $2 million from the prior year quarter due primarily to benefits related to the 2007 restructuring program.

 

Third quarter pretax income increased 37% to $52 million and the pretax margin increased 370 basis points to 15.4% versus the prior year quarter.  Adjusting for certain items detailed on page 11, pretax income increased 36% to $53 million and the pretax margin increased 370 basis points to 15.7%.

 

UNALLOCATED INCOME AND EXPENSE

 

 

 

Third Quarter Ended

 

 

 

 

 

Sep 30,

 

Sep 30,

 

%

 

(millions)

 

2008

 

2007

 

Change

 

Operating segment income before tax

 

$

240

 

$

266

 

(10

)%

Property & Casualty operations

 

(2

)

(5

)

(60

)

Unallocated investment income

 

40

 

19

 

111

 

Unallocated expenses

 

(34

)

(24

)

42

 

Interest expense

 

(32

)

(33

)

(3

)

Income from continuing operations before tax

 

$

212

 

$

223

 

(5

)%

 

Property & Casualty loss declined $3 million compared to the prior year quarter.  All property & casualty business was placed into run-off in the fourth quarter 2006.

 

Unallocated investment income for the third quarter increased $21 million to $40 million compared to the prior year quarter due primarily to a $13 million increase in certain private equity distributions and an increase in interest income from higher cash balances.  Unallocated expenses increased $10 million to $34 million versus the prior year quarter due primarily to $6 million in Benfield costs and $3 million of absorbed costs previously allocated to the insurance underwriting segment.  Interest expense was relatively unchanged from the prior year quarter.

 

Conference Call and Webcast Details

 

The Company will host a conference call on Friday, October 31, 2008 at 7:30 a.m. central time.  Interested parties can listen to the conference call via a live audio webcast at www.aon.com.

 

About Aon

 

Aon Corporation (NYSE:AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting.  Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions.  Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries.  Aon was named the world’s best broker by Euromoney magazine’s 2008 Insurance Survey.  In 2008, Aon was ranked as the world’s largest insurance broker by Business Insurance.  Aon also was ranked by A.M. Best as the number one global insurance brokerage in 2007 and 2008 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 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

 

5


 

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 complete our pending acquisition of Benfield Group Limited and, if completed, to integrate Benfield successfully and to realize the anticipated benefits of the Benfield acquisition. 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, Investor Relations

Vice President, Global Public Relations

312-381-3983

312-381-2485

 

6


 

Aon Corporation

Consolidated Summary of Operations (Unaudited)

 

 

 

Third Quarter Ended

 

Nine Months Ended

 

(millions except per share data)

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent
Change

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent
Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions, fees and other

 

$

1,756

 

$

1,672

 

5

%

$

5,493

 

$

5,125

 

7

%

Investment income

 

91

 

77

 

18

 

218

 

236

 

(8

)

Total revenue

 

1,847

 

1,749

 

6

 

5,711

 

5,361

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

1,132

 

1,048

 

8

 

3,432

 

3,188

 

8

 

Other general expenses

 

425

 

397

 

7

 

1,350

 

1,228

 

10

 

Depreciation and amortization

 

49

 

48

 

2

 

157

 

141

 

11

 

Total operating expenses

 

1,606

 

1,493

 

8

 

4,939

 

4,557

 

8

 

Operating income

 

241

 

256

 

(6

)

772

 

804

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

32

 

33

 

(3

)

96

 

102

 

(6

)

Other income

 

(3

)

—

 

N/A

 

(9

)

(29

)

(69

)

Income from continuing operations before provision for income tax

 

212

 

223

 

(5

)

685

 

731

 

(6

)

Provision for income tax (1)

 

59

 

93

 

(37

)

191

 

262

 

(27

)

Income from continuing operations

 

153

 

130

 

18

 

494

 

469

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

(55

)

88

 

N/A

 

1,445

 

261

 

454

 

Provision for (benefit from) income tax (2)

 

(19

)

14

 

N/A

 

471

 

73

 

545

 

Income (loss) from discontinued operations

 

(36

)

74

 

N/A

 

974

 

188

 

418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

117

 

$

204

 

(43

)%

$

1,468

 

$

657

 

123

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.56

 

$

0.44

 

27

%

$

1.70

 

$

1.59

 

7

%

Discontinued operations

 

(0.13

)

0.25

 

N/A

 

3.37

 

0.63

 

435

 

Net income

 

$

0.43

 

$

0.69

 

(38

)%

$

5.07

 

$

2.22

 

128

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.52

 

$

0.41

 

27

%

$

1.62

 

$

1.47

 

10

%

Discontinued operations

 

(0.12

)

0.23

 

N/A

 

3.19

 

0.58

 

450

 

Net income

 

$

0.40

 

$

0.64

 

(38

)%

$

4.81

 

$

2.05

 

135

%

Weighted average common shares outstanding – diluted

 

290.3

 

321.5

 

(10

)%

305.2

 

322.6

 

(5

)%

 

(1)

Tax rate from continuing operations is 27.8% and 41.7% for the third quarters ended September 30, 2008 and 2007, respectively, and 27.9% and 35.8% for the nine months ended September 30, 2008 and 2007, respectively.

 

 

(2)

Tax rate from discontinued operations is 34.5% and 15.9% for the third quarters ended September 30, 2008 and 2007, respectively, and 32.6% and 28.0% for the nine months ended September 30, 2008 and 2007, respectively.

 

7


 

Aon Corporation

Revenue from Continuing Operations (Unaudited)

 

 

 

Third Quarter Ended

 

(millions)

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent
Change

 

Less:
Currency
Impact

 

Less:
Acquisitions,
Divestitures &
Other

 

Organic
Revenue
Growth (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions, Fees and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

557

 

$

546

 

2

%

1

%

—

%

1

%

United Kingdom

 

182

 

193

 

(6

)

(2

)

(3

)

(1

)

Europe, Middle East & Africa

 

314

 

268

 

17

 

10

 

2

 

5

 

Asia Pacific

 

120

 

116

 

3

 

3

 

(1

)

1

 

Reinsurance brokerage and related services

 

252

 

232

 

9

 

4

 

4

 

1

 

Total Risk and Insurance Brokerage Services

 

1,425

 

1,355

 

5

 

3

 

—

 

2

 

Consulting:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting services

 

284

 

269

 

6

 

1

 

(3

)

8

 

Outsourcing

 

51

 

55

 

(7

)

(2

)

(1

)

(4

)

Total Consulting

 

335

 

324

 

3

 

1

 

(4

)

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Segments

 

$

1,760

 

$

1,679

 

5

%

3

%

—

%

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services

 

$

48

 

$

56

 

(14

)%

 

 

 

 

 

 

Consulting

 

2

 

1

 

100

 

 

 

 

 

 

 

Total Operating Segments

 

$

50

 

$

57

 

(12

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services

 

$

1,473

 

$

1,411

 

4

%

 

 

 

 

 

 

Consulting

 

337

 

325

 

4

 

 

 

 

 

 

 

Unallocated

 

41

 

21

 

95

 

 

 

 

 

 

 

Intersegment

 

(4

)

(8

)

(50

)

 

 

 

 

 

 

Total

 

$

1,847

 

$

1,749

 

6

%

 

 

 

 

 

 

 

(1)   Organic revenue growth excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items.

 

8


 

Aon Corporation

Revenue from Continuing Operations (Unaudited)

 

 

 

Nine Months Ended

 

(millions)

 

Sept. 30,
2008

 

Sept. 30,

2007

 

Percent
Change

 

Less:
Currency
Impact

 

Less:
Acquisitions,
Divestitures &
Other

 

Organic
Revenue
Growth (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions, Fees and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$

1,638

 

$

1,609

 

2

%

2

%

—

%

—

%

United Kingdom

 

546

 

545

 

—

 

1

 

(1

)

—

 

Europe, Middle East & Africa

 

1,188

 

988

 

20

 

13

 

2

 

5

 

Asia Pacific

 

373

 

343

 

9

 

8

 

(1

)

2

 

Reinsurance brokerage and related services

 

756

 

691

 

9

 

5

 

3

 

1

 

Total Risk and Insurance Brokerage Services

 

4,501

 

4,176

 

8

 

5

 

1

 

2

 

Consulting:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting services

 

850

 

794

 

7

 

3

 

(1

)

5

 

Outsourcing

 

162

 

177

 

(8

)

1

 

(1

)

(8

)

Total Consulting

 

1,012

 

971

 

4

 

3

 

(2

)

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Segments

 

$

5,513

 

$

5,147

 

7

%

5

%

—

%

2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services

 

$

148

 

$

154

 

(4

)%

 

 

 

 

 

 

Consulting

 

4

 

8

 

(50

)

 

 

 

 

 

 

Total Operating Segments

 

$

152

 

$

162

 

(6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services

 

$

4,649

 

$

4,330

 

7

%

 

 

 

 

 

 

Consulting

 

1,016

 

979

 

4

 

 

 

 

 

 

 

Unallocated

 

66

 

76

 

(13

)

 

 

 

 

 

 

Intersegment

 

(20

)

(24

)

(17

)

 

 

 

 

 

 

Total

 

$

5,711

 

$

5,361

 

7

%

 

 

 

 

 

 

 

(1)

Organic revenue growth excludes the impact of foreign exchange, acquisitions, divestitures, transfers, reimbursable expenses and unusual items.

 

9


 

Aon Corporation - Segments (Unaudited)

Risk and Insurance Brokerage Services - Continuing Operations

 

 

 

Third Quarter Ended

 

Nine Months Ended

 

(millions)

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent
Change

 

Sept. 30,
 2008

 

Sept. 30,
2007

 

Percent
Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions, fees and other

 

$

1,425

 

$

1,355

 

5

%

$

4,501

 

$

4,176

 

8

%

Investment income

 

48

 

56

 

(14

)

148

 

154

 

(4

)

Total revenue

 

1,473

 

1,411

 

4

 

4,649

 

4,330

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

910

 

832

 

9

 

2,773

 

2,534

 

9

 

Other general expenses

 

384

 

351

 

9

 

1,233

 

1,091

 

13

 

Total operating expenses

 

1,294

 

1,183

 

9

 

4,006

 

3,625

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

179

 

228

 

(21

)

643

 

705

 

(9

)

Other income

 

(9

)

—

 

N/A

 

(14

)

(29

)

(52

)

Income before provision for income tax

 

$

188

 

$

228

 

(18

)%

$

657

 

$

734

 

(10

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax income margin

 

12.8%

 

16.2

%

 

 

14.1

%

17.0

%

 

 

 

Consulting - Continuing Operations

 

 

 

Third Quarter Ended

 

Nine Months Ended

 

(millions)

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent Change

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent Change

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions, fees and other

 

$

335

 

$

324

 

3

%

$

1,012

 

$

971

 

4

%

Investment income

 

2

 

1

 

100

 

4

 

8

 

(50

)

Total revenue

 

337

 

325

 

4

 

1,016

 

979

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

206

 

209

 

(1

)

612

 

604

 

1

 

Other general expenses

 

79

 

78

 

1

 

247

 

246

 

—

 

Total operating expenses

 

285

 

287

 

(1

)

859

 

850

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

52

 

38

 

37

 

157

 

129

 

22

 

Other income

 

—

 

—

 

N/A

 

(1

)

—

 

N/A

 

Income before provision for income tax

 

$

52

 

$

38

 

37

%

$

158

 

$

129

 

22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax income margin

 

15.4%

 

11.7

%

 

 

15.6

%

13.2

%

 

 

 

Reconciliation of segment income before provision for income tax to income from continuing operations before provision for income tax:

 

 

 

Third Quarter Ended

 

Nine Months Ended

 

(millions)

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent Change

 

Sept. 30,
2008

 

Sept. 30,
2007

 

Percent Change

 

Segment income before provision for income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and Insurance Brokerage Services

 

$

188

 

$

228

 

(18

)%

$

657

 

$

734

 

(10

)%

Consulting

 

52

 

38

 

37

 

158

 

129

 

22

 

Total segment income before provision for income tax

 

240

 

266

 

(10

)

815

 

863

 

(6

)

Property & Casualty operations

 

(2

)

(5

)

(60

)

(5

)

(9

)

(44

)

Unallocated investment income

 

40

 

19

 

111

 

62

 

70

 

(11

)

Unallocated expenses

 

(34

)

(24

)

42

 

(91

)

(91

)

—

 

Interest expense

 

(32

)

(33

)

(3

)

(96

)

(102

)

(6

)

Income from continuing operations before provision for income tax

 

$

212

 

$

223

 

(5

)%

$

685

 

$

731

 

(6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax income margin

 

11.5%

 

12.8

%

 

 

12.0

%

13.6

%

 

 

 

10


 

Aon Corporation

Reconciliation of the Impact of Non-GAAP Measures on Segments and Diluted Earnings Per Share (Unaudited) (1)

 

 

 

Third Quarter Ended September 30, 2008

 

Nine Months Ended September 30, 2008

 

(millions except per share data)

 

Risk and
Insurance
Brokerage
Services

 

Consulting

 

Unallocated
Income &
Expense

 

Total

 

Risk and
Insurance
Brokerage
Services

 

Consulting

 

Unallocated
Income &
Expense

 

Total

 

Revenue as reported

 

$

1,473

 

$

337

 

$

37

 

$

1,847

 

$

4,649

 

$

1,016

 

$

46

 

$

5,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before provision for income tax - as reported

 

$

188

 

$

52

 

$

(28

)

$

212

 

$

657

 

$

158

 

$

(130

)

$

685

 

Restructuring charges (2005 and 2007 plans)

 

53

 

1

 

—

 

54

 

159

 

8

 

—

 

167

 

Anti-bribery and compliance initiatives

 

6

 

—

 

—

 

6

 

31

 

—

 

—

 

31

 

Benfield costs

 

—

 

—

 

6

 

6

 

—

 

—

 

6

 

6

 

Gain on sale of land

 

—

 

—

 

—

 

—

 

(5

)

—

 

—

 

(5

)

Income (loss) from continuing operations before provision for income tax - as adjusted

 

$

247

 

$

53

 

$

(22

)

278

 

$

842

 

$

166

 

$

(124

)

884

 

Provision for income taxes (2)

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

247

 

Income from continuing operations - as adjusted

 

 

 

 

 

 

 

$

200

 

 

 

 

 

 

 

$

637

 

Diluted earnings per share from continuing operations - as adjusted

 

 

 

 

 

 

 

$

0.69

 

 

 

 

 

 

 

$

2.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted

 

 

 

 

 

 

 

290.3

 

 

 

 

 

 

 

305.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax income margins - as adjusted

 

16.8

%

15.7

%

N/A

 

15.1

%

18.1

%

16.3

%

N/A

 

15.5

%

 

 

 

Third Quarter Ended September 30, 2007

 

Nine Months Ended September 30, 2007

 

(millions except per share data)

 

Risk and
Insurance
Brokerage
Services

 

Consulting

 

Unallocated
Income &
Expense

 

Total

 

Risk and
Insurance
Brokerage
Services

 

Consulting

 

Unallocated
Income &
Expense

 

Total

 

Revenue as reported

 

$

1,411

 

$

325

 

$

13

 

$

1,749

 

$

4,330

 

$

979

 

$

52

 

$

5,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before provision for income tax - as reported

 

$

228

 

$

38

 

$

(43

)

$

223

 

$

734

 

$

129

 

$

(132

)

$

731

 

Restructuring charges (2005 and 2007 plans)

 

16

 

1

 

—

 

17

 

44

 

7

 

—

 

51

 

Gain on sale of businesses

 

—

 

—

 

—

 

—

 

(30

)

—

 

—

 

(30

)

Reinsurance litigation

 

—

 

—

 

—

 

—

 

21

 

—

 

—

 

21

 

Income (loss) from continuing operations before provision for income tax - as adjusted

 

$

244

 

$

39

 

$

(43

)

240

 

$

769

 

$

136

 

$

(132

)

773

 

Provision for income taxes (2)

 

 

 

 

 

 

 

76

 

 

 

 

 

 

 

250

 

Income from continuing operations - as adjusted

 

 

 

 

 

 

 

$

164

 

 

 

 

 

 

 

$

523

 

Diluted earnings per share from continuing operations - as adjusted

 

 

 

 

 

 

 

$

0.52

 

 

 

 

 

 

 

$

1.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted

 

 

 

 

 

 

 

321.5

 

 

 

 

 

 

 

322.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pretax income margins - as adjusted

 

17.3

%

12.0

%

N/A

 

13.7

%

17.8

%

13.9

%

N/A

 

14.4

%

 

(1)

Certain noteworthy items impacting revenue and pretax income in 2008 and 2007 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 28.1% and 31.7% for the third quarters ended September 30, 2008 and 2007, respectively, and 27.9% and 32.3% for the nine months ended September 30, 2008 and 2007, respectively.

 

11


 

Aon Corporation

2007 Restructuring Plan (Unaudited)

 

By Type:

 

 

 

Actual

 

Estimated

 

(millions)

 

2007

 

Six
Months
2008

 

Third
Quarter
2008

 

Nine
Months
2008

 

Total
Incurred to
Date

 

Total

 

Workforce reduction (Compensation and benefits)

 

$

17

 

$

76

 

$

42

 

$

118

 

$

135

 

$

284

 

Lease consolidation (Other general expenses)

 

22

 

18

 

7

 

25

 

47

 

88

 

Asset impairments (Depreciation and amortization)

 

4

 

14

 

(1

)

13

 

17

 

44

 

Other costs associated with restructuring (Other general expenses)

 

3

 

5

 

4

 

9

 

12

 

34

 

Total restructuring and related expenses

 

$

46

 

$

113

 

$

52

 

$

165

 

$

211

 

$

450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By Segment:

 

 

 

Actual

 

Estimated

 

(millions)

 

2007

 

Six
Months
2008

 

Third Quarter
2008

 

Nine
Months
2008

 

Total Incurred to Date

 

Total

 

Risk and Insurance Brokerage Services

 

$

41

 

$

106

 

$

51

 

$

157

 

$

198

 

$

403

 

Consulting

 

5

 

7

 

1

 

8

 

13

 

47

 

Total restructuring and related expenses

 

$

46

 

$

113

 

$

52

 

$

165

 

$

211

 

$

450

 

 

12


 

Aon Corporation

Consolidated Summary of Operations - Reclassified for Discontinued Operations (Unaudited)

 

 

 

2007

 

2008

 

(millions except per share data)

 

1st
Quarter

 

2nd
Quarter

 

3rd
Quarter

 

4th
Quarter

 

Full
Year

 

1st
Quarter

 

2nd
Quarter

 

3rd
Quarter

 

Nine
Months

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions, fees and other

 

$

1,702

 

$

1,751

 

$

1,672

 

$

1,944

 

$

7,069

 

$

1,848

 

$

1,889

 

$

1,756

 

$

5,493

 

Investment income

 

69

 

90

 

77

 

64

 

300

 

59

 

68

 

91

 

218

 

Total revenue

 

1,771

 

1,841

 

1,749

 

2,008

 

7,369

 

1,907

 

1,957

 

1,847

 

5,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

1,042

 

1,098

 

1,048

 

1,159

 

4,347

 

1,155

 

1,145

 

1,132

 

3,432

 

Other general expenses

 

414

 

417

 

397

 

499

 

1,727

 

422

 

503

 

425

 

1,350

 

Depreciation and amortization

 

47

 

46

 

48

 

52

 

193

 

50

 

58

 

49

 

157

 

Total operating expenses

 

1,503

 

1,561

 

1,493

 

1,710

 

6,267

 

1,627

 

1,706

 

1,606

 

4,939

 

Operating income

 

268

 

280

 

256

 

298

 

1,102

 

280

 

251

 

241

 

772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

35

 

34

 

33

 

36

 

138

 

33

 

31

 

32

 

96

 

Other income

 

—

 

(29

)

—

 

(6

)

(35

)

(4

)

(2

)

(3

)

(9

)

Income from continuing operations before provision for income tax

 

233

 

275

 

223

 

268

 

999

 

251

 

222

 

212

 

685

 

Provision for income tax

 

73

 

96

 

93

 

82

 

344

 

75

 

57

 

59

 

191

 

Income from continuing operations

 

160

 

179

 

130

 

186

 

655

 

176

 

165

 

153

 

494

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

80

 

93

 

88

 

80

 

341

 

68

 

1,432

 

(55

)

1,445

 

Provision for (benefit from) income tax

 

27

 

32

 

14

 

59

 

132

 

26

 

464

 

(19

)

471

 

Income (loss) from discontinued operations

 

53

 

61

 

74

 

21

 

209

 

42

 

968

 

(36

)

974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

213

 

$

240

 

$

204

 

$

207

 

$

864

 

$

218

 

$

1,133

 

$

117

 

$

1,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.53

 

$

0.60

 

$

0.44

 

$

0.62

 

$

2.20

 

$

0.58

 

$

0.57

 

$

0.56

 

$

1.70

 

Discontinued operations

 

0.18

 

0.21

 

0.25

 

0.07

 

0.70

 

0.14

 

3.34

 

(0.13

)

3.37

 

Net income

 

$

0.71

 

$

0.81

 

$

0.69

 

$

0.69

 

$

2.90

 

$

0.72

 

$

3.91

 

$

0.43

 

$

5.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.50

 

$

0.56

 

$

0.41

 

$

0.58

 

$

2.04

 

$

0.55

 

$

0.54

 

$

0.52

 

$

1.62

 

Discontinued operations

 

0.16

 

0.19

 

0.23

 

0.06

 

0.65

 

0.13

 

3.17

 

(0.12

)

3.19

 

Net income

 

$

0.66

 

$

0.75

 

$

0.64

 

$

0.64

 

$

2.69

 

$

0.68

 

$

3.71

 

$

0.40

 

$

4.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted

 

324.4

 

321.9

 

321.5

 

324.1

 

323.0

 

319.8

 

305.3

 

290.3

 

305.2

 

 

13


 

Aon Corporation

Segments  - Reclassification for Discontinued Operations (Unaudited)

 

 

 

2007

 

2008

 

(millions)

 

1st
Quarter

 

2nd
Quarter

 

3rd
Quarter

 

4th
Quarter

 

Full
Year

 

1st
Quarter

 

2nd
Quarter

 

Six
Months

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

1,456

 

$

1,515

 

$

1,437

 

$

1,651

 

$

6,059

 

$

1,591

 

$

1,633

 

$

3,224

 

Less: reclassification to discontinued operations

 

(27

)

(25

)

(26

)

(24

)

(102

)

(25

)

(23

)

(48

)

As reclassified

 

1,429

 

1,490

 

1,411

 

1,627

 

5,957

 

1,566

 

1,610

 

3,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

329

 

325

 

325

 

373

 

1,352

 

343

 

336

 

679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated

 

23

 

32

 

21

 

13

 

89

 

7

 

18

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intersegment

 

(10

)

(6

)

(8

)

(5

)

(29

)

(9

)

(7

)

(16

)

Total

 

$

1,771

 

$

1,841

 

$

1,749

 

$

2,008

 

$

7,369

 

$

1,907

 

$

1,957

 

$

3,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

$

242

 

$

278

 

$

236

 

$

281

 

$

1,037

 

$

244

 

$

235

 

$

479

 

Less: reclassification to discontinued operations

 

(8

)

(6

)

(8

)

(5

)

(27

)

(6

)

(4

)

(10

)

As reclassified

 

234

 

272

 

228

 

276

 

1,010

 

238

 

231

 

469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

47

 

44

 

38

 

60

 

189

 

63

 

43

 

106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

(49

)

(41

)

(44

)

(68

)

(202

)

(51

)

(52

)

(103

)

Less: reclassification to discontinued operations

 

1

 

—

 

1

 

—

 

2

 

1

 

—

 

1

 

As reclassified

 

(48

)

(41

)

(43

)

(68

)

(200

)

(50

)

(52

)

(102

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

233

 

$

275

 

$

223

 

$

268

 

$

999

 

$

251

 

$

222

 

$

473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax - margins

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk and insurance brokerage services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

16.6

%

18.3

%

16.4

%

17.0

%

17.1

%

15.3

%

14.4

%

14.9

%

As reclassified

 

16.4

%

18.3

%

16.2

%

17.0

%

17.0

%

15.2

%

14.3

%

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

14.3

%

13.5

%

11.7

%

16.1

%

14.0

%

18.4

%

12.8

%

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As reported

 

13.3

%

15.1

%

13.0

%

13.4

%

13.7

%

13.3

%

11.4

%

12.3

%

As reclassified

 

13.2

%

14.9

%

12.8

%

13.3

%

13.6

%

13.2

%

11.3

%

12.2

%

 

14


 

Aon Corporation

Auto Insurance Specialists (Unaudited)

 

 

 

2007

 

2008

 

(millions except per share data)

 

1st
Quarter

 

2nd
Quarter

 

3rd
Quarter

 

4th
Quarter

 

Full
Year

 

1st
Quarter

 

2nd
Quarter

 

3rd
Quarter

 

Nine
Months

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions, fees and other

 

$

27

 

$

25

 

$

26

 

$

23

 

$

101

 

$

25

 

$

23

 

$

23

 

$

71

 

Investment income

 

—

 

—

 

—

 

1

 

1

 

—

 

—

 

—

 

—

 

Total revenue

 

27

 

25

 

26

 

24

 

102

 

25

 

23

 

23

 

71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

11

 

11

 

10

 

9

 

41

 

11

 

10

 

11

 

32

 

Other general expenses

 

9

 

8

 

9

 

9

 

35

 

9

 

9

 

34

 

52

 

Depreciation and amortization

 

—

 

—

 

—

 

1

 

1

 

—

 

—

 

—

 

—

 

Total operating expenses

 

20

 

19

 

19

 

19

 

77

 

20

 

19

 

45

 

84

 

Operating income (loss)

 

7

 

6

 

7

 

5

 

25

 

5

 

4

 

(22

)

(13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Other income

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Income (loss) before provision for (benefit from) income tax

 

7

 

6

 

7

 

5

 

25

 

5

 

4

 

(22

)

(13

)

Provision for (benefit from) income tax

 

2

 

2

 

3

 

1

 

8

 

2

 

1

 

(8

)

(5

)

Net income (loss)

 

$

5

 

$

4

 

$

4

 

$

4

 

$

17

 

$

3

 

$

3

 

$

(14

)

$

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

 

$

0.02

 

$

0.02

 

$

0.01

 

$

0.01

 

$

0.05

 

$

0.01

 

$

0.01

 

$

(0.05

)

$

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dilutive net income (loss) per share

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.06

 

$

0.01

 

$

0.01

 

$

(0.05

)

$

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - diluted

 

324.4

 

321.9

 

321.5

 

324.1

 

323.0

 

319.8

 

305.3

 

290.3

 

305.2

 

 

15


 

Aon Corporation

Condensed Consolidated Statements of Financial Position

 

 

 

As of

 

(millions)

 

Sept. 30, 2008

 

Dec. 31, 2007 (2)

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Cash

 

$

478

 

$

584

 

Short-term investments

 

1,946

 

1,209

 

Receivables

 

1,877

 

1,996

 

Fiduciary assets (1)

 

9,109

 

9,498

 

Other current assets

 

245

 

219

 

Assets held for sale

 

31

 

4,418

 

Total Current Assets

 

13,686

 

17,924

 

Goodwill

 

4,882

 

4,915

 

Other intangible assets

 

222

 

204

 

Fixed assets, net

 

449

 

497

 

Long-term investments

 

370

 

417

 

Other non-current assets

 

1,109

 

920

 

TOTAL ASSETS

 

$

20,718

 

$

24,877

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Fiduciary liabilities

 

$

9,109

 

$

9,498

 

Short-term debt

 

—

 

252

 

Accounts payable and accrued liabilities

 

1,180

 

1,416

 

Other current liabilities

 

346

 

288

 

Liabilities held for sale

 

3

 

3,028

 

Total Current Liabilities

 

10,638

 

14,482

 

Long-term debt

 

1,964

 

1,893

 

Pension, post employment and post retirement liabilities

 

1,136

 

1,251

 

Other non-current liabilities

 

1,033

 

1,030

 

TOTAL LIABILITIES

 

14,771

 

18,656

 

TOTAL STOCKHOLDERS’ EQUITY

 

5,947

 

6,221

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

20,718

 

$

24,877

 

 

(1) Includes short-term investments: 2008 - $3,092; 2007 - $3,122.

(2) Certain amounts have been reclassified to conform to the 2008 presentation.

 

16