Aon Sees Q4 Net Income of $224M

February 10, 2006

Aon Corp. reported fourth quarter and full year 2005 results.

Net income was $224 million or $0.65 per share in the fourth quarter of 2005 and $81 million or $0.24 per share in 2004. Fourth quarter 2005 net income from continuing operations increased 97% to $144 million or $0.42 per share compared to $73 million or $0.22 per share a year ago.

Net income for the full year of $737 million increased 35% from the prior year, and earnings per share of $2.17 was up 33%. Full year 2005 net income from continuing operations increased to $642 million or $1.89 per share from $545 million or $1.63 per share in 2004.

Excluding certain items that influenced the fourth quarter and full year results, net income per share from continuing operations was $0.67 and $2.21 for the fourth quarter and twelve months 2005, respectively.

Greg Case, Aon’s president and CEO, said, “Our fourth quarter operating results show strong underlying margin improvement. Americas Brokerage, led by our U.S. and Latin America Retail businesses, showed very solid organic growth, continuing a trend which emerged previously in 2005. Our Affinity business continues to make an important contribution to organic revenue growth, and we continue to take steps to strengthen that business. For each of our operating segments, 2005 marked a year of good progress toward realizing the full potential of our tremendous portfolio of businesses.”

The previously announced three-year restructuring plan is currently expected to result in cumulative pretax charges of $262 million, including employee termination and lease consolidation costs, asset impairments, and other costs associated with the restructuring. Annualized cost savings are now targeted at approximately $180 million by 2008. Certain aspects of the plan are not finalized, and actual total costs, the timing of the costs, and ultimate savings may vary from the estimates due to changes in the scope or assumptions underlying this plan.

Risk and Insurance Brokerage Services fourth quarter revenue of $1.4 billion was essentially unchanged from the prior year, with 3% organic revenue growth. Contingent commission revenue reflecting amounts relating to arrangements in existence prior to Oct. 1, 2004 was $4 million in the fourth quarter of 2005 and $11 million in fourth quarter 2004. Contingent commission revenue was $26 million and $111 million for the twelve months of 2005 and 2004, respectively.

Organic revenue in Brokerage-Americas rose 10%, primarily driven by the impact of new business in all geographic regions as well as in the Affinity business. Brokerage-International organic revenue declined 3%, with strong new business generation in Continental Europe offset by weaker revenue performance in the U.K. A 1% decline in Reinsurance organic growth reflected the impact of higher risk retention by clients and weaker pricing in the international markets, partially offset by new business in the Americas.

Insurance underwriting revenue was $756 million in the quarter, with segment organic revenue growth, which is based on written premiums and fees, of 9%. In the Accident & Health and Life business, organic revenue grew 10%, primarily driven by strong growth in the sales of a supplemental health product. Warranty, Credit and Property & Casualty organic revenue growth was 8% in the quarter.

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