Aon Re’s 3rd Annual Study: Improvement in Homeowners Prospective ROE Keeps Up

October 27, 2004

Aon Corp. ( announced Wednesday the results of Aon Re’s third annual study of return on capital in the United States homeowners insurance marketplace.

The results of the study reportedly reveal continuing improvement in expected return, although the line is still expected to return less than its cost of capital. Further moderate rate increases or underwriting actions are still needed in most states.

The findings of the update indicate an expected ROE of 8.0% countrywide. This expected result has improved from 6.3% a year ago, and 4.8% two years ago.

This study by Aon Re is the third in an annual series of updates to provide economic status of the market, given the history of volatile or negative returns experienced by many homeowners insurance providers and the challenges faced by companies providing this coverage. The study offers a prospective look, taking into consideration rate changes that have been filed and capital or reinsurance requirements by state. The study is adaptable to assess prospective return on capital for individual companies.

The analysis includes the rate filings of the top five homeowners insurers in each state for the states that represent more than 80% of the U.S. population.

Complete study results will be made available to clients of Aon Re.

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