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AON Corporation
Type Public (NYSEAON)
Founded 1919
Founder(s) W. Clement Stone
Headquarters United States Chicago, IL, USA
Area served Worldwide
Key people Lester B. Knight
(Chairman of the Board)
Gregory C. Case
(President), (CEO) & (Director)
Industry Reinsurance & Management consulting
Products Insurance, Risk management,
Human resource consulting
Revenue $ 7.631 billion (2008)
Operating income $ 1.044 billion (2008)
Net income $ 1.462 billion (2008)
Total assets $ 22.940 billion (2008)
Total equity $ 5.310 billion (2008)
Employees 36,000 (2009)
Website AON.com

Aon Corporation (NYSEAON) is a provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. It is based in the Aon Center in the Chicago Loop area of Chicago, Illinois, United States.[1] In July 2007, Aon Corp. was ranked as the world's second largest insurance broker.[2]

Aon was created in 1982, when the Ryan Insurance Group (founded by Pat Ryan in the 1960s) merged with the Combined Insurance Company of America (founded by W. Clement Stone in 1919). In 1987, that company was introduced to Wall Street as Aon, a Gaelic word meaning “oneness”.

On 22 August 2008, Aon announced that it will acquire London based Benfield Group. The acquiring price will be $1.75 Billion (USD) or 935 million pounds, with $170 Million (USD) of debt.[3]

Contents

Corporate Overview

Aon Corp. is a global provider of insurance brokerage services, insurance products, and risk and insurance advice, web based risk management information systems, as well as other consulting services. The company operates in three major segments: commercial brokerage, consulting services, and consumer insurance underwriting. Aons Corp.'s brokerage unit, Aon Risk Services, provides retail property/casualty, liability, and other insurance products for groups and businesses, as well as risk management services. Aon Re Global handles reinsurance brokerage services for aviation, marine, energy, professional liability, and other niche and specialty business lines. Its consulting unit, Aon Consulting Worldwide, specializes in employee benefits administration. The risk and insurance brokerage segment accounted for 82% of total revenue from continuing operations in 2007, and the consulting segment accounted for 18%[citation needed].

The company employs approximately 36,000 workers in its 500 offices in 120 countries[citation needed]. Aon is the world's second largest insurance brokerage, and largest reinsurance brokerage.[4]

History

W. Clement Stone's mother bought a small Detroit insurance agency, and in 1918 brought her son into the business. Young Stone sold low-cost, low-benefit accident insurance, underwriting and issuing policies on-site. The next year he founded his own agency, the Combined Registry Co.

As the Great Depression began, Stone reduced his workforce and improved training. Forced by his son's respiratory illness to winter in the South, Stone moved to Arkansas and Texas. In 1939 he bought American Casualty Insurance Co. of Dallas, TX. It was consolidated with other purchases as the Combined Insurance Co. of America in 1947. The company continued through the 1950s and 1960s, continuing to sell health and accident policies. In the 1970s Combined expanded overseas despite being hit hard by the recession.

In 1982, after 10 years of stagnation under Clement Stone Jr., the elder Stone, then 79, resumed control until the completion of a merger with Ryan Insurance Co. allowed him to transfer control to Patrick Ryan. Ryan, the son of a Wisconsin Ford dealer, had started his company as an auto credit insurer in 1964. In 1976, the company bought the insurance brokerage units of the Esmark conglomerate. Ryan focused on insurance brokering and added more upscale insurance products. He also trimmed staff and took other cost-cutting measures, and in 1987 he changed Combined's name to Aon. In 1992, he bought Dutch insurance broker Hudig-Langeveldt. In 1995, the company sold its remaining direct life insurance holdings to focus on consulting. The following year it began offering hostile takeover insurance policies to small and midsized companies.

Aon built a global presence through purchases. In 1997 it bought The Minet Group, as well as insurance brokerage Alexander & Alexander Services, Inc. in a deal that made Aon (temporarily) the largest insurance broker worldwide. The firm made no US buys in 1998, but doubled its employee base with purchases including Spain's largest retail insurance broker, Gil y Carvajal, and the formation of Aon Korea, the first non-Korean firm of its kind to be licensed there.

Responding to industry demands, Aon announced its new fee disclosure policy in 1999, and the company reorganized to focus on buying personal line insurance firms and to integrate its acquisitions. That year it bought Nikols Sedgwick Group, an Italian insurance firm, and formed RiskAttack (with Zurich US), a risk analysis and financial management concern aimed at technology companies. The cost of integrating its numerous purchases, however, hammered profits in 1999.

Despite its troubles, in 2000 Aon bought Reliance Group's accident and health insurance business, as well as Actuarial Sciences Associates, a compensation and employee benefits consulting company. Later in that year, however, the company decided to cut 6% of its workforce as part of a restructuring effort. In 2003, the company saw revenues increase primarily because of rate hikes in the insurance industry (meaning higher commissions for Aon). Also that year Endurance Specialty, the company's Bermuda-based underwriting operations, went public. The next year Aon sold most of its holdings in Endurance.

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September 11 Attack

Its New York offices were on floors 92 and 98-105 of the south tower of the World Trade Center at the time of the September 11, 2001 terrorist attack. As a result, 175 employees of Aon Corp. were killed in the attacks.[5]

Spitzer Investigation

In 2004-2005 Aon, along with other brokers including AIG, Marsh & McLennan and Willis, fell under regulatory investigation under New York Attorney General Eliot Spitzer and other state attorneys general. At issue was the practice of insurance companies' payments to brokers (known as contingent commissions). The payments were thought to bring a conflict of interest, swaying broker decisions on behalf of carriers, rather than customers. In the spring of 2005, without acknowledging any wrongdoing, Aon agreed to a $190 million settlement payable over 30 months.

UK regulatory breach

In January 2009 Aon was fined £5.25m in the UK after it unwittingly made more than $7m worth of "suspicious" payments to overseas firms and individuals. The UK's Financial Services Authority stated that the fine related to the company's inadequate bribery and corruption controls, claiming that Aon between 14 January 2005 and 30 September 2007 had failed properly to assess the risks involved in its dealings with overseas firms and individuals. Aon fully cooperated with its investigation and qualified for a 30% discount on the fine. Aon said its conduct was not deliberate, adding it had since "significantly strengthened and enhanced its controls around the usage of third parties".[6]

Manchester United sponsorship

On June 3, 2009, it was reported that Aon had signed a four year shirt sponsorship deal with English football giants Manchester United. In 2010, Aon will replace troubled American insurance company AIG, which is restructuring itself having received a $150 billion (£109 billion) bail-out from the U.S. government.[7]

The deal is said to be worth £80 million over four years, replacing United's deal with AIG as the most lucrative shirt deal in history at the time, but it was later equalled when Standard Chartered Bank agreed a deal with Liverpool FC to pay £20 million a year over the same period. Aon beat out competition from Sahara India Pariwar, Saudi Telecom Company, and Prudential plc.[7]

Awards

  • Best Employee Benefit Consulting Firm and Best Retail Agent/Broker in 2007 by Business Insurance.[8][9]

References

External links


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