Aon Reports Fourth Quarter and Full Year 2009 Results
Fourth Quarter Highlights
- Total revenue increased 9% to $2.1 billion with a decline in organic revenue of 2%
- EPS from continuing operations was $0.49 and adjusted EPS from continuing operations, excluding certain items, increased 20% to $0.96
- Brokerage revenue increased 8% to $1.7 billion with a decline in organic revenue of 1%
- Brokerage pretax margin was 11.5% and the adjusted pretax margin, excluding certain items, increased 160 basis points to 21.4%
- Consulting revenue increased 2% to $350 million with a decline in organic revenue of 4%
- Consulting pretax margin was 17.4% and the adjusted pretax margin, excluding certain items, increased 240 basis points to 21.4%
- Repurchased 8.6 million shares of common stock for $340 million
- Increased estimated annualized savings for the 2007 restructuring program by $69 million to $536 million, and costs necessary to achieve savings by $50 million to $750 million
- Completed acquisitions of Allied North America and FCC Global Insurance Services in construction and Carpenter Moore Insurance Services in professional liability
CHICAGO, Feb. 5 /PRNewswire-FirstCall/ -- Aon Corporation (NYSE: AON) today reported results for the fourth quarter and full year ended December 31, 2009.
Net income attributable to Aon stockholders was $198 million or $0.69 per share, compared to a loss of $6 million or $0.02 per share for the prior year quarter. Net income attributable to Aon stockholders from continuing operations increased 15% to $142 million or $0.49 per share, compared to $123 million or $0.42 per share for the prior year quarter. Net income attributable to Aon stockholders from continuing operations per share, excluding certain items, increased 20% to $0.96 compared to $0.80 for the prior year quarter. Certain items that impacted fourth quarter results and comparisons with the prior year quarter are detailed in the reconciliation of non-GAAP measures on page 12 of this press release.
"Our fourth quarter results reflect solid operational performance across both Brokerage and Consulting. On an adjusted basis, total pretax margin increased 190 basis points and EPS from continuing operations increased 20 percent, despite difficult economic conditions and a 63 percent decline in investment income. Colleagues globally have done an outstanding job supporting our clients in a very challenging year, and we begin 2010 in a position of strength in the industry," said Greg Case, president and chief executive officer. "Recent investments across our organization in construction, professional liability, claims consulting and key talent continue to strengthen our client-serving capability, while our restructuring programs continue to deliver additional cost savings and margin improvement. With the achievement of a 20% adjusted pretax margin in Brokerage for 2009, we are establishing a new long-term pretax margin target of 25% for the Brokerage segment. Finally, our balance sheet and strong cash flow provide significant financial flexibility to create shareholder value, as highlighted by the repurchase of an additional $340 million of stock during the quarter, and the authorization of a new two billion dollar share repurchase program subsequent to the close of 2009."
FOURTH QUARTER FINANCIAL SUMMARY
Total revenue increased 9% to $2.1 billion due to a 6% increase from foreign currency translation and a 5% increase from acquisitions, primarily Benfield, net of dispositions, partially offset by a $24 million or 63% decline in investment income.
Total operating expenses increased 10% or $162 million to $1.8 billion due primarily to an estimated $96 million unfavorable impact from foreign currency translation, an $88 million increase in restructuring related expenses and the inclusion of Benfield operating expenses, partially offset by benefits related to the 2007 and Aon Benfield restructuring programs and lower errors and omissions expense resulting from insurance recoveries.
Restructuring expenses were $175 million in the fourth quarter compared to $87 million in the prior year quarter. An analysis of restructuring-related expenses by segment and type for both the 2007 and Aon Benfield restructuring programs are detailed on page 13 of this release.
Restructuring savings in the fourth quarter related to the 2007 restructuring program are estimated at $108 million compared to $32 million in the prior year quarter. Of the estimated restructuring savings in the fourth quarter, $90 million were related to the Brokerage segment primarily from workforce reduction. Before any potential reinvestment of savings, the 2007 restructuring program delivered $269 million of cumulative cost savings in 2009, and is now expected to deliver $536 million of annualized run-rate cost savings by the end of 2010, primarily as a result of additional cost savings opportunities to streamline support functions globally.
Restructuring savings in the fourth quarter related to the Aon Benfield restructuring program are estimated at $17 million. Before any potential reinvestment of savings, the Benfield restructuring program delivered $45 million of cumulative cost savings in 2009, and is expected to deliver cumulative cost savings of $90-100 million in 2010 and $122 million in 2011.
Currency fluctuations in the fourth quarter favorably impacted adjusted net income from continuing operations by $0.05 per diluted share when the Company translates prior year quarter results at current quarter foreign exchange rates.
Effective tax rate on net income from continuing operations decreased to 25.4% for the fourth quarter compared to 28.2% for the prior year quarter due primarily to changes in the geographical distribution of income. The company anticipates an effective tax rate on net income from continuing operations of 28.0% for 2010.
Average diluted shares outstanding decreased to 287.8 million in the fourth quarter compared to 291.4 million in the prior year quarter due primarily to the Company's share repurchase program. During the quarter, the Company repurchased 8.6 million shares of common stock for $340 million. The company has approximately $265 million remaining under the existing share repurchase program previously authorized in 2005.
Discontinued Operations after-tax income was $56 million or $0.20 per share in the fourth quarter compared to an after-tax loss of $129 million or $0.44 per share in the prior year quarter. The fourth quarter primarily reflects the recognition of a foreign tax credit carryback related to the completed sale of Combined Insurance Companies of America (CICA). The prior year quarter included an estimated $116 million loss on disposal of the property and casualty insurance operations and the results of Automobile Insurance Specialists (AIS).
FOURTH QUARTER SEGMENT REVIEW
Certain noteworthy items impacted pretax income and pretax margins in the fourth quarter of 2009 and 2008. The fourth quarter segment reviews provided below include supplemental information related to organic revenue growth, adjusted pretax income and pretax margin which is described in detail on the "Reconciliation of Non-GAAP Measures - Organic Revenue Growth" on page 11 and "Reconciliation of Non-GAAP Measures - Segments and Diluted Earnings Per Share" on page 12 of this press release.
RISK AND INSURANCE BROKERAGE SERVICES
-------------------------------------
Less:
Acquis-
(millions) Fourth Quarter Ended Less: itions,
-------------------- Curr- Divest- Organic
Commissions, Dec 31, Dec 31, % ency itures, Revenue
Fees and Other 2009 2008 Change Impact Other Growth
------ ------ ------ ------ ------ ------
Retail $1,347 $1,285 5% 7% (1)% (1)%
Reinsurance 339 247 37 4 35 (2)
------ ------
Subtotal $1,686 $1,532 10% 6 5 (1)
------ ------
Investment Income 14 37 (62)%
------ ------
Total Revenue $1,700 $1,569 8%
====== ======
Risk and Insurance Brokerage Services total revenue increased 8% to $1.7 billion compared to the prior year quarter due to a 6% favorable impact from foreign currency translation on commissions and fees and a 5% increase from acquisitions, primarily Benfield, net of dispositions, partially offset by a $23 million or 62% decline in investment income.
Retail organic revenue declined 1% compared to the prior year quarter. By geographic region in Retail, the Americas organic revenue was similar to the prior year quarter as strong growth in Latin America and strong new business growth in U.S. retail was offset by the impact of soft pricing and lower exposure units on renewal business in Canada and U.S. retail. U.K. organic revenue decreased 9% due primarily to weak economic conditions, soft pricing and lower new business. EMEA organic revenue increased 2% due to strong growth in emerging markets, partially offset by weak economic conditions in Continental Europe. APAC organic revenue was similar to the prior year reflecting strong growth in emerging markets partially offset by soft market conditions in Australia. Reinsurance organic revenue decreased 2% due primarily to higher cedent retentions in treaty business, partially offset by new business growth in treaty placements globally, facultative and capital markets transactions.
Fourth Quarter Ended
--------------------
(millions) Dec 31, Dec 31, %
2009 2008 Change
------ ------ ------
Revenue $1,700 $1,569 8%
Expenses
Compensation and benefits 1,099 934 18
Other expenses 407 425 (4)
------ ------
Total operating expenses 1,506 1,359 11
------ ------
$194 $210 (8)%
Operating income
Other income (expense) 2 3 (33)
---- ----
Pretax income $196 $213 (8)%
==== ====
Pretax margin 11.5% 13.6%
Pretax income - adjusted $363 $310 17%
Pretax margin - adjusted 21.4% 19.8%
Compensation and benefits for the fourth quarter increased 18% or $165 million compared to the prior year quarter including an $88 million increase in restructuring related costs, a $54 million unfavorable impact from foreign currency translation and increased operating expenses from the Benfield merger, partially offset by benefits related to the restructuring programs. Other operating expenses for the fourth quarter decreased 4% or $18 million from the prior year quarter due primarily to lower errors and omissions expense resulting from insurance recoveries and benefits related to the restructuring programs, partially offset by a $25 million unfavorable impact from foreign currency translation and the inclusion of Benfield operating expenses.
Fourth quarter pretax income decreased 8% to $196 million. Adjusting for certain items detailed on page 12 of this press release, pretax income increased 17% or $53 million to $363 million and pretax margin increased 160 basis points to 21.4% versus the prior year quarter due primarily to benefits of the restructuring programs and lower errors and omissions expense, partially offset by a $23 million decrease in investment income.
CONSULTING
----------
Less:
Acquis-
(millions) Fourth Quarter Ended Less: itions,
-------------------- Curr- Divest- Organic
Commissions, Dec 31, Dec 31, % ency itures, Revenue
Fees and Other 2009 2008 Change Impact Other Growth
-------- ------- ------- ------- ------- -------
Services $299 $289 3% 5% 2% (4)%
Outsourcing 51 52 (2) 3 (3) (2)
--- ---
Subtotal $350 $341 3% 5% 2% (4)%
--- ---
Investment
Income - 1 (100)%
--- ---
Total Revenue $350 $342 2%
==== ====
Consulting total revenue increased 2% to $350 million compared to the prior year quarter due primarily to a 5% favorable impact from foreign currency translation and a 2% increase from acquisitions, net of dispositions, partially offset by a 4% decline in organic commissions and fees revenue. Organic revenue in Services decreased 4% primarily reflecting a decline in compensation and retirement consulting, partially offset by growth in international health and benefits. Organic revenue in Outsourcing declined 2% as the wind down from a previously announced outsourcing contract was completed in the fourth quarter.
Fourth Quarter Ended
--------------------
(millions) Dec 31, Dec 31, %
2009 2008 Change
------- ------ ------
Revenue $350 $342 2%
Expenses
Compensation and benefits 210 203 3
Other expenses 81 84 (4)
--- ---
Total operating expenses 291 287 1
--- ---
Operating income $59 $55 7%
Other income (expense) 2 - N/A
--- ---
Pretax income $61 $55 11%
=== ===
Pretax margin 17.4% 16.1%
Pretax income - adjusted $75 $65 15%
Pretax margin - adjusted 21.4% 19.0%
Compensation and benefits for the fourth quarter increased 3% or $7 million from the prior year quarter including a $10 million unfavorable impact from foreign currency translation and a $4 million increase in restructuring related costs, partially offset by benefits related to the 2007 restructuring program. Other operating expenses decreased 4% or $3 million compared to the prior year quarter due to benefits related to the 2007 restructuring program and lower errors and omissions expense resulting from insurance recoveries, partially offset by a $6 million unfavorable impact from foreign currency translation.
Fourth quarter pretax income increased 11% to $61 million. Adjusting for certain items detailed on page 12 of this press release, pretax income increased 15% or $10 million to $75 million and pretax margin increased 240 basis points to 21.4% versus the prior year quarter due primarily to benefits related to the 2007 restructuring program and lower errors and omissions expense, partially offset by a decline in organic revenue.
UNALLOCATED INCOME AND EXPENSE
------------------------------
Fourth Quarter Ended
----------------------
(millions) Dec 31, Dec 31, %
2009 2008 Change
------ ------ ------
Total segment income before tax $257 $268 (4)%
Unallocated revenue 29 N/A
Unallocated expenses (43) (74) (42)
Interest income 10 13 (23)
Interest expense (35) (30) 17
--- ---
Income from continuing operations
before tax $218 $177 23%
==== ====
Unallocated revenue for the fourth quarter was $29 million reflecting the Company's equity ownership in certain insurance investment funds. Unallocated expenses decreased $31 million to $43 million. The fourth quarter included $5 million of expense related to the Company's equity ownership in certain insurance investment funds. The prior year quarter included $44 million of hedging costs related to the Benfield transaction. Interest income decreased $3 million to $10 million compared to the prior year quarter due primarily to lower cash balances. Interest expense increased $5 million to $35 million due to an increase in the average rate on outstanding debt.
2009 FULL YEAR SUMMARY
Total revenue for 2009 increased 1% to $7.6 billion due to a 7% increase from acquisitions, primarily Benfield, net of dispositions, primarily offset by a 4% unfavorable impact from foreign currency translation and a $97 million or 57% decline in investment income. Risk and Insurance Brokerage Services total revenue increased 2% to $6.3 billion and Consulting total revenue decreased 7% to $1.3 billion.
Net income attributable to Aon stockholders for 2009 decreased 49% to $747 million compared to $1.5 billion for the prior year. The prior year included a $935 million after-tax gain on the sales of Combined Insurance Companies of America (CICA) and Sterling Life Insurance (Sterling). Net income attributable to Aon stockholders from continuing operations increased 2% to $636 million compared to $621 million for the prior year. Net income attributable to Aon stockholders, excluding certain items, increased 4% to $906 million compared to $874 million for the prior year. Certain items that impacted full year results and comparisons against the prior year are detailed in the reconciliations of the impact of non-GAAP measures on page 12.
Net income attributable to Aon stockholders for 2009 decreased 46% to $2.57 per share compared to $4.80 per share for the prior year. Net income attributable to Aon stockholders from continuing operations increased 7% to $2.19 per share compared to $2.04 per share for the prior year. Net income attributable to Aon stockholders, excluding certain items, increased 8% to $3.11 per share compared to $2.87 per share for the prior year. Certain items that impacted full year results and comparisons against the prior year are detailed in the reconciliations of the impact of non-GAAP measures on page 12.
During 2009, the Company repurchased approximately 15.1 million shares of common stock for $590 million at an average price of $39.17 per share.
SUBSEQUENT EVENTS
In January 2010, the Board of Directors authorized a new share repurchase program under which up to $2 billion of common stock may be repurchased from time to time depending on market conditions or other factors through open market or privately negotiated transactions. Repurchases will commence under the new share repurchase program upon conclusion of the existing program.
Conference Call and Webcast Details
The Company will host a conference call on Friday, February 5, 2010 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: AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008 and 2009 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and 2009. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007, 2008, and 2009, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007, 2008 and 2009 by the readers of Business Insurance. For more information on Aon, log onto http://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 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, and our ability to integrate Benfield successfully and to realize the anticipated benefits of the Benfield merger. 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.
Explanation of Non-GAAP Measures
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. The impact of foreign exchange is determined by translating last year's revenue, expense or net income at this year's foreign exchange rates. 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 Statements of Income. 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, Vice President,
Investor Relations Global Public Relations
312-381-3983 312-381-2485
Aon Corporation
Consolidated Statements of Income (Unaudited)
Fourth Quarter Ended Twelve Months Ended
------------------------- -------------------------
(millions except Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent
per share data) 2009 2008 Change 2009 2008 Change
-------- -------- ------- -------- -------- -------
Revenue
-------
Commissions, fees
and other $2,059 $1,868 10% $7,521 $7,357 2%
Investment income 14 38 (63) 74 171 (57)
--- --- --- ---
Total
revenue 2,073 1,906 9 7,595 7,528 1
----- ----- ----- -----
Expenses
--------
Compensation and
benefits 1,330 1,153 15 4,597 4,581 -
Other general
expenses 434 452 (4) 1,735 1,785 (3)
Depreciation
and
amortization 68 65 5 242 222 9
--- --- --- ---
Total
operating
expenses 1,832 1,670 10 6,574 6,588 -
----- ----- ----- -----
Operating income 241 236 2 1,021 940 9
Interest income 10 13 (23) 30 94 (68)
Interest expense (35) (30) 17 (122) (126) (3)
Other income
(expense) 2 (42) N/A 20 (29) N/A
--- --- --- ---
Income from
continuing
operations
before income
taxes 218 177 23 949 879 8
Income taxes (1) 56 50 12 268 242 11
--- --- --- ---
Income from
continuing
operations 162 127 28 681 637 7
--- --- --- ---
Income (loss)
from
discontinued
operations
before income
taxes (10) (184) (95) 83 1,256 (93)
Income taxes (2) (66) (55) 20 (28) 415 N/A
--- --- --- ---
Income (loss) from
discontinued
operations 56 (129) N/A 111 841 (87)
--- ---- --- ---
Net income
(loss) 218 (2) N/A 792 1,478 (46)
Less: Net
income
attributable to
the
noncontrolling
interests 20 4 400 45 16 181
--- --- --- ---
Net income
(loss)
attributable
to Aon
stockholders $198 $(6) N/A% $747 $1,462 (49)%
==== === ==== ======
Net income (loss)
attributable to Aon
stockholders:
Income from
continuing
operations $142 $123 15% $636 $621 2%
Income (loss) from
discontinued
operations 56 (129) N/A 111 841 (87)
--- ---- --- ---
Net income (loss) $198 $(6) N/A% $747 $1,462 (49)%
==== === ==== ======
Basic net income
(loss) per share
attributable to
Aon stockholders
(3):
Income from
continuing
operations $0.51 $0.44 16% $2.25 $2.12 6%
Income (loss) from
discontinued
operations 0.20 (0.46) N/A 0.39 2.87 (86)
---- ----- ---- ----
Net income (loss) $0.71 $(0.02) N/A% $2.64 $4.99 (47)%
===== ====== ===== =====
Diluted net income
(loss) per share
attributable to
Aon stockholders
(3):
Income from
continuing
operations $0.49 $0.42 17% $2.19 $2.04 7%
Income (loss) from
discontinued
operations 0.20 (0.44) N/A 0.38 2.76 (86)
---- ----- ---- ----
Net income (loss) $0.69 $(0.02) N/A% $2.57 $4.80 (46)%
===== ====== ===== =====
Weighted
average common
shares
outstanding -
diluted 287.8 291.4 (1)% 291.1 304.5 (4)%
===== ===== ===== =====
(1) Tax rate for continuing operations is 25.4% and 28.2% for the fourth
quarters ended December 31, 2009 and 2008, respectively, and 28.2%
and 27.5% for the twelve months ended December 31, 2009 and 2008,
respectively.
(2) Tax rate for discontinued operations is not meaningful for the
fourth quarter and twelve months ended December 31, 2009. The tax
rate for discontinued operations was 29.9% and 33.0% for the fourth
quarter and twelve months ended December 31, 2008, respectively.
(3) The basic and diluted earnings per share calculation was performed
using the two-class method and included the impact of certain
unvested share-based payment awards that have the right to receive
nonforfeitable dividends.
Aon Corporation
Revenue from Continuing Operations (Unaudited)
Fourth Quarter Ended Twelve Months Ended
---------------------------- ---------------------------
Orga- Orga-
nic nic
Reve- Reve-
Dec. Dec. Per- nue Dec. Dec. Per- nue
31, 31, cent Growth 31, 31, cent Growth
(millions) 2009 2008 Change (1) 2009 2008 Change (1)
---- ---- ------- ----- ---- ---- ----- -----
Commissions,
Fees and
Other
----------
Risk and
Insurance
Brokerage
Services $1,686 $1,532 10% (1)% $6,232 $6,029 3% (1)%
Consulting 350 341 3 (4) 1,266 1,353 (6) (2)
--- --- ----- -----
Total
Operating
Segments $2,036 $1,873 9% (2)% $7,498 $7,382 2% (1)%
====== ====== ====== ======
Investment
Income
----------
Risk and
Insurance
Brokerage
Services $14 $37 (62)% $73 $168 (57)%
Consulting - 1 (100) 1 3 (67)
--- --- ----- -----
Total
Operating
Segments $14 $38 (63)% $74 $171 (57)%
=== === === ====
Total Revenue
-------------
Risk and
Insurance
Brokerage
Services $1,700 $1,569 8% $6,305 $6,197 2%
Consulting 350 342 2 1,267 1,356 (7)
Unallocated 29 - N/A 49 - N/A
Intersegment (6) (5) 20 (26) (25) 4
--- --- --- ---
Total $2,073 $1,906 9% $7,595 $7,528 1%
====== ====== ====== ======
(1) Organic revenue growth excludes the impact of foreign exchange,
acquisitions, divestitures, transfers, reimbursable expenses and
unusual items. Organic revenue growth, a non-GAAP measure, is
reconciled to the corresponding U.S. GAAP percent change in revenue
on page 11 of this release.
Aon Corporation
Segments (Unaudited)
Risk and Insurance
Brokerage Services -
Continuing Operations Fourth Quarter Ended Twelve Months Ended
---------------------- ---------------------- ----------------------
Dec. Dec. Per- Dec. Dec. Per-
31, 31, cent 31, 31, cent
(millions) 2009 2008 Change 2009 2008 Change
----- ----- ------ ----- ----- ------
Revenue
-------
Commissions, fees
and other $1,686 $1,532 10% $6,232 $6,029 3%
Investment income 14 37 (62) 73 168 (57)
--- --- --- ---
Total revenue 1,700 1,569 8 6,305 6,197 2
----- ----- ----- -----
Expenses
--------
Compensation and
benefits 1,099 934 18 3,777 3,707 2
Other general
expenses 407 425 (4) 1,628 1,644 (1)
--- --- ----- -----
Total operating
expenses 1,506 1,359 11 5,405 5,351 1
----- ----- ----- -----
Operating income 194 210 (8) 900 846 6
Other income
(expense) 2 3 (33) 14 21 (33)
--- --- --- ---
Segment income before
income taxes $196 $213 (8)% $914 $867 5%
==== ==== ==== ====
Segment pretax income
margin 11.5% 13.6% 14.5% 14.0%
Consulting -
Continuing Operations Fourth Quarter Ended Twelve Months Ended
---------------------- ---------------------- ----------------------
Dec. Dec. Per- Dec. Dec. Per-
31, 31, cent 31, 31, cent
(millions) 2009 2008 Change 2009 2008 Change
----- ----- ------ ----- ----- ------
Revenue
-------
Commissions, fees
and other $350 $341 3% $1,266 $1,353 (6)%
Investment income - 1 (100) 1 3 (67)
--- --- --- ---
Total revenue 350 342 2 1,267 1,356 (7)
--- --- ----- -----
Expenses
--------
Compensation and
benefits 210 203 3 754 815 (7)
Other general
expenses 81 84 (4) 310 333 (7)
--- --- --- ---
Total operating
expenses 291 287 1 1,064 1,148 (7)
--- --- ----- -----
Operating income 59 55 7 203 208 (2)
Other income
(expense) 2 - N/A 2 1 100
--- --- --- ---
Segment income before
income taxes $61 $55 11% $205 $209 (2)%
=== === ==== ====
Segment pretax income
margin 17.4% 16.1% 16.2% 15.4%
Reconciliation of segment income
before income taxes to income
from continuing operations
before income taxes:
Fourth Quarter Ended Twelve Months Ended
---------------------- ----------------------
Dec. Dec. Per- Dec. Dec. Per-
31, 31, cent 31, 31, cent
(millions) 2009 2008 Change 2009 2008 Change
----- ----- ------ ----- ---- ------
Segment income before
income taxes
Risk and Insurance
Brokerage Services $196 $213 (8)% $914 $867 5%
Consulting 61 55 11 205 209 (2)
--- --- --- ---
Total segment
income before
income
taxes 257 268 (4) 1,119 1,076 4
Unallocated revenue 29 - N/A 49 - N/A
Unallocated expenses (43) (74) (42) (127) (165) (23)
Interest income 10 13 (23) 30 94 (68)
Interest expense (35) (30) 17 (122) (126) (3)
--- --- ---- ----
Income from
continuing operations
before income taxes $218 $177 23% $949 $879 8%
==== ==== ==== ====
Pretax income margin 10.5% 9.3% 12.5% 11.7%
Aon Corporation
Reconciliation of Non-GAAP Measures - Organic Revenue Growth (Unaudited)
Fourth Quarter Ended
--------------------------------------------------
Less:
Acquis- Org-
Less: itions, anic
Curr- Dives- Reve-
Dec. Dec. Per- ency titures nue
31, 31, cent Impact & Growth
(millions) 2009 2008 Change (1) Other (2)
---- ----- ------ ------- -------- ------
Commissions, Fees
and Other
-----------------
Risk and Insurance
Brokerage Services
Segment:
Retail
brokerage
Americas $657 $642 2% 3% (1)% -%
United
Kingdom 186 196 (5) 3 1 (9)
Europe,
Middle East
& Africa 366 329 11 11 (2) 2
Asia Pacific 138 118 17 21 (4) -
--- ---
Total Retail
brokerage 1,347 1,285 5 7 (1) (1)
Reinsurance
brokerage 339 247 37 4 35 (2)
--- ---
Total Risk and
Insurance
Brokerage
Services 1,686 1,532 10 6 5 (1)
----- -----
Consulting
Segment:
Consulting
services 299 289 3 5 2 (4)
Outsourcing 51 52 (2) 3 (3) (2)
--- ---
Total
Consulting 350 341 3 5 2 (4)
--- ---
Total Operating
Segments $2,036 $1,873 9% 6% 5% (2)%
====== ======
Twelve Months Ended
--------------------------------------------------
Less:
Acqui- Org-
Less: sitions, anic
Curr- Dives- Reve-
Dec. Dec. Per- ency titures nue
31, 31, cent Impact & Growth
(millions) 2009 2008 Change (1) Other (2)
----- ----- ------ ------- -------- -------
Commissions, Fees
and Other
-----------------
Risk and Insurance
Brokerage Services
Segment:
Retail
brokerage
Americas $2,249 $2,280 (1)% (2)% -% 1%
United
Kingdom 650 742 (12) (9) 3 (6)
Europe,
Middle East
& Africa 1,392 1,515 (8) (7) - (1)
Asia Pacific 456 491 (7) (4) (2) (1)
--- ---
Total Retail
brokerage 4,747 5,028 (6) (5) - (1)
Reinsurance
brokerage 1,485 1,001 48 (4) 52 -
----- -----
Total Risk and
Insurance
Brokerage
Services 6,232 6,029 3 (4) 8 (1)
----- -----
Consulting
Segment:
Consulting
services 1,075 1,139 (6) (5) 1 (2)
Outsourcing 191 214 (11) (7) - (4)
--- ---
Total
Consulting 1,266 1,353 (6) (5) 1 (2)
----- -----
Total Operating
Segments $7,498 $7,382 2% (4)% 7% (1)%
====== ======
(1) Currency impact is determined by translating last year's revenue at
this year's foreign exchange rates.
(2) Organic revenue growth excludes the impact of foreign exchange,
acquisitions, divestitures, transfers, reimbursable expenses and
unusual items.
Aon Corporation
Reconciliation of Non-GAAP Measures - Segment Income and Diluted Earnings
Per Share (Unaudited) (1)
Fourth Quarter Ended Twelve Months Ended
December 31, 2009 December 31, 2009
---------------------------- ----------------------------
Risk Risk
and and
Insur- Insur-
ance Unallo- ance Unallo-
(millions Broke- cated Broke- cated
except rage and rage and
per Serv- Consu- Elimin- Serv- Consu- Elimin-
share data) ices lting ations Total ices lting ations Total
------ ------ ------- ----- ------ ------ ------- ------
Revenue $1,700 $350 $23 $2,073 $6,305 $1,267 $23 $7,595
====== ==== === ====== ====== ====== === ======
Income
(loss)
from
continuing
operations
before
income
taxes -
as
reported $196 $61 $(39) $218 $914 $205 $(170) $949
Restructuring
charges 161 14 - 175 377 35 - 412
Pension
curtailment - - - - (54) (20) (4) (78)
Anti-bribery
and
compliance
initiatives 4 - - 4 7 - - 7
Benfield
integration
costs 2 - - 2 15 - - 15
--- --- --- --- --- --- --- ---
Income
(loss)
from
continuing
operations
before
income
taxes - as
adjusted $363 $75 $(39) 399 $1,259 $220 $(174) 1,305
==== === ==== ====== ==== =====
Income
taxes
(2) 103 354
--- ---
Income from
continuing
operations
- as
adjusted 296 951
Less:
Net income
attributable
to
noncontrolling
interests 20 45
--- ---
Income from
continuing
operations
attributable
to Aon
stockholders
- as
adjusted $276 $906
==== ====
Diluted
earnings
per
share from
continuing
operations
- as
adjusted $0.96 $3.11
===== =====
Weighted
average
common
shares
outstanding -
diluted 287.8 291.1
===== =====
Pretax
income
margins -
as
adjusted 21.4% 21.4% N/A 19.2% 20.0% 17.4% N/A 17.2%
==== ==== === ==== ==== ==== === ====
Fourth Quarter Ended Twelve Months Ended
December 31, 2008 December 31, 2008
---------------------------- ----------------------------
Risk Risk
and and
Insur- Insur-
ance Unallo- ance Unallo-
(millions Broke- cated Broke- cated
except rage and rage and
per Serv- Consu- Elimin- Serv- Consu- Elimin-
share data) ices lting ations Total ices lting ations Total
------ ------ ------- ----- ------ ------ ------- -----
Revenue $1,569 $342 $(5)$1,906 $6,197 $1,356 $(25)$7,528
====== ==== === ====== ====== ====== ==== ======
Income
(loss)
from
continuing
operations
before
income taxes
- as
reported $213 $55 $(91) $177 $867 $209 $(197) $879
Restructuring
charges 78 9 - 87 237 17 - 254
Pension
curtailment 6 1 1 8 6 1 1 8
Anti-bribery
and
compliance
initiatives 11 - - 11 42 - - 42
Benfield
costs 2 - 44 46 2 - 50 52
Gain on
sale
of land - - - - (5) - - (5)
--- --- --- --- --- --- --- ---
Income
(loss)
from
continuing
operations
before
income tax
- as
adjusted $310 $65 $(46) 329 $1,149 $227 $(146) 1,230
==== === ==== ====== ==== =====
Income
taxes (2) 93 340
--- ---
Income
from
continuing
operations
- as
adjusted 236 890
Less: Net
income
attributable
to
noncontrolling
interests 4 16
--- ---
Income from
continuing
operations
attributable
to Aon
stockholders
- as
adjusted $232 $874
==== ====
Diluted earnings
per share from
continuing
operations
- as
adjusted $0.80 $2.87
===== =====
Weighted
average
common shares
outstanding -
diluted 291.4 304.5
===== =====
Pretax
income
margins -
as adjusted 19.8% 19.0% N/A 17.3% 18.5% 16.7% N/A 16.3%
==== ==== === ==== ==== ==== === ====
(1) Certain noteworthy items impacting pretax income in 2009 and 2008 are
described in this schedule. The income (loss) from continuing
operations before income taxes, diluted earnings per share from
continuing operations and related margins shown with the caption
"as adjusted" are non-GAAP measures.
(2) Tax rate for continuing operations is 25.4% and 28.2% for the fourth
quarters ended December 31, 2009 and 2008, respectively, and 28.2%
and 27.5% for the twelve months ended December 31, 2009 and 2008,
respectively (U.S. GAAP). All reconciling items for the twelve month
periods are taxed at the effective tax rate. However, the twelve
months 2009 U.S. GAAP effective tax rate was adjusted to 27.1% to
exclude the impact of the 40% tax rate applied to the $83 million
U.S. pension curtailment gain.
Aon Corporation
Restructuring Plans (Unaudited) (1)
2007 Restructuring Plan
By Type: Actual
-------------------------------
Total
Full Full Fourth Full Incurred
Year Year Quarter Year to Estimated
(millions) 2007 2008 2009 2009 Date Total
---- ---- ------- ---- -------- -----------
Workforce reduction $17 $166 $133 $251 $434 $510
Lease consolidation 22 38 22 78 138 149
Asset impairments 4 18 8 15 37 39
Other costs associated with
restructuring 3 29 2 13 45 52
--- --- --- --- --- ---
Total restructuring and
related expenses $46 $251 $165 $357 $654 $750
=== ==== ==== ==== ==== ====
By Segment:
Risk and Insurance
Brokerage Services $41 $234 $151 $322 $597 $683
Consulting 5 17 14 35 57 67
--- --- --- --- --- ---
Total restructuring and
related expenses $46 $251 $165 $357 $654 $750
=== ==== ==== ==== ==== ====
Benfield Restructuring Plan
By Type:
Operations
------------
Purchase
Price Fourth Full
Allocation Quarter Year Estimated
(millions) (2) 2009 2009 Total
----------- ------- ---- ---------
Workforce reduction $32 $7 $38 $98
Lease consolidation 22 3 14 49
Asset impairments - - 2 5
Other costs associated with
restructuring 1 - 1 3
--- --- --- ---
Total restructuring and
related expenses $55 $10 $55 $155
=== === === ====
(1) In the Consolidated Statements of Income, workforce reductions are
included in "Compensation and benefits," lease consolidations and
other costs associated with restructuring are included in "Other
general expenses," and asset impairments are included in
"Depreciation and amortization."
(2) Represents costs associated with the execution of restructuring
activity identified at the acquisition date (November 30, 2008).
Aon Corporation
Condensed Consolidated Statements of Financial Position
As of
-----------------------------
(millions) Dec. 31, 2009 Dec. 31, 2008
------------ ------------- --------------
(Unaudited)
ASSETS
--------
CURRENT ASSETS
Cash and cash equivalents $217 $582
Short-term investments 422 684
Receivables 2,052 1,990
Fiduciary assets (1) 10,835 10,678
Other current assets 463 355
Assets held for sale - 237
--- ---
Total Current Assets 13,989 14,526
Goodwill 6,078 5,637
Other intangible assets 791 779
Fixed assets, net 461 451
Investments 319 332
Other non-current assets 1,320 1,215
----- -----
TOTAL ASSETS $22,958 $22,940
======= =======
LIABILITIES
--------------
CURRENT LIABILITIES
Fiduciary liabilities $10,835 $10,678
Short-term debt 10 105
Accounts payable and
accrued liabilities 1,535 1,560
Other current liabilities 260 314
Liabilities held for sale - 146
--- ---
Total Current
Liabilities 12,640 12,803
Long-term debt 1,998 1,872
Pension and other post
employment liabilities 1,889 1,694
Other non-current
liabilities 1,000 1,156
--- -----
TOTAL LIABILITIES 17,527 17,525
------ ------
TOTAL STOCKHOLDERS'
EQUITY 5,379 5,310
Noncontrolling interest 52 105
--- ---
TOTAL EQUITY 5,431 5,415
----- -----
TOTAL LIABILITIES AND
EQUITY $22,958 $22,940
======= =======
(1) Includes short-term investments: 2009 - $3,329,
2008 - $3,178.
Aon Corporation
Consolidated Statements of Income - Reflects the reclassification of
non-fiduciary investment income and other items (unaudited)
2007
------------------------------------------
(millions except per share 1st 2nd 3rd 4th Full
data) Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -----
Revenue
-------
Commissions, fees and other $1,701 $1,747 $1,666 $1,940 $7,054
Investment income 42 45 49 44 180
--- --- --- --- ---
Total revenue 1,743 1,792 1,715 1,984 7,234
----- ----- ----- ----- -----
Expenses
--------
Compensation and benefits 1,040 1,097 1,047 1,157 4,341
Other general expenses 409 410 387 491 1,697
Depreciation and
amortization 47 46 48 52 193
--- --- --- --- ---
Total operating expenses 1,496 1,553 1,482 1,700 6,231
----- ----- ----- ----- -----
Operating income 247 239 233 284 1,003
Interest income 25 31 25 19 100
Interest expense (35) (34) (33) (36) (138)
Other income (expense) 1 44 6 7 58
--- --- --- --- ---
Income from continuing
operations before income
taxes 238 280 231 274 1,023
Income taxes 73 97 95 83 348
--- --- --- --- ---
Income from continuing
operations 165 183 136 191 675
--- --- --- --- ---
Income (loss) from
discontinued operations
before income taxes 79 91 83 77 330
Income taxes 27 31 12 58 128
--- --- --- --- ---
Income (loss) from
discontinued operations 52 60 71 19 202
--- --- --- --- ---
Net income (loss) 217 243 207 210 877
Less: Net income
attributable to the
noncontrolling interests 4 3 3 3 13
--- --- --- --- ---
Net income (loss)
attributable to Aon
stockholders $213 $240 $204 $207 $864
==== ==== ==== ==== ====
Net income (loss) attributable
to Aon stockholders:
Income from continuing
operations $161 $180 $133 $188 $662
Income (loss) from
discontinued operations 52 60 71 19 202
--- --- --- --- ---
Net income (loss) $213 $240 $204 $207 $864
==== ==== ==== ==== ====
Basic net income (loss)
per share attributable to
Aon stockholders (1):
Income from continuing
operations $0.53 $0.60 $0.44 $0.61 $2.18
Income (loss) from
discontinued operations 0.17 0.19 0.23 0.06 0.66
---- ---- ---- ---- ----
Net income (loss) $0.70 $0.79 $0.67 $0.67 $2.84
===== ===== ===== ===== =====
Dilutive net income (loss)
per share attributable to
Aon stockholders (1):
Income from continuing
operations $0.49 $0.56 $0.41 $0.57 $2.04
Income (loss) from
discontinued operations 0.16 0.18 0.22 0.06 0.62
---- ---- ---- ---- ----
Net income (loss) $0.65 $0.74 $0.63 $0.63 $2.66
===== ===== ===== ===== =====
Weighted average common
shares outstanding - diluted 328.2 326.2 325.6 327.7 326.9
===== ===== ===== ===== =====
2008
------------------------------------------
(millions except per share 1st 2nd 3rd 4th Full
data) Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -----
Revenue
-------
Commissions, fees and other $1,848 $1,887 $1,754 $1,868 $7,357
Investment income 45 44 44 38 171
--- --- --- --- ---
Total revenue 1,893 1,931 1,798 1,906 7,528
----- ----- ----- ----- -----
Expenses
--------
Compensation and benefits 1,154 1,143 1,131 1,153 4,581
Other general expenses 414 500 419 452 1,785
Depreciation and
amortization 50 58 49 65 222
--- --- --- --- ---
Total operating expenses 1,618 1,701 1,599 1,670 6,588
----- ----- ----- ----- -----
Operating income 275 230 199 236 940
Interest income 12 23 46 13 94
Interest expense (33) (31) (32) (30) (126)
Other income (expense) 4 4 5 (42) (29)
--- --- --- --- ---
Income from continuing
operations before income
taxes 258 226 218 177 879
Income taxes 76 57 59 50 242
--- --- --- --- ---
Income from continuing
operations 182 169 159 127 637
--- --- --- --- ---
Income (loss) from
discontinued operations
before income taxes 66 1,431 (57) (184) 1,256
Income taxes 25 464 (19) (55) 415
--- --- --- --- ---
Income (loss) from
discontinued operations 41 967 (38) (129) 841
--- --- --- --- ---
Net income (loss) 223 1,136 121 (2) 1,478
Less: Net income
attributable to the
noncontrolling interests 5 3 4 4 16
--- --- --- --- ---
Net income (loss)
attributable to Aon
stockholders $218 $1,133 $117 $(6) $1,462
==== ====== ==== === ======
Net income (loss) attributable
to Aon stockholders:
Income from continuing
operations $177 $166 $155 $123 $621
Income (loss) from
discontinued operations 41 967 (38) (129) 841
--- --- --- ---- ---
Net income (loss) $218 $1,133 $117 $(6) $1,462
==== ====== ==== === ======
Basic net income (loss)
per share attributable to
Aon stockholders (1):
Income from continuing
operations $0.57 $0.56 $0.55 $0.44 $2.12
Income (loss) from
discontinued operations 0.13 3.25 (0.13) (0.46) 2.87
---- ---- ----- ----- ----
Net income (loss) $0.70 $3.81 $0.42 $(0.02) $4.99
===== ===== ===== ====== =====
Dilutive net income (loss)
per share attributable to
Aon stockholders (1):
Income from continuing
operations $0.55 $0.54 $0.53 $0.42 $2.04
Income (loss) from
discontinued operations 0.12 3.12 (0.13) (0.44) 2.76
---- ---- ----- ----- ----
Net income (loss) $0.67 $3.66 $0.40 $(0.02) $4.80
===== ===== ===== ====== =====
Weighted average common
shares outstanding - diluted 323.3 309.3 293.9 291.4 304.5
===== ===== ===== ===== =====
2009
------------------------------------------
(millions except per share 1st 2nd 3rd 4th Full
data) Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -----
Revenue
-------
Commissions, fees and other $1,821 $1,863 $1,778 $2,059 $7,521
Investment income 25 19 16 14 74
--- --- --- --- ---
Total revenue 1,846 1,882 1,794 2,073 7,595
----- ----- ----- ----- -----
Expenses
--------
Compensation and benefits 1,014 1,134 1,119 1,330 4,597
Other general expenses 406 470 425 434 1,735
Depreciation and
amortization 60 58 56 68 242
--- --- --- --- ---
Total operating expenses 1,480 1,662 1,600 1,832 6,574
----- ----- ----- ----- -----
Operating income 366 220 194 241 1,021
Interest income 7 2 11 10 30
Interest expense (29) (26) (32) (35) (122)
Other income (expense) (1) 14 5 2 20
--- --- --- --- ---
Income from continuing
operations before income
taxes 343 210 178 218 949
Income taxes 108 57 47 56 268
--- --- --- --- ---
Income from continuing
operations 235 153 131 162 681
--- --- --- --- ---
Income (loss) from
discontinued operations
before income taxes 91 2 - (10) 83
Income taxes 41 - (3) (66) (28)
--- --- --- --- ---
Income (loss) from
discontinued operations 50 2 3 56 111
--- --- --- --- ---
Net income (loss) 285 155 134 218 792
Less: Net income
attributable to the
noncontrolling interests 5 6 14 20 45
--- --- --- --- ---
Net income (loss)
attributable to Aon
stockholders $280 $149 $120 $198 $747
==== ==== ==== ==== ====
Net income (loss) attributable
to Aon stockholders:
Income from continuing
operations $230 $147 $117 $142 $636
Income (loss) from
discontinued operations 50 2 3 56 111
--- --- --- --- ---
Net income (loss) $280 $149 $120 $198 $747
==== ==== ==== ==== ====
Basic net income (loss) per
share attributable to
Aon stockholders (1):
Income from continuing
operations $0.81 $0.52 $0.41 $0.51 $2.25
Income (loss) from
discontinued operations 0.18 - 0.01 0.20 0.39
---- --- ---- ---- ----
Net income (loss) $0.99 $0.52 $0.42 $0.71 $2.64
===== ===== ===== ===== =====
Dilutive net income (loss)
per share attributable to
Aon stockholders (1):
Income from continuing
operations $0.79 $0.50 $0.40 $0.49 $2.19
Income (loss) from
discontinued operations 0.17 0.01 0.01 0.20 0.38
---- ---- ---- ---- ----
Net income (loss) $0.96 $0.51 $0.41 $0.69 $2.57
===== ===== ===== ===== =====
Weighted average common
shares outstanding - diluted 292.0 292.7 292.1 287.8 291.1
===== ===== ===== ===== =====
(1) The basic and diluted earnings per share calculation was performed
using the two-class method and included the impact of certain
unvested share-based payment awards that have the right to receive
nonforfeitable dividends.
Aon Corporation
Segments - Reclassified for the changes in presentation of non-fiduciary
investment income, equity income in non-consolidated subsidiaries,
realized gains from investments, and investment expenses (unaudited)
2007
------------------------------------------
1st 2nd 3rd 4th Full
(millions) Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
Revenue
-------
Risk and insurance brokerage
services segment
As reported $1,429 $1,490 $1,411 $1,627 $5,957
Less: reclassification of
non-fiduciary
investment income 4 2 8 8 22
Less: reclassification of
realized gains
from investments - 6 - - 6
Less: reclassification of
equity income of non-
consolidated subsidiaries 1 3 4 3 11
--- --- --- --- ---
As reclassified 1,424 1,479 1,399 1,616 5,918
Consulting segment
As reported 329 325 325 373 1,352
Less: reclassification of
non-fiduciary
investment income - 1 - - 1
Less: reclassification of
realized gains
from investments - 5 - - 5
Less: reclassification of
equity income of non-
consolidated subsidiaries - - 1 - 1
--- --- --- --- ---
As reclassified 329 319 324 373 1,345
Unallocated
As reported 21 29 18 11 79
Less: reclassification of
non-fiduciary
investment income 21 28 17 11 77
Less: reclassification of
realized gains
from investments - 1 1 - 2
--- --- --- --- ---
As reclassified - - - - -
Intersegment (10) (6) (8) (5) (29)
--- --- --- --- ---
Total $1,743 $1,792 $1,715 $1,984 $7,234
====== ====== ====== ====== ======
Income (loss) before income taxes
---------------------------------
Risk and insurance brokerage
services segment
As reported $238 $275 $231 $279 $1,023
Less: reclassification of
non-fiduciary
investment income 4 2 8 8 22
Less: reclassification of
realized gains
from investments - 6 - - 6
Less: reclassification of
investment expense 5 (5) (3) (2) (5)
--- --- --- --- ---
As reclassified 229 272 226 273 1,000
Consulting segment
As reported 47 44 38 60 189
Less: reclassification of
non-fiduciary
investment income - 1 - - 1
Less: reclassification of
realized gains
from investments - 5 - - 5
Less: reclassification of
investment expense - - 2 - 2
--- --- --- --- ---
As reclassified 47 38 36 60 181
Unallocated
As reported (47) (39) (38) (65) (189)
Add: reclassification of
non-fiduciary
investment income 4 3 8 8 23
Add: reclassification of
realized gains
from investments - 11 - - 11
Add: reclassification of
investment expense 5 (5) (1) (2) (3)
--- --- --- --- ---
As reclassified (38) (30) (31) (59) (158)
---- ---- ---- ---- ------
Total $238 $280 $231 $274 $1,023
==== ==== ==== ==== ======
Income from continuing
operations before income
taxes - margins
-------------------------
Risk and insurance brokerage
services
As reported 16.7% 18.5% 16.4% 17.1% 17.2%
As reclassified 16.1% 18.4% 16.2% 16.9% 16.9%
Consulting
As reported 14.3% 13.5% 11.7% 16.1% 14.0%
As reclassified 14.3% 11.9% 11.1% 16.1% 13.5%
Total
As reported 13.5% 15.2% 13.2% 13.7% 13.9%
As reclassified 13.7% 15.6% 13.5% 13.8% 14.1%
2008
------------------------------------------
1st 2nd 3rd 4th Full
(millions) Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
Revenue
-------
Risk and insurance brokerage
services segment
As reported $1,566 $1,610 $1,473 $1,581 $6,230
Less: reclassification of
non-fiduciary
investment income 7 5 5 7 24
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
equity income of non-
consolidated subsidiaries - 2 2 5 9
--- --- --- --- ---
As reclassified 1,559 1,603 1,466 1,569 6,197
Consulting segment
As reported 343 336 337 342 1,358
Less: reclassification of
non-fiduciary
investment income - 1 1 - 2
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
equity income of non-
consolidated subsidiaries - - - - -
--- --- --- --- ---
As reclassified 343 335 336 342 1,356
Unallocated
As reported 5 17 40 6 68
Less: reclassification of
non-fiduciary
investment income 5 17 40 6 68
Less: reclassification of
realized gains
from investments - - - - -
--- --- --- --- ---
As reclassified - - - - -
Intersegment (9) (7) (4) (5) (25)
--- --- --- --- ---
Total $1,893 $1,931 $1,798 $1,906 $7,528
====== ====== ====== ====== ======
Income (loss) before income taxes
---------------------------------
Risk and insurance brokerage
services segment
As reported $243 $234 $192 $220 $889
Less: reclassification of
non-fiduciary
investment income 7 5 5 7 24
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
investment expense - - (2) - (2)
--- --- --- --- ---
As reclassified 236 229 189 213 867
Consulting segment
As reported 63 43 52 56 214
Less: reclassification of
non-fiduciary
investment income - 1 1 - 2
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
investment expense 1 - 1 1 3
--- --- --- --- ---
As reclassified 62 42 50 55 209
Unallocated
As reported (48) (51) (26) (99) (224)
Add: reclassification of
non-fiduciary
investment income 7 6 6 7 26
Add: reclassification of
realized gains
from investments - - - - -
Add: reclassification of
investment expense 1 - (1) 1 1
--- --- --- --- ---
As reclassified (40) (45) (21) (91) (197)
---- ---- ---- ---- ----
Total $258 $226 $218 $177 $879
==== ==== ==== ==== ====
Income from continuing
operations before income
taxes - margins
-------------------------
Risk and insurance brokerage
services
As reported 15.5% 14.5% 13.0% 13.9% 14.3%
As reclassified 15.1% 14.3% 12.9% 13.6% 14.0%
Consulting
As reported 18.4% 12.8% 15.4% 16.4% 15.8%
As reclassified 18.1% 12.5% 14.9% 16.1% 15.4%
Total
As reported 13.5% 11.6% 11.8% 9.2% 11.5%
As reclassified 13.6% 11.7% 12.1% 9.3% 11.7%
2009
------------------------------------------
1st 2nd 3rd 4th Full
(millions) Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- ----
Revenue
-------
Risk and insurance brokerage
services segment
As reported $1,550 $1,578 $1,489 $1,700 $6,317
Less: reclassification of
non-fiduciary
investment income 6 - 2 - 8
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
equity income of non-
consolidated subsidiaries 1 1 2 - 4
--- --- --- --- ---
As reclassified 1,543 1,577 1,485 1,700 6,305
Consulting segment
As reported 309 300 308 350 1,267
Less: reclassification of
non-fiduciary
investment income - - - - -
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
equity income of non-
consolidated subsidiaries - - - - -
--- --- --- --- ---
As reclassified 309 300 308 350 1,267
Unallocated
As reported 1 13 19 29 62
Less: reclassification of
non-fiduciary
investment income 1 2 9 - 12
Less: reclassification of
realized gains
from investments - - 1 - 1
--- --- --- --- ---
As reclassified - 11 9 29 49
Intersegment (6) (6) (8) (6) (26)
--- --- --- --- ---
Total $1,846 $1,882 $1,794 $2,073 $7,595
====== ====== ====== ====== ======
Income (loss) before income taxes
---------------------------------
Risk and insurance brokerage
services segment
As reported $328 $210 $188 $196 $922
Less: reclassification of
non-fiduciary
investment income 6 - 2 - 8
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
investment expense - - - - -
--- --- --- --- ---
As reclassified 322 210 186 196 914
Consulting segment
As reported 70 41 33 61 205
Less: reclassification of
non-fiduciary
investment income - - - - -
Less: reclassification of
realized gains
from investments - - - - -
Less: reclassification of
investment expense - - - - -
--- --- --- --- ---
As reclassified 70 41 33 61 205
Unallocated
As reported (55) (41) (43) (39) (178)
Add: reclassification of
non-fiduciary
investment income 6 - 2 - 8
Add: reclassification of
realized gains
from investments - - - - -
Add: reclassification of
investment expense - - - - -
--- --- --- --- ---
As reclassified (49) (41) (41) (39) (170)
---- ---- ---- ---- ----
Total $343 $210 $178 $218 $949
==== ==== ==== ==== ====
Income from continuing
operations before income
taxes - margins
-------------------------
Risk and insurance brokerage
services
As reported 21.2% 13.3% 12.6% 11.5% 14.6%
As reclassified 20.9% 13.3% 12.5% 11.5% 14.5%
Consulting
As reported 22.7% 13.7% 10.7% 17.4% 16.2%
As reclassified 22.7% 13.7% 10.7% 17.4% 16.2%
Total
As reported 18.5% 11.1% 9.8% 10.5% 12.5%
As reclassified 18.6% 11.2% 9.9% 10.5% 12.5%
SOURCE Aon Corporation
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