Aon Reports Second Quarter 2008 Results

- Total Revenue grew 6% to $2.0 billion with Organic Revenue growth of 2%

CHICAGO, July 31 /PRNewswire-FirstCall/ -- Aon Corporation (NYSE: AOC)
today reported results for the second quarter ended June 30, 2008.
Net income increased 372% to $1.1 billion or $3.71 per share, compared to
$240 million or $0.75 per share for the prior year quarter, including a $1.0
billion after-tax gain on the sales of CICA and Sterling. Net income from
continuing operations decreased 8% to $168 million or $0.55 per share,
compared to $183 million or $0.57 per share for the prior year quarter. Net
income from continuing operations per share, excluding certain items,
increased 25% to $0.71 compared to $0.57 for the prior year quarter. Certain
items that impacted second 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.
"Our second quarter results reflect a 25 percent increase in adjusted
earnings per share from continuing operations, highlighted by two percent
organic revenue growth and a 30 basis point increase in adjusted pretax margin
from our Brokerage segment, despite unusually high legacy litigation
accruals," said Greg Case, president and chief executive officer, Aon
Corporation. "Our core assets are now strategically aligned as we completed
the sales of our remaining insurance underwriting businesses. Our 2007
restructuring program is on-track and beginning to deliver benefits, driving
margin improvement, while funding investments to generate future revenue
growth. We returned more than one billion dollars to our shareholders through
the share repurchase program, demonstrating a continued belief in the
underlying strength of Aon, and an effective use of capital to create
long-term value for our shareholders."
SECOND QUARTER FINANCIAL SUMMARY
Total revenue increased 6% to $2.0 billion with organic revenue growth of
2%. Total operating expenses increased 9% or $145 million to $1.7 billion,
including a $77 million unfavorable impact from foreign currency translation,
$28 million increase in restructuring expense and $20 million of legacy
litigation accruals.
Restructuring expense was $53 million in the second quarter compared to
$25 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 second quarter related to the 2005
restructuring program are estimated at $67 million compared to $56 million in
the prior year quarter. Of the estimated restructuring savings in the second
quarter, $57 million were related to the Brokerage segment, primarily for
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 second quarter related to the 2007
restructuring program are estimated at $16 million compared to no material
savings in the prior year quarter. These savings were all related to the
Brokerage segment, primarily for workforce reduction. Before any potential
reinvestment of savings, the 2007 restructuring program is expected to result
in cumulative cost savings of approximately $50-70 million in 2008, $175-200
million in 2009 and $240 million in 2010, consistent with previous estimates.
Foreign currency translation increased net income by approximately $0.06
per share compared to the prior year quarter due primarily to a weaker U.S.
dollar versus the Euro.
Effective tax rate on continuing operations was 25.7% for the second
quarter compared to 34.9% for the prior year quarter. The rate in the second
quarter includes an underlying tax rate on operations of 30.0% and the
favorable resolution of prior year tax issues in the U.K.
Average diluted shares outstanding declined to 305 million in the second
quarter compared to 322 million in the prior year quarter, due primarily to
the Company's share repurchase program. During the second quarter, the
Company repurchased 24.5 million shares of common stock for $1.1 billion, at
an average price of $45.82 per share. As of June 30, the Company had
approximately $1.3 billion of remaining share repurchase authorization.
Discontinued Operations after-tax income was $1.0 billion or $3.16 per
share compared to $57 million or $0.18 per share for the prior year quarter.
Discontinued operations for the second quarter included a $1.0 billion
after-tax gain, subject to post-closing adjustments, related to the completed
sales of both CICA and Sterling Life Insurance on April 1.
SECOND QUARTER SEGMENT REVIEW
Certain noteworthy items impacted revenue, pretax income and pretax
margins in the second quarter of 2008 and 2007. The second quarter segment
reviews provided below include 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

(millions) Second Quarter Ended Less:
-------------------- Less: Acquisitions, Less: Organic
Jun 30, Jun 30, % Currency Divestitures, All Revenue
Revenue 2008 2007 Change Impact Transfers Other Growth
--------- ------- ------ -------- ------------ ------ ------
Americas $625 $618 1% 2% -% -% (1)%
U.K. 223 218 2 2 1 (2) 1
EMEA 382 307 24 15 - 2 7
Asia Pacific 152 138 10 10 (2) 1 1
Reinsurance 251 234 7 6 6 (7) 2
--------- ------- ------ -------- ------------ ------ ------
Total $1,633 $1,515 8% 6% 1% (1)% 2%
========= ======= ====== ======== ============ ====== ======

Risk and Insurance Brokerage Services revenue increased 8% compared to the
prior year quarter with organic revenue growth of 2%. Americas organic
revenue decreased 1% reflecting a slowdown in private equity and commercial
construction activity in U.S. Retail and soft market conditions, partially
offset by strong growth in Latin America. U.K. organic revenue increased 1%
due primarily to growth in Affinity products. EMEA organic revenue increased
7% 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 2% due primarily to
growth in global facultative placements and capital markets transactions,
partially offset by soft market conditions and higher cedent retentions.

Second Quarter Ended
------------------------
(millions) Jun 30, Jun 30, %
2008 2007 Change
-------- --------- --------
Revenue $1,633 $1,515 8%
Expenses
Compensation and benefits 933 884 6
Other expenses 466 382 22
-------- --------- --------
Total operating expenses 1,399 1,266 11

Operating income $234 $249 (6)%
Other (income) expense (1) (29) (97)
-------- --------- --------
Pretax income $235 $278 (15)%
======== ========= ========
Pretax margin 14.4% 18.3%

Pretax income - adjusted $295 $269 10%
Pretax margin - adjusted 18.1% 17.8%

Compensation and benefits for the second quarter increased 6% or $49
million from the prior year quarter including a $47 million unfavorable impact
from foreign currency translation, $11 million increase in restructuring costs
and investments in key talent, partially offset by benefits related to the
2005 and 2007 restructuring programs. Other expenses increased 22% or $84
million compared to the prior year quarter including $20 million of legacy
litigation accruals, an $18 million unfavorable impact from foreign currency
translation, $17 million increase in restructuring costs and $11 million for
the previously disclosed reviews under the Foreign Corrupt Practices Act
(FCPA) and similar laws in other countries and related compliance initiatives.
Second quarter pretax income decreased 15% to $235 million. Adjusting for
certain items detailed on page 11 of this press release, pretax income
increased 10% to $295 million and pretax margin increased 30 basis points to
18.1% versus the prior year quarter. Absent the $20 million of legacy
litigation accruals in the second quarter, adjusted pretax margin would have
increased 150 basis points from the prior year quarter.

CONSULTING

(millions) Second Quarter Ended Less:
-------------------- Less: Acquisitions, Less: Organic
Jun 30, Jun 30, % Currency Divestitures, All Revenue
Revenue 2008 2007 Change Impact Transfers Other Growth
------- -------- ------- ------ -------- ------------- ------ -------
Services $279 $269 4% 4% (1)% (2)% 3%
Outsourcing 57 56 2 1 (1) 2 -
-------- ------- ------ -------- ------------- ------ -------
Total $336 $325 3% 4% (1)% (2)% 2%
======== ======= ====== ======== ============= ====== =======

Consulting revenue increased 3% to $336 million compared to the prior year
quarter. The prior year quarter revenue included a $5 million gain from the
sale of an equity investment. Organic revenue in Consulting Services
increased 3% reflecting growth internationally in retirement and health and
benefits consulting. Organic revenue in Outsourcing was similar to the prior
year quarter due primarily to modest growth in benefits outsourcing, offset by
a decline related to the previously announced termination of a significant
outsourcing contract.

Second Quarter Ended
----------------------
(millions) Jun 30, Jun 30, %
2008 2007 Change
------- -------- --------
Revenue $336 $325 3%
Expenses
Compensation and benefits 205 198 4

Other expenses 89 83 7
------- -------- --------
Total operating expenses 294 281 5

Operating income $42 $44 (5)%
Other (income) expense (1) - N/A
------- -------- --------
Pretax income $43 $44 (2)%
======= ======== ========
Pretax margin 12.8% 13.5%

Pretax income - adjusted $47 $48 (2)%
Pretax margin - adjusted 14.0% 14.8%

Compensation and benefits for the second quarter increased 4% or $7
million from the prior year quarter including an $8 million unfavorable impact
from foreign currency translation and investments in key talent, partially
offset by benefits related to the 2005 restructuring program. Other expenses
increased 7% or $6 million compared to the prior year quarter including a $3
million unfavorable impact from foreign currency translation.
Second quarter pretax income decreased 2% to $43 million and the pretax
margin decreased 70 basis points to 12.8% versus the prior year quarter.
Adjusting for certain items detailed on page 11, pretax income decreased 2% to
$47 million and the pretax margin decreased 80 basis points to 14.0%. Absent
the $5 million equity investment gain recorded in the prior year quarter,
adjusted pretax margin for the second quarter would have increased 60 basis
points from the prior year quarter.

UNALLOCATED INCOME AND EXPENSE

Second Quarter Ended
---------------------
(millions) Jun 30, Jun 30, %
2008 2007 Change
------- ------- ------
Operating segment income before tax $278 $322 (14)%
Property & Casualty operations (1) (2) (50)
Unallocated investment income 17 29 (41)
Unallocated expenses (37) (34) 9
Interest expense (31) (34) (9)
------- ------- ------
Income from continuing
operations before tax $226 $281 (20)%
======= ======= ======

Property & Casualty loss declined $1 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 second quarter decreased $12 million
to $17 million compared to the prior year quarter. The Company recorded no
income during the second quarter related to certain private equity investments
compared to $26 million in the prior year quarter, as the timing of
distributions are subject to completed transactions in the underlying
portfolios. The decline in income from these private equity investments was
partially offset by interest income on higher cash balances. Unallocated
expenses increased $3 million to $37 million versus the prior year quarter due
primarily to absorbed costs previously allocated to the insurance underwriting
businesses. Interest expense decreased $3 million to $31 million due
primarily to redemption of the Company's outstanding convertible debt in
November 2007.
Conference Call and Webcast Details
The Company will host a conference call on Friday, August 1, 2008 at 10:00
a.m. central time. Interested parties can listen to the conference call via a
live audio webcast at http://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
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, and the cost of resolution of other
contingent liabilities and loss contingencies. 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

Aon Corporation
Consolidated Summary of Operations (Unaudited)

Second Quarter Ended Six Months Ended
---------------------------- ----------------------------
(millions except June 30, June 30, Percent June 30, June 30, Percent
per share data) 2008 2007 Change 2008 2007 Change
-------- -------- -------- -------- -------- --------
Revenue
--------
Commissions,
fees and
other $1,912 $1,776 8% $3,785 $3,505 8%
Investment
income 68 90 (24) 127 159 (20)
-------- -------- -------- -------- -------- --------
Total
revenue 1,980 1,866 6 3,912 3,664 7
-------- -------- -------- -------- -------- --------

Expenses
---------
Compensation
and benefits 1,155 1,109 4 2,321 2,162 7
Other
general
expenses 512 425 20 943 848 11
Depreciation
and
amortization 58 46 26 108 93 16
-------- -------- -------- -------- -------- --------
Total
operating
expenses 1,725 1,580 9 3,372 3,103 9
-------- -------- -------- -------- -------- --------
Operating
income 255 286 (11) 540 561 (4)

Interest
expense 31 34 (9) 64 69 (7)
Other income (2) (29) (93) (6) (29) (79)
-------- -------- -------- -------- -------- --------
Income from
continuing
operations
before
provision for
income tax 226 281 (20) 482 521 (7)
Provision
for income
tax (1) 58 98 (41) 135 173 (22)
-------- -------- -------- -------- -------- --------
Income from
continuing
operations 168 183 (8) 347 348 -

Discontinued
operations
Income from
discontinued
operations 1,428 87 1,541 1,491 160 832
Provision for
income
tax (2) 463 30 1,443 487 55 785
-------- -------- -------- -------- -------- --------
Income from
discontinued
operations 965 57 1,593 1,004 105 856
-------- -------- -------- -------- -------- --------

Net income $1,133 $240 372% $1,351 $453 198%
======== ======== ======== ======== ======== ========

Basic net
income per
share:
Continuing
operations $0.58 $0.62 (6)% $1.17 $1.18 (1)%
Discontinued
operations 3.33 0.19 1,653 3.38 0.35 866
-------- -------- -------- -------- -------- --------
Net income $3.91 $0.81 383% $4.55 $1.53 197%
======== ======== ======== ======== ======== ========

Diluted net
income per
share:
Continuing
operations $0.55 $0.57 (4)% $1.11 $1.09 2%
Discontinued
operations 3.16 0.18 1,656 3.21 0.32 903
-------- -------- -------- -------- -------- --------
Net income $3.71 $0.75 395% $4.32 $1.41 206%
======== ======== ======== ======== ======== ========

Weighted average
common shares
outstanding -
diluted 305.3 321.9 (5)% 312.5 323.1 (3)%
======== ======== ======== ======== ======== ========

(1) Tax rate from continuing operations is 25.7% and 34.9% for the second
quarters ended June 30, 2008 and 2007, respectively, and 28.0% and
33.2% for the six months ended June 30, 2008 and 2007, respectively.
(2) Tax rate from discontinued operations is 32.4% and 34.5% for the
second quarters ended June 30, 2008 and 2007, respectively, and 32.7%
and 34.4% for the six months ended June 30, 2008 and 2007,
respectively.

Aon Corporation
Revenue from Continuing Operations (Unaudited)

Second Quarter Ended
---------------------------------------------------------------
Less: Less: Organic
Less: Acquisitions, All Revenue
June 30, June 30, Percent Currency Divestitures Other Growth
(millions) 2008 2007 Change Impact & Transfers (1) (2)
------- ------- ------- ------- ------------ ------- -------
Revenue
-------
Risk and
Insurance
Brokerage
Services:
Americas $625 $618 1% 2% -% -% (1)%
United
Kingdom 223 218 2 2 1 (2) 1
Europe,
Middle
East &
Africa 382 307 24 15 - 2 7
Asia
Pacific 152 138 10 10 (2) 1 1
Reinsurance
brokerage
and
related
services 251 234 7 6 6 (7) 2
------- ------- ------- ------- ------------ ------- -------
Total
Risk and
Insurance
Brokerage
Services 1,633 1,515 8 6 1 (1) 2
------- ------- ------- ------- ------------ ------- -------

Consulting:
Consulting
services 279 269 4 4 (1) (2) 3
Outsourcing 57 56 2 1 (1) 2 -
------- ------- ------- ------- ------------ ------- -------
Total
Consulting 336 325 3 4 (1) (2) 2
------- ------- ------- ------- ------------ ------- -------

Unallocated
revenue 18 32 (44) N/A N/A N/A N/A

Intersegment
revenues (7) (6) N/A N/A N/A N/A N/A
------- ------- ------- ------- ------------ ------- -------
Total $1,980 $1,866 6% 5% -% (1)% 2%
======= ======= ======= ======= ============ ======= =======

(1) Includes the impact of investment income, reimbursable expenses and
unusual items.
(2) Organic revenue growth excludes the impact of foreign exchange,
acquisitions, divestitures, transfers and items described in (1).

Aon Corporation
Revenue from Continuing Operations (Unaudited)

Six Months Ended
----------------------------------------------------------------
Less: Less: Organic
Less: Acquisitions, All Revenue
June 30, June 30, Percent Currency Divestitures Other Growth
(millions) 2008 2007 Change Impact & Transfers (1) (2)
------- ------- ------- ------- ------------ ------- -------
Revenue
--------
Risk and
Insurance
Brokerage
Services:
Americas $1,156 $1,137 2% 2% -% -% -%
United
Kingdom 384 374 3 2 1 - -
Europe,
Middle
East &
Africa 907 741 22 14 1 2 5
Asia
Pacific 262 238 10 10 (1) (1) 2
Reinsurance
brokerage
and
related
services 515 481 7 6 3 (3) 1
------- ------- ------- ------- ------------ ------- -------
Total
Risk and
Insurance
Brokerage
Services 3,224 2,971 9 6 - 1 2
------- ------- ------- ------- ------------ ------- -------
Consulting:
Consulting
services 568 533 7 5 - (2) 4
Outsourcing 111 121 (8) 2 (1) - (9)
------- ------- ------- ------- ------------ ------- -------
Total
consulting 679 654 4 4 (1) - 1
------- ------- ------- ------- ------------ ------- -------

Unallocated
revenue 25 55 (55) N/A N/A N/A N/A
Intersegment
revenues (16) (16) N/A N/A N/A N/A N/A
------- ------- ------- ------- ------------ ------- -------
Total $3,912 $3,664 7% 6% -% (1)% 2%
======= ======= ======= ======= ============ ======= =======

(1) Includes the impact of investment income, reimbursable expenses and
unusual items.
(2) Organic revenue growth excludes the impact of foreign exchange,
acquisitions, divestitures, transfers and items described in (1).

Aon Corporation - Segments (Unaudited)
Risk and Insurance Brokerage Services - Continuing Operations
-------------------------------------------------------------

Second Quarter Ended Six Months Ended
-------------------------- --------------------------
June 30, June 30, Percent June 30, June 30, Percent
(millions) 2008 2007 Change 2008 2007 Change
-------- -------- -------- -------- -------- --------
Revenue
--------
Commissions, fees
and other $1,584 $1,462 8% $3,124 $2,873 9%
Investment income 49 53 (8) 100 98 2
-------- -------- -------- -------- -------- --------
Total revenue 1,633 1,515 8 3,224 2,971 9
-------- -------- -------- -------- -------- --------

Expenses
---------
Compensation and
benefits 933 884 6 1,884 1,724 9
Other general
expenses 466 382 22 866 756 15
-------- -------- -------- -------- -------- --------
Total operating
expenses 1,399 1,266 11 2,750 2,480 11
-------- -------- -------- -------- -------- --------

Operating income 234 249 (6) 474 491 (3)
Other income (1) (29) (97) (5) (29) (83)
-------- -------- -------- -------- -------- --------
Income before
provision for income
tax $235 $278 (15)% $479 $520 (8)%
======== ======== ======== ======== ======== ========

Pretax income margin 14.4% 18.3% 14.9% 17.5%

Consulting - Continuing Operations
----------------------------------

Second Quarter Ended Six Months Ended
-------------------------- --------------------------
(millions) June 30, June 30, Percent June 30, June 30, Percent
2008 2007 Change 2008 2007 Change
-------- -------- -------- -------- -------- --------
Revenue
--------
Commissions, fees
and other $335 $319 5% $677 $647 5%
Investment income 1 6 (83) 2 7 (71)
-------- -------- -------- -------- -------- --------
Total revenue 336 325 3 679 654 4
-------- -------- -------- -------- -------- --------

Expenses
---------
Compensation and
benefits 205 198 4 406 395 3
Other general
expenses 89 83 7 168 168 -
-------- -------- -------- -------- -------- --------
Total operating
expenses 294 281 5 574 563 2
-------- -------- -------- -------- -------- --------

Operating income 42 44 (5) 105 91 15
Other income (1) - N/A (1) - N/A
-------- -------- -------- -------- -------- --------
Income before
provision for income
tax $43 $44 (2)% $106 $91 16%
======== ======== ======== ======== ======== ========

Pretax income margin 12.8% 13.5% 15.6% 13.9%

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

Second Quarter Ended Six Months Ended
-------------------------- --------------------------
June 30, June 30, Percent June 30, June 30, Percent
(millions) 2008 2007 Change 2008 2007 Change
-------- -------- -------- -------- -------- --------
Segment income
before provision
for income tax
Risk and Insurance
Brokerage Services $235 $278 (15)% $479 $520 (8)%
Consulting 43 44 (2) 106 91 16
-------- -------- -------- -------- -------- --------
Total segment
income before
provision for
income tax 278 322 (14) 585 611 (4)
Property & Casualty
operations (1) (2) (50) (3) (4) (25)
Unallocated investment
income 17 29 (41) 22 51 (57)
Unallocated expenses (37) (34) 9 (58) (68) (15)
Interest expense (31) (34) (9) (64) (69) (7)
-------- -------- -------- -------- -------- --------
Income from
continuing
operations before
provision
for income tax $226 $281 (20)% $482 $521 (7)%
======== ======== ======== ======== ======== ========

Pretax income margin 11.4% 15.1% 12.3% 14.2%

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

Second Quarter Ended Six Months Ended
June 30, 2008 June 30, 2008
------------------------------- -------------------------------
(millions Risk and Risk and
except Insurance Unallocated Insurance Unallocated
per share Brokerage Cons- Income & Brokerage Cons- Income &
data) Services ulting Expense Total Services ulting Expense Total
------- ------- -------- ----- -------- ------- ------- ------

Revenue as
reported $1,633 $336 $11 $1,980 $3,224 $679 $9 $3,912
======= ======= ======= ======= ======= ======= ======= ======

Income
(loss)
from
continuing
operations
before
provision
for income
tax - as
reported $235 $43 $(52) $226 $479 $106 $(103) $482
Restructuring
charges 49 4 - 53 106 7 - 113
Anti-bribery
and
compliance
initiatives 11 - - 11 25 - - 25
Gain on
sale of
land - - - - (5) - - (5)
------- ------- -------- ----- -------- ------- ------- ------
Income (loss)
from continuing
operations
before
provision
for income
tax - as
adjusted $295 $47 $(52) 290 $605 $113 $(103) 615
======= ======= ======= ======= ======= =======
Provision for
income taxes 74 172
----- ------
Income from
continuing
operations -
as adjusted $216 $443
======= ======
Diluted
earnings
per share
from
continuing
operations -
as adjusted $0.71 $1.42
======= ======

Weighted
average
common shares
outstanding -
diluted 305.3 312.5
======= ======

Pretax income
margins -
as adjusted 18.1% 14.0% N/A 14.6% 18.8% 16.6% N/A 15.7%
======= ======= ======= ======= ======= ======= ======= ======

Second Quarter Ended Six Months Ended
June 30, 2007 June 30, 2007
-------------------------------- -------------------------------
(millions Risk and Risk and
except Insurance Unallocated Insurance Unallocated
per share Brokerage Cons- Income & Brokerage Cons- Income &
data) Services ulting Expense Total Services ulting Expense Total
--------- ------- -------- ----- -------- ------- ------- ------

Revenue
as
reported $1,515 $325 $26 $1,866 $2,971 $654 $39 $3,664
======= ======= ======= ======= ======= ======= ======= ======

Income
(loss)
from
continuing
operations
before
provision
for income
tax - as
reported $278 $44 $(41) $281 $520 $91 $(90) $521
Restructuring
charges 21 4 - 25 28 6 - 34
Gain on
sale of
businesses (30) - - (30) (30) - - (30)
Reinsurance
litigation - - - - 21 - - 21
------- ------- -------- ----- -------- ------- ------- ------
Income
(loss)
from
continuing
operations
before
provision
for income
tax - as
adjusted $269 $48 $(41) 276 $539 $97 $(90) 546
======= ======= ======= ======= ======= =======
Provision
for income
taxes 93 178
------- ------
Income from
continuing
operations -
as adjusted $183 $368
======= ======
Diluted
earnings
per share
from
continuing
operations -
as adjusted $0.57 $1.15
======= ======

Weighted
average
common shares
outstanding -
diluted 321.9 323.1
======= ======

Pretax
income margins
- as
adjusted 17.8% 14.8% N/A 14.8% 18.1% 14.8% N/A 14.9%
======= ======= ======= ======= ======= ======= ======= ======

(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.

Aon Corporation
2007 Restructuring Plan (Unaudited)

By Type: Actual Estimated
------------------------------------------- ---------
First Second Six Total
Quarter Quarter Months Incurred
(millions) 2007 2008 2008 2008 to Date Total
------------------------------------------- ---------
Workforce reduction
(Compensation
and benefits) $17 $51 $25 $76 $93 $185
Lease consolidation
(Other general
expenses) 22 5 13 18 40 95
Asset impairments
(Depreciation and
amortization) 4 2 12 14 18 52
Other costs associated
with restructuring
(Other general
expenses) 3 2 3 5 8 28
------------------------------------------- ---------
Total
restructuring and
related expenses $46 $60 $53 $113 $159 $360
=========================================== =========

By Segment: Actual Estimated
------------------------------------------- ---------
First Second Six Total
Quarter Quarter Months Incurred
(millions) 2007 2008 2008 2008 to Date Total
------------------------------------------- ---------
Risk and Insurance
Brokerage
Services $41 $57 $49 $106 $147 $307
Consulting 5 3 4 7 12 53
------------------------------------------- ---------
Total restructuring
and related
expenses $46 $60 $53 $113 $159 $360
=========================================== =========

Aon Corporation
Condensed Consolidated Statements of Financial Position

As of
---------------------------------
(millions) Jun. 30, 2008 Dec. 31, 2007 (2)
--------------------------------------- ------------- -----------------
(Unaudited)
ASSETS
-------
CURRENT ASSETS
Cash $466 $584
Short-term investments 2,566 1,209
Receivables 2,012 2,002
Net fiduciary assets (1) 11,358 9,498
Other current assets 229 292
Assets held for sale - 4,388
------------- -----------------
Total Current Assets 16,631 17,973
Goodwill 5,137 4,935
Other intangible assets 245 204
Fixed assets, net 483 498
Long-term investments 414 417
Other non-current assets 1,165 921
------------- -----------------
TOTAL ASSETS $24,075 $24,948
============= =================

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Net fiduciary liabilities $11,358 $9,498
Short-term debt - 252
Accounts payable and accrued liabilities 1,207 1,418
Other current liabilities 694 360
Liabilities held for sale - 3,025
------------- -----------------
Total Current Liabilities 13,259 14,553
Long-term debt 2,022 1,893
Pension, post employment and
post retirement liabilities 1,296 1,251
Other non-current liabilities 1,043 1,030
------------- -----------------
TOTAL LIABILITIES 17,620 18,727
TOTAL STOCKHOLDERS' EQUITY 6,455 6,221
------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $24,075 $24,948
============= =================

(1) Includes short-term investments: 2008 - $3,521; 2007 - $3,122.
(2) Certain amounts have been reclassified to conform to the 2008
presentation.

SOURCE Aon Corporation

Investors, Scott Malchow, Vice President, Investor Relations, +1-312-381-3983,
or Media, David Prosperi, Vice President, Global Public Relations,
+1-312-381-2485, both of Aon Corporation