Aon Corporation (NYSE: AON) 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 Chicago Loop Illinois, United States.[3] In July 2007, Aon Corp. was ranked as the world's second largest insurance broker.[4]
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”. Combined Insurance was sold to ACE Limited in April 2008.
On August 22, 2008, Aon announced that it had acquired London-based Benfield Group. The acquiring price was US$1.75 billion or £935 million, with US$170 million of debt.[5] Today, the company is best known internationally as the principal sponsor of English football giant, Manchester United.[6][7]
On July 12, 2010, Aon announced that it has agreed to buy Lincolnshire, IL based Hewitt Associates for $4.9 billion in cash and stock.[8]

Aon (NYSE:AON) provides risk management and human capital consulting services, delivering distinctive client value via innovative and effective risk management solutions, including insurance and reinsurance brokerage and workforce productivity solutions. The company generates revenues through commissions, fees from clients, and compensation from insurance and reinsurance companies for services we provide to them.

AON's operations can be divided into three core groups: Insurance, warranties, and consulting. Aon’s insurance operations are aimed largely at corporations and wealthy individuals. It also provides health and life insurance for individuals. Its warranties segment deals with extended product warranties, and its consulting segment provides its corporate clients with advice on human resources and benefit plans.

Company Overview

Based in Chicago, Aon Corporation (AOC) is the world's largest insurance and reinsurance broker. Through its subsidiaries, the company operates in three broad segments: Risk and Insurance Brokerage Services, Insurance Underwriting, and Consulting.

Aon’s business operations fall under one of three categories: Insurance underwriting, risk insurance brokerage services, and consulting. Aon’s clients include corporations and other businesses, insurance businesses, independent agents and brokers, governments, and professional organizations.

Business Financials
In 2009, AON earned a total of $7.62 billion in total revenues. This was virtually the same as its 2008 revenues of $7.63 billion. However, it had a large adverse impact on AON's net income. Between 2008 and 2009, AON's net income declined from $1.46 billion in 2008 to $792 million in 2009.[1]

Contents
1 Company Overview
1.1 Business Financials
1.2 Business Segments
1.2.1 Risk and Insurance Brokerage Services
1.2.2 Risk Management
1.2.3 Reinsurance Brokerage
1.2.4 Consulting
2 Trends and Forces
2.1 Fluctuations in interest rates may hurt Aon’s investment portfolio
2.2 Obligations to pension plans have currently been hurting Aon’s earnings
2.3 A significant portion of Aon’s business is conducted overseas, which might make it harder to predict future growth and profitability
2.4 Large-scale disasters may increase claims to levels which Aon is not financially prepared to honor
3 References
Business Segments
AON breaks its operations into three segments.

Risk and Insurance Brokerage Services
Aon’s largest division is the Risk and Insurance Brokerage Services division. Revenue is earned via fees from clients, commission, and consulting fees from other insurance and reinsurance firms.

Risk Management
As a retail broker and insurance underwriter, Aon serves as an advisor to corporate clients on matters regarding property, general, and executive liability, and workers’ compensation. Aon also provides life and disability insurance for individuals and businesses. Its retail brokerage is broken down into sections according to industry specialization, which include entertainment, media, marine, aviation, and construction, amongst others.

Reinsurance Brokerage
Its reinsurance division consults clients on how to increase claims recoveries, enhance the risk to return ratio of investment portfolios, decrease exposure to catastrophic loss worldwide, and improve capital utilization.

Aon acts as a broker to insurance companies wishing to remove risky obligations from its portfolio. It mainly focuses on

Consulting
Its consulting segment maintains a presence in the United States, Canada, Europe, South Africa, and the Pacific region. Its consulting segment is further divided into consulting services and outsourcing divisions. Aon’s consulting services include employee benefit, compensation, management, communications, human resources, and financial advisory and litigation consulting. Aon is the third largest employe benefit consulting in the world and second in the U.S. in terms of revenue. Revenue is generated via client consulting fees as well as placement fees paid by insurance companies for recommending their products.

Its employee benefits arm focuses on attracting, retaining, and motivating employees by providing programs such as executive compensation, retirement benefits, and elective benefits, amongst others.

Trends and Forces

Fluctuations in interest rates may hurt Aon’s investment portfolio
Aon’s portfolio is largely composed of long-term investments and fixed-maturity products. Declines in the expected returns of the portfolio may render Aon unable to meet its financial obligations. If the securities it holds are downgraded, Aon may have to write the assets off as impaired, which will lead to weaker earnings. Furthermore, if it does not have the liquidity it needs to meet its financial obligations, Aon may be forced to sell parts of its portfolio at below-market prices.


Obligations to pension plans have currently been hurting Aon’s earnings
Due to decreasing interest rates, the assets backing several major pension plans under Aon’s control have increased at a slower rate than its liabilities, resulting in unfunded portions of its pension plans.

A significant portion of Aon’s business is conducted overseas, which might make it harder to predict future growth and profitability
Although this helps protect Aon from economic downturns in the United States, Aon must conform to each countries’ accounting, staffing, and legal standards. Stricter governmental regulations, longer payment cycles, hyperinflation, and difficulty collecting payments may hurt its investment opportunities and revenue streams. Since all revenues are translated into U.S. dollars, a strong dollar or hyperinflation of the local currency might cause Aon’s financial positions to be understated. Likewise, the converse may make Aon appear more financially stable than it really is.

Large-scale disasters may increase claims to levels which Aon is not financially prepared to honor
Terrorist attacks, floods, pandemics, and earthquakes may increase its liabilities and may also decrease its investment portfolio. Depending on the disaster, such as terrorism, Aon may be unable to diversify away its exposure. Furthermore, an economic decline in the affected area may result in clients being unable to pay insurance premiums, leading to a decrease in its business earnings.
 
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