A.M. Best Places Ratings of Aon's Insurance Subsidiaries Under Review.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--April 20, 2001

A.M. Best Co. has placed the financial strength ratings of Aon Corporation's (NYSE: AOC) property/casualty and life/health insurance companies under review with developing implications. The principal operating entities affected are Virginia Surety Company Inc. (Virginia Surety), rated A+ (Superior) and Combined Insurance Company of America (Combined), rated A (Excellent), both of Chicago, Illinois.

These rating actions follow the April 20, 2001 announcement by Aon Corporation that management is evaluating the divestiture of its life/health and property/casualty insurance underwriting operations from its flagship brokerage and consulting businesses. Under the plan being considered, shares in a newly formed holding company, parent to Virginia Surety and Combined, will be distributed to Aon's existing shareholders. Concurrent with the spin-off, A.M. Best expects that the newly formed holding company would issue debt, with the proceeds payable to Aon to retire a portion of Aon's existing debt. The composition of the new holding company's capital structure has not yet been determined. A.M. Best's review will focus, in part, on the new holding company's initial capital structure, including financial leverage and cash flow, the quality of the assets being transferred, the resolution of shared services with its former parent and management's plans for growth.

A.M. Best believes this proposed realignment presents some potential long-term strategic benefits for both Aon and its member insurance companies. Since the mid-1990's, cross-marketing opportunities and synergies among Aon's brokerage and insurance underwriting operations have been minimal, as the benefits from marketing Combined's and Virginia Surety's insurance products through Aon's distribution channels were never fully realized. A.M. Best believes that a separation of the operations could create greater perceived value in the marketplace value for Combined and Virginia Surety as they have historically been overshadowed by the relative importance of the core brokerage and consulting operations to Aon. This divestiture also helps Aon sharpen its focus on insurance brokerage and consulting operations, while reducing leverage as well as overall earnings volatility. It is anticipated that the existing management teams of Combined and Virginia Surety will remain intact following the spin-off.

A.M. Best believes that the newly formed holding company will have limited financial flexibility, as it would no longer enjoy the benefits of being part of Aon, the world's second largest insurance broker. Further, the significant dividend burden Aon has placed on the underwriting companies will in effect be transferred to support the direct debt obligations of the newly formed holding company. Therefore, the ultimate capital structure of the new organization is an important factor in A.M. Best's rating review.

The financial strength ratings of Combined and Virginia Surety will remain under review pending the close of the transaction and analysis of the new organization's business plans. In the interim, A.M. Best will continue to engage in further discussions with Aon's management concerning the details of this transaction and ongoing business strategies.

The financial strength ratings of the following companies have been placed under review with developing implications:

-- Virginia Surety Company Inc. - A+ (Superior);

-- Combined Insurance Company of America - A (Excellent);

-- Combined Life Insurance Company of New York - A (Excellent);

-- Resource Life Insurance Co. - A- (Excellent).

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.