Aon Provides Outlook For First Quarter and Full Year 2002; Favorable Ruling Received From Internal Revenue Service For Spin-Off.Business Editors CHICAGO--(BUSINESS WIRE)--April 19, 2002 Aon and Combined Specialty Make Announcements Concerning Dividends Aon Corporation (NYSE NYSE See: New York Stock Exchange :AOC AOC, n an acronym for the Aromatherapy Organizations Council. ) today reported that first quarter 2002 dilutive earnings per share are expected to be in the range of $0.56-$0.59 per share (including a one-time pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. item of $48 million or $0.11 per share). This compares with year ago net income of $0.32 per share before special charges and goodwill amortization. The one-time income item is the result of a tax settlement. Patrick G. Ryan, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Aon Corporation, said, "Our first quarter earnings per share, excluding the one-time income item, did not meet internal targets that we established at the beginning of the year. International, reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. , and wholesale brokerage operations performed well and organic revenue growth for the Insurance Brokerage and Other Services segment improved to approximately 13%. U.S. retail brokerage results pressured first quarter earnings, however, due largely to increased employee compensation costs related to the business transformation. Additionally, our managing underwriting business within the brokerage segment experienced a temporary decline in revenue due to a required change in an insurance carrier relationship that is expected to be corrected during the second quarter. Aggregate operating segment reported revenue growth is estimated to be up approximately 8% year-over-year for the first quarter." Aon is scheduled to report first quarter results on April 30th. "As previously reported in our third and fourth quarter 2001 earnings releases, there are many factors, including the finalization of the business transformation, that influence 2002 results," stated Mr. Ryan. "Based on our current view of our businesses for the full year and our assessment of internal and external factors, we believe that earnings for 2002, excluding the $0.11 per share one-time income item in the first quarter, will be within the lower half of the $2.30 to $2.75 earnings per share range of analysts' estimates. Estimates are based on Aon's current structure before the pending spin-off and exclude special charges and the financial impact of the World Trade Center loss." Mr. Ryan added, "Most of our businesses are performing well and client demand for our services and products remains strong." Spin-Off of Insurance Underwriting Operations The Internal Revenue Service recently issued a favorable private letter ruling for the spin-off of Combined Specialty Group, Inc. The ruling provides, among other things, that Aon's common stockholders should not owe U.S. tax on a dividend of shares of Combined Specialty common stock in the spin-off. Aon currently expects to complete the spin-off in the second quarter. Completion remains subject to regulatory and other conditions. Capital Raising As previously reported, Aon plans to raise capital in relation to the spin-off primarily to take advantage of new insurance underwriting growth opportunities, and to strengthen the Company's capital base. Aon has filed a $750 million universal shelf registration statement to provide flexibility in raising capital before the spin-off, and as previously announced, Combined Specialty may conduct its own capital raising to fund growth opportunities. "Given the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. approval, we expect to announce capital raising initiatives in the near term, subject to market conditions, and complete the spin-off during the second quarter," said Mr. Ryan. Aon and Combined Specialty also made announcements regarding cash dividends. Aon Corporation Dividend Aon management plans to recommend to its Board of Directors that Aon Corporation's next cash dividend before the spin-off equal its most recent cash dividend of $0.225 per share, or $0.90 on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. Aon's Board is scheduled to vote to declare this cash dividend today, which would be payable on May 15, 2002 to common stockholders of record on May 2, 2002. Post Spin-Off Shares and Dividends: "New" Aon and Combined Specialty On the record date of the spin-off, Aon stockholders will be credited with an additional share of Combined Specialty for every three shares of Aon common stock that they hold. Aon stockholders will therefore own shares of two independent, publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. after the spin-off: "New" Aon (comprised of Aon's insurance brokerage and consulting businesses) and Combined Specialty (Aon's insurance underwriting businesses). Concerning post spin-off cash dividends, the "New" Aon and Combined Specialty Boards specialty board Graduate education An organization that certifies, through standardized examinations, that a person has the knowledge to practice a chosen specialty. See Board certification, Peer review, Residency. Cf State board. will determine their own dividend policy based A decision made by any software application that is based on the policy (rules and regulations) of the organization. See policy and COPS. on consideration of earnings, cash flow, capital needed to support growth, debt obligations, regulatory constraints and other factors that may be deemed appropriate. Mr. Ryan, addressing the "New" Aon dividend policy, stated, "I plan to recommend to the 'New' Aon Board that the quarterly cash dividend be $0.15 per share, or $0.60 per share on an annualized basis. This equals two-thirds of Aon's most recent dividend and represents 'New' Aon's proportionate share of the most recent dividend paid by Aon." Concerning Combined Specialty's dividend policy, Dennis B. Reding Reding may refer to: People
tr.v. re·in·vest·ed, re·in·vest·ing, re·in·vests To invest (capital or earnings) again, especially to invest (income from securities or funds) in additional shares. a significant portion of Combined Specialty's cash flows in order to accelerate earnings growth and improve returns on capital." Mr. Reding Mr. Red is the first mascot of the Cincinnati Reds baseball team, known as baseball's first professional franchise. He is a humanoid figure dressed in a Reds uniform, with an oversized baseball for a head. Sometimes, Mr. added, "At the same time, we recognize that stockholders value dividend income, as well as capital appreciation. Therefore, Combined Specialty's Board intends to set an initial quarterly cash dividend of $0.11 per share ($0.44 annualized) based on each Aon stockholder receiving one share of Combined Specialty for every three shares of Aon they own." The Combined Specialty Board will set record and payment dates for its first cash dividend and declare that dividend after the spin-off is completed. The Combined Specialty quarterly dividend of $0.11 per share ($0.44 annualized) translates into approximately $0.036 ($0.146 annualized) adjusted for the 1:3 spin-off distribution ratio: one Combined Specialty share for every three shares of Aon. Therefore, Aon stockholders that maintain shares in both "New" Aon and Combined Specialty after the spin-off would initially receive approximately $0.186 per share in quarterly dividends, compared with Aon's most recent quarterly cash dividend of $0.225 per share. By reinvesting the difference in profitable new underwriting businesses, Combined Specialty believes it can produce greater value for its stockholders. Annual Stockholders' Meeting: 10:00 a.m. (CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT ) As previously released, Aon will be holding its Annual Stockholders' Meeting today at 10:00 a.m. (CDT). Presentations will include the matters addressed above. Stockholders and other interested parties may listen to the live audio webcast of the meeting by logging onto Aon's web site at www.aon.com. The webcast will be archived for two weeks. Post Annual Meeting Conference Call With Institutional Investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. : 1:00 p.m. (CDT) Stockholders and other interested parties may also listen to a live webcast of a conference call to be hosted by Mr. Ryan for institutional investors by logging on to www.aon.com at 1:00 p.m. (CDT). The webcast will be archived for two weeks. Aon Corporation (www.aon.com) is a holding company that is comprised of a family of insurance brokerage, consulting and insurance underwriting subsidiaries. This press release may contain certain statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future results, which are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, depending on a variety of factors such as general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, changes in commercial property and casualty premium rates, the competitive environment, the actual cost of resolution of contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. , the final form of the business transformation plan, the ultimate cost and timing of the implementation thereof, the actual cost savings and other benefits resulting therefrom there·from adv. From that place, time, or thing. Adv. 1. therefrom - from that circumstance or source; "atomic formulas and all compounds thence constructible"- W.V. , whether the Company ultimately implements the proposed spin-off of its underwriting operations, and the timing and terms associated therewith there·with adv. 1. With that, this, or it. 2. In addition to that. 3. Archaic Immediately thereafter. Adv. 1. , and events surrounding terrorists attacks of September 11, 2001, including the timing and resolution of related insurance and reinsurance issues. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, are contained in the Company's filings with the Securities and Exchange Commission. |
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