Aon Reports Fourth Quarter and Full Year 2001 Results; Updates on Business Transformation, Spin-off and Financing Plans.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 12, 2002 Aon Corporation (NYSE NYSE See: New York Stock Exchange : AOC AOC, n an acronym for the Aromatherapy Organizations Council. ) today reported fourth quarter and full year 2001 results. One or both of these periods and the comparable 2000 periods included special charges, World Trade Center (WTC WTC World Trade Center, see there ) charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc September September: see month. 11 and the adoption of SAB SAB Spontaneous abortion. See Abortion. 101. Excluding these items, fourth quarter dilutive earnings per share were $0.33 and $0.52, respectively, for 2001 and 2000. Similar full-year earnings per share comparisons were $1.37 for 2001 and $2.01 for 2000. When earnings per share are further adjusted to exclude the impact of non-operating Corporate and Other segment investment results, the 2001 and 2000 year-over-year comparisons are $0.50 versus $0.53 for the fourth quarter and $1.75 versus $1.85 for the full year.
4Q01 4Q00 FY01 FY00
------------------------------------------
Reported Dilutive EPS $ 0.30 $ 0.33 $ 0.73 $ 1.79
Special Charges - (0.19) (0.49) (0.19)
WTC Charges (0.03) - (0.15) -
Adoption of SAB 101 - - - (0.03)
------- ------- ------- -------
EPS before WTC and special
charges and SAB 101 $ 0.33 $ 0.52 $ 1.37 $ 2.01
Non-operating Corporate and
Other segment revenue (0.17) (0.01) (0.38) 0.16
------- ------- ------- -------
EPS before WTC and special
charges, SAB 101 and
Non-operating Corporate
and Other revenue $ 0.50 $ 0.53 $ 1.75 $ 1.85
Reported dilutive net income per share for fourth quarter 2001 was $0.30 compared with $0.33 in the year ago period. Comparable full year results were $0.73 for 2001 compared with $1.79 for 2000. The per share impact of special charges related to the business transformation were $0.19 in fourth quarter 2000, $0.49 for 2001 and $0.19 for 2000. WTC charges taken in 2001 were $0.03 per share for fourth quarter and $0.15 per share for full year. The adoption of SAB 101 equaled $0.03 per share in 2000. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue of $2.036 billion in the fourth quarter increased from $1.961 billion in the prior year. Consolidated revenue for full year 2001 was $7.7 billion, up from $7.4 billion in 2000. Solid operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. growth was partially offset by reductions in investment income that impacted both fourth quarter and full year 2001. Patrick G. Ryan Ryan may refer to: Places
See also Determination. Ainsworth redid dictionary manuscript burnt in fire. [Br. Hist.: Brewer Handbook, 752] Call of the Wild, The dogs trail steadfastly through Alaska’s tundra. [Am. Lit. of our employees around the world, and together we are moving forward." "In many areas, 2001 was also a year of progress for Aon. Most of our core businesses produced good results and they are well-positioned as we enter 2002," Ryan added. "Together our business segments produced revenue growth of 7%, and our consulting and insurance underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. segments both improved their 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. margins. Last month we named Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the Reding Reding may refer to: People
"U.S. retail brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. operations, however, experienced challenges implementing portions of the business transformation plan. The September 11 attacks September 11 attacks Series of airline hijackings and suicide bombings against U.S. targets perpetrated by 19 militants associated with the Islamic extremist group al-Qaeda. that destroyed the World Trade Center, the location of our largest retail brokerage office, magnified our internal challenges since it happened as we were transitioning to a new operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. . We are working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to complete our U.S. retail transformation and reinvigorate re·in·vig·o·rate tr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·rates To give new life or energy to. re production. I commend com·mend tr.v. com·mend·ed, com·mend·ing, com·mends 1. To represent as worthy, qualified, or desirable; recommend. 2. To express approval of; praise. See Synonyms at praise. 3. our employees for maintaining high client service levels throughout this period." Ryan also noted, "Non-operating revenue declines, not related to our core businesses, were the single largest factor in our earnings decrease in 2001. We believe we have significantly addressed this issue going forward by completing a securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. of most of our limited partnership investments at the end of 2001. Therefore, the opportunity for significant improvement from 2001 results is very good." Operating Segments Aon's three operating segments - Insurance Brokerage and Other Services, Consulting, and Insurance Underwriting - recorded aggregate fourth quarter revenue of $2.1 billion, up 7% from the prior year. Fourth quarter operating segment investment income decreased $36 million from the same period in 2000 to $83 million, due in part to declining interest rates. For the full year, operating segment revenue of $7.8 billion rose 7% from $7.3 billion in 2000. Excluding investment income, 2001 operating segment revenue increased 10% and 9% for the fourth quarter and full year, respectively, when compared to prior year. All operating segment comparisons exclude WTC charges and special charges. Total operating segment pretax income in fourth quarter 2001 was $321 million compared with $338 million in 2000. Excluding investment income, fourth quarter pretax income increased 9% versus the prior year. Reported operating segment pretax income was $1.176 billion for full year 2001 and $1.178 billion for 2000. Excluding investment income, year-over-year pretax income grew 7%. Fourth quarter Insurance Brokerage and Other Services segment revenue grew 8% to $1.276 billion compared with $1.186 billion in 2000. Organic revenue growth was also 8% for the quarter. 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, as well as claims servicing, posted good operating results. Capital markets earned $24 million in fees for managing the capital raising of Endurance Endurance See also Longevity. Atalanta feminine name denotes power of endurance. [Gk. Myth.: Jobes, 148] Boston marathon famous 26-mile race held annually for long-distance runners. [Am. Pop. Culture: Misc. Specialty Insurance Ltd. Brokerage investment income, however, decreased $25 million to $29 million in the fourth quarter due primarily to declining interest rates. The U.S. retail brokerage business continued to experience slower new business growth and below normal account retention, in part from previously announced delays in the implementation of the business transformation plan and the impact of September 11. For the full year, insurance brokerage and other services revenues grew 7% on a reported basis, and 8% on an organic basis. Insurance Brokerage and Other Services fourth quarter pretax income was $190 million compared with $221 million in fourth quarter 2000. The pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern margin in fourth quarter 2001 was 14.9% compared with 18.6% in the year ago period. Fourth quarter business transformation transition costs, all related to U.S. retail, were $12 million and included temporary employee and consulting costs, and expenses to retain certain employees beyond originally planned termination dates termination date, n See expiration date. . U.S. retail brokerage negatively affected margin comparisons due to slower new business growth, below normal account retention, higher costs related to running parallel systems and increased compensation to certain employees. These factors related to challenges implementing the business transformation plan in U.S. retail brokerage. A decline in investment income, due mostly to reduced interest rates, also affected margin comparisons. Strong results from international, reinsurance and wholesale brokerage partially offset margin declines. Pretax income and margins in 2001 were $734 million and 15.8%, respectively, compared with $766 million and 17.5% in 2000. Consulting segment revenue rose 14% to $265 million from $232 million in the year-ago fourth quarter. This increase partly reflects core growth in U.S. employee benefits business and the addition of ASI ASI, n See Anxiety Sensitivity Index. Solutions Incorporated (ASI), acquired in May 2001. Consulting segment organic revenue growth for the quarter was 7%. For the year, consulting revenues grew 22%, or 7% on an organic basis. Pretax income rose 20% to $49 million versus $41 million in fourth quarter 2000. The Consulting pretax margin was 18.5% in the fourth quarter, up from 17.7% in the year ago period, reflecting the benefits of organic growth and strong results in U.S. employee benefits business. September 11 and a weaker economy, however, somewhat offset organic revenue growth. Pretax income rose 22% to $133 million in 2001, up from $109 million in 2000. The pretax margin for full year 2001 and 2000 was 14.2%. Insurance Underwriting segment revenue increased 4% to $570 million in fourth quarter 2001, up from $549 million in fourth quarter 2000, reflecting the continued development of accident and health product initiatives and a higher volume of business. Insurance Underwriting segment organic revenue growth, based on written premiums, was 10% for the quarter. For the full year, insurance underwriting revenue grew 4%, versus 6% organic growth based on written premium. Fourth quarter investment income decreased $10 million from the prior year period. Insurance Underwriting pretax income was $82 million in the fourth quarter, up from $76 million in the prior year period. The Underwriting pretax margin was 14.4% for the quarter, up from 13.8% in fourth quarter 2000. Pretax income rose to $309 million in 2001, up from $303 million in 2000. The pretax margins for full year 2001 and 2000 were 13.7% and 14.0%, respectively. Investment income declined $22 million year-over-year. Corporate and Other segment revenue, comprised primarily of equity-related revenues from limited partnerships and directly owned equities, was negative $75 million for the quarter compared with negative $6 million in fourth quarter 2000, representing a $0.16 per share decline. The decline in fourth quarter 2001 was primarily due to reduced valuations of limited partnership investments. The Corporate and Other segment year-over-year revenue decline of $242 million, or $0.54 per share, from positive $71 million in 2000 to negative $171 million in 2001 was a major factor in the decline in earnings per share. Corporate and Other revenue primarily reflected the performance of the Company's equity investments that were negatively impacted by unfavorable equity markets. As reported in January January: see month. 2002, the Company securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. $450 million of limited partnership investments and associated limited partnership commitments effective December December: see month. 31, 2001. The Company received cash and securities from the securitization transaction. The limited partnership interests were included on the balance sheets of the Company's insurance company subsidiaries and consolidated on the Company's balance sheet. Following the securitization, the cash and securities received as part of the transaction are similarly included on the balance sheets of the Company's insurance company subsidiaries and consolidated on the Company's balance sheet. As a result of the securitization, Corporate and Other revenue is expected to be much less variable beginning in first quarter 2002. The Corporate and Other segment pretax loss pretax loss A loss reported before tax benefits are considered. for the quarter was $152 million, compared with a pretax loss of $92 million in the prior year quarter due primarily to the decline in Corporate and Other segment revenue. Interest expense decreased 24% relative to the prior year primarily reflecting lower interest rates. After netting the effect of currency hedges Currency hedge Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks). , the impact of foreign currency translations on net income in fourth quarter 2001 was not material. In July July: see month. 2001, the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). (FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ) issued Statement No. 142, Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , which changes the accounting for goodwill from an amortization method to an impairment-only approach. The Company plans to adopt FAS 142 in first quarter 2002. Based on an evaluation of goodwill as of December 31, 2001, no goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. will occur from the adoption of FAS 142. Effective January 1, 2002, the amortization of goodwill will no longer be included in Aon's reported earnings per share. Goodwill amortization expense was $30 million in the fourth quarter and $118 million for full year 2001. Business Transformation Plan Update "Our goals for the business transformation are to enhance client service, accelerate organic revenue growth and reduce costs," stated Ryan. "We believe that clients have begun to realize some of the benefits of our new operating model. While net positions eliminated under the plan will be somewhat less than originally expected, we believe that we will save approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $150 million in expenses in 2002 related to actions already taken. These savings will be partially offset by compensation increases required to retain certain employees and increased costs related to hiring employees with specialist skills into newly created positions. The changing dynamics of the insurance marketplace have also increased the time requirements for handling certain job functions." During 2001, Aon incurred previously anticipated transition costs related to the plan. The level of these costs has been more than expected, due in part to additional temporary employee expense necessary to complete the account conversions to the Client Service Business Units (CSBU CSBU Commercial Services Business Unit ), which had been delayed. The Company expects these conversions to be complete by the end of second quarter 2002 as previously reported. Approximately $12 million and $30 million of pretax transition costs were incurred in fourth quarter and full year 2001, respectively. In the U.K and the rest of Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , the business transformation has
proceeded according to according toprep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. plan and we have achieved the objectives. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. D. O'Halleran, president and COO (Cell Of Origin) See mobile positioning. of Aon Corporation, stated, "Our entire U.S. retail team is now refocused on new business growth and improved client retention. Our new platform allows us to more effectively and efficiently serve existing and potential clients." September 11 Impact Consolidated charges related to the destruction of the WTC were $15 million pretax or $0.03 per share in fourth quarter 2001. The charges included a $10 million commitment to the Aon Memorial Education Fund to support the educational needs of the children of Aon employees who were victims of the September 11 attacks. For full year 2001, consolidated charges related to the destruction of the WTC were $68 million pretax or $0.15 per share. The charges were principally comprised of $45 million of insurance benefits, net of approximately $147 million of reinsurance, provided under insurance policies issued by Aon's Combined Insurance Company subsidiaries for Aon employees. As previously reported, $90 million of reinsurance recoverables are in dispute and the Company and reinsurers are presently in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . The events of September 11 had an unfavorable impact on our near-term near-term adj. Of, for, or involving a short period of time in the near future. financial results. Aon is still in the process of presenting additional insurance claims to its insurers for losses related to the WTC. The Company expects additional recoveries in future periods from its insurance policies that cover the value of destroyed assets and the continuing excess and extra costs and lost income related to business interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. . Insurance Underwriting Spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. Update In 2001, the Company announced plans to spin-off its underwriting operations to stockholders through a new company to be named Combined Specialty Corporation. The spin-off is scheduled for Spring 2002. Aon recently announced that Dennis B. Reding has joined the Company as the CEO of Combined Specialty. 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. has assumed responsibility for Aon's insurance underwriting operations and will be leading the expansion of those businesses into direct property and casualty insurance. "We are very pleased to have Dennis leading Combined Specialty," said Ryan. "Dennis is reviewing business and financial plans for the underwriting operations in anticipation of raising capital to grow the property and casualty business." The Company is currently involved in the customary review process with the Internal Revenue Service seeking a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. tax ruling for the planned spin-off. Customary Securities and Exchange Commission (SEC) filings will be made by the Company regarding the spin-off and will be sent to stockholders. The spin-off requires regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and final Board approval. In November November: see month. 2001, we announced that Aon would be sponsoring and investing in a new Bermuda-based insurance and reinsurance company, Endurance Specialty Insurance Ltd. The Company's investment in Endurance was funded in December by its underwriting subsidiaries and it will be spun-off with Combined Specialty. Capital Raising In December 2001, Aon filed with the SEC a universal shelf registration statement for the issuance and sale by Aon, from time to time, of up to $750 million of debt and equity securities. Ryan said, "The shelf gives us flexibility as we complete plans for our spin-off and the expansion of Combined Specialty's property and casualty business. We would expect our capital raising, subject to market conditions, to take place in sufficient time for the scheduled spin-off." Future Outlook "The demand for Aon's expertise and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. has increased given the heightened challenges clients face in the current insurance marketplace," noted Ryan. "As mentioned at the time of our third quarter 2001 earnings release, there are many external and internal issues that will impact results in 2002. These factors include escalating premium rates and economic conditions, as well as the completion of our business transformation and spin-off plans, increased pension costs and the impact of September 11." "Most of our businesses are performing well. After the spin-off, Aon will split into two separate, independent companies. Based on Aon's current structure, however, we believe that a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. increase in earnings per share before special charges from $2.01 in 2000 is achievable in 2002, excluding the elimination of goodwill amortization that will further benefit our earnings per share, starting in first quarter 2002. Goodwill amortization expense was approximately $0.36 per share in 2001." As previously reported, the Company plans to host an audio webcast on February February: see month. 12th at 10:00 a.m. (CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ) that can be accessed at www.aon.com. The Company is also scheduled to present at an insurance industry investor conference on Thursday Thursday: see week. , February 14, 2002 at 11:25 a.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ). Mr. Ryan's presentation may be listened to live by logging on to the conference website at: http://www.on24.com/clients/merrill/conference_020212/index.html?pres enter=aoncorporat For those unable to listen to Mr. Ryan's live presentations, the webcasts will be archived for a period following the live webcasts at the same sites. It should be noted that Mr. Ryan's remarks may contain 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. . Aon refers you to the Aon Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2001 for a description of the business environment in which Aon operates and the important factors that may affect its business. Aon is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. 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 future results, which are forward-looking statements 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 sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. 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.
Aon Corporation
Consolidated Summary of Operations
Fourth Quarter Ended Twelve Months Ended
-------------------- -------------------
(millions except
per share data)
Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent
2001 2000 Change 2001 2000 Change
----- ----- ------ ----- ----- ------
Revenue
-------
Brokerage
commissions
and fees $ 1,511 $ 1,362 11 % $ 5,436 $ 4,946 10 %
Premiums and
other 517 486 6 2,027 1,921 6
Investment
income 8 113 (93) 213 508 (58)
----- ----- ------ ----- ----- ------
Total
revenue 2,036 1,961 4 7,676 7,375 4
----- ----- ------ ----- ----- ------
Expenses
--------
General
expenses 1,510 1,367 10 5,595 5,108 10
Benefits to
policyholders 288 271 6 1,111 1,037 7
Interest
expense 29 38 (24) 127 140 (9)
Amortization
of intangible
assets 40 39 3 158 154 3
----- ----- ------ ----- ----- ------
Total
expenses 1,867 1,715 9 6,991 6,439 9
----- ----- ------ ----- ----- ------
Income Before
Unusual &
Special
Charges 169 246 (31) 685 936 (27)
Unusual
charges -
World Trade
Center (15) - N/A (68) - N/A
Special
charges - (82) N/A (218) (82) N/A
----- ----- ------ ----- ----- ------
Income Before
Income Tax,
Minority
Interest and
Accounting
Change 154 164 (6) 399 854 (53)
Provision
for income
tax 61 64 (5) 156 333 (53)
----- ----- ------ ----- ----- ------
Income Before
Minority
Interest and
Accounting
Change 93 100 (7) 243 521 (53)
Minority
interest -
8.205% trust
preferred
capital
securities (10) (10) - (40) (40) -
----- ----- ------ ----- ----- ------
Income Before
Accounting
Change 83 90 (8) 203 481 (58)
Cumulative
effect of
change in
accounting
principle,
net of
tax(1) - - - - (7) N/A
----- ----- ------ ----- ----- ------
Net Income $ 83 $ 90 (8) % $ 203 $ 474 (57) %
===== ===== ====== ===== ===== ======
Preferred
stock
dividends (1) (1) - (3) (3) -
----- ----- ------ ----- ----- ------
Net Income
Available
for Common
Stockholders $ 82 $ 89 (8) % $ 200 $ 471 (58) %
===== ===== ====== ===== ===== ======
Net Income
Per Share:
Basic net
income
per share $ 0.30 $ 0.34 (12) % $ 0.74 $ 1.81 (59) %
===== ===== ====== ===== ===== ======
Dilutive net
income per
share:
Net income
before
unusual and
special
charges $ 0.33 $ 0.52 (37) % $ 1.37 $ 2.01 (32) %
Unusual
charges -
World Trade
Center (0.03) - N/A (0.15) - N/A
Special
charges - (0.19) N/A (0.49) (0.19) N/A
Cumulative
effect of
change in
accounting
principle(1) - - - - (0.03) N/A
----- ----- ------ ----- ----- ------
Dilutive
net income
per
share $ 0.30 $ 0.33 (9) % $ 0.73 $ 1.79 (59) %
===== ===== ====== ===== ===== ======
Dilutive average
common and
common
equivalent
shares
outstanding 276.9 267.0 272.4 263.0
===== ===== ===== =====
(1) Adoption of SEC Staff Accounting Bulletin 101, effective
January 1, 2000.
Aon Corporation
Operating Segments
Fourth Quarter Ended Twelve Months Ended
-------------------- -------------------
(millions) Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent
2001 2000 Change 2001 2000 Change
----- ----- ------ ----- ----- ------
Revenue
-------
Insurance
brokerage
and other
services(1) $ 1,276 $ 1,186 8 % $ 4,659 $ 4,367 7 %
Consulting(2) 265 232 14 938 770 22
Insurance
underwriting 570 549 4 2,250 2,167 4
----- ----- ------ ----- ----- ------
Total
revenue $ 2,111 $ 1,967 7 % $ 7,847 $ 7,304 7 %
===== ===== ====== ===== ===== ======
Income Before
Income Tax
-------------
Insurance
brokerage
and other
services $ 190 $ 221 (14) % $ 734 $ 766 (4) %
Consulting 49 41 20 133 109 22
Insurance
underwriting 82 76 8 309 303 2
----- ----- ------ ----- ----- ------
Income before
income tax
excluding
unusual and
special
charges 321 338 (5) 1,176 1,178 (0)
Unusual
charges -
World
Trade
Center (15) - N/A (68) - N/A
Special
charges - (82) N/A (218) (82) N/A
----- ----- ------ ----- ----- ------
Income before
income tax $ 306 $ 256 20 % $ 890 $ 1,096 (19) %
===== ===== ====== ===== ===== ======
(1) Includes investment income of $29 million and $54 million for
the fourth quarter ended December 31, 2001 and 2000,
respectively, and $156 million and $186 million for the twelve
months ended December 31, 2001 and 2000, respectively.
(2) Includes investment income of $1 million and $2 million for
the fourth quarter ended December 31, 2001 and 2000,
respectively, and $5 million and $6 million for the twelve
months ended December 31, 2001 and 2000, respectively.
Aon Corporation
Corporate and Other
Fourth Quarter Ended Twelve Months Ended
-------------------- -------------------
(millions) Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent
2001 2000 Change 2001 2000 Change
----- ----- ------ ----- ----- ------
Corporate
and other
revenue(1) $ (75) $ (6) N/A % $ (171) $ 71 N/A %
Non operating
expenses
-------------
Amortization
of goodwill $ 30 $ 29 3 % $ 118 $ 114 4 %
Interest
expense 29 38 (24) 127 140 (9)
General
expenses 18 19 (5) 75 59 27
----- ----- ------ ----- ----- ------
Loss before
income tax $ (152) $ (92) N/A % $ (491) $ (242) N/A %
===== ===== ====== ===== ===== ======
Fourth Quarter Ended Twelve Months Ended
-------------------- -------------------
(millions) Dec. 31, Dec. 31, Percent Dec. 31, Dec. 31, Percent
2001 2000 Change 2001 2000 Change
----- ----- ------ ----- ----- ------
(1)Components of
corporate and
other revenue
----------------
Change in
valuation on
private
limited
partnership
investments $ (38) $ (2) N/A % $ (94) $ 73 N/A %
Income from
marketable
equity
securities
and other
investments 1 3 (67) 7 9 (22)
----- ----- ------ ----- ----- ------
Corporate and
other revenue
before loss
on disposals
and related
expenses (37) 1 N/A (87) 82 N/A
Loss on
disposals
and
related
expenses(A) (38) (7) N/A (84) (11) N/A
----- ----- ------ ----- ----- ------
Corporate
and other
revenue $ (75) $ (6) N/A % $ (171) $ 71 N/A %
===== ===== ====== ===== ===== ======
(A) Includes impairment writedowns of $23 million and $57 million
for the fourth quarter and twelve months 2001, respectively.
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