Aon Reports Second Quarter and Six Months 2003 Results.Business Editors CHICAGO--(BUSINESS WIRE)--Aug. 5, 2003 Aon Corporation (NYSE NYSE See: New York Stock Exchange :AOC AOC, n an acronym for the Aromatherapy Organizations Council. ) today reported second quarter and six months 2003 results. Second Quarter and Six Months Highlights Net income for the second quarter was $146 million or $0.46 per share compared with breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations results in the year ago period. Six months results increased to $298 million or $0.94 per share from $160 million or $0.57 per share in 2002. Excluding an expected $9 million ($0.02 per share) unusual World Trade Center (WTC WTC World Trade Center, see there ) charge initially noted in first quarter 2003, net income per share was $0.48 for the second quarter. Six months net income per share, excluding unusual WTC charges ($0.09 per share) was $1.03. 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: revenues grew 15% for the second quarter and six months to $2.4 billion and $4.8 billion, respectively, versus the year ago periods. Continued demand for Aon's services and products and improved investment income drove the increases. Foreign exchange translations accounted for 5% of the growth for both the quarter and first half. Patrick G. Ryan Ryan may refer to: Places
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. , and good core performance in consulting given the current economic climate. Client demand for our services and products continues to be robust, as evidenced by our solid organic revenue growth, and I am encouraged by the progress we have made in our businesses." Ryan added, "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 increase our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by further tightening our expense management, and I believe we can increase our productivity as we continue to grow revenues." Second Quarter Segment Review Risk and Insurance Brokerage Services second quarter revenue grew 17% to $1.424 billion. Organic revenue growth for the total segment was 11%. Within the segment, organic revenue growth was 14% for the Americas A·mer·i·cas , the See America. (up from 13% in first quarter 2003), 10% for International, 13% for 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 2% for Claims Services. 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. increased 22% to $175 million from $144 million in second quarter 2002. Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern margins improved to 12.3% from 11.9%. Excluding a previously reported $6 million special credit, pretax income in second quarter 2002 was $138 million and the pretax margin was 11.4%. As expected, defined benefit pension costs increased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $28 million year-to-year in the segment. Claims services second quarter pretax income declined approximately $19 million from the prior year. Investment income was $8 million lower in the second quarter compared with a year ago, and second quarter 2002 results included $7 million of transition costs related to the business transformation. Mr. Ryan commented, "Margins were up, despite increased pension costs and a decline in claims services results, which shows that most of our brokerage businesses have performed better than last year. Excluding the claims services decline, the second quarter brokerage margin was in line with our original expectation." Mr. Ryan added, "There is seasonality within the year, and our brokerage margins are highest in the fourth quarter. Given our current outlook, we continue to expect that the 2003 brokerage margin will exceed full year 2002." Reinsurance operations, particularly in the U.S., had excellent results and U.S. retail brokerage and managing underwriting improved significantly from a year ago, driven by higher retention rates and new business development. International brokerage continued to have solid results. In claims services, actions have been and are being taken to improve the financial performance of this business. Consulting revenue rose 19% to $294 million, or 9% on an organic basis. Human resource outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. was the principal growth area with 26% organic revenue growth. Non-outsourcing business grew 5% on an organic basis, mostly due to slower hiring and less discretionary spending by clients in response to challenging economic conditions. Pretax income was $21 million compared with $23 million one year ago, and the pretax margin was 7.1% versus 9.3%. An increasing mix of lower margin outsourcing business factored into the comparisons; however, the profitability of these multi-year contracts is expected to improve in future periods. Insurance Underwriting revenue was $692 million compared with $750 million in second quarter 2002. The decline in reported revenues was primarily the result of the "back-to-basics" strategy within A&H underwriting that was announced in fourth quarter 2002. Additionally, investment income decreased $11 million, primarily from the runoff Runoff The procedure of printing the end-of-day prices for every stock on an exchange onto ticker tape. Notes: If the "tape is late" then it can take a long time to print off all the closing prices. of guaranteed investment contracts Guaranteed investment contract (GIC) A pure investment product in which a life company agrees, for a single premium, to pay at a maturity date the principal amount of a predetermined annual crediting (interest) rate over the life of the investment. . Organic revenue growth, based on written premiums, was 8%, driven by credit and select property and casualty premiums. Pretax income was $64 million compared with $2 million in second quarter 2002. Pretax margins grew to 9.2% from 0.3%. Excluding a previously reported $3 million special charge in second quarter 2002, pretax income was $5 million and the pretax margin was 0.7%. The "back-to-basics" focus in accident and health (A&H) underwriting significantly improved the benefits payout ratio Payout Ratio The percentage of earnings paid out in dividends. It is calculated by dividing dividends per share by earnings per share. Notes: The payout ratio indicates how well earnings support the dividend payments: the lower the ratio, the more secure the dividend. , which contributed to the margin increase. Second quarter 2002 results included a $15 million pretax non-claim 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. reserve and a $36 million pretax expense related to the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of NPS NPS National Park Service NPS Naval Postgraduate School NPS Net Promoter Score (customer management) NPS Non-Point Source pollution NPS Native Plant Society NPS Norfolk Public Schools (Virginia) , an independent managing general agent. Corporate and Other segment revenue of $44 million improved from a negative $91 million in second quarter 2002, due mostly to lower 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. write downs and increased income from equity securities. Investment income in second quarter 2003 included $21 million from an increase in the value 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 A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Holdings Limited (NYSE: ENH ENH Enhancement ENH Evanston Northwestern Healthcare (Illinois) ENH Evanston-Northwestern Hospital ) warrants. Aon co-sponsored the formation of Endurance in 2001 and made an initial investment of $227 million. The Corporate and Other segment pretax loss pretax loss A loss reported before tax benefits are considered. was $15 million compared to a pretax loss of $153 million a year ago, principally due to improved revenues. A $9 million unusual WTC charge was incurred in the quarter. This previously anticipated charge, originally noted in Aon's first quarter 2003 earnings release, relates to temporary office space secured in Manhattan Manhattan, indigenous people of North America Manhattan (mănhăt`ən), indigenous people of North America of the Algonquian-Wakashan linguistic stock (see Native American languages). following the WTC disaster. Aon has included these costs as part of its WTC property insurance claim, which continues to be processed.
Second Quarter and Six Months Earnings Per Share: Review of
Selected Items
The table below outlines certain items that influenced the second
quarter and six months results.
----------------------------------------------------------------------
Earnings Per Share (EPS) Analysis:
credit (charge) Second Quarter Six Months
---------------------------------- -------------- -------------
2003 2002 2003 2002
------- ------ ------ ------
Reported Dilutive EPS $0.46 $0.00 $0.94 $0.57
Unusual charges - WTC (0.02) - (0.09) -
Special charges - spin off expenses - (0.01) - (0.02)
Special credits - business
transformation plan - 0.01 - 0.01
One-time tax related item - - - 0.11
Cumulative adjustment - other than
temporary impairments - (0.13) - (0.12)
NPS related costs - (0.08) - (0.08)
Underwriting segment non-claim
litigation reserves - (0.03) - (0.03)
Losses and other costs for certain
insurance underwriting units
being discontinued (0.01) (0.01) (0.01) (0.01)
Additional spin-off plan and related
expenses not reflected
as special charges - (0.01) - (0.02)
----------------------------------------------------------------------
In addition to the items shown above, defined benefit pension costs increased by approximately $34 million pretax ($0.07 per share) in second quarter 2003 compared to a year ago. 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 positive impact of foreign currency translations was approximately $0.03 per share in the quarter. Financial Strength Highlights Total debt decreased to approximately $1.76 billion at June June: see month. 30, 2003 from $1.79 billion at December December: see month. 31, 2002. Preferred securities outstanding were $752 million for both periods. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was approximately $4.3 billion at June 30, 2003, up from $3.9 billion at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2002. At June 30, 2003, Aon's total debt and preferred securities as a percentage of total capital improved to 37% from 40% at December 31, 2002. Approximately 90% of Aon's investment portfolio at quarter end was in short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. and fixed maturities. More than 95% of the fixed income securities were investment grade. Aon's senior debt is rated "A-" by Standard and Poor's Noun 1. Standard and Poor's - a broadly based stock market index Standard and Poor's Index and Fitch fitch: see polecat. , and Baa2 by Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. . Aon's principal insurance underwriting subsidiaries are rated "A" by A.M. Best for their claims paying ability. Accounting and Disclosure Changes In May 2003, 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 FAS Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement establishes standards for classifying and measuring as liabilities certain financial instruments that embody em·bod·y tr.v. em·bod·ied, em·bod·y·ing, em·bod·ies 1. To give a bodily form to; incarnate. 2. To represent in bodily or material form: obligations of the issuer and have characteristics of both liabilities and equity. Beginning third quarter 2003, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with FAS 150, Aon will reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you as liabilities its Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ($50 million) and Trust Preferred Capital Securities ($702 million). The amounts reclassified will be at fair value. The difference between fair value and book value at July July: see month. 1, 2003 will be reflected on the condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated statements of income as a cumulative effect of change in accounting principle, net of tax, in third quarter 2003. Changes in the fair value after July 1, 2003 will be reflected in interest expense. Dividends paid on the Capital Securities (currently shown as minority interest, net of tax on the condensed consolidated statements of income) and the Redeemable Preferred Stock will also be included in interest expense in future quarters. Future Outlook "We had solid organic revenue growth in the quarter and brokerage margins have improved year-over-year," Mr. Ryan said. "We have recruited some excellent new talent into our organization, and our franchise has never been stronger in terms of delivering valuable services and products to our clients. Margin expansion is a key focus, and we are working to improve margins in each of our operating segments." Mr. Ryan added, "Based on our current outlook, we remain comfortable with a 2003 earnings per share range of $1.90 to $2.00, excluding unusual WTC charges and the impact of FAS 150." The Company will host an audio webcast on Wednesday Wednesday: see week. , August 6th at 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 ) that can be accessed at www.aon.com. 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 contains 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 either historical or anticipated results, depending on a variety of factors. Potential factors that could impact results include the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, pension funding, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual costs 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. and other loss contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , the heightened level of potential errors and omissions errors and omissions n. short-hand for malpractice insurance which gives physicians, attorneys, architects, accountants and other professionals coverage for claims by patients and clients for alleged professional errors and omissions which amount to negligence. liability arising from placements of complex policies and sophisticated reinsurance arrangements in an insurance market in which insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. reserves are under pressure, and the timing and resolution of related insurance and reinsurance issues relating to the events of September September: see month. 11, 2001. 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
Second Quarter Ended Six Months Ended
--------------------- --------------------
Jun. Jun. Jun. Jun.
(millions except per 30, 30, Percent 30, 30, Percent
share data) 2003 2002 Change 2003 2002 Change
------ ------ ------ ------ ------ -----
Revenue
-------
Brokerage commissions
and fees $1,713 $1,510 13 % $3,389 $2,954 15 %
Premiums and other 635 638 - 1,267 1,173 8
Investment income 90 (26) N/A 170 83 105
------ ------ ------ ------ ------ -----
Total revenue 2,438 2,122 15 4,826 4,210 15
------ ------ ------ ------ ------ -----
Expenses
--------
General expenses 1,817 1,671 9 3,526 3,134 13
Benefits to
policyholders 325 391 (17) 670 705 (5)
Interest expense 27 30 (10) 55 59 (7)
Amortization of
intangible assets 15 14 7 28 25 12
Unusual charges - World
Trade Center 9 - N/A 46 - N/A
------ ------ ------ ------ ------ -----
Total expenses 2,193 2,106 4 4,325 3,923 10
------ ------ ------ ------ ------ -----
Income Before Income Tax
and Minority Interest 245 16 +500 501 287 75
Provision for income
tax (37% in 2003 and
2002) 90 6 +500 185 107 73
------ ------ ------ ------ ------ -----
Income Before Minority
Interest 155 10 +500 316 180 76
Minority interest -
8.205% trust preferred
capital securities (9) (10) (10) (18) (20) (10)
------ ------ ------ ------ ------ -----
Net Income $ 146 $ - N/A % $ 298 $ 160 86 %
====== ====== ====== ====== ====== =====
Preferred stock
dividends - - N/A (1) (1) -
------ ------ ------ ------ ------ -----
Net Income Available for
Common Stockholders $ 146 $ - N/A % $ 297 $ 159 87 %
====== ====== ====== ====== ====== =====
Net Income Per Share:
Basic net income per
share $ 0.46 $ - N/A % $ 0.94 $ 0.58 62 %
====== ====== ====== ====== ====== =====
Dilutive net income per
share $ 0.46 $ - N/A % $ 0.94 $ 0.57 65 %
====== ====== ====== ====== ====== =====
Dilutive average common
and common equivalent
shares outstanding 318.2 278.0 14 % 316.7 277.3 14 %
====== ====== ====== ====== ====== =====
Aon Corporation
Segments
Second Quarter Ended
-----------------------------------
(millions) Organic
Revenue
Jun. 30, Jun. 30, Percent Growth
2003 2002 Change (5)
-------- --------- ------- --------
Revenue
-------
Risk and insurance brokerage
services (1)
Risk management and insurance
brokerage - Americas $ 590 $ 517 14 % 14 %
Risk management and insurance
brokerage - International 507 413 23 10
Reinsurance brokerage and related
services 226 192 18 13
Claims services 101 93 9 2
-------- --------- ------- --------
Total risk and insurance
brokerage services 1,424 1,215 17 11
-------- --------- ------- --------
Consulting (2)
Benefits, compensation,
management and communications
consulting 224 194 15 5
Human resource outsourcing 70 54 30 26
-------- --------- ------- --------
Total consulting 294 248 19 9
-------- --------- ------- --------
Insurance underwriting (3)
Accident & health and life 377 441 (15) (1)
Warranty, credit and property &
casualty 315 309 2 19
-------- --------- ------- --------
Total insurance underwriting 692 750 (8) 8
-------- --------- ------- --------
Operating segments 2,410 2,213 9 10 %
========
Corporate and other 44 (91) N/A
Intersegment revenues (4) (16) - N/A
-------- --------- -------
Total revenue $2,438 $2,122 15 %
======== ========= =======
Income (Loss) Before Income Tax
and Minority Interest
----------------------
Risk and insurance brokerage
services $ 175 $ 144 22 %
Consulting 21 23 (9)
Insurance underwriting 64 2 +500
Corporate and other (15) (153) N/A
-------- --------- -------
Total income before income tax
and minority interest $ 245 $ 16 +500 %
======== ========= =======
Six Months Ended
-----------------------------------
(millions) Organic
Revenue
Jun. 30, Jun. 30, Percent Growth
2003 2002 Change (5)
-------- --------- ------- --------
Revenue
-------
Risk and insurance brokerage
services (1)
Risk management and insurance
brokerage - Americas $1,097 $ 965 14 % 13 %
Risk management and insurance
brokerage - International 1,031 833 24 10
Reinsurance brokerage and related
services 468 391 20 14
Claims services 202 183 10 8
-------- --------- ------- --------
Total risk and insurance
brokerage services 2,798 2,372 18 12
-------- --------- ------- --------
Consulting (2)
Benefits, compensation,
management and communications
consulting 433 377 15 6
Human resource outsourcing 143 104 38 32
-------- --------- ------- --------
Total consulting 576 481 20 11
-------- --------- ------- --------
Insurance underwriting (3)
Accident & health and life 776 830 (7) 2
Warranty, credit and property &
casualty 625 569 10 21
-------- --------- ------- --------
Total insurance underwriting 1,401 1,399 - 11
-------- --------- ------- --------
Operating segments 4,775 4,252 12 11 %
========
Corporate and other 79 (42) N/A
Intersegment revenues (4) (28) - N/A
-------- --------- -------
Total revenue $4,826 $4,210 15 %
======== ========= =======
Income (Loss) Before Income Tax
and Minority Interest
----------------------
Risk and insurance brokerage
services $ 405 $ 333 22 %
Consulting 41 50 (18)
Insurance underwriting 127 70 81
Corporate and other (72) (166) N/A
-------- --------- -------
Total income before income tax
and minority interest $ 501 $ 287 75 %
======== ========= =======
(1) Includes investment income of $20 million and $28 million for the
second quarters ended June 30, 2003 and 2002, respectively, and
$40 million and $49 million for the six months ended June 30, 2003
and 2002, respectively.
(2) Includes investment income of $0 million for both the second
quarters ended June 30, 2003 and 2002, respectively, and $1
million for both the six months ended June 30, 2003 and 2002,
respectively.
(3) Includes investment income of $30 million and $41 million, of
which $1 million and $10 million pertain to interest earned on
investments underlying investment-type contracts, for the second
quarters ended June 30, 2003 and 2002, respectively. Includes
investment income of $58 million and $83 million, of which $3
million and $22 million pertain to interest earned on investments
underlying investment-type contracts, for the six months ended
June 30, 2003 and 2002, respectively.
(4) Total revenue from operating segments include intersegment
revenues of $16 million and $28 million for the second quarter and
six months ended June 30, 2003, respectively, which have been
eliminated in the consolidated summary of operations. Intersegment
revenues in periods prior to March 31, 2003 have not been
eliminated in the consolidated summary of operations as the
amounts were immaterial.
(5) Organic revenue growth excludes the impact of acquisitions,
dispositions, transfers, investment income, foreign exchange,
reimbursable expenses and unusual items. Written premiums and fees
are the basis for organic revenue growth within the Insurance
Underwriting segment.
Aon Corporation
Corporate and Other
Second Quarter Ended Six Months Ended
--------------------- --------------------
Jun. Jun. Jun. Jun.
(millions) 30, 30, Percent 30, 30, Percent
2003 2002 Change 2003 2002 Change
------ ------ ------ ------ ------ -----
Revenue
-------
Investment Income:
Income from marketable
equity securities and
other investments (1) $ 36 $ 3 +500 % $ 89 $ 6 +500 %
Limited partnership
investments - 5 (100) - 14 (100)
Interest on tax refund - - N/A - 48 (100)
Net gain (loss) on
disposals and related
expenses (2) 4 (103) N/A (18) (118) N/A
------ ------ ------ ------ ------ -----
Total investment
income 40 (95) N/A 71 (50) N/A
Auto finance service
revenue 4 4 - 8 8 -
------ ------ ------ ------ ------ -----
Total revenue 44 (91) N/A 79 (42) N/A
------ ------ ------ ------ ------ -----
Expenses
--------
General expenses (3) 23 32 (28) 50 65 (23)
Interest expense 27 30 (10) 55 59 (7)
Unusual charges - World
Trade Center 9 - N/A 46 - N/A
------ ------ ------ ------ ------ -----
Total expenses 59 62 (5) 151 124 22
------ ------ ------ ------ ------ -----
Loss before income tax $ (15) $ (153) N/A % $ (72) $(166) N/A %
======= ====== ====== ====== ====== =====
(1) Includes income of $21 million and $66 million from an increase in
the value of warrants held by the company in Endurance Specialty
for the second quarter and six months ended June 30, 2003,
respectively, as well as $13 million and $20 million from a common
equity interest in Endurance for the second quarter and six months
ended June 30, 2003, respectively.
(2) Includes impairment writedowns of $5 million and $101 million
(including $56 million for the cumulative adjustment for other
than temporary impairments that existed in prior financial
reporting periods, of which $5 million pertained to first quarter
2002) for the second quarters ended June 30, 2003 and 2002,
respectively, and $33 million and $109 million (including $51
million cumulative adjustment relating to prior financial
reporting periods) for the six months ended June 30, 2003 and
2002, respectively.
(3) Includes costs related to the auto finance service business of $13
million and $10 million for the second quarters ended June 30,
2003 and 2002, respectively, and $24 million and $20 million for
the six months ended June 30, 2003 and 2002, respectively.
Aon Corporation
Supplemental Financial Information
Second Quarter Ended
----------------------------------------------
Less:
Less: All Organic
Jun. 30,Jun. 30,Percent Currency Other Revenue
(millions) 2003 2002 Change Impact (1) Growth
----------------------------------------------
Revenue
-------
Risk and insurance
brokerage services
Risk management and
insurance brokerage -
Americas $ 590 $ 517 14 % - % - % 14 %
Risk management and
insurance brokerage -
International 507 413 23 14 (1) 10
Reinsurance brokerage
and related services 226 192 18 7 (2) 13
Claims services 101 93 9 3 4 2
------ ------ ------ -------- ----- --------
Total risk and
insurance
brokerage services 1,424 1,215 17 6 - 11
------ ------ ------ -------- ----- --------
Consulting
Benefits,
compensation,
management and
communications
consulting 224 194 15 5 5 5
Human resource
outsourcing 70 54 30 3 1 26
------ ------ ------ -------- ----- --------
Total consulting 294 248 19 5 5 9
------ ------ ------ -------- ----- --------
Insurance underwriting
Accident & health and
life 377 441 (15) 4 (18) (1)
Warranty, credit and
property & casualty 315 309 2 3 (20) 19
------ ------ ------ -------- ----- --------
Total insurance
underwriting 692 750 (8) 3 (19) 8
------ ------ ------ -------- ----- --------
Operating segments 2,410 2,213 9 5 % (6) % 10 %
=======================
Corporate and other 44 (91) N/A
Intersegment revenues (16) - N/A
------ ------ ------
Total revenue $2,438 $2,122 15 %
====== ====== ======
Six Months Ended
----------------------------------------------
Less:
Less: All Organic
Jun. 30,Jun. 30,Percent Currency Other Revenue
(millions) 2003 2002 Change Impact (1) Growth
----------------------------------------------
Revenue
-------
Risk and insurance
brokerage services
Risk management and
insurance brokerage -
Americas $1,097 $ 965 14 % - % 1 % 13 %
Risk management and
insurance brokerage -
International 1,031 833 24 14 - 10
Reinsurance brokerage
and related services 468 391 20 7 (1) 14
Claims services 202 183 10 3 (1) 8
------ ------ ------ -------- ----- --------
Total risk and
insurance
brokerage services 2,798 2,372 18 6 - 12
------ ------ ------ -------- ----- --------
Consulting
Benefits,
compensation,
management and
communications
consulting 433 377 15 5 4 6
Human resource
outsourcing 143 104 38 3 3 32
------ ------ ------ -------- ----- --------
Total consulting 576 481 20 5 4 11
------ ------ ------ -------- ----- --------
Insurance underwriting
Accident & health and
life 776 830 (7) 3 (12) 2
Warranty, credit and
property & casualty 625 569 10 4 (15) 21
------ ------ ------ -------- ----- --------
Total insurance
underwriting 1,401 1,399 - 3 (14) 11
------ ------ ------ -------- ----- --------
Operating segments 4,775 4,252 12 5 % (4) % 11 %
======== ===== ========
Corporate and other 79 (42) N/A
Intersegment revenues (28) - N/A
------ ------ ------
Total revenue $4,826 $4,210 15 %
====== ====== ======
(1) Includes items discussed in the organic revenue growth
description, beyond currency impacts.
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