| Type | Public company S&P 500 Component |
|---|---|
| Traded as | NYSE: AON |
| Industry | Risk management Insurance brokerage Reinsurance brokerage Management consulting |
| Founded | 1919 |
| Founder(s) | W. Clement Stone |
| Headquarters | Aon Corporation Aon Center, 200 East Randolph Street, Chicago, Illinois, United States |
| Area served | Worldwide |
| Key people | Gregory C. Case (President and CEO) Lester B. Knight (Chairman) |
| Products | Insurance, risk management, human resource consulting |
| Revenue | US$7.60B (FY 2009)[1] |
| Operating income | US$1.02B (FY 2009)[1] |
| Net income | US$747M (FY 2009)[1] |
| Total assets | US$23.0B (FY 2009)[2] |
| Total equity | US$5.38B (FY 2009)[2] |
| Employees | 61,000 (2011) |
| Website | aon.com |
Aon Corporation (NYSE: AON) is an American public multinational corporation headquartered in Chicago, Illinois, USA that provides risk management services, insurance and reinsurance brokerage, human capital and management consulting. Aon has approximately 500 offices worldwide, serving 120 countries with 59,000 employees.[3]
In 2011, Aon was ranked number 287 on the Fortune 500 list.[4] Aon is the largest reinsurance broker in the world. In 2010, Aon was ranked as the second largest insurance broker in the world based on brokerage revenue.[5] Aon is known internationally as the principal sponsor of the English Premier League team Manchester United.[6][7]
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 renamed to Aon, a Gaelic word meaning oneness. Combined Insurance was sold to ACE Limited in April 2008.
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Aon is a global provider of insurance and reinsurance brokerage services, insurance products, risk and insurance advice, web-based risk management information systems, as well as other consulting services. The company operates in three major segments: commercial brokerage, consulting services, and consumer insurance underwriting.
The brokerage unit Aon Risk Services provides retail property/casualty, liability, and other insurance products for groups and businesses, as well as risk management services. Aon Re Global handles reinsurance brokerage services for aviation, marine, energy, professional liability, and other niche and specialty business lines. Its consulting unit, Aon Consulting Worldwide, specializes in employee benefits administration. The risk and insurance brokerage segment accounted for 82% of total revenue from continuing operations in 2007, and the consulting segment accounted for 18%.[8]
The company employs approximately 59,000 workers in its 500 offices in 120 countries.[9] Aon is the world's second largest insurance brokerage, and largest reinsurance brokerage.[10]
W. Clement Stone's mother bought a small Detroit insurance agency, and in 1918 brought her son into the business. Young Stone sold low-cost, low-benefit accident insurance, underwriting and issuing policies on-site. The next year he founded his own agency, the Combined Registry Co.
As the Great Depression began, Stone reduced his workforce and improved training. Forced by his son's respiratory illness to winter in the South, Stone moved to Arkansas and Texas. In 1939 he bought American Casualty Insurance Co. of Dallas, Texas. It was consolidated with other purchases as the Combined Insurance Co. of America in 1947. The company continued through the 1950s and 1960s, continuing to sell health and accident policies. In the 1970s Combined expanded overseas despite being hit hard by the recession.
In 1982, after 10 years of stagnation under Clement Stone Jr., the elder Stone, then 79, resumed control until the completion of a merger with Ryan Insurance Co. allowed him to transfer control to Patrick Ryan. Ryan, the son of a Ford dealer in Wisconsin, had started his company as an auto credit insurer in 1964. In 1976, the company bought the insurance brokerage units of the Esmark conglomerate. Ryan focused on insurance brokering and added more upscale insurance products. He also trimmed staff and took other cost-cutting measures, and in 1987 he changed Combined's name to Aon. In 1992, he bought Dutch insurance broker Hudig-Langeveldt. In 1995, the company sold its remaining direct life insurance holdings to focus on consulting. The following year it began offering hostile takeover insurance policies to small and midsized companies.
Aon built a global presence through purchases. In 1997 it bought The Minet Group, as well as insurance brokerage Alexander & Alexander Services, Inc. in a deal that made Aon (temporarily) the largest insurance broker worldwide. The firm made no U.S. buys in 1998, but doubled its employee base with purchases including Spain's largest retail insurance broker, Gil y Carvajal, and the formation of Aon Korea, the first non-Korean firm of its kind to be licensed there.
Responding to industry demands, Aon announced its new fee disclosure policy in 1999, and the company reorganized to focus on buying personal line insurance firms and to integrate its acquisitions. That year it bought Nikols Sedgwick Group, an Italian insurance firm, and formed RiskAttack (with Zurich U.S.), a risk analysis and financial management concern aimed at technology companies. The cost of integrating its numerous purchases, however, hammered profits in 1999.
Despite its troubles, in 2000 Aon bought Reliance Group's accident and health insurance business, as well as Actuarial Sciences Associates, a compensation and employee benefits consulting company. Later in that year, however, the company decided to cut 6% of its workforce as part of a restructuring effort. In 2003, the company saw revenues increase primarily because of rate hikes in the insurance industry (meaning higher commissions for Aon). Also that year Endurance Specialty, a Bermuda-based underwriting operation that Aon helped to establish in November 2001 along with other investors, went public. The next year Aon sold most of its holdings in Endurance.
Its New York offices were on the 92nd and 98th–105th floors of the South Tower of the World Trade Center at the time of the September 11, 2001 terrorist attack. When the North Tower was struck at 8:46 a.m., many executives began evacuating their employees from the upper floors of the South Tower. The evacuation of Aon's offices, ordered by Eric Eisenberg, was carried out quickly as 924 of the 1,100 Aon employees present at the time managed to evacuate the building before United Airlines Flight 175 struck it twenty stories below them.[11]
However, many were influenced to stay by security guards and security announcements, or did not exit the building in time. As a result, 176 employees of Aon were killed in the attacks, including Eisenberg and Kevin Cosgrove, a vice president of the company that made a call to 911 when the tower collapsed.[12]
In 2004–2005 Aon, along with other brokers including Marsh & McLennan and Willis, fell under regulatory investigation under New York Attorney General Eliot Spitzer and other state attorneys general. At issue was the practice of insurance companies' payments to brokers (known as contingent commissions). The payments were thought to bring a conflict of interest, swaying broker decisions on behalf of carriers, rather than customers. In the spring of 2005, without acknowledging any wrongdoing, Aon agreed to a $190 million settlement, payable over 30 months.
In January 2009 Aon was fined £5.25 million in the UK after it made more than $7 million worth of "suspicious" payments to overseas firms and individuals. The UK's Financial Services Authority stated that the fine related to the company's inadequate bribery and corruption controls, claiming that between January 14, 2005 and September 30, 2007 Aon had failed to properly assess the risks involved in its dealings with overseas firms and individuals. The Authority did not find that any money had actually made its way to illegal organisations. Aon qualified for a 30% discount on the fine as a result of its cooperation with the investigation. Aon said its conduct was not deliberate, adding it had since "significantly strengthened and enhanced its controls around the usage of third parties".[13]
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.[14]
On Mar 5, 2010, Hewitt Associates announced that it acquired Senior Educators Ltd. The acquisition offers companies a new way to address retiree medical insurance commitments. [15]
On July 12, 2010, Aon announced that it has agreed to buy Lincolnshire, Illinois, based Hewitt Associates for $4.9 billion in cash and stock.[16]
On July 19, 2011, Aon announced that it bought Westfield Financial Corp., the owner of insurance-industry consulting firm Ward Financial Group, from Ohio Farmers Insurance Co. Financial terms were not disclosed. [17]
Aon has 29 offices throughout Australia, including every state and territory capital city.[18] Its head office is in Sydney.
On June 3, 2009, it was reported that Aon had signed a four year shirt sponsorship deal with English football giant Manchester United. On June 1, 2010, Aon replaced troubled American insurance company AIG as the principal sponsor of the club. The Aon logo is prominently displayed on the front of the club's new shirts.[19]
The deal is said to be worth £80 million over four years, replacing United's deal with AIG as the most lucrative shirt deal in history at the time, but it was later equalled when Standard Chartered Bank agreed a deal with Liverpool FC to pay £20 million a year over the same period.[19]
Aon has sponsored the British Touring Car Championship team run by Arena Motorsport since 2009. Arena Motorsport runs 3 Ford Focus' under the Team Aon banner. Its drivers are Tom Chilton, Andy Neate and Tom Onslow-Cole with Chilton's father Grahame being Aon's vice-chairman, who is a "huge fan" of motor racing. His other son Max Chilton races in the GP2 Series with backing from Aon.