Aon Unveils New Environmental Program

Aon Corporation announced the availability of Aon Environmental Edge(SM), a customizable program and the first of its kind to provide global coverage for environmental exposures with limits up to $300 million for the most complicated risks. Once assessed, environmental liability is strict, joint and retroactive; there is no statute of limitations. Environmental liability survives bankruptcy as well as dissolution of the liable entity. Unlike typical environmental insurance policies, Aon Environmental Edge reportedly encompasses legal liability protection across the board and around the world, without the need for scheduling specific locations or activities. Corporations have reportedly long-enjoyed a false sense of security created by the "innocent lender" legal protection status and the protection of individual assets by corporate veil, or limited liability protection. Aon Environmental Edge reportedly helps fill the gaps in general liability and directors' and officers' policies, rendering obsolete these insufficient umbrellas of security. Structured to respond in the event the corporate veil is pierced, Aon Environmental Edge imparts a broad insuring agreement for third party claims arising from environmental conditions alleged to be caused by an insured entity. Additionally, the program reportedly manages this risk in a cost-effective manner, all on a single policy.

D&O Liability Ins. Costs for Financial Institutions Rise

Directors' and officers' liability insurance costs for financial institutions significantly increased in the fourth quarter of 2007, according to a D&O pricing index released by Aon Corporation. Authored by Aon Financial Services Group, the index tracks changes in D&O premium costs relative to the base year of 2001. Measured on a price per million basis, D&O insurance costs for banks and securities firms increased 18.66 percent from Q4 2006 to Q4 2007. Comparatively, firms operating in industries outside the financial services sector experienced an 18.99 percent decrease in D&O costs during the same time period. Since 2001, industries across the board have experienced similar decreases in average D&O pricing. Now, pricing for financial institutions is increasing at a time when the rest of the market is experiencing price decreases. The index explains these findings by pointing to the fact that financial institutions were impacted particularly hard by the subprime crisis during the last three months of 2007. In that timeframe, the S&P 500 Financial Sector saw a 21.62 percent drop(1) in the value of a broad index of financial institutions. As a result, D&O underwriters associated larger amounts of risk with the directors and officers of these firms and thus increased D&O costs for the financial services sector.

Tough Flying for Air Insurance Market

The high level of hull and liability claims, at $1.7 billion, coupled with the lowest amount of lead hull and liability premium since 2000 ($1.5 billion), means that the airline insurance market was broadly unprofitable in 2007. The negotiating process is likely to be tougher in 2008 as a result, according to Aon's Airline Insurance Market Review of 2007 (www.aon.com). This is the key finding of the review that brings together data for the last year and extrapolates its likely effect on the market in 2008 and beyond.

The reviews findings include:

* Total recorded lead hull and liability premium for 2007 was $1.5 billion, a reduction of 30 percent since 2005;
* Total incurred claims, including hull, liability and an estimate attritional losses, amounted to $1.7 billion;
* North American fleet values, at $192 billion, fell below those of Europe and Asia, both at $193 billion, for the first time in 2007. North American passenger numbers, however, were still higher than the other two major aviation regions;
* The proportion of passengers travelling with flag carriers has fallen from 66 percent in 2005 to 48 percent in 2007.

Having started the year with average premium reductions of around 20 percent, the airline insurance market became gradually less soft as the year progressed with underwriters recognising the probability that the value of hull claims would outweigh the total lead hull and liability premium.

Aon, Gallagher Announce Deal

Aon Corporation, a provider of global risk management services, has signed definitive agreements to acquire substantially all of Gallagher Re's U.S. and U.K. reinsurance brokerage business. In addition, a team of industry professionals from Gallagher Re, based in the U.S. and U.K., will join Aon Re Global, the world's leading reinsurance intermediary. The definitive agreement includes an initial payment of approximately $30 million in cash and an additional payment for revenues generated in the 12 months following the close of the transaction. The UK portion of the transaction will be finalized when all regulatory requirements are met.

Aon Corp. Power Brokers Named

Risk & Insurance Magazine has recognized 41 risk management executives from Aon Corporation as "Power Brokers™" in the publication's annual list of the most influential commercial insurance brokers. Published in the February 2008 issue, Risk & Insurance Magazine (www.riskandinsurance.com) recognized 151 people in 28 industry categories. Aon executives took top honors in 22 categories -- highlighting the company's breadth of expertise and its unique ability to provide distinctive client value. Among the 2008 list were seven Aon executives named Power Brokers for the third time. They are Peter Breitstone, an authority in the environmental industry; automotive experts Carol Williams and Anthony DeFelice; James Beardsley, a transportation-railroad specialist; Marshall Nadel, a utilities expert; technology expert Michael Lamprecht; and education specialist Anne Mulholland.

Aon Integrates Operations

Aon Corporation announced the firm is integrating its worldwide risk and insurance brokerage operations into a single global business, Aon Risk Services, with more than 26,000 colleagues in 120 countries and more than $5 billion in revenues. Aon Risk Services will be led by Steve McGill, currently chief executive officer of Aon Risk Services Americas and Aon Global, and Ted T. Devine, currently chief executive officer of Aon Re Global. McGill will serve as chairman and chief executive officer and Devine as president of Aon Risk Services, and both will continue to be based in Chicago. McGill, whose career spans three decades, has led Aon Risk Services Americas and Aon Global since 2006. Devine, who joined Aon in 2005, has served as chief executive officer of Aon Re Global, head of strategy for Aon Corporation, chief operating officer of Aon Risk Services Americas and chief operating officer of Aon Global.