Back to GetFilings.com
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number: 1-7933
Aon Corporation
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of 36-3051915
Incorporation or Organization) (I.R.S. Employer
123 NORTH WACKER DRIVE, Identification No.)
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 701-3000
(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock, $1 par value New York Stock Exchange*
7.40% Notes Due 2002 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
*The Common Stock of the Registrant is also listed for trading on the Chicago
Stock Exchange and the International Stock Exchange London and Frankfurt.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO []
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements,
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of February 21, 2001 was $7,688,275,227.
Number of shares of $1.00 par value Common Stock outstanding as of February 21,
2001 was 261,338,989.
DOCUMENTS FROM WHICH INFORMATION IS INCORPORATED BY REFERENCE:
Annual Report to Stockholders of the Registrant for the Year 2000 (Parts I, II
and IV)
Notice of Annual Meeting of Holders of Common Stock and Series C Preferred
Stock and Proxy Statement for Annual Meeting of Stockholders on April 20, 2001
of the Registrant (Part III)
- --------------------------------------------------------------------------------
PART I
ITEM 1. BUSINESS.
The Registrant is a holding company whose operating subsidiaries carry on
business in three distinct operating segments: (i) insurance brokerage and other
services, (ii) consulting, and (iii) insurance underwriting. Incorporated in
1979, it is the parent corporation of long-established and more recently formed
companies.
The Registrant acquired, among other companies and businesses, Actuarial
Sciences Associates, Inc. (ASA), an employee benefits and consulting firm, and
Horizon Consulting Group, Inc., a firm specializing in commercial policyholder
claim consulting services, in 2000. In February 2001, Aon announced that it had
entered into a definitive agreement to acquire ASI Solutions Incorporated (ASI),
a worldwide provider of human resources administration and compensation
consulting services. The transaction involves an exchange of Aon common stock
and is subject to regulatory approval and ASI shareholder approval.
The Insurance Brokerage and Other Services segment consists principally
of Aon's retail brokerage, reinsurance, wholesale and specialty brokerage and
other related services such as managing underwriting and claims and financing
services. These services are provided by Aon Group, Inc., its subsidiaries
and certain other indirect subsidiaries of the Registrant (the "Aon Group")
including Aon Risk Services Companies, Inc.; Aon Holdings bv; Aon Services
Group, Inc.; Aon Re Worldwide, Inc.; Aon Limited; Cananwill, Inc.; and Premier
Auto Finance, Inc.
The Consulting segment provides a range of services utilizing four
practice groups: employee benefits, compensation, management consulting and
employment practices outsourcing. These services are provided by Aon
Consulting Worldwide, Inc. which is also a subsidiary of Aon Group.
Aon's Insurance Underwriting segment is comprised of supplemental life,
accident and health insurance, and extended warranty and casualty insurance
products. Combined Insurance Company of America ("Combined Insurance") engages
in the marketing and underwriting of life and accident and health insurance
products. Virginia Surety Company, Inc. and London General Insurance Company
Limited offer extended warranty and casualty insurance products.
On November 2, 2000, the Registrant announced a business transformation
plan, to be undertaken from November 2000 through the next fiscal year. The
transformation plan will affect each operating segment; however, most changes
will affect the largest operating segment, Insurance Brokerage and Other
Services, and will occur in the major countries of operation, the U.S. and the
United Kingdom.
The Registrant hereby incorporates by reference "Business Transformation
Plan" on page 17 of the Annual Report to Stockholders of the Registrant for the
Year 2000 ("Annual Report"), as well as pages 6 through 15, 20 through 24, and
pages 54, 55 and 59 of the Annual Report.
COMPETITION AND INDUSTRY POSITION
(1) INSURANCE BROKERAGE AND OTHER SERVICES
Aon Group, Inc; Aon Risk Services Companies, Inc.; Aon Limited (U.K.); Aon
Holdings International bv; Aon Services Group, Inc.; Aon Re Worldwide, Inc.;
Cananwill, Inc.; and Premier Auto Finance, Inc.
Aon Group affiliated companies conduct the Registrant's brokerage and
consulting operations, and have 550 offices around the world in 120 countries.
In 2000, those companies employed nearly 40,000 professionals and support
personnel to serve the diverse needs of clients.
Aon Group's retail brokerage companies operate in a highly competitive
industry and compete with a large number of retail insurance brokerage and
agency firms as well as individual brokers and agents and direct writers of
insurance coverage. Those companies provide risk management services, including
insurance placement and claims, loss control and administrative services as well
as specialty underwriting solutions and customized products and services.
They have also developed certain specialist areas such as marine, aviation,
directors and officers liability, financial institutions, construction, energy,
media and entertainment. In 2000, investments were made in professional talent,
technology, process improvement and the development of specialized products and
services to meet the evolving needs of clients. Those companies operate through
offices located in North America, Europe, Latin America, Africa, Australia and
Asia.
Aon Group's companies also address the highly specialized product
development, consulting and administrative risk management needs of professional
groups, service businesses, governments, healthcare providers and commercial
organizations. They also provides underwriting management skills, claims and
risk management expertise, and third-party administration services to insurance
companies, and insurance brokerage services for individuals. They market and
broker both the primary and reinsurance risks of these programs. For
individuals, associations and businesses, affinity products for professional
liability, life, disability income and personal lines are provided.
Aon's reinsurance brokerage activities are organized under Aon Re in the
United States and Aon Limited in the United Kingdom, constituting the largest
reinsurance broker in the world and offering reinsurance, analytical services
and alternative risk financing vehicles. The companies serve the alternative
market with reinsurance placement, alternative risk services, captive management
services and catastrophe information forecasting.
Premium-related financing services are available to clients of Aon Group
and other independent organizations through Cananwill. Certain retail automotive
organizations have also been provided a service which purchases a select amount
of their auto financing and leasing contracts from individuals and sells them to
unaffiliated parties through companies associated with Premier Auto Finance,
Inc., which then continue the management of collections on the contracts and
provide other related services. After March 27, 2001, contract purchasing by
companies associated with Premier Auto Finance, Inc. will no longer be generally
available, but service will continue on existing contracts with current clients.
(2) CONSULTING
Aon Consulting Worldwide
Aon Consulting Worldwide affiliated companies serve the employee benefit
needs of clients around the world. Aon Consulting is one of the world's largest
integrated human resources consulting organizations. Focusing on the increasing
demand for outsourcing solutions, Aon Consulting targets emerging businesses,
IPOs, recent mergers and acquisitions and corporations that are reengineering
staff functions. The year 2000 acquisition of ASA, an employee benefits and
compensation consulting firm, increased Aon's penetration of large corporate
accounts.
Around the world, employee benefits markets continue to change as
companies look for better ways to manage their human capital costs while
expanding the choices offered to their employees. Aon Consulting, with its
expertise in employee benefits, compensation, management consulting and
employment practices outsourcing, and its access to the Registrant's other
subsidiaries, is well-positioned to serve this market. Aon Consulting
subsidiaries offer services to clients including benefit plan design and
administration; compensation consulting and surveys; employee selection and
assessment; process improvement; leadership development; performance management
tools; workforce productivity and individual and organizational change
management. Benefits issues outside the U.S. are becoming more complicated, and
Aon Holdings and Aon Consulting anticipate increased demand for their services
in these markets.
(3) INSURANCE UNDERWRITING
Combined Insurance Company of America ("Combined Insurance"); Combined
Life Insurance Company of New York ("CLICNY"); Virginia Surety Company, Inc.
("VSC"); London General Insurance Company Limited ("London General"); and Aon
Warranty Group, Inc. ("Aon Warranty").
The Registrant's insurance underwriting subsidiaries are part of a highly
competitive industry that serves individual consumers in North America, Europe,
Latin America and Asia/Pacific by providing accident and health coverage,
traditional life insurance and extended warranties through distribution
networks, most of which are directly owned by the Registrant's subsidiaries.
The supplemental life and accident and health distribution network
encompasses primarily the agents of Combined Insurance and CLICNY (which
operates exclusively in the State of New York). Combined Insurance, the
Registrant's principal life and accident and health insurer, has a sales force
of several thousand career agents calling on individuals to sell a broad
spectrum of low premium accident and health products. Combined Insurance's
current product portfolio often allows policyholders the option of paying
premiums monthly through a pre-authorized check mechanism in the U.S. and on a
direct debit option in the U.K. Combined Insurance offers a wide range of
accident-only and sickness-only insurance products, including short-term
disability, cancer aid, Medicare supplement, disability income and long-term
care coverage. Most of Combined Insurance's products are primarily
fixed-indemnity obligations, thereby not subject to escalating medical costs.
Combined Insurance offers a simplified accident and sickness long-term
disability policy. Combined Insurance has expanded its product distribution
through payroll deduction and their worksite marketing programs continue to
develop. Combined Insurance's business is conducted in the United States,
Canada, Latin America, Europe and Asia/Pacific.
The Registrant's extended warranty and specialty insurance business,
conducted by VSC subsidiaries in North America, South America and Asia/Pacific
and London General in Europe, is composed primarily of extended warranty
insurance products, professional liability insurance coverages and workers'
compensation coverage. VSC and London General are among the world's largest
underwriters of consumer extended warranties. The extended warranty products are
sold in the United States, Canada, Latin America, Europe and Asia/Pacific. The
administration of certain extended warranty products on automobiles, electronic
goods, personal computers and appliances is handled by certain operations in the
Insurance Brokerage and Other Services segment.
(4) DISCONTINUED OPERATIONS
The Registrant hereby incorporates by reference note 5 of the Notes to
Consolidated Financial Statements on page 40 of the Annual Report.
LICENSING AND REGULATION
Regulatory authorities in the states or countries in which the operating
subsidiaries of Aon Group conduct business may require individual or company
licensing to act as brokers, agents, third party administrators, managing
general agents, reinsurance intermediaries or adjusters. Under the laws of most
states in the United States and in most foreign countries, regulatory
authorities have relatively broad discretion with respect to granting, renewing
and revoking brokers' and agents' licenses to transact business in the state or
country. The manner of operating in particular states and countries may vary
according to the licensing requirements of the particular state or country,
which may require, among other things, that a firm operate in the state or
country through a local corporation. In a few states and countries, licenses are
issued only to individual residents or locally-owned business entities. In such
cases, Aon Group subsidiaries have arrangements with residents or business
entities licensed to act in the state or country.
Insurance companies must comply with laws and regulations of the
jurisdictions in which they do business. These laws and regulations are designed
to ensure financial solvency of insurance companies and to require fair and
adequate service and treatment for policyholders. They are enforced by the
states in the United States, by industry self-regulating agencies in the United
Kingdom, and by various regulatory agencies in other countries through the
granting and revoking of licenses to do business, licensing of agents,
monitoring of trade practices, policy form approval, minimum loss ratio
requirements, limits on premium and commission rates, and minimum reserve and
capital requirements. Compliance is monitored by the state insurance departments
through periodic regulatory reporting procedures and periodic examinations. The
quarterly and annual financial reports to the regulators in the United States
utilize statutory accounting principles which are different from the generally
accepted accounting principles used in stockholders' reports. The statutory
accounting principles, in keeping with the intent to assure the protection of
policyholders are based, in general, on a liquidation concept while generally
accepted accounting principles are based on a going-concern concept.
The state insurance regulators are members of the National Association of
Insurance Commissioners ("NAIC"). This Association seeks to promote uniformity
of, and to enhance the state regulation of, insurance. Both the NAIC and the
individual states continue to focus on the solvency of insurance companies and
their conduct in the market place. This focus is reflected in additional
regulatory oversight by the states and emphasis on the enactment or adoption of
a series of NAIC model laws and regulations designed to promote solvency. The
NAIC revised the Accounting Practices and Procedures Manual in a process
referred to as Codification. The revised manual is effective January 1, 2001.
The domiciliary states of Aon's major insurance subsidiaries have adopted the
provisions of the revised manual. The revised manual has changed, to some
extent, prescribed statutory accounting practices and will result in changes to
the accounting practices that Aon's major insurance subsidiaries use to prepare
their statutory-basis financial statements. The impact of these changes to Aon's
major insurance subsidiaries' statutory capital and surplus as of January 1,
2001 is not expected to be significant.
Several years ago, the NAIC developed a formula for analyzing insurers
called risk-based capital ("RBC"). RBC is intended to establish "minimum"
capital threshold levels that vary with the size and mix of a company's
business. It is designed to identify companies with the capital levels that may
require regulatory attention. RBC does not have any significant impact on the
insurance business of the Registrant.
The state insurance holding company laws require prior notice to and
approval of the domestic state insurance department of intracorporate transfers
of assets within the holding company structure, including the payment of
dividends by insurance company subsidiaries. In addition, the premium finance
loans by Cananwill, Inc., an indirect wholly-owned subsidiary of the Registrant,
are subject to one or more of truth-in-lending and credit regulations, insurance
premium finance acts, retail installment sales acts and other similar consumer
protection legislation. Failure to comply with such laws or regulations can
result in the temporary suspension or permanent loss of the right to engage in
business in a particular jurisdiction as well as other penalties.
Recent federal and state laws and proposals mandating specific practices
by medical insurers and the health care industry will not, because of the nature
of the business of the Registrant's subsidiaries, materially affect the
Registrant. Numerous states have had legislation introduced to reform the health
care system and such legislation has passed in several states. While it is
impossible to forecast the precise nature of future federal and state health
care changes, the Registrant does not expect a major impact on its operations
because of the supplemental nature of most of the policies issued by its
insurance subsidiaries and because the coverages are primarily purchased to
provide, on a fixed-indemnity basis, protection against loss-of-time or
disability benefits. Congress has passed the Financial Services Modernization
Act commonly known as S 900 or the Gramm, Leach, Bliley Act. While S 900 makes
substantial changes in allowing financial organizations to diversify, the
Registrant does not believe the enactment of S 900 will have a material effect
on the business of its insurance subsidiaries.
CLIENTELE
No significant part of the Registrant's or its subsidiaries' business is
dependent upon a single client or on a few clients, the loss of any one of which
would have a material adverse effect on the Registrant.
EMPLOYEES
The Registrant's subsidiaries had approximately 51,000 employees at the
end of 2000 of whom approximately 43,000 are salaried and hourly employees and
the remaining 8,000 are sales representatives who are generally compensated
wholly or primarily by commission.
ITEM 2. PROPERTIES.
The Registrant's subsidiaries own and occupy office buildings in four
states and certain foreign countries, and lease office space elsewhere in the
United States and in various foreign cities. Loss of the use of any owned or
leased property, while potentially disruptive, would have no material impact on
the Registrant.
ITEM 3. LEGAL PROCEEDINGS.
The Registrant hereby incorporates by reference note 14 of the Notes to
Consolidated Financial Statements on page 53 of the Annual Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers of the Registrant are regularly elected by its Board of
Directors at the annual meeting of the Board which is held following each annual
meeting of the stockholders of the Registrant. The executive officers of the
Registrant were elected to their current positions on April 18, 2000 to serve
until the meeting of the Board following the annual meeting of stockholders on
April 20, 2001. Ages shown are as of December 31, 2000.
For information concerning certain directors and executive officers of the
Registrant, see item 10 below. As of March 5, 2001, the following individuals
are also executive officers of the Registrant as defined in Rule 16a-1(f):
HAS
CONTINUOUSLY
SERVED AS AN
OFFICER
OF REGISTRANT OR
NAME, AGE, AND ONE OR MORE OF
CURRENT OFFICE ITS SUBSIDIARIES BUSINESS EXPERIENCE
OR PRINCIPAL POSITION SINCE PAST 5 YEARS
--------------------- ----- ------------
Harvey N. Medvin, 64 1972 Mr. Medvin became Vice President
Executive Vice President and and Chief Financial Officer of the
Chief Financial Officer Registrant in 1982 and was elected
to his current position in 1987. He
also serves as a Director or
Officer of certain of the
Registrant's subsidiaries.
Michael A. Conway, 53 1990 Mr. Conway was Vice President of
Senior Vice President and Combined Insurance from 1980 to
Senior Investment Officer 1984. Following other employment,
Mr. Conway rejoined the Registrant
in 1990 as Senior Vice President of
Combined Insurance and was elected
to his current position in 1991. He
also serves as Director or Officer
of certain of the Registrant's
subsidiaries.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
The Registrant's $1.00 par value common shares ("Common Shares") are
traded on the New York, Chicago, London and Frankfurt stock exchanges. The
Registrant hereby incorporates by reference the "Dividends paid per share" and
"Price range" data on page 57 of the Annual Report.
The Registrant had approximately 13,650 holders of record of its Common
Shares as of February 21, 2001.
The Registrant hereby incorporates by reference note 10 of the Notes to
Consolidated Financial Statements on page 45 of the Annual Report.
Recent Sales of Unregistered Securities. On October 2, 2000, 3,864,824
shares of Aon common stock were issued to all of the shareholders and holders of
phantom shares of ASA Acquisition Corp. ("ASA") in connection with the
acquisition of ASA and its subsidiaries by the merger of a subsidiary of Aon
with and into ASA. The shares were issued to the shareholders of ASA by Aon in a
private offering exempt from registration pursuant to Section 4 (2) of the
Securities Act of 1933.
ITEM 6. SELECTED FINANCIAL DATA.
The Registrant hereby incorporates by reference the "Selected Financial
Data" table on page 57 of the Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Registrant hereby incorporates by reference "Management's Discussion
and Analysis of Financial Condition and Results of Operations" on pages 17
through 28 and "Information Concerning Forward-Looking Statements" on page 28 of
the Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Registrant hereby incorporates by reference "Market Risk Exposure" on
pages 27 and 28 of the Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Registrant hereby incorporates by reference the following statements,
notes and data from the Annual Report.
Page(s)
-------
Consolidated Financial Statements ....................... 29 - 33
Notes to Consolidated Financial Statements .............. 34 - 55
Report of Ernst & Young LLP, Independent Auditors ....... 56
Quarterly Financial Data ................................ 58
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Registrant hereby incorporates by reference the information on pages
3, 6 and 7 of the Proxy Statement For The Annual Meeting of the Stockholders on
April 20, 2001, of the Registrant ("Proxy Statement") concerning the following
Directors of the Registrant, each of whom also serves as an executive officer of
the Registrant as defined in Rule 16a-1(f): Patrick G. Ryan, Michael D.
O'Halleran and Raymond I. Skilling. Information concerning additional executive
officers of the Registrant is contained in Part I hereof, pursuant to General
Instruction G(3) and Instruction 3 to Item 401(b) of Regulation S-K. The
Registrant also hereby incorporates by reference the information on pages 10
through 12 of the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION.
The Registrant hereby incorporates by reference the information under the
headings "Executive Compensation," "Aggregated Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values," "Option Grants in 2000 Fiscal Year" and
"Pension Plan Table" on pages 15 through 18 of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Registrant hereby incorporates by reference the share ownership data
contained on pages 2, 9 and 10 of the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Registrant hereby incorporates by reference the information under the
heading "Transactions With Management" on page 22 of the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A) (1) AND (2). The Registrant has incorporated by reference from the Annual
Report (see Item 8) the following consolidated financial statements of the
Registrant and subsidiaries:
ANNUAL
REPORT
PAGE(S)
-------
Consolidated Statements of Income - Years Ended
December 31, 2000, 1999 and 1998 29
Consolidated Statements of Financial Position -
As of December 31, 2000 and 1999 30-31
Consolidated Statements of Stockholders' Equity -
Years Ended December 31, 2000, 1999 and 1998 32
Consolidated Statements of Cash Flows - Years
Ended December 31, 2000, 1999 and 1998 33
Notes to Consolidated Financial Statements 34-55
Report of Ernst & Young LLP, Independent Auditors 56
Financial statement schedules of the Registrant and consolidated subsidiaries
not included in the Annual Report but filed herewith:
Consolidated Financial Statement Schedules -
Schedule
--------
Condensed Financial Information of Registrant I
Valuation and Qualifying Accounts II
All other schedules for Aon Corporation and Subsidiaries have been omitted
because the required information is not present in amounts sufficient to require
submission of the schedules or because the information required is included in
the respective financial statements or notes thereto.
The following supplementary schedules have been provided for Aon Corporation and
Subsidiaries as they relate to the insurance underwriting operations:
Schedule
Summary of Investments Other than Investments in Related Parties II.1
Reinsurance II.2
Supplementary Insurance Information II.3
(A)(3). EXHIBITS
(a) Second Restated Certificate of Incorporation of the Registrant -
incorporated by reference to Exhibit 3(a) to the Registrant's Annual
Report to the Securities and Exchange Commission on Form 10-K for
the year ended December 31, 1991 (the "1991 Form 10-K").
(b) Certificate of Amendment of the Registrant's Second Restated
Certificate of Incorporation - incorporated by reference to Exhibit
3 to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994 (the "First Quarter 1994 Form 10Q").
(c) Certificate of Amendment of the Registrant's Second Restated
Certificate of Incorporation - incorporated by reference to Exhibit
3 to the Registrant's current Form 8-K, dated May 9, 2000.
(d) Amended Bylaws of the Registrant.
(e) Indenture dated September 15, 1992 between the Registrant and
Continental Bank Corporation (now known as Bank of America
Illinois), as Trustee - incorporated by reference to Exhibit 4(a) to
the Registrant's Current Report on Form 8-K dated September 23,
1992.
(f) Resolutions establishing terms of 7.40% Notes Due 2002 -
incorporated by reference to Exhibits 4(d) to the Registrant's
Annual Report to the Securities and Exchange Commission on Form 10-K
for the year ended December 31, 1992 (the "1992 Form 10-K").
(g) Resolutions establishing the terms of 6.70% Notes Due 2003 and 6.30%
Notes Due 2004 incorporated by reference to Exhibits 4(c) and 4(d)
of the Registrant's Annual Report to the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 1993 (the
"1993 Form 10-K").
(h) Resolutions establishing the terms of the 6.90% Notes Due 2004,
incorporated by reference to Exhibit 4(e) of the Registrant's Annual
Report to the Securities and Exchange Commission on Form 10-K for
the year ended December 31, 1999 (the "1999 Form 10-K").
(i) Resolutions establishing the terms of the 8.65% Notes due 2005.
(j) Junior Subordinated Indenture dated as of January 13, 1997 between
the Registrant and The Bank of New York, as trustee - incorporated
by reference to Exhibit 4.1 of the Registrant's Amendment No. 1 to
Registration Statement on Form S-4 No. 333-21237 dated March 27,
1997 (the "Capital Securities Registration").
(k) First Supplemental Indenture dated as of January 13, 1997 between
the Registrant and the Bank of New York, as trustee - incorporated
by reference to Exhibit 4.2 of the Capital Securities Registration.
(l) Certificate of Trust of Aon Capital A - incorporated by reference to
Exhibit 4.3 of the Capital Securities Registration.
(m) Amended and Restated Trust Agreement of Aon Capital A dated as of
January 13, 1997 among the Registrant, as Depositor, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware), as
Delaware Trustee, the Administrative Trustees named therein and the
holders, from time to time, of the Capital Securities - incorporated
by reference to Exhibit 4.5 of the Capital Securities Registration.
(n) Capital Securities Guarantee Agreement dated as of January 13, 1997
between the Registrant and the Bank of New York, as guarantee
trustee - incorporated by reference to Exhibit 4.8 of the Capital
Securities Registration.
(o) Capital Securities Exchange and Registration Rights Agreement dated
as of January 13, 1997 among the Registrant, Aon Capital A and
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. -
incorporated by reference to Exhibit 4.10 of the Capital Securities
Registration.
(p) Debenture Exchange and Registration Rights Agreement dated as of
January 13, 1997 among the Registrant, Aon Capital A and Morgan
Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated
by reference to Exhibit 4.11 of the Capital Securities Registration.
(q) Guarantee Exchange and Registration Rights Agreement dated as of
January 13, 1997 among the Registrant, Aon Capital A and Morgan
Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated
by reference to Exhibit 4.12 of the Capital Securities Registration.
(r) Certificate of Designation for the Registrant's Series C Cumulative
Preferred Stock - incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated February 9, 1994.
(s) Registration Rights Agreement dated November 2, 1992 by and between
the Registrant and Frank B. Hall & Co., Inc. - incorporated by
reference to Exhibit 4(c) to the Third Quarter 1992 Form 10-Q.
(t) Registration rights agreement by and among the Registrant and
certain affiliates of Ryan Insurance Group, Inc. (including Patrick
G. Ryan and Andrew J. McKenna) - incorporated by reference to
Exhibit (f) to the 1982 Form 10-K.
(u) Aon Corporation Outside Director Deferred Compensation Agreement by
and among the Registrant and Registrant's directors who are not
salaried employees of Registrant or Registrant's affiliates.
(v) Amendment and Waiver Agreement dated as of November 4, 1991 among
the Registrant and each of Patrick G. Ryan, Shirley Ryan, Ryan
Enterprises Corporation and Harvey N. Medvin - incorporated by
reference to Exhibit 10(j) to the 1991 Form 10-K.
(w) Statement regarding Computation of Ratio of Earnings to Fixed
Charges.
(x) Statement regarding Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends.
(y) Aon Corporation 1994 Amended and Restated Outside Director Stock
Award Plan - incorporated by reference to Exhibit 10(b) to the First
Quarter 1994 Form 10-Q.
(z) Annual Report to Stockholders of the Registrant for the year ended
December 31, 2000 (for information, and not to be deemed filed,
except for those portions specifically incorporated by reference
herein).
(aa) List of Subsidiaries of the Registrant.
(ab) Consent of Ernst & Young LLP to the incorporation by reference into
Aon's Annual Report on Form 10-K of its report included in the 2000
Annual Report to Stockholders and into Aon's Registration Statement
Nos. 33-27984, 33-42575, 33-59037, 333-21237, 333-50607, 333-55773,
333-78723 and 333-49300.
(ac) Annual Report to the Securities and Exchange Commission on Form 11-K
for the Aon Savings Plan for the year ended December 31, 2000 - to
be filed by amendment as provided in Rule 15d- 21(b).
(ad) Executive Compensation Plans and Arrangements:
(A) Aon Stock Award Plan (as amended and restated through February
2000) - incorporated by reference to Exhibit 10 (a) to the
Registrant's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the Quarter ended June 30, 2000
(the "Second Quarter 2000 Form 10-Q").
(B) Aon Stock Option Plan (as amended and restated through 1997) -
incorporated by reference to Exhibit 10(a) to the Registrant's
Quarterly Report to the Securities and Exchange Commission on
Form 10-Q for the quarter ended March 31, 1997 (the "First
Quarter 1997 Form 10-Q").
(C) First Amendment to the Aon Stock Option Plan as amended and
restated through 1997 - incorporated by reference to Exhibit
10(a) to the Registrant's Quarterly Report to the Securities
and Exchange Commission on Form 10-Q for the Quarter ended
March 31, 1999 (the "First Quarter 1999 Form 10-Q").
(D) Aon Stock Award Plan (as amended and restated through 1997) -
incorporated by reference to Exhibit 10(b) to the First
Quarter 1997 Form 10-Q.
(E) First Amendment to the Aon Stock Award Plan as Amended and
Restated Through 1997 - incorporated by reference to Exhibit
10(b) to the First Quarter 1999 Form 10-Q.
(F) Aon Corporation 1995 Senior Officer Incentive Compensation
Plan incorporated by reference to Exhibit 10(p) to the
Registrant's Annual Report to the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 1995
(the "1995 Form 10-K").
(G) Aon Deferred Compensation Plan and First Amendment to the Aon
Deferred Compensation Plan - incorporated by reference to
Exhibit 10(q) of the 1995 Form 10-K.
(H) 1999 Aon Deferred Compensation Plan incorporated by reference
to Exhibit 10(1) of the 1999 Form 10-K.
(I) Employment Agreement dated June 1, 1993 by and among the
Registrant, Aon Risk Services, Inc. and Michael D. O'Halleran,
incorporated by reference to Exhibit 10(p) to the Registrant's
Annual Report to the Securities and Exchange Commission on
Form 10-K for the year ended December 31, 1998.
(J) Aon Severance Plan - incorporated by reference to Exhibit 10
to the Registrant's Quarterly Report to the Securities and
Exchange Commission and Form 10-Q for the quarter ended June
30, 1997.
(ae) Asset Purchase Agreement dated July 24, 1992 between the Registrant and
Frank B. Hall & Co. Inc. - incorporated by reference to Exhibit 10(c) to
the Registrant's Quarterly Report on Form 10- Q for the period ended June
30, 1992.
(af) Stock Purchase Agreement by and among the Registrant, Combined Insurance
Company of America, Union Fidelity Life Insurance Company and General
Electric Capital Corporation dated as of November 11, 1995 - incorporated
by reference to Exhibit 10(s) of the 1995 Form 10-K.
(ag) Stock Purchase Agreement by and among the Registrant; Combined Insurance
Company of America; The Life Insurance Company of Virginia; Forth
Financial Resources, Ltd.; Newco Properties, Inc.; and General Electric
Capital Corporation dated as of December 22, 1995 - incorporated by
reference to Exhibit 10(t) of the 1995 Form 10-K.
(ah) Agreement and Plan of Merger among the Registrant; Subsidiary Corporation,
Inc. ("Purchaser"); and Alexander & Alexander Services Inc. ("A&A") dated
as of December 11, 1996 - incorporated by reference to Exhibit (c)(1) of
the Registrant's Tender Offer Statement on Schedule 14D-1 filed by the
Registrant with the Securities and Exchange Commission ("SEC") on December
16, 1996 (the "Schedule 14D-1").
(ai) First Amendment to Agreement and Plan of Merger, dated as of January 7,
1997, among the Registrant, Purchaser and A&A - incorporated by reference
to Exhibit (c)(3) to the Schedule 14D-1 filed by the Registrant with the
SEC on January 9, 1997.
(b) REPORTS ON FORM 8-K.
During the quarter ended December 31, 2000, the Registrant filed a
Current Report on Form 8-K dated November 3, 2000 reporting its third
quarter 2000 results and announcing that the Company's board of directors
approve, in principle, a comprehensive business transformation plan.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 16th day of
March, 2001.
Aon Corporation
By: /s/ PATRICK G. RYAN
----------------------------
Patrick G. Ryan, Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman, Chief Executive March 16, 2001
/s/ PATRICK G. RYAN Officer and Director
- ---------------------------- (Principal Executive Officer)
Patrick G. Ryan
/s/ DANIEL T. CARROLL Director March 16, 2001
- ----------------------------
Daniel T. Carroll
/s/ FRANKLIN A. COLE Director March 16, 2001
- ----------------------------
Franklin A. Cole
/s/ EDGAR D. JANNOTTA Director March 16, 2001
- ----------------------------
Edgar D. Jannotta
/s/ LESTER B. KNIGHT Director March 16, 2001
- ----------------------------
Lester B. Knight
/s/ PERRY J. LEWIS Director March 16, 2001
- ----------------------------
Perry J. Lewis
/s/ ANDREW J. McKENNA Director March 16, 2001
- ----------------------------
Andrew J. McKenna
/s/ NEWTON N. MINOW Director March 16, 2001
- ----------------------------
Newton N. Minow
/s/ ROBERT S. MORRISON Director March 16, 2001
- ----------------------------
Robert S. Morrison
Signature Title Date
--------- ----- ----
/s/ RICHARD C. NOTEBAERT Director March 16, 2001
- ----------------------------
Richard C. Notebaert
/s/ MICHAEL D. O'HALLERAN Director March 16, 2001
- ----------------------------
Michael D. O'Halleran
/s/ DONALD S. PERKINS Director March 16, 2001
- ----------------------------
Donald S. Perkins
/s/ JOHN W. ROGERS, JR. Director March 16, 2001
- ----------------------------
John W. Rogers, Jr.
/s/ GEORGE A. SCHAEFER Director March 16, 2001
- ----------------------------
George A. Schaefer
/s/ RAYMOND I. SKILLING Director March 16, 2001
- ----------------------------
Raymond I. Skilling
/s/ FRED L. TURNER Director March 16, 2001
- ----------------------------
Fred L. Turner
/s/ ARNOLD R. WEBER Director March 16, 2001
- ----------------------------
Arnold R. Weber
/s/ CAROLYN Y. WOO Director March 16, 2001
- ----------------------------
Carolyn Y. Woo
/s/ HARVEY N. MEDVIN Executive Vice President March 16, 2001
- ---------------------------- and Chief Financial Officer
Harvey N. Medvin (Principal Financial and
Accounting Officer)
SCHEDULE I
Aon CORPORATION
(Parent Company)
CONDENSED STATEMENTS OF FINANCIAL POSITION
As of December 31
-------------------------
(millions) 2000 1999
----------- -----------
ASSETS
Investments in subsidiaries ............................................ $ 6,127 $ 5,585
Notes receivable - subsidiaries ........................................ 515 447
Cash and cash equivalents .............................................. 1 17
Other assets ........................................................... 111 123
----------- -----------
TOTAL ASSETS ....................................................... $ 6,754 $ 6,172
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Short-term borrowings .................................................. $ 853 $ 823
6.3% long-term debt securities ......................................... 100 100
7.4% long-term debt securities ......................................... 100 100
8.65% long-term debt securities ........................................ 250 -
6.9% long-term debt securities ......................................... 250 250
6.7% long-term debt securities ......................................... 150 150
Subordinated debt ...................................................... 800 800
Notes payable - subsidiaries ........................................... 571 622
Notes payable - other .................................................. 70 70
Accrued expenses and other liabilities ................................. 172 156
----------- -----------
TOTAL LIABILITIES .................................................. 3,316 3,071
----------- -----------
REDEEMABLE PREFERRED STOCK ............................................. 50 50
STOCKHOLDERS' EQUITY
Common stock ........................................................... 264 259
Paid-in additional capital ............................................. 706 525
Accumulated other comprehensive loss ................................... (377) (309)
Retained earnings ...................................................... 3,127 2,905
Less treasury stock at cost ............................................ (118) (90)
Less deferred compensation ............................................. (214) (239)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY ......................................... 3,388 3,051
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................... $ 6,754 $ 6,172
=========== ===========
See notes to condensed financial statements.
Aon CORPORATION
(Parent Company)
CONDENSED STATEMENTS OF INCOME
Years Ended December 31
---------------------------
(millions) 2000 1999 1998
------- ------- --------
REVENUE
Dividends from subsidiaries ...................................... $ 379 $ 467 $ 351
Other investment income .......................................... 9 20 69
------- ------- --------
Total Revenue ................................................ 388 487 420
------- ------- --------
EXPENSES
Operating and administrative ..................................... 22 13 20
Interest - subsidiaries .......................................... 103 96 94
Interest - other ................................................. 122 85 76
------- ------- --------
Total Expenses ............................................... 247 194 190
------- ------- --------
INCOME BEFORE INCOME TAXES AND EQUITY (DEFICIT) IN
UNDISTRIBUTED INCOME OF SUBSIDIARIES .............................. 141 293 230
Income tax benefit ............................................... 95 70 54
------- ------- --------
........................................................................ 236 363 284
EQUITY (DEFICIT) IN UNDISTRIBUTED INCOME OF SUBSIDIARIES ............... 238 (11) 257
------- ------- --------
NET INCOME ....................................................... $ 474 $ 352 $ 541
======= ======= ========
See notes to condensed financial statements.
Aon CORPORATION
(Parent Company)
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended December 31
-------------------------------
(millions) 2000 1999 1998
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES ................................... $ 137 $ 287 $ 445
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in subsidiaries ...................................... (124) (363) (93)
Notes receivables from subsidiaries .............................. (40) (208) (16)
--------- --------- ---------
CASH USED BY INVESTING ACTIVITIES ........................... (164) (571) (109)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock transactions - net ................................ (59) (66) (18)
Issuance (repayment) of short-term borrowings - net .............. 30 387 (328)
Issuance of notes payable and long-term debt ..................... 266 284 200
Repayment of notes payable and long-term debt .................... - (100) -
Cash dividends to stockholders ................................... (226) (210) (194)
--------- --------- ---------
CASH PROVIDED (USED) BY FINANCING ACTIVITIES ................ 11 295 (340)
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ....................... (16) 11 (4)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ......................... 17 6 10
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR ............................... $ 1 $ 17 $ 6
========= ========= =========
See notes to condensed financial statements.
SCHEDULE I
(Continued)
Aon Corporation
(Parent Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) See notes to consolidated financial statements incorporated by reference
from the Annual Report.
(2) Generally, the net assets of Aon's insurance subsidiaries available for
transfer to the parent company are limited to the amounts that the
insurance subsidiaries' statutory net assets exceed minimum statutory
capital requirements; however, payments of the amounts as dividends in
excess of $197 million may be subject to approval by regulatory
authorities.
(3) In 1998, Aon guaranteed a committed bank credit facility under which
certain European subsidiaries can borrow up to EUR 400 million. At
December 31, 2000, loans of EUR 279 million ($260 million) were
outstanding under this facility.
An indirect wholly-owned subsidiary of Aon Corporation manages various
investment portfolios, totaling $247 million at December 31, 2000, held in
a collateral trust for the benefit of certain unaffiliated entities and is
obligated to produce specified investment returns for those portfolios.
Aon Corporation has unconditionally guaranteed the obligations of this
subsidiary.
(4) In 2000, the Condensed Statements of Cash Flows exclude the impact of
certain non-cash transfers primarily related to notes receivable from
subsidiaries and notes payable to subsidiaries.
SCHEDULE II
Aon CORPORATION and SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2000, 1999 and 1998
(millions) Additions
---------------------
Charged/
Balance at Charged to (credited) Balance
beginning cost and to other Deductions at end
Description of year expenses accounts (1) of year
- ------------------------------------------------------------ ---------- --------- ---------- -----------
YEAR ENDED DECEMBER 31, 2000
- ----------------------------
Allowance for doubtful accounts (3)
(deducted from insurance brokerage
and consulting receivables) $ 88 $ 19 $ (2) $ (17) $ 88
Allowance for doubtful accounts
(deducted from premiums and other) 6 - - (2) 4
YEAR ENDED DECEMBER 31, 1999
- ----------------------------
Reserve for losses (2)
(deducted from other long-term investments) $ 9 $ - $ (9) $ - $ -
Allowance for doubtful accounts (3)
(deducted from insurance brokerage
and consulting receivables) 93 12 (3) (14) 88
Allowance for doubtful accounts
(deducted from premiums and other) 6 1 - (1) 6
YEAR ENDED DECEMBER 31, 1998
- ----------------------------
Reserve for losses (2)
(deducted from other long-term investments) $ 9 $ - $ - $ - $ 9
Allowance for doubtful accounts (3)
(deducted from insurance brokerage
and consulting receivables) 81 20 (5) (3) 93
Allowance for doubtful accounts
(deducted from premiums and other) 5 1 - - 6
- ------------------------------------------------------------------------------------------------------------
(1) Amounts deemed to be uncollectible.
(2) Amounts shown in additions charged/(credited) to other accounts represent
(income) losses on disposals.
(3) Amounts shown in additions charged/(credited) to other accounts primarily
represent reserves related to acquired business and foreign exchange.
SCHEDULE II.1
Aon CORPORATION and SUBSIDIARIES
CONSOLIDATED SUMMARY OF INVESTMENTS -
OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2000
Amount Shown
in Statement
Amortized Fair of Financial
(millions) Cost or Cost Value Position
------------- ----------- -------------
FIXED MATURITIES - AVAILABLE FOR SALE:
US government and agencies ........................ $ 189 $ 193 $ 193
States and political subdivisions ................. 8 8 8
Debt securities of foreign governments
not classified as loans ...................... 722 735 735
Corporate securities .............................. 1,368 1,307 1,307
Public utilities .................................. 39 38 38
Mortgage-backed securities ........................ 32 32 32
Other fixed maturities ............................ 24 24 24
------------ ------------ ------------
Total fixed maturities ....................... 2,382 2,337 2,337
------------ ------------ ------------
EQUITY SECURITIES - AVAILABLE FOR SALE:
Common stocks:
Public utilities .............................. 2 2 2
Banks, trusts and insurance companies ......... 95 107 107
Industrial, miscellaneous and all other ....... 100 61 61
Non-redeemable preferred stocks ................... 367 322 322
------------ ------------ ------------
Total equity securities ...................... 564 492 492
------------ ------------ ------------
Mortgage loans on real estate ......................... 3 * 3 *
Policy loans .......................................... 74 * 74 *
Other long-term investments ........................... 788 * 788 *
Short-term investments ................................ 2,325 2,325
------------ ------------
TOTAL INVESTMENTS............................. $ 6,136 $ 6,019
============ ============
* These investment categories are combined and are shown as other
investments in the Consolidated Statements of Financial Position.
SCHEDULE II.2
Aon CORPORATION AND SUBSIDIARIES
REINSURANCE
Year Ended December 31, 2000
----------------------------------------------------------
Ceded to Assumed Percentage of
Gross other from other Net amount
amount companies companies amount assumed to net
----------------------------------------------------------
LIFE INSURANCE IN FORCE ............... $ 18,803 $ 9,442 $ 9,367 $ 18,728 50%
========= ========== ========== ========= ============
PREMIUMS
Life Insurance ....................... $ 198 $ 91 $ 37 $ 144 26%
A&H Insurance ........................ 1,209 226 106 1,089 10%
Specialty Property & Casualty ........ 965 380 88 673 13%
--------- ---------- ---------- --------- ------------
TOTAL PREMIUMS ..................... $ 2,372 $ 697 $ 231 $ 1,906 12%
========= ========== ========== ========= ============
Year Ended December 31, 1999
----------------------------------------------------------
Ceded to Assumed Percentage of
Gross other from other Net amount
amount companies companies amount assumed to net
----------------------------------------------------------
LIFE INSURANCE IN FORCE ............... $ 14,444 $ 10,023 $ 3,050 $ 7,471 41%
========= ========== ========== ========= ============
PREMIUMS
Life Insurance ....................... $ 227 $ 93 $ 2 $ 136 2%
A&H Insurance ........................ 1,167 257 91 1,001 9%
Specialty Property & Casualty ........ 860 274 85 671 13%
--------- ---------- ---------- --------- ------------
TOTAL PREMIUMS ..................... $ 2,254 $ 624 $ 178 $ 1,808 10%
========= ========== ========== ========= ============
Year Ended December 31, 1998
----------------------------------------------------------
Ceded to Assumed Percentage of
Gross other from other Net amount
amount companies companies amount assumed to net
----------------------------------------------------------
LIFE INSURANCE IN FORCE ............... $ 10,653 $ 9,813 $ 5,510 $ 6,350 87%
========= ========== ========== ========= ============
PREMIUMS
Life Insurance ....................... $ 235 $ 103 $ 7 $ 139 5%
A&H Insurance ........................ 1,134 235 46 945 5%
Specialty Property & Casualty ........ 734 241 96 589 16%
--------- ---------- ---------- --------- ------------
TOTAL PREMIUMS ..................... $ 2,103 $ 579 $ 149 $ 1,673 9%
========= ========== ========== ========= ============
SCHEDULE II.3
Aon CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
Unearned
Deferred Future policy premiums and
policy benefits, losses, other Net
acquisition claims and loss policyholders' Premium investment
(millions) costs expenses funds revenue income (1)
-------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2000
----------------------------
Insurance brokerage and other services ........ $ - $ - $ - $ - $ 186
Consulting .................................... - - - - 6
Insurance underwriting ........................ 656 1,855 3,004 1,905 245
Corporate and other ........................... - - - - 71
-------------- -------------- ------------- -------------- --------------
Total ............................... $ 656 $ 1,855 $ 3,004 $ 1,905 $ 508
============== ============== ============= ============== ==============
YEAR ENDED DECEMBER 31, 1999
----------------------------
Insurance brokerage and other services ........ $ - $ - $ - $ - $ 159
Consulting .................................... - - - - 3
Insurance underwriting ........................ 636 1,769 3,219 1,808 251
Corporate and other ........................... - - - - 164
-------------- -------------- ------------- -------------- --------------
Total ............................... $ 636 $ 1,769 $ 3,219 $ 1,808 $ 577
============== ============== ============= ============== ==============
YEAR ENDED DECEMBER 31, 1998
----------------------------
Insurance brokerage and other services ........ $ - $ - $ - $ - $ 194
Consulting .................................... - - - - 6
Insurance underwriting ........................ 573 1,765 3,058 1,673 240
Corporate and other ........................... - - - - 150
-------------- -------------- ------------- -------------- --------------
Total ............................... $ 573 $ 1,765 $ 3,058 $ 1,673 $ 590
============== ============== ============= ============== ==============
SCHEDULE II.3
Aon CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
(Continued)
Amortization
Benefits, of deferred
claims, losses policy Other
Commissions, and settlement acquisition operating Premiums
(millions) fees and other expenses costs expenses written (2)
-------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2000
----------------------------
Insurance brokerage and other services ........ $ 4,181 $ - $ - $ 3,677 $ -
Consulting .................................... 764 - - 664 -
Insurance underwriting ........................ 17 1,037 215 615 1,887
Corporate and other ........................... - - - 313 -
------------- -------------- ------------- -------------- --------------
Total ............................... $ 4,962 $ 1,037 $ 215 $ 5,269 $ 1,887
============= ============== ============= ============== ==============
YEAR ENDED DECEMBER 31, 1999
----------------------------
Insurance brokerage and other services ........ $ 3,985 $ - $ - $ 3,651 $ -
Consulting .................................... 653 - - 698 -
Insurance underwriting ........................ 47 973 247 596 1,787
Corporate and other ........................... - - - 270 -
-------------- -------------- ------------- -------------- --------------
Total ............................... $ 4,685 $ 973 $ 247 $ 5,215 $ 1,787
============== ============== ============= ============== ==============
YEAR ENDED DECEMBER 31, 1998
----------------------------
Insurance brokerage and other services ........ $ 3,588 $ - $ - $ 3,119 $ -
Consulting .................................... 609 - - 547 -
Insurance underwriting ........................ 33 896 216 551 1,668
Corporate and other ........................... - - - 233 -
-------------- -------------- ------------- -------------- --------------
Total ............................... $ 4,230 $ 896 $ 216 $ 4,450 $ 1,668
============== ============== ============= ============== ==============
(1) The above results reflect allocations of investment income and certain
expense elements considered reasonable under the circumstances. Results
include income (loss) on disposals of investments.
(2) Net of reinsurance ceded.
Cross Reference Sheet, Pursuant
to General Instruction G(4)
ITEM IN FORM 10-K INCORPORATED BY REFERENCE TO
- ----------------- ----------------------------
Part I
- ------
Item 1. Business Annual Report to Stockholders of
the Registrant for the Year 2000
("Annual Report") pages 6 through
15, 20 through 24, and pages 40,
54, 55 and 59.
Item 3. Legal Proceedings Annual Report page 53 (note 14 of
Notes to Consolidated Financial
Statements).
Part II
- -------
Item 5. Market for the Registrant's Annual Report page 45 (note 10 of
Common Stock and Related Security Notes to Consolidated Financial
Holder Matters Statements) and page 57 ("Dividends
paid per share" and "Price range").
Item 6. Selected Financial Data Annual Report page 57.
Item 7. Management's Discussion and Annual Report pages 17 through 28.
Analysis of Financial Condition and
Results of Operations
Item 7A. Quantitative and Annual Report pages 27 and 28
Qualitative Disclosures about ("Market Risk Exposure").
Market Risk
Item 8. Financial Statements and Annual Report pages 29 through 55
Supplementary Data and 58.
Part III
- --------
Item 10. Directors and Executive Proxy Statement For Annual Meeting
Officers of the Registrant of Stockholders on April 20, 2001
of the Registrant ("Proxy
Statement") pages 3, 6, 7, and 10
through 12.
Item 11. Executive Compensation Proxy Statement pages 15 through
18.
Item 12. Security Ownership of Proxy Statement pages 2, 9 and 10.
Certain Beneficial Owners and Management
Item 13. Certain Relationships and Proxy Statement page 22
Related Transaction ("Transactions With Management").
Part IV
- -------
Item 14. Exhibits, Financial Annual Report pages 29 through 55.
Statement Schedules, And Reports
on Form 8-K
EXHIBIT INDEX
Exhibit Number Page Number of
Regulation Sequentially
S-K, Item 601 Numbered Copy
- ------------- -------------
(3) Articles of incorporation and bylaws:
(a) Second Restated Certificate of Incorporation of the Registrant -
incorporated by reference to Exhibit 3(a) to the 1991 Form 10-K.
(b) Certificate of Amendment of the Registrant's Second Restated
Certificate of Incorporation - incorporated by reference to Exhibit
3 to the First Quarter 1994 Form 10-Q.
(c) Certificate of Amendement of the Registrant's Second Restated
Certificate of Incorporation - incorporated by reference to Exhibit
3 to the Registrant's current Form 8-K, dated May 9, 2000.
(d) Amended Bylaws of the Registrant
(e) Certificate of Designation for the Registrant's Series C Cumulative
Preferred Stock - incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated February 9, 1994.
(4) Instruments defining the rights of security holders, including indentures:
(a) Indenture dated September 15, 1992 between the Registrant and
Continental Bank Corporation (now known as Bank of America
Illinois), as Trustee - incorporated by reference to Exhibit 4(a) of
the Registrant's Current Report on Form 8-K dated September 23,
1992.
(b) Resolutions establishing terms of 7.40% Notes Due 2002 -
incorporated by reference to Exhibit 4(d) to the 1992 Form 10-K.
(c) Resolutions establishing the terms of 6.70% Notes Due 2003
incorporated by reference to Exhibit 4(c) to the 1993 Form 10-K.
(d) Resolutions establishing the terms of 6.30% Notes Due 2004
incorporated by reference to Exhibit 4(d) to the 1993 Form 10-K.
(e) Resolutions establishing the terms of 6.90% Notes due 2004
incorporated by reference to Exhibit 4(e) to the 1999 Form 10-K.
(f) Resolutions establishing the terms of 8.65% Notes due 2005.
(g) Junior Subordinated Indenture dated as of January 13, 1997 between
the Registrant and The Bank of New York, as trustee - incorporated
by reference to Exhibit 4.1 of the Registrant's Amendment No. 1 to
Registration Statement on Form S-4 No. 333-21237 dated March 27,
1997 (the "Capital Securities Registration").
(h) First Supplemental Indenture dated as of January 13, 1997 between
the Registrant and the Bank of New York, as trustee - incorporated
by reference to Exhibit 4.2 of the Capital Securities Registration.
EXHIBIT INDEX
Exhibit Number Page Number of
Regulation Sequentially
S-K, Item 601 Numbered Copy
- ------------- -------------
(i) Certificate of Trust of Aon Capital A - incorporated by reference to
Exhibit 4.3 of the Capital Securities Registration.
(j) Amended and Restated Trust Agreement of Aon Capital A dated as of
January 13, 1997 among the Registrant, as Depositor, The Bank of New
York, as Property Trustee, The Bank of New York (Delaware), as
Delaware Trustee, the Administrative Trustees named therein and the
holders, from time to time, of the Capital Securities - incorporated
by reference to Exhibit 4.5 of the Capital Securities Registration.
(k) Capital Securities Guarantee Agreement dated as of January 13, 1997
between the Registrant and the Bank of New York, as guarantee
trustee - incorporated by reference to Exhibit 4.8 of the Capital
Securities Registration.
(l) Capital Securities Exchange and Registration Rights Agreement dated
as of January 13, 1997 among the Registrant, Aon Capital A and
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. -
incorporated by reference to Exhibit 4.10 of the Capital Securities
Registration.
(m) Debenture Exchange and Registration Rights Agreement dated as of
January 13, 1997 among the Registrant, Aon Capital A and Morgan
Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated
by reference to Exhibit 4.11 of the Capital Securities Registration.
(n) Guarantee Exchange and Registration Rights Agreement dated as of
January 13, 1997 among the Registrant, Aon Capital A and Morgan
Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated
by reference to Exhibit 4.12 of the Capital Securities Registration.
(10) Material Contracts:
(a) Aon Stock Option Plan (as amended and restated through February
2000) - incorporated by reference to Exhibit 10(a) to the
Registrant's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarter June 30, 2000 (the "Second
Quarter 2000 Form 10-Q").
(b) Aon Stock Option Plan (as amended and restated through 1997) -
incorporated by reference to Exhibit 10(a) to the Registrant's
Quarterly Report to the Securities and Exchange Commission on Form
10-Q for the quarter ended March 31, 1997 (the "First Quarter 1997
Form 10-Q").
(c) First Amendment to the Aon Stock Option Plan as Amended and Restated
Through 1997 - incorporated by reference to Exhibit 10(a) to the
Registrant's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarter ended March 31, 1999 (the
"First Quarter 1999 Form 10-Q").
EXHIBIT INDEX
Exhibit Number Page Number of
Regulation Sequentially
S-K, Item 601 Numbered Copy
- ------------- -------------
(d) Registration Rights Agreement by and among the Registrant and
certain affiliates of Ryan Insurance Group, Inc. (Including Patrick
G. Ryan and Andrew J. McKenna) - incorporated by reference to
Exhibit (f) to the 1982 Form 10-K.
(e) Aon Corporation Outside Director Deferred Compensation Agreement by
and among Registrant and Registrant's directors who are not salaried
employees of Registrant or Registrant's affiliates.
(f) Aon Stock Award Plan (as amended and restated through 1997) -
incorporated by reference to Exhibit 10(b) to the First Quarter 1997
Form 10-Q.
(g) First Amendment to the Aon Stock Award Plan as Amended and Restated
Through 1997 - incorporated by reference to exhibit 10(b) to the
First Quarter 1999 Form 10-Q.
(h) Amendment and Waiver Agreement dated as of November 4, 1991 among
the Registrant and each of Patrick G. Ryan, Shirley Ryan, Ryan
Enterprises Corporation and Harvey N. Medvin - incorporated by
reference to Exhibit 10(j) to the 1991 Form 10-K.
(i) Registration Rights Agreement dated November 2, 1992 by and between
the Registrant and Frank B. Hall & Co., Inc. - incorporated by
reference to Exhibit 4(c) to the Third Quarter 1992 Form 10-Q.
(j) Aon Corporation 1994 Amended and Restated Outside Director Stock
Award Plan - incorporated by reference to Exhibit 10(b) to the First
Quarter 1994 Form 10-Q.
(k) Aon Corporation 1995 Senior Officer Incentive Compensation Plan -
incorporated by reference to Exhibit 10(p) to the 1995 Form 10-K.
(l) Aon Deferred Compensation Plan and First Amendment to the Aon
Deferred Compensation Plan - incorporated by reference to Exhibit
10(q) to the 1995 Form 10-K.
(m) 1999 Aon Deferred Compensation Plan incorporated by reference to
Exhibit 10(1) of the 1999 Form 10-K.
(n) Aon Severance Plan - incorporated by reference to Exhibit 10 to the
Registrant's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarter ended June 30, 1997.
(o) Asset Purchase Agreement dated July 24, 1992 between the Registrant
and Frank B. Hall & Co. Inc. - incorporated by reference to Exhibit
10(c) to the Registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1992.
EXHIBIT INDEX
Exhibit Number Page Number of
Regulation Sequentially
S-K, Item 601 Numbered Copy
- ------------- -------------
(p) Stock Purchase Agreement by and among the Registrant, Combined
Insurance Company of America, Union Fidelity Life Insurance Company
and General Electric Capital Corporation dated as of November 11,
1995 - incorporated by reference to Exhibit 10(s) of the 1995 Form
10-K.
(q) Stock Purchase Agreement by and among the Registrant; Combined
Insurance Company of America; The Life Insurance Company of
Virginia; Forth Financial Resources, Ltd.; Newco Properties, Inc.;
and General Electric Capital Corporation dated as of December 22,
1995 - incorporated by reference to Exhibit 10(t) to the 1995 Form
10-K.
(r) Agreement and Plan of Merger among the Registrant, Purchaser and A&A
dated as of December 11, 1996 - incorporated by reference to Exhibit
(c)(1) to the Registrant's Schedule 14D-1 filed with the SEC on
December 16, 1996.
(s) First Amendment to Agreement and Plan of Merger dated as of January
7, 1997 among the Registrant, Purchaser and A&A - incorporated by
reference to Exhibit (c)(3) to Schedule 14D-1 filed by the
Registrant with the SEC on January 9, 1997.
(t) Employment Agreement dated June 1, 1993 by and among the Registrant,
Aon Risk Services, Inc. and Michael D. O'Halleran, incorporated by
reference to Exhibit 10(p) to the Registrant's Annual Report to the
Securities and Exchange Commission on Form 10-K for the year ended
December 31, 1998.
(12) Statements regarding Computation of Ratios.
(a) Statement regarding Computation of Ratio of Earnings to Fixed
Charges.
(b) Statement regarding Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends.
(13) Annual Report to Stockholders of the Registrant for the year ended
December 31, 2000.
(21) List of subsidiaries of the Registrant.
(23) Consent of Ernst & Young LLP to the incorporation by reference into Aon's
Annual Report on Form 10-K of their report included in the 2000 Annual
Report to Stockholders and into Aon's Registration Statement Nos.
33-27984, 33-42575, 33-59037, 333-21237, 333-50607, 333-55773, 333-78723
and 333-49300.
(99) Annual Report to the Securities and Exchange Commission on Form 11-K for
the Aon Savings Plan for the year ended December 31, 2000 - to be filed by
amendment as provided in Rule 15d-21(b).