Aon 4Q Income Drops 8%

Total fourth-quarter revenue rose 4 percent, increasing from $1.9 billion in 2000 to $2.04 billion in 2001. However, expenses were also up, rising 9 percent from $1.72 billion in the fourth quarter of 2000 to $1.87 billion in 2001.

In a financial analyst's conference call held today, Aon's chairman and chief executive officer Patrick G. Ryan said that much of the decline can be attributed to the events of Sept. 11 and the cost of the firm's plans to spin-off its underwriting division, Combined, into a separate company.

Aon lost some key people in the Sept. 11 attack, and consequently lost some business, Mr. Ryan said. There has also been retrenchment in some of the operating functions of employees as they position themselves for the spin-off, which he said is scheduled to take place in the spring of this year.

Mr. Ryan said Aon also suffered from losses in the United States retail brokerage segment of the business. He said mid-market producers have left the firm and gone over to the competition, taking accounts and reducing Aon's retention levels. He indicated that there have been management changes in "these geographic locations" and Aon would be working to win the lost accounts back.

"We believe we are on the right path and it is now a matter of execution," Mr. Ryan remarked concerning Aon's future.

Mr. Ryan revealed Aon had less than $1 million invested in Enron through a subsidiary, LJM2, but reported no fourth-quarter losses related to the investment.

Mr. Ryan also said the split-off of consulting services by the Big Five accounting firms would help Aon Consulting get its "foot in the door" in some cases, though the service, which reported a 14 percent increase in revenue, and 20 percent increase in before tax income, has done exceptionally well on its own.