S&P Lowers Ratings For Aon, Combined

S&P Lowers Ratings For Aon, Combined

NU Online News Service, Aug. 22, 10:35 a.m. EST?Standard and Poor's announced it has lowered the ratings on Aon and the insurance broker's underwriting arm, Combined, citing short-term stress on the firm from its decision not to spin-off the insurer.

Declaring that it sees the Chicago-based firm's outlook as stable, the New York City-based rating service lowered its "counterparty credit rating" on Aon from ?A'/ ?A-1' to ?A'-minus/ ?A-2.' It also lowered Combined's "counterparty credit and financial strength ratings" from single-?A' to triple ??B'?plus.

The agency said in a statement that it took the action "because of concerns about the company's financial leverage and the uncertainty surrounding the sale or spin-off of the underwriting operations."

Aon's decision not to turn to the capital markets to raise equity capital leaves the underwriting operation "undercapitalized by as much as $500 million," S&P said it estimated.

In its announcement, however, S&P went on to say it expected business to "improve significantly in the third and fourth quarters of this year."

S&P said it believed management's ability to "deliver strong results" would improve investor confidence and "enhance" Aon's ability to reduce debt levels internally.