Ratings Concerns Linger After Aon Settlement

S&P also said it affirmed its "triple-B-plus/A-2″ counterparty credit and financial strength ratings of Aon, with a "Negative" outlook.

"The removal from CreditWatch status is in response to a settlement agreement resolving allegations of fraud and anticompetitive actions with the attorneys general of Connecticut, Illinois and New York, the Illinois Acting Director of Insurance and the New York State Insurance Superintendent," S&P credit analyst Steven Ader said.

Mr. Ader explained that S&P negative outlook reflects "ongoing competitive and financial uncertainties" resulting from possible damage to reputation and the implementation of a new business model.

Fitch Ratings announced it is cutting Aon's long-term issuer rating and related senior debt ratings to "triple-B-plus" from "A-minus."

Gretchen Roetzer, who is the lead analyst for Aon at Fitch, told National Underwriter that the $190 million settlement amount was generally what has been expected since it is roughly what Aon took in from contingency fees in 2003.

The ratings firm said that while the settlement agreement "favorably eliminates one major uncertainty for Aon," it is outweighed by the combination of the civil suit [brought by the New York attorney general's office], related settlement costs, and other near-term challenges including the broker's susceptibility to a decline in franchise value and loss of business due to lost clients.

Ms. Roetzer also speculated that going forward, there may very well be even more allegations and charges brought forth against other brokerage firms. "I think it's inevitable that there will be additional findings. But I would expect the magnitude to be less," she said.