Aon Provides Update to Clients and Stockholders

Aon Corp. recently issued the following statement to its clients and stockholders from Chairman and CEO Patrick G. Ryan: “The shocking events of last Tuesday have had a dramatic impact on the world. Our primary focus since the terrorist attacks has been searching for our employees who were in and around the World Trade Center on that day. We have also been working with the families of our employees who were impacted to provide appropriate support. Preceding this report, we issued an update on the status of our employees involved in the World Trade Center tragedy.

“In addition to supporting fellow employees and their families, our 50,000 employees in our 600 offices around the world have rallied together to ensure that our clients’ needs are being met during this challenging period. We know that our clients require the expertise that Aon provides now more than ever and we have been in touch with the vast majority of our clients.

“Special attention is being given to those clients directly impacted by the tragedy, including assisting their employees with critical claims for workers’ compensation insurance. In addition, we are providing claims assistance for accident, health, and life insurance to Aon’s Combined Insurance Company subsidiary policyholders affected by the attacks, most of whom are Aon employees.

“We are also helping our clients with claims assistance so their businesses can resume. Understandably, clients not directly affected are also deeply concerned with safety, loss control, disaster recovery and human resource services; we are providing them with needed assistance.

“On behalf of our clients, following the disaster, we approached property and casualty insurance companies who have issued insurance policies to our clients. We requested that they not issue any cancellations or changes in terms and conditions, and to provide 60-day policy extensions. Most insurance carriers have agreed.

“Concurrently, Aon implemented its operating and systems disaster recovery plans, and document and data recovery continues. Aon’s communication network allowed us to reroute data traffic that flowed through the World Trade Center within an hour. Other critical business processing systems were recovered and relocated, outside New York, within 24 hours. Policy, consulting and other client-related information is being recovered, principally from our own systems but also through outstanding cooperation from carriers and clients.

“Financial records and systems are fully intact. Aon may however have a brief delay in the release of third quarter results, previously scheduled for early November. Payroll and employee benefit records were unaffected, and our New York colleagues including the families of those missing will receive their regular compensation on time. Other electronic data, principally the most recent World Trade Center intra-office e-mail and the hard copy documents that were not electronically imaged may be less recoverable.

“All of Aon’s normal processing systems are up and running. We are grateful to our IT team who worked relentlessly to maintain the integrity of our systems and data. Our World Trade Center offices housed Aon employees from insurance brokerage, human resource consulting, claims servicing, other specialty operations, and accident, health and life insurance underwriting. These colleagues are among Aon’s most talented and provide service to clients not only in the New York Metropolitan area, but are a resource to our other employees around the world.

“We are committed to providing services to our clients from New York City and we are working to establish new office space in mid-town Manhattan for our displaced employees. Many employees have already been temporarily assigned to Aon’s many offices in the New York tri-state area.

“We are principally an insurance brokerage and human resource consulting firm, but we do have insurance underwriting businesses. There are two principal impacts on those businesses from the terrorist attacks. First, our Combined Insurance Company subsidiaries issued a portion of the life coverage for the benefit of our employees in the World Trade Center. If our number of missing colleagues results in 200 losses, Aon’s portion of the total would be $50 million – $55 million pre-tax, inclusive of other policyholder claims that we are aware of.

“Second, the September 11 events will likely have an unfavorable impact on our near-term financial results due in part to delayed billings resulting from policy extensions arranged for clients, as well as slower new business growth due to our concentration on our current clients in dealing with this tragedy. As expected, third quarter revenue growth was slower in our human resource consulting business and our U.S. retail brokerage business compared with a year ago — the latter due in part to business transformation efforts. All of Aon’s other insurance brokerage businesses are performing on target. I can assure you that our financial resources and long-term earnings capacity remain strong. Mitigating against an adverse impact on operating revenues from the terrorist attacks, would be payments received under our business interruption insurance coverages. Our strategic decision to spin-off our underwriting business has not changed, although the timing could be delayed.

“This represents our best information and judgements as of today. The compassion, commitment and support of our Aon colleagues for each other is truly inspirational and a source of great pride and comfort. On behalf of our entire Aon family, I want to thank all of those who have provided us with expressions of concern and support and who have kept our missing colleagues in their thoughts and prayers. We will keep you informed.”

Topics New York Claims Aon Human Resources