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MOST BROKER CEOS SEE PAY INCREASE

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Aon Group Inc.'s Patrick G. Ryan is the highest paid insurance brokerage chief executive officer among the U.S. publicly traded insurance brokers.

The leader in the consolidation of insurance brokers, Mr. Ryan was awarded a 58.2% pay raise in 1996. His cash compensation of $2,577,692 bumped Marsh & McLennan Cos. Inc.'s A.J.C. Smith from the No. 1 spot he had held the last four years.

Mr. Ryan was paid a salary of $957,692 and a bonus of $1,620,000 in 1996. In 1995, he earned $886,968 in salary and $742,500 in bonus.

Mr. Ryan also is chairman, president and CEO of Aon Corp., which owns insurance companies as well as insurance brokerage and consulting operations. Consolidating the acquisition of three of last year's top 20 insurance brokers with its other insurance operations, Aon reports $5.8 billion in 1996 pro forma revenues, a 69% increase from 1995 revenues of $3.5 billion.

Business Insurance does not recognize underwriting revenues for its broker rankings, however, and therefore ranks Aon Group Inc. on its 1996 pro forma revenues of $3.96 billion, making it the second-largest broker in the world.

Aon Group's net income before taxes fell 14.1% in 1996 due to acquisition costs. Aon Corp.'s net income in 1996 similarly fell 16.8% to $335.2 million.

Mr. Ryan beneficially owns 13,015,447 shares of Aon Corp. stock, which, at a July 11 price of $54.50, were worth $709.3 million.

At M&M, still the world's largest broker, Mr. Smith's 1996 cash compensation increased 7.9%, to a combined salary and bonus of $2,050,000-$1.2 million in salary and and 850,000 bonus. In 1995 he received $1,125,000 in salary and a 775,000 bonus.

M&M's 1996 gross revenues, restated to reflect its $1.8 billion purchase of Johnson & Higgins in March, totaled $5.46 billion, up 44% from 1995.

M&M's net income for 1996, not restated to reflect J&H, rang up at $459.3 million, 14% higher than in 1995. Mr. Smith beneficially owns 102,697 shares of the company's stock, which, at a July 11 share price of $72.50, were worth $7.4 million.

But Mr. Smith was not the highest-paid executive at M&M. Lawrence J. Lasser, president of subsidiary Putnam Investments Inc., brought home an $870,000 base salary and a $9,500,000 bonus. Putnam's revenues increased 44% in 1996 to $1.1 billion.

Bruce D. Guthart, president and CEO of the Kaye Group Inc., the smallest of the publicly traded brokers, was the third-highest paid CEO in the group at $747,673 in 1996. He earned $589,007 in salary and $158,666 in bonus, up 9% from his combined salary and bonus in 1995 of $685,827.

Chairman Howard Kaye made a $674,972 salary and $192,334 bonus in 1996 for a total of $867,306, up 2.9% from his combined earnings of $843,042 in 1995.

Kaye's gross revenues from insurance brokerage fell 8% to $47.2 million in 1996. Net income, which includes earnings from underwriting operations, dropped 13.6% to $3.1 million from $3.6 million in 1995.

Frank Witthun, president and CEO of Acordia since December 1996, is the fourth-highest paid CEO in the group and achieved the most significant jump in compensation. Acordia also saw the highest percentage increase in net income of the six companies surveyed, rising 26.7% in 1996 to $29.9 million.

Mr. Witthun's $327,971 salary and $297,016 bonus totaled $624,987, a 171.7% hike from his 1995 earnings of $230,002. Mr. Witthun did not receive a bonus in 1995.

L. Ben Lytle, chairman and former CEO of Acordia, was compensated with a sum of $127,232, a 47% drop from his earnings of $240,000 in 1995. Mr. Lytle did not receive bonuses for either year, but the salaries from Acordia are supplemental to his yearly compensation from Acordia's parent, Anthem Insurance Cos. Mr. Lytle also beneficially owns 105,000 shares of Acordia's stock, which were worth $4.2 million at a July 11 price of $39.88. Mr. Witthun's beneficial ownership of Acordia stock, totaling 6,087 shares, was worth $242,750.

J. Hyatt Brown, president and CEO of Poe & Brown Inc., enters as the fifth-highest paid brokerage CEO.

Mr. Brown's combined earnings in 1996 of $564,450 is an 11.6% pay raise compared with $505,850 from 1995.

Mr. Brown's salary was $377,000 and his annual bonus was $187,450.

Mr. Brown beneficially owns 1,819,766 shares, or 21.5%, of Poe & Brown stock. At a July 11 stock price of $37.50, the shares were worth $68.2 million.

Mr. Brown's pay increase reflects the 11.5% increase in Poe & Brown's 1996 net income to $16.5 million.

The figures for 1996 prove, however, that an increase in profits does not necessarily coincide with an increase in cash compensation. The CEO of Arthur J. Gallagher & Co. saw his cash compensation dip, though the company's net income rose.

J. Patrick Gallagher, president and CEO of Arthur J. Gallagher & Co., experienced an 11.8% drop in cash compensation from 1995 despite the company's net income rise of 7.7% to $45.8 million, and the acquisition of five brokers, a risk management services company and an investigation services firm in 1996.

Mr. Gallagher's $356,000 salary for 1996 remained unchanged from 1995, and his bonus of $25,000 was $51,000 less than his 1995 bonus, making him the sixth-highest paid in the group.

According to the company's proxy statement, the Compensation Committee recommended a significant increase for Mr. Gallagher's 1996 pay, considering the company's success since his assumption of the additional role of CEO in January 1995.

Mr. Gallagher voluntarily declined the offer, citing wage freezes that were imposed on certain management employees as part of a companywide expense control effort.

Mr. Gallagher beneficially owns 118,766 shares of stock in the company. At a July 11 price of $36, his shares totaled $4.3 million.

Hilb, Rogal &*Hamilton Co. promoted Andrew L. Rogal to CEO this year, after Robert H. Hilb's retirement in May 1997.

Mr. Hilb, who in 1996 earned a combined cash compensation of $380,000 as chairman and CEO, will continue to serve the company for the next three years in consulting capacities.

Mr. Hilb's fee under this agreement is $134,000 during the first year, and $84,000 for the remaining two.

Mr. Rogal, who previously served as president and chief operating officer, earned $305,000 in salary for 1996, up 8.3% from the previous year. His bonus for last year, as yet undetermined in the company's proxy statement, will be awarded this year.

Mr. Rogal beneficially owns 38,500 shares of company stock. At a July 11 stock price of $16.75, those shares were worth $644,875. Mr. Hilb's 56,250 shares of company stock, at the same price on July 11, were worth $942,188.