Restructuring costs affect Aon's 2006 profits

CHICAGO--Aon Corp. reported single-digit revenue gains in 2006 while profits slid 2.2% to $721 million, the Chicago-based brokerage said late Thursday.

Revenues from its risk and insurance brokerage and consulting units were up 5.2% for the year to $6.96 billion, Aon reported. Total revenues, which include its underwriting operations, were up 5.4% to $8.95 billion.

Income from discontinued operations and expenses relating to its three-year restructuring plan, however, impacted Aon's profits in 2006, the brokerage said.

Aon incurred $167 million in expenses relating to its restructuring efforts during the year, which the brokerage anticipates will ultimately result in $280 million in annualized cost savings.

"Our 2006 performance is fully on track with the first year of our three-year improvement plan, as we made measurable progress on all three of our key operating metrics," said Greg Case, Aon's president and chief executive officer, in a statement.

He noted that Aon's organic revenue growth was 5% in 2006 and that net income per share from continuing operations increased 22% during the period.

Aon noted in its earnings release that its audit committee has begun a comprehensive review of option grant date practices and related accounting issues at the brokerage.

Aon said it recently determined that incorrect measurement dates for certain stock options granted in 2000 and in certain years prior appear to have been used for financial accounting purposes rather than any intentional misconduct or financial self-dealing, including backdating or other manipulation of stock-option pricing.

An Aon spokesman would not comment further on the issue except to say that the options in question are not Executive Chairman Patrick G. Ryan's, who was Aon's CEO in 2000.