Aon plans sale of underwriting unit Combined

CHICAGO--Aon Corp. said Tuesday that it has renewed its effort to fully divest itself from the underwriting business.

The announcement came as the Chicago-based broker reported gains in revenues and profits for the first half of 2007.

In a statement, Aon said it is exploring strategic alternatives for its remaining accident/health and life insurance underwriting unit, Combined Insurance Co. of America.

Aon attempted to spin off its underwriting units in 2001 but scrapped the plans, citing difficult market conditions. It has since sold off pieces of the underwriting business.

"We are making preparations for a spin-off of the company to our shareholders, but we anticipate receiving inquiries from potential buyers and are prepared to respond accordingly," Aon President and Chief Executive Officer Gregory C. Case said in the statement.

Aon has engaged Credit Suisse Securities (USA) L.L.C., Merrill Lynch & Co., and Aon Capital Markets as advisors on any potential related transaction, Aon said.

CICA, which generated $2.0 billion in revenues in 2006, is Aon's last remaining underwriting operation. In November 2006, Aon completed the sale of Aon Warranty Group and its operations to Warrior Acquisition Corp., an affiliate of Toronto-based investment firm Onex Corp., and sold its Construction Program Group to Old Republic Insurance Co. The deals were expected to result in proceeds and dividends in excess of $800 million, Aon said. The brokerage placed all of its remaining property/casualty underwriting business into runoff in the fourth quarter of 2006.

Meanwhile, Aon reported that revenues from its risk and insurance brokerage and consulting units rose 7.2% in the first six months of the year to $3.63 billion compared with the same period in 2006. Total revenues, which include underwriting premiums and investment income, rose 11.3% to $4.87 billion, while net income was up 15.9% to $453 million.