ITEM 1. BUSINESS.
The Registrant is a holding company whose operating subsidiaries carry on business in three distinct operating segments: (i) insurance brokerage and other services, (ii) consulting, and (iii) insurance underwriting. Incorporated in 1979, it is the parent corporation of long-established and more recently formed companies.
The Registrant acquired, among other companies and businesses, Actuarial Sciences Associates, Inc. (ASA), an employee benefits and consulting firm, and Horizon Consulting Group, Inc., a firm specializing in commercial policyholder claim consulting services, in 2000. In February 2001, Aon announced that it had entered into a definitive agreement to acquire ASI Solutions Incorporated (ASI), a worldwide provider of human resources administration and compensation consulting services. The transaction involves an exchange of Aon common stock and is subject to regulatory approval and ASI shareholder approval.
The Insurance Brokerage and Other Services segment consists principally of Aon's retail brokerage, reinsurance, wholesale and specialty brokerage and other related services such as managing underwriting and claims and financing services. These services are provided by Aon Group, Inc., its subsidiaries and certain other indirect subsidiaries of the Registrant (the "Aon Group") including Aon Risk Services Companies, Inc.; Aon Holdings bv; Aon Services Group, Inc.; Aon Re Worldwide, Inc.; Aon Limited; Cananwill, Inc.; and Premier Auto Finance, Inc.
The Consulting segment provides a range of services utilizing four practice groups: employee benefits, compensation, management consulting and employment practices outsourcing. These services are provided by Aon Consulting Worldwide, Inc. which is also a subsidiary of Aon Group.
Aon's Insurance Underwriting segment is comprised of supplemental life, accident and health insurance, and extended warranty and casualty insurance products. Combined Insurance Company of America ("Combined Insurance") engages in the marketing and underwriting of life and accident and health insurance products. Virginia Surety Company, Inc. and London General Insurance Company Limited offer extended warranty and casualty insurance products.
On November 2, 2000, the Registrant announced a business transformation plan, to be undertaken from November 2000 through the next fiscal year. The transformation plan will affect each operating segment; however, most changes will affect the largest operating segment, Insurance Brokerage and Other Services, and will occur in the major countries of operation, the U.S. and the United Kingdom.
The Registrant hereby incorporates by reference "Business Transformation Plan" on page 17 of the Annual Report to Stockholders of the Registrant for the Year 2000 ("Annual Report"), as well as pages 6 through 15, 20 through 24, and pages 54, 55 and 59 of the Annual Report.
COMPETITION AND INDUSTRY POSITION
(1) INSURANCE BROKERAGE AND OTHER SERVICES
Aon Group, Inc; Aon Risk Services Companies, Inc.; Aon Limited (U.K.); Aon Holdings International bv; Aon Services Group, Inc.; Aon Re Worldwide, Inc.; Cananwill, Inc.; and Premier Auto Finance, Inc.
Aon Group affiliated companies conduct the Registrant's brokerage and consulting operations, and have 550 offices around the world in 120 countries. In 2000, those companies employed nearly 40,000 professionals and support personnel to serve the diverse needs of clients.
Aon Group's retail brokerage companies operate in a highly competitive industry and compete with a large number of retail insurance brokerage and agency firms as well as individual brokers and agents and direct writers of insurance coverage. Those companies provide risk management services, including insurance placement and claims, loss control and administrative services as well as specialty underwriting solutions and customized products and services. They have also developed certain specialist areas such as marine, aviation, directors and officers liability, financial institutions, construction, energy, media and entertainment. In 2000, investments were made in professional talent, technology, process improvement and the development of specialized products and services to meet the evolving needs of clients. Those companies operate through offices located in North America, Europe, Latin America, Africa, Australia and Asia.
Aon Group's companies also address the highly specialized product development, consulting and administrative risk management needs of professional groups, service businesses, governments, healthcare providers and commercial organizations. They also provides underwriting management skills, claims and risk management expertise, and third-party administration services to insurance companies, and insurance brokerage services for individuals. They market and broker both the primary and reinsurance risks of these programs. For individuals, associations and businesses, affinity products for professional liability, life, disability income and personal lines are provided.
Aon's reinsurance brokerage activities are organized under Aon Re in the United States and Aon Limited in the United Kingdom, constituting the largest reinsurance broker in the world and offering reinsurance, analytical services and alternative risk financing vehicles. The companies serve the alternative market with reinsurance placement, alternative risk services, captive management services and catastrophe information forecasting.
Premium-related financing services are available to clients of Aon Group and other independent organizations through Cananwill. Certain retail automotive organizations have also been provided a service which purchases a select amount of their auto financing and leasing contracts from individuals and sells them to unaffiliated parties through companies associated with Premier Auto Finance, Inc., which then continue the management of collections on the contracts and provide other related services. After March 27, 2001, contract purchasing by companies associated with Premier Auto Finance, Inc. will no longer be generally available, but service will continue on existing contracts with current clients.
(2) CONSULTING
Aon Consulting Worldwide
Aon Consulting Worldwide affiliated companies serve the employee benefit needs of clients around the world. Aon Consulting is one of the world's largest integrated human resources consulting organizations. Focusing on the increasing demand for outsourcing solutions, Aon Consulting targets emerging businesses, IPOs, recent mergers and acquisitions and corporations that are reengineering staff functions. The year 2000 acquisition of ASA, an employee benefits and compensation consulting firm, increased Aon's penetration of large corporate accounts.
Around the world, employee benefits markets continue to change as companies look for better ways to manage their human capital costs while expanding the choices offered to their employees. Aon Consulting, with its expertise in employee benefits, compensation, management consulting and employment practices outsourcing, and its access to the Registrant's other subsidiaries, is well-positioned to serve this market. Aon Consulting subsidiaries offer services to clients including benefit plan design and administration; compensation consulting and surveys; employee selection and assessment; process improvement; leadership development; performance management tools; workforce productivity and individual and organizational change management. Benefits issues outside the U.S. are becoming more complicated, and Aon Holdings and Aon Consulting anticipate increased demand for their services in these markets.
(3) INSURANCE UNDERWRITING
Combined Insurance Company of America ("Combined Insurance"); Combined Life Insurance Company of New York ("CLICNY"); Virginia Surety Company, Inc. ("VSC"); London General Insurance Company Limited ("London General"); and Aon Warranty Group, Inc. ("Aon Warranty").
The Registrant's insurance underwriting subsidiaries are part of a highly competitive industry that serves individual consumers in North America, Europe, Latin America and Asia/Pacific by providing accident and health coverage, traditional life insurance and extended warranties through distribution networks, most of which are directly owned by the Registrant's subsidiaries.
The supplemental life and accident and health distribution network encompasses primarily the agents of Combined Insurance and CLICNY (which operates exclusively in the State of New York). Combined Insurance, the Registrant's principal life and accident and health insurer, has a sales force of several thousand career agents calling on individuals to sell a broad spectrum of low premium accident and health products. Combined Insurance's current product portfolio often allows policyholders the option of paying premiums monthly through a pre-authorized check mechanism in the U.S. and on a direct debit option in the U.K. Combined Insurance offers a wide range of accident-only and sickness-only insurance products, including short-term disability, cancer aid, Medicare supplement, disability income and long-term care coverage. Most of Combined Insurance's products are primarily fixed-indemnity obligations, thereby not subject to escalating medical costs. Combined Insurance offers a simplified accident and sickness long-term disability policy. Combined Insurance has expanded its product distribution through payroll deduction and their worksite marketing programs continue to develop. Combined Insurance's business is conducted in the United States, Canada, Latin America, Europe and Asia/Pacific.
The Registrant's extended warranty and specialty insurance business, conducted by VSC subsidiaries in North America, South America and Asia/Pacific and London General in Europe, is composed primarily of extended warranty insurance products, professional liability insurance coverages and workers' compensation coverage. VSC and London General are among the world's largest underwriters of consumer extended warranties. The extended warranty products are sold in the United States, Canada, Latin America, Europe and Asia/Pacific. The administration of certain extended warranty products on automobiles, electronic goods, personal computers and appliances is handled by certain operations in the Insurance Brokerage and Other Services segment.
(4) DISCONTINUED OPERATIONS
The Registrant hereby incorporates by reference note 5 of the Notes to Consolidated Financial Statements on page 40 of the Annual Report.
LICENSING AND REGULATION
Regulatory authorities in the states or countries in which the operating subsidiaries of Aon Group conduct business may require individual or company licensing to act as brokers, agents, third party administrators, managing general agents, reinsurance intermediaries or adjusters. Under the laws of most states in the United States and in most foreign countries, regulatory authorities have relatively broad discretion with respect to granting, renewing and revoking brokers' and agents' licenses to transact business in the state or country. The manner of operating in particular states and countries may vary according to the licensing requirements of the particular state or country, which may require, among other things, that a firm operate in the state or country through a local corporation. In a few states and countries, licenses are issued only to individual residents or locally-owned business entities. In such cases, Aon Group subsidiaries have arrangements with residents or business entities licensed to act in the state or country.
Insurance companies must comply with laws and regulations of the jurisdictions in which they do business. These laws and regulations are designed to ensure financial solvency of insurance companies and to require fair and adequate service and treatment for policyholders. They are enforced by the states in the United States, by industry self-regulating agencies in the United Kingdom, and by various regulatory agencies in other countries through the granting and revoking of licenses to do business, licensing of agents, monitoring of trade practices, policy form approval, minimum loss ratio requirements, limits on premium and commission rates, and minimum reserve and capital requirements. Compliance is monitored by the state insurance departments through periodic regulatory reporting procedures and periodic examinations. The quarterly and annual financial reports to the regulators in the United States utilize statutory accounting principles which are different from the generally accepted accounting principles used in stockholders' reports. The statutory accounting principles, in keeping with the intent to assure the protection of policyholders are based, in general, on a liquidation concept while generally accepted accounting principles are based on a going-concern concept.
The state insurance regulators are members of the National Association of Insurance Commissioners ("NAIC"). This Association seeks to promote uniformity of, and to enhance the state regulation of, insurance. Both the NAIC and the individual states continue to focus on the solvency of insurance companies and their conduct in the market place. This focus is reflected in additional regulatory oversight by the states and emphasis on the enactment or adoption of a series of NAIC model laws and regulations designed to promote solvency. The NAIC revised the Accounting Practices and Procedures Manual in a process referred to as Codification. The revised manual is effective January 1, 2001. The domiciliary states of Aon's major insurance subsidiaries have adopted the
provisions of the revised manual. The revised manual has changed, to some extent, prescribed statutory accounting practices and will result in changes to the accounting practices that Aon's major insurance subsidiaries use to prepare their statutory-basis financial statements. The impact of these changes to Aon's major insurance subsidiaries' statutory capital and surplus as of January 1, 2001 is not expected to be significant.
Several years ago, the NAIC developed a formula for analyzing insurers called risk-based capital ("RBC"). RBC is intended to establish "minimum" capital threshold levels that vary with the size and mix of a company's business. It is designed to identify companies with the capital levels that may require regulatory attention. RBC does not have any significant impact on the insurance business of the Registrant.
The state insurance holding company laws require prior notice to and approval of the domestic state insurance department of intracorporate transfers of assets within the holding company structure, including the payment of dividends by insurance company subsidiaries. In addition, the premium finance loans by Cananwill, Inc., an indirect wholly-owned subsidiary of the Registrant, are subject to one or more of truth-in-lending and credit regulations, insurance premium finance acts, retail installment sales acts and other similar consumer protection legislation. Failure to comply with such laws or regulations can result in the temporary suspension or permanent loss of the right to engage in business in a particular jurisdiction as well as other penalties.
Recent federal and state laws and proposals mandating specific practices by medical insurers and the health care industry will not, because of the nature of the business of the Registrant's subsidiaries, materially affect the Registrant. Numerous states have had legislation introduced to reform the health care system and such legislation has passed in several states. While it is impossible to forecast the precise nature of future federal and state health care changes, the Registrant does not expect a major impact on its operations because of the supplemental nature of most of the policies issued by its insurance subsidiaries and because the coverages are primarily purchased to provide, on a fixed-indemnity basis, protection against loss-of-time or disability benefits. Congress has passed the Financial Services Modernization Act commonly known as S 900 or the Gramm, Leach, Bliley Act. While S 900 makes substantial changes in allowing financial organizations to diversify, the Registrant does not believe the enactment of S 900 will have a material effect on the business of its insurance subsidiaries.
CLIENTELE
No significant part of the Registrant's or its subsidiaries' business is dependent upon a single client or on a few clients, the loss of any one of which would have a material adverse effect on the Registrant.
EMPLOYEES
The Registrant's subsidiaries had approximately 51,000 employees at the end of 2000 of whom approximately 43,000 are salaried and hourly employees and the remaining 8,000 are sales representatives who are generally compensated wholly or primarily by commission.
ITEM 2.
ITEM 2. PROPERTIES.
The Registrant's subsidiaries own and occupy office buildings in four states and certain foreign countries, and lease office space elsewhere in the United States and in various foreign cities. Loss of the use of any owned or leased property, while potentially disruptive, would have no material impact on the Registrant.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
The Registrant hereby incorporates by reference note 14 of the Notes to Consolidated Financial Statements on page 53 of the Annual Report.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers of the Registrant are regularly elected by its Board of Directors at the annual meeting of the Board which is held following each annual meeting of the stockholders of the Registrant. The executive officers of the Registrant were elected to their current positions on April 18, 2000 to serve until the meeting of the Board following the annual meeting of stockholders on April 20, 2001. Ages shown are as of December 31, 2000.
For information concerning certain directors and executive officers of the Registrant, see item 10 below. As of March 5, 2001, the following individuals are also executive officers of the Registrant as defined in Rule 16a-1(f):
HAS CONTINUOUSLY SERVED AS AN OFFICER OF REGISTRANT OR NAME, AGE, AND ONE OR MORE OF CURRENT OFFICE ITS SUBSIDIARIES BUSINESS EXPERIENCE OR PRINCIPAL POSITION SINCE PAST 5 YEARS --------------------- ----- ------------
Harvey N. Medvin, 64 1972 Mr. Medvin became Vice President Executive Vice President and and Chief Financial Officer of the Chief Financial Officer Registrant in 1982 and was elected to his current position in 1987. He also serves as a Director or Officer of certain of the Registrant's subsidiaries.
Michael A. Conway, 53 1990 Mr. Conway was Vice President of Senior Vice President and Combined Insurance from 1980 to Senior Investment Officer 1984. Following other employment, Mr. Conway rejoined the Registrant in 1990 as Senior Vice President of Combined Insurance and was elected to his current position in 1991. He also serves as Director or Officer of certain of the Registrant's subsidiaries.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS.
The Registrant's $1.00 par value common shares ("Common Shares") are traded on the New York, Chicago, London and Frankfurt stock exchanges. The Registrant hereby incorporates by reference the "Dividends paid per share" and "Price range" data on page 57 of the Annual Report.
The Registrant had approximately 13,650 holders of record of its Common Shares as of February 21, 2001.
The Registrant hereby incorporates by reference note 10 of the Notes to Consolidated Financial Statements on page 45 of the Annual Report.
Recent Sales of Unregistered Securities. On October 2, 2000, 3,864,824 shares of Aon common stock were issued to all of the shareholders and holders of phantom shares of ASA Acquisition Corp. ("ASA") in connection with the acquisition of ASA and its subsidiaries by the merger of a subsidiary of Aon with and into ASA. The shares were issued to the shareholders of ASA by Aon in a private offering exempt from registration pursuant to Section 4 (2) of the Securities Act of 1933.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
The Registrant hereby incorporates by reference the "Selected Financial Data" table on page 57 of the Annual Report.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The Registrant hereby incorporates by reference "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 17 through 28 and "Information Concerning Forward-Looking Statements" on page 28 of the Annual Report.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Registrant hereby incorporates by reference "Market Risk Exposure" on pages 27 and 28 of the Annual Report.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Registrant hereby incorporates by reference the following statements, notes and data from the Annual Report. Page(s) ------- Consolidated Financial Statements ....................... 29 - 33 Notes to Consolidated Financial Statements .............. 34 - 55 Report of Ernst & Young LLP, Independent Auditors ....... 56 Quarterly Financial Data ................................ 58
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Registrant hereby incorporates by reference the information on pages 3, 6 and 7 of the Proxy Statement For The Annual Meeting of the Stockholders on April 20, 2001, of the Registrant ("Proxy Statement") concerning the following Directors of the Registrant, each of whom also serves as an executive officer of the Registrant as defined in Rule 16a-1(f): Patrick G. Ryan, Michael D. O'Halleran and Raymond I. Skilling. Information concerning additional executive officers of the Registrant is contained in Part I hereof, pursuant to General Instruction G(3) and Instruction 3 to Item 401(b) of Regulation S-K. The Registrant also hereby incorporates by reference the information on pages 10 through 12 of the Proxy Statement.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
The Registrant hereby incorporates by reference the information under the headings "Executive Compensation," "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values," "Option Grants in 2000 Fiscal Year" and "Pension Plan Table" on pages 15 through 18 of the Proxy Statement.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Registrant hereby incorporates by reference the share ownership data contained on pages 2, 9 and 10 of the Proxy Statement.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Registrant hereby incorporates by reference the information under the heading "Transactions With Management" on page 22 of the Proxy Statement.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A) (1) AND (2). The Registrant has incorporated by reference from the Annual Report (see Item 8) the following consolidated financial statements of the Registrant and subsidiaries:
ANNUAL REPORT PAGE(S) -------
Consolidated Statements of Income - Years Ended December 31, 2000, 1999 and 1998 29
Consolidated Statements of Financial Position - As of December 31, 2000 and 1999 30-31
Consolidated Statements of Stockholders' Equity - Years Ended December 31, 2000, 1999 and 1998 32
Consolidated Statements of Cash Flows - Years Ended December 31, 2000, 1999 and 1998 33
Notes to Consolidated Financial Statements 34-55
Report of Ernst & Young LLP, Independent Auditors 56
Financial statement schedules of the Registrant and consolidated subsidiaries not included in the Annual Report but filed herewith:
Consolidated Financial Statement Schedules -
Schedule -------- Condensed Financial Information of Registrant I Valuation and Qualifying Accounts II
All other schedules for Aon Corporation and Subsidiaries have been omitted because the required information is not present in amounts sufficient to require submission of the schedules or because the information required is included in the respective financial statements or notes thereto.
The following supplementary schedules have been provided for Aon Corporation and Subsidiaries as they relate to the insurance underwriting operations:
Schedule Summary of Investments Other than Investments in Related Parties II.1 Reinsurance II.2 Supplementary Insurance Information II.3
(A)(3). EXHIBITS
(a) Second Restated Certificate of Incorporation of the Registrant - incorporated by reference to Exhibit 3(a) to the Registrant's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1991 (the "1991 Form 10-K").
(b) Certificate of Amendment of the Registrant's Second Restated Certificate of Incorporation - incorporated by reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 (the "First Quarter 1994 Form 10Q").
(c) Certificate of Amendment of the Registrant's Second Restated Certificate of Incorporation - incorporated by reference to Exhibit 3 to the Registrant's current Form 8-K, dated May 9, 2000.
(d) Amended Bylaws of the Registrant.
(e) Indenture dated September 15, 1992 between the Registrant and Continental Bank Corporation (now known as Bank of America Illinois), as Trustee - incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated September 23, 1992.
(f) Resolutions establishing terms of 7.40% Notes Due 2002 - incorporated by reference to Exhibits 4(d) to the Registrant's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1992 (the "1992 Form 10-K").
(g) Resolutions establishing the terms of 6.70% Notes Due 2003 and 6.30% Notes Due 2004 incorporated by reference to Exhibits 4(c) and 4(d) of the Registrant's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1993 (the "1993 Form 10-K").
(h) Resolutions establishing the terms of the 6.90% Notes Due 2004, incorporated by reference to Exhibit 4(e) of the Registrant's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1999 (the "1999 Form 10-K").
(i) Resolutions establishing the terms of the 8.65% Notes due 2005.
(j) Junior Subordinated Indenture dated as of January 13, 1997 between the Registrant and The Bank of New York, as trustee - incorporated by reference to Exhibit 4.1 of the Registrant's Amendment No. 1 to Registration Statement on Form S-4 No. 333-21237 dated March 27, 1997 (the "Capital Securities Registration").
(k) First Supplemental Indenture dated as of January 13, 1997 between the Registrant and the Bank of New York, as trustee - incorporated by reference to Exhibit 4.2 of the Capital Securities Registration.
(l) Certificate of Trust of Aon Capital A - incorporated by reference to Exhibit 4.3 of the Capital Securities Registration.
(m) Amended and Restated Trust Agreement of Aon Capital A dated as of January 13, 1997 among the Registrant, as Depositor, The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, the Administrative Trustees named therein and the holders, from time to time, of the Capital Securities - incorporated by reference to Exhibit 4.5 of the Capital Securities Registration.
(n) Capital Securities Guarantee Agreement dated as of January 13, 1997 between the Registrant and the Bank of New York, as guarantee trustee - incorporated by reference to Exhibit 4.8 of the Capital Securities Registration.
(o) Capital Securities Exchange and Registration Rights Agreement dated as of January 13, 1997 among the Registrant, Aon Capital A and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated by reference to Exhibit 4.10 of the Capital Securities Registration.
(p) Debenture Exchange and Registration Rights Agreement dated as of January 13, 1997 among the Registrant, Aon Capital A and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated by reference to Exhibit 4.11 of the Capital Securities Registration.
(q) Guarantee Exchange and Registration Rights Agreement dated as of January 13, 1997 among the Registrant, Aon Capital A and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated by reference to Exhibit 4.12 of the Capital Securities Registration.
(r) Certificate of Designation for the Registrant's Series C Cumulative Preferred Stock - incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated February 9, 1994.
(s) Registration Rights Agreement dated November 2, 1992 by and between the Registrant and Frank B. Hall & Co., Inc. - incorporated by reference to Exhibit 4(c) to the Third Quarter 1992 Form 10-Q.
(t) Registration rights agreement by and among the Registrant and certain affiliates of Ryan Insurance Group, Inc. (including Patrick G. Ryan and Andrew J. McKenna) - incorporated by reference to Exhibit (f) to the 1982 Form 10-K.
(u) Aon Corporation Outside Director Deferred Compensation Agreement by and among the Registrant and Registrant's directors who are not salaried employees of Registrant or Registrant's affiliates.
(v) Amendment and Waiver Agreement dated as of November 4, 1991 among the Registrant and each of Patrick G. Ryan, Shirley Ryan, Ryan Enterprises Corporation and Harvey N. Medvin - incorporated by reference to Exhibit 10(j) to the 1991 Form 10-K.
(w) Statement regarding Computation of Ratio of Earnings to Fixed Charges.
(x) Statement regarding Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
(y) Aon Corporation 1994 Amended and Restated Outside Director Stock Award Plan - incorporated by reference to Exhibit 10(b) to the First Quarter 1994 Form 10-Q.
(z) Annual Report to Stockholders of the Registrant for the year ended December 31, 2000 (for information, and not to be deemed filed, except for those portions specifically incorporated by reference herein).
(aa) List of Subsidiaries of the Registrant.
(ab) Consent of Ernst & Young LLP to the incorporation by reference into Aon's Annual Report on Form 10-K of its report included in the 2000 Annual Report to Stockholders and into Aon's Registration Statement Nos. 33-27984, 33-42575, 33-59037, 333-21237, 333-50607, 333-55773, 333-78723 and 333-49300.
(ac) Annual Report to the Securities and Exchange Commission on Form 11-K for the Aon Savings Plan for the year ended December 31, 2000 - to be filed by amendment as provided in Rule 15d- 21(b).
(ad) Executive Compensation Plans and Arrangements:
(A) Aon Stock Award Plan (as amended and restated through February 2000) - incorporated by reference to Exhibit 10 (a) to the Registrant's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the Quarter ended June 30, 2000 (the "Second Quarter 2000 Form 10-Q").
(B) Aon Stock Option Plan (as amended and restated through 1997) - incorporated by reference to Exhibit 10(a) to the Registrant's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the quarter ended March 31, 1997 (the "First Quarter 1997 Form 10-Q").
(C) First Amendment to the Aon Stock Option Plan as amended and restated through 1997 - incorporated by reference to Exhibit 10(a) to the Registrant's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the Quarter ended March 31, 1999 (the "First Quarter 1999 Form 10-Q").
(D) Aon Stock Award Plan (as amended and restated through 1997) - incorporated by reference to Exhibit 10(b) to the First Quarter 1997 Form 10-Q.
(E) First Amendment to the Aon Stock Award Plan as Amended and Restated Through 1997 - incorporated by reference to Exhibit 10(b) to the First Quarter 1999 Form 10-Q.
(F) Aon Corporation 1995 Senior Officer Incentive Compensation Plan incorporated by reference to Exhibit 10(p) to the Registrant's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1995 (the "1995 Form 10-K").
(G) Aon Deferred Compensation Plan and First Amendment to the Aon Deferred Compensation Plan - incorporated by reference to Exhibit 10(q) of the 1995 Form 10-K.
(H) 1999 Aon Deferred Compensation Plan incorporated by reference to Exhibit 10(1) of the 1999 Form 10-K.
(I) Employment Agreement dated June 1, 1993 by and among the Registrant, Aon Risk Services, Inc. and Michael D. O'Halleran, incorporated by reference to Exhibit 10(p) to the Registrant's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1998.
(J) Aon Severance Plan - incorporated by reference to Exhibit 10 to the Registrant's Quarterly Report to the Securities and Exchange Commission and Form 10-Q for the quarter ended June 30, 1997.
(ae) Asset Purchase Agreement dated July 24, 1992 between the Registrant and Frank B. Hall & Co. Inc. - incorporated by reference to Exhibit 10(c) to the Registrant's Quarterly Report on Form 10- Q for the period ended June 30, 1992.
(af) Stock Purchase Agreement by and among the Registrant, Combined Insurance Company of America, Union Fidelity Life Insurance Company and General Electric Capital Corporation dated as of November 11, 1995 - incorporated by reference to Exhibit 10(s) of the 1995 Form 10-K.
(ag) Stock Purchase Agreement by and among the Registrant; Combined Insurance Company of America; The Life Insurance Company of Virginia; Forth Financial Resources, Ltd.; Newco Properties, Inc.; and General Electric Capital Corporation dated as of December 22, 1995 - incorporated by reference to Exhibit 10(t) of the 1995 Form 10-K.
(ah) Agreement and Plan of Merger among the Registrant; Subsidiary Corporation, Inc. ("Purchaser"); and Alexander & Alexander Services Inc. ("A&A") dated as of December 11, 1996 - incorporated by reference to Exhibit (c)(1) of the Registrant's Tender Offer Statement on Schedule 14D-1 filed by the Registrant with the Securities and Exchange Commission ("SEC") on December 16, 1996 (the "Schedule 14D-1").
(ai) First Amendment to Agreement and Plan of Merger, dated as of January 7, 1997, among the Registrant, Purchaser and A&A - incorporated by reference to Exhibit (c)(3) to the Schedule 14D-1 filed by the Registrant with the SEC on January 9, 1997.
(b) REPORTS ON FORM 8-K.
During the quarter ended December 31, 2000, the Registrant filed a Current Report on Form 8-K dated November 3, 2000 reporting its third quarter 2000 results and announcing that the Company's board of directors approve, in principle, a comprehensive business transformation plan.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 16th day of March, 2001.
Aon Corporation
By: /s/ PATRICK G. RYAN ---------------------------- Patrick G. Ryan, Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ----
Chairman, Chief Executive March 16, 2001 /s/ PATRICK G. RYAN Officer and Director - ---------------------------- (Principal Executive Officer) Patrick G. Ryan
/s/ DANIEL T. CARROLL Director March 16, 2001 - ---------------------------- Daniel T. Carroll
/s/ FRANKLIN A. COLE Director March 16, 2001 - ---------------------------- Franklin A. Cole
/s/ EDGAR D. JANNOTTA Director March 16, 2001 - ---------------------------- Edgar D. Jannotta
/s/ LESTER B. KNIGHT Director March 16, 2001 - ---------------------------- Lester B. Knight
/s/ PERRY J. LEWIS Director March 16, 2001 - ---------------------------- Perry J. Lewis
/s/ ANDREW J. McKENNA Director March 16, 2001 - ---------------------------- Andrew J. McKenna
/s/ NEWTON N. MINOW Director March 16, 2001 - ---------------------------- Newton N. Minow
/s/ ROBERT S. MORRISON Director March 16, 2001 - ---------------------------- Robert S. Morrison
Signature Title Date --------- ----- ----
/s/ RICHARD C. NOTEBAERT Director March 16, 2001 - ---------------------------- Richard C. Notebaert
/s/ MICHAEL D. O'HALLERAN Director March 16, 2001 - ---------------------------- Michael D. O'Halleran
/s/ DONALD S. PERKINS Director March 16, 2001 - ---------------------------- Donald S. Perkins
/s/ JOHN W. ROGERS, JR. Director March 16, 2001 - ---------------------------- John W. Rogers, Jr.
/s/ GEORGE A. SCHAEFER Director March 16, 2001 - ---------------------------- George A. Schaefer
/s/ RAYMOND I. SKILLING Director March 16, 2001 - ---------------------------- Raymond I. Skilling
/s/ FRED L. TURNER Director March 16, 2001 - ---------------------------- Fred L. Turner
/s/ ARNOLD R. WEBER Director March 16, 2001 - ---------------------------- Arnold R. Weber
/s/ CAROLYN Y. WOO Director March 16, 2001 - ---------------------------- Carolyn Y. Woo
/s/ HARVEY N. MEDVIN Executive Vice President March 16, 2001 - ---------------------------- and Chief Financial Officer Harvey N. Medvin (Principal Financial and Accounting Officer)
See notes to condensed financial statements.
See notes to condensed financial statements.
See notes to condensed financial statements.
SCHEDULE I (Continued)
Aon Corporation (Parent Company) NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) See notes to consolidated financial statements incorporated by reference from the Annual Report.
(2) Generally, the net assets of Aon's insurance subsidiaries available for transfer to the parent company are limited to the amounts that the insurance subsidiaries' statutory net assets exceed minimum statutory capital requirements; however, payments of the amounts as dividends in excess of $197 million may be subject to approval by regulatory authorities.
(3) In 1998, Aon guaranteed a committed bank credit facility under which certain European subsidiaries can borrow up to EUR 400 million. At December 31, 2000, loans of EUR 279 million ($260 million) were outstanding under this facility.
An indirect wholly-owned subsidiary of Aon Corporation manages various investment portfolios, totaling $247 million at December 31, 2000, held in a collateral trust for the benefit of certain unaffiliated entities and is obligated to produce specified investment returns for those portfolios. Aon Corporation has unconditionally guaranteed the obligations of this subsidiary.
(4) In 2000, the Condensed Statements of Cash Flows exclude the impact of certain non-cash transfers primarily related to notes receivable from subsidiaries and notes payable to subsidiaries.
Cross Reference Sheet, Pursuant to General Instruction G(4)
ITEM IN FORM 10-K INCORPORATED BY REFERENCE TO - ----------------- ----------------------------
Part I - ------
Item 1. Business Annual Report to Stockholders of the Registrant for the Year 2000 ("Annual Report") pages 6 through 15, 20 through 24, and pages 40, 54, 55 and 59.
Item 3. Legal Proceedings Annual Report page 53 (note 14 of Notes to Consolidated Financial Statements).
Part II - -------
Item 5. Market for the Registrant's Annual Report page 45 (note 10 of Common Stock and Related Security Notes to Consolidated Financial Holder Matters Statements) and page 57 ("Dividends paid per share" and "Price range").
Item 6. Selected Financial Data Annual Report page 57.
Item 7. Management's Discussion and Annual Report pages 17 through 28. Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Annual Report pages 27 and 28 Qualitative Disclosures about ("Market Risk Exposure"). Market Risk
Item 8. Financial Statements and Annual Report pages 29 through 55 Supplementary Data and 58.
Part III - --------
Item 10. Directors and Executive Proxy Statement For Annual Meeting Officers of the Registrant of Stockholders on April 20, 2001 of the Registrant ("Proxy Statement") pages 3, 6, 7, and 10 through 12.
Item 11. Executive Compensation Proxy Statement pages 15 through 18.
Item 12. Security Ownership of Proxy Statement pages 2, 9 and 10. Certain Beneficial Owners and Management
Item 13. Certain Relationships and Proxy Statement page 22 Related Transaction ("Transactions With Management").
Part IV - -------
Item 14. Exhibits, Financial Annual Report pages 29 through 55. Statement Schedules, And Reports on Form 8-K
EXHIBIT INDEX
Exhibit Number Page Number of Regulation Sequentially S-K, Item 601 Numbered Copy - ------------- -------------
(3) Articles of incorporation and bylaws:
(a) Second Restated Certificate of Incorporation of the Registrant - incorporated by reference to Exhibit 3(a) to the 1991 Form 10-K.
(b) Certificate of Amendment of the Registrant's Second Restated Certificate of Incorporation - incorporated by reference to Exhibit 3 to the First Quarter 1994 Form 10-Q.
(c) Certificate of Amendement of the Registrant's Second Restated Certificate of Incorporation - incorporated by reference to Exhibit 3 to the Registrant's current Form 8-K, dated May 9, 2000.
(d) Amended Bylaws of the Registrant
(e) Certificate of Designation for the Registrant's Series C Cumulative Preferred Stock - incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated February 9, 1994.
(4) Instruments defining the rights of security holders, including indentures:
(a) Indenture dated September 15, 1992 between the Registrant and Continental Bank Corporation (now known as Bank of America Illinois), as Trustee - incorporated by reference to Exhibit 4(a) of the Registrant's Current Report on Form 8-K dated September 23, 1992.
(b) Resolutions establishing terms of 7.40% Notes Due 2002 - incorporated by reference to Exhibit 4(d) to the 1992 Form 10-K.
(c) Resolutions establishing the terms of 6.70% Notes Due 2003 incorporated by reference to Exhibit 4(c) to the 1993 Form 10-K.
(d) Resolutions establishing the terms of 6.30% Notes Due 2004 incorporated by reference to Exhibit 4(d) to the 1993 Form 10-K.
(e) Resolutions establishing the terms of 6.90% Notes due 2004 incorporated by reference to Exhibit 4(e) to the 1999 Form 10-K.
(f) Resolutions establishing the terms of 8.65% Notes due 2005.
(g) Junior Subordinated Indenture dated as of January 13, 1997 between the Registrant and The Bank of New York, as trustee - incorporated by reference to Exhibit 4.1 of the Registrant's Amendment No. 1 to Registration Statement on Form S-4 No. 333-21237 dated March 27, 1997 (the "Capital Securities Registration").
(h) First Supplemental Indenture dated as of January 13, 1997 between the Registrant and the Bank of New York, as trustee - incorporated by reference to Exhibit 4.2 of the Capital Securities Registration.
EXHIBIT INDEX
Exhibit Number Page Number of Regulation Sequentially S-K, Item 601 Numbered Copy - ------------- -------------
(i) Certificate of Trust of Aon Capital A - incorporated by reference to Exhibit 4.3 of the Capital Securities Registration.
(j) Amended and Restated Trust Agreement of Aon Capital A dated as of January 13, 1997 among the Registrant, as Depositor, The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, the Administrative Trustees named therein and the holders, from time to time, of the Capital Securities - incorporated by reference to Exhibit 4.5 of the Capital Securities Registration.
(k) Capital Securities Guarantee Agreement dated as of January 13, 1997 between the Registrant and the Bank of New York, as guarantee trustee - incorporated by reference to Exhibit 4.8 of the Capital Securities Registration.
(l) Capital Securities Exchange and Registration Rights Agreement dated as of January 13, 1997 among the Registrant, Aon Capital A and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated by reference to Exhibit 4.10 of the Capital Securities Registration.
(m) Debenture Exchange and Registration Rights Agreement dated as of January 13, 1997 among the Registrant, Aon Capital A and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated by reference to Exhibit 4.11 of the Capital Securities Registration.
(n) Guarantee Exchange and Registration Rights Agreement dated as of January 13, 1997 among the Registrant, Aon Capital A and Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. - incorporated by reference to Exhibit 4.12 of the Capital Securities Registration.
(10) Material Contracts:
(a) Aon Stock Option Plan (as amended and restated through February 2000) - incorporated by reference to Exhibit 10(a) to the Registrant's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the quarter June 30, 2000 (the "Second Quarter 2000 Form 10-Q").
(b) Aon Stock Option Plan (as amended and restated through 1997) - incorporated by reference to Exhibit 10(a) to the Registrant's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the quarter ended March 31, 1997 (the "First Quarter 1997 Form 10-Q").
(c) First Amendment to the Aon Stock Option Plan as Amended and Restated Through 1997 - incorporated by reference to Exhibit 10(a) to the Registrant's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the quarter ended March 31, 1999 (the "First Quarter 1999 Form 10-Q").
EXHIBIT INDEX
Exhibit Number Page Number of Regulation Sequentially S-K, Item 601 Numbered Copy - ------------- -------------
(d) Registration Rights Agreement by and among the Registrant and certain affiliates of Ryan Insurance Group, Inc. (Including Patrick G. Ryan and Andrew J. McKenna) - incorporated by reference to Exhibit (f) to the 1982 Form 10-K.
(e) Aon Corporation Outside Director Deferred Compensation Agreement by and among Registrant and Registrant's directors who are not salaried employees of Registrant or Registrant's affiliates.
(f) Aon Stock Award Plan (as amended and restated through 1997) - incorporated by reference to Exhibit 10(b) to the First Quarter 1997 Form 10-Q.
(g) First Amendment to the Aon Stock Award Plan as Amended and Restated Through 1997 - incorporated by reference to exhibit 10(b) to the First Quarter 1999 Form 10-Q.
(h) Amendment and Waiver Agreement dated as of November 4, 1991 among the Registrant and each of Patrick G. Ryan, Shirley Ryan, Ryan Enterprises Corporation and Harvey N. Medvin - incorporated by reference to Exhibit 10(j) to the 1991 Form 10-K.
(i) Registration Rights Agreement dated November 2, 1992 by and between the Registrant and Frank B. Hall & Co., Inc. - incorporated by reference to Exhibit 4(c) to the Third Quarter 1992 Form 10-Q.
(j) Aon Corporation 1994 Amended and Restated Outside Director Stock Award Plan - incorporated by reference to Exhibit 10(b) to the First Quarter 1994 Form 10-Q.
(k) Aon Corporation 1995 Senior Officer Incentive Compensation Plan - incorporated by reference to Exhibit 10(p) to the 1995 Form 10-K.
(l) Aon Deferred Compensation Plan and First Amendment to the Aon Deferred Compensation Plan - incorporated by reference to Exhibit 10(q) to the 1995 Form 10-K.
(m) 1999 Aon Deferred Compensation Plan incorporated by reference to Exhibit 10(1) of the 1999 Form 10-K.
(n) Aon Severance Plan - incorporated by reference to Exhibit 10 to the Registrant's Quarterly Report to the Securities and Exchange Commission on Form 10-Q for the quarter ended June 30, 1997.
(o) Asset Purchase Agreement dated July 24, 1992 between the Registrant and Frank B. Hall & Co. Inc. - incorporated by reference to Exhibit 10(c) to the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1992.
EXHIBIT INDEX
Exhibit Number Page Number of Regulation Sequentially S-K, Item 601 Numbered Copy - ------------- -------------
(p) Stock Purchase Agreement by and among the Registrant, Combined Insurance Company of America, Union Fidelity Life Insurance Company and General Electric Capital Corporation dated as of November 11, 1995 - incorporated by reference to Exhibit 10(s) of the 1995 Form 10-K.
(q) Stock Purchase Agreement by and among the Registrant; Combined Insurance Company of America; The Life Insurance Company of Virginia; Forth Financial Resources, Ltd.; Newco Properties, Inc.; and General Electric Capital Corporation dated as of December 22, 1995 - incorporated by reference to Exhibit 10(t) to the 1995 Form 10-K.
(r) Agreement and Plan of Merger among the Registrant, Purchaser and A&A dated as of December 11, 1996 - incorporated by reference to Exhibit (c)(1) to the Registrant's Schedule 14D-1 filed with the SEC on December 16, 1996.
(s) First Amendment to Agreement and Plan of Merger dated as of January 7, 1997 among the Registrant, Purchaser and A&A - incorporated by reference to Exhibit (c)(3) to Schedule 14D-1 filed by the Registrant with the SEC on January 9, 1997.
(t) Employment Agreement dated June 1, 1993 by and among the Registrant, Aon Risk Services, Inc. and Michael D. O'Halleran, incorporated by reference to Exhibit 10(p) to the Registrant's Annual Report to the Securities and Exchange Commission on Form 10-K for the year ended December 31, 1998.
(12) Statements regarding Computation of Ratios.
(a) Statement regarding Computation of Ratio of Earnings to Fixed Charges.
(b) Statement regarding Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.
(13) Annual Report to Stockholders of the Registrant for the year ended December 31, 2000.
(21) List of subsidiaries of the Registrant.
(23) Consent of Ernst & Young LLP to the incorporation by reference into Aon's Annual Report on Form 10-K of their report included in the 2000 Annual Report to Stockholders and into Aon's Registration Statement Nos. 33-27984, 33-42575, 33-59037, 333-21237, 333-50607, 333-55773, 333-78723 and 333-49300.
(99) Annual Report to the Securities and Exchange Commission on Form 11-K for the Aon Savings Plan for the year ended December 31, 2000 - to be filed by amendment as provided in Rule 15d-21(b).