SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
__X__ Annual Report Pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1998
OR
_____ Transition Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
A. Full title of the plan and the address of the plan, if
different from the issuer named below:
Aon Savings Plan
B. Name of the issuer of the securities held pursuant to the plan
and the address of its principal executive office:
Aon Corporation
123 N. Wacker Drive
Chicago, Illinois 60606
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan,
by the Plan Administrator, the Committee, has caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
County of Cook and the State of Illinois on the 25th day of June, 1999.
AON SAVINGS PLAN
BY THE COMMITTEE
/s/ THOMAS STACHURA /s/ JOHN A. RESCHKE
- - - - - - - - - - - - - - - - - ---------------------------- -------------------------
Thomas Stachura John A. Reschke
/s/ NANCY GROSS /s/ ROBERT S. Hurwitz
- - - - - - - - - - - - - - - - - ---------------------------- -------------------------
Nancy Gross Robert S. Hurwitz
/s/ ELIZABETH WHITTLE
- - - - - - - - - - - - - - - - - ----------------------------
Elizabeth Whittle
- 2 -
<PAGE>
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
AON SAVINGS PLAN
Years Ended December 31, 1998 and 1997
With Report of Independent Auditors
Employer Identification Number 36-3051915
Plan # 020
<PAGE>
AON SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors 1
Financial Statements:
Statement of Net Assets Available for Benefits,
with Fund Information at December 31, 1998 2
Statement of Net Assets Available for Benefits,
with Fund Information at December 31, 1997 3
Statement of Changes in Net Assets Available for Benefits,
with Fund Information for the year ended December 31, 1998 4
Statement of Changes in Net Assets Available for Benefits,
with Fund Information for the year ended December 31, 1997 5
Notes to Financial Statements 6
Supplemental Schedules:
Line 27a - Schedule of Assets Held for Investment Purposes 17
Line 27d - Schedule of Reportable Transactions 21
<PAGE>
Report of Independent Auditors
The Participants and Administrative Committee
Aon Savings Plan
We have audited the accompanying statements of net assets available for benefits
of Aon Savings Plan as of December 31, 1998 and 1997, and the related statements
of changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purposes of additional
analysis and are not a required part of the financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The Fund Information in the statements of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ERNST & YOUNG LLP
June 11, 1999
- 1 -
<PAGE>
<TABLE>
<CAPTION>
Employer Identification # 36-3051915
Plan # 020
AON SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
(in thousands)
Fund Information
Money Aon Investment Government Total Common
Market Stock Contracts Securities Return Stock Index
Assets: Fund Fund Fund Fund Fund Fund
- - - - - - - - - - - - - - - - - ------- ----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investments, at Fair Value:
United States Government and
Government Agency Securities $ 92,425
Common Stocks:
Aon Corporation $ 368,496 -
Investments held in the Aon Funds:
Aon Money Market Fund $ 133,933 - -
Aon Government Securities Fund - - - $ 49,186
Aon Asset Allocation Fund - - - - $ 164,318
Aon S&P 500 Index Fund - - - - - $ 251,594
Aon REIT Index Fund - - - - - -
Aon International Equity Fund - - - - - -
Other Long-Term Investments - - 5 - - -
Short-Term Investments 57 4,228 13,479 335 3,865 423
Participant Loans - - - - - -
----------- ----------- ---------- ---------- ----------- -----------
133,990 372,724 105,909 49,521 168,183 252,017
Unallocated Guaranteed Insurance Contracts,
at Contract Value - - 11,455 - - -
----------- ----------- ---------- ---------- ----------- -----------
Total Investments 133,990 372,724 117,364 49,521 168,183 252,017
Receivables:
Company Contribution 1,513 6,302 1,350 1,064 3,488 6,058
Participant Contribution 477 440 62 55 210 478
Accrued Dividends and Income 201 590 519 75 248 355
Due from Broker 68 - - - - -
Fund Transfers (2,155) (2,261) 153 157 5,088 (1,223)
----------- ----------- ---------- ---------- ----------- -----------
Total Receivables 104 5,071 2,084 1,351 9,034 5,668
----------- ----------- ---------- ---------- ----------- -----------
Total Assets 134,094 377,795 119,448 50,872 177,217 257,685
Liabilities:
Accrued Administrative Expenses Payable 47 143 42 16 53 71
Accrued Interest Expense - - - - - -
Notes Payable - - - - - -
Due to Broker 34 166 - - - -
----------- ----------- ---------- ---------- ----------- -----------
Total Liabilities 81 309 42 16 53 71
----------- ----------- ---------- ---------- ----------- -----------
Net Assets Available for Benefits
Allocated Net Assets 134,013 377,486 119,406 50,856 177,164 257,614
Unallocated Net Assets - - - - - -
----------- ----------- ---------- ---------- ----------- -----------
Total Net Assets Available for Benefits $ 134,013 $ 377,486 $ 119,406 $ 50,856 $ 177,164 $ 257,614
=========== =========== ========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Employer Identification # 36-3051915
Plan # 020
AON SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
(in thousands)
(Continued)
Fund Information
Real Estate International ESOP ESOP
Securities Equity Participant Allocated Unallocated
Assets: Fund Fund Loans Account Account Total
- - - - - - - - - - - - - - - - - ------- ----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investments, at Fair Value:
United States Government and
Government Agency Securities $ 92,425
Common Stocks:
Aon Corporation $ 219,601 588,097
Investments held in the Aon Funds:
Aon Money Market Fund - 133,933
Aon Government Securities Fund - 49,186
Aon Asset Allocation Fund - 164,318
Aon S&P 500 Index Fund - 251,594
Aon REIT Index Fund $ 19,603 - 19,603
Aon International Equity Fund - $ 27,014 - 27,014
Other Long-Term Investments - - - 5
Short-Term Investments 1,112 206 2,324 $ 677 26,706
Participant Loans - - $ 13,161 - - 13,161
----------- ----------- ---------- ---------- ----------- -----------
20,715 27,220 13,161 221,925 677 1,366,042
Unallocated Guaranteed Insurance Contracts,
at Contract Value - - - - - 11,455
----------- ----------- ---------- ---------- ----------- -----------
Total Investments 20,715 27,220 13,161 221,925 677 1,377,497
Receivables:
Company Contribution 813 888 - - 15,625 37,101
Participant Contribution 51 117 - - - 1,890
Accrued Dividends and Income 34 39 - 12 3 2,076
Due from Broker - - - - - 68
Fund Transfers 925 (684) - (1,825) 1,825 -
----------- ----------- ---------- ---------- ----------- -----------
Total Receivables 1,823 360 - (1,813) 17,453 41,135
----------- ----------- ---------- ---------- ----------- -----------
Total Assets 22,538 27,580 13,161 220,112 18,130 1,418,632
Liabilities:
Accrued Administrative Expenses Payable 8 9 - 115 2 506
Accrued Interest Expense - - - - 61 61
Notes Payable - - - - 17,500 17,500
Due to Broker - - - - - 200
----------- ----------- ---------- ---------- ----------- -----------
Total Liabilities 8 9 - 115 17,563 18,267
----------- ----------- ---------- ---------- ----------- -----------
Net Assets Available for Benefits
Allocated Net Assets 22,530 27,571 13,161 219,997 - 1,399,798
Unallocated Net Assets - - - - 567 567
----------- ----------- ---------- ---------- ----------- -----------
Total Net Assets Available for Benefits $ 22,530 $ 27,571 $ 13,161 $ 219,997 $ 567 $ 1,400,365
=========== =========== ========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
Employer Iden36-3051915 #
Plan # 020
AON SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
(in thousands)
Fund Information
Money Aon Investment Government Total
Market Balanced Stock Contracts Securities Return
Assets: Fund Fund Fund Fund Fund Fund
- - - - - - - - - - - - - - - - - ------- ----------- ----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investments, at Fair Value:
United States Government and
Government Agency Securities $ 54,658
Common Stocks:
Aon Corporation $ 392,871 -
Other $ 12 - -
Investments held in the Aon Funds:
Aon Money Market Fund $ 29,678 - - -
Aon Government Securities Fund - - - - $ 16,768
Aon Asset Allocation Fund - - - - - $ 79,836
Aon S&P 500 Index Fund - - - - - -
Aon REIT Index Fund - - - - - -
Aon International Equity Fund - - - - - -
Other Long-Term Investments - - - 14 - -
Short-Term Investments 95 64,366 421 4,914 76 140
Participant Loans - - - - - -
----------- ----------- ---------- ---------- ----------- -----------
29,773 64,378 393,292 59,586 16,844 79,976
Unallocated Guaranteed Insurance Contracts,
at Contract Value - - - 43,526 - -
----------- ----------- ---------- ---------- ----------- -----------
Total Investments 29,773 64,378 393,292 103,112 16,844 79,976
Receivables:
Company Contribution 794 - 5,327 1,581 756 1,701
Participant Contribution 28 (2) 162 45 20 57
Accrued Dividends and Income 1 213 3 38 1 2
Due from Broker - 1,265 925 14,113 - -
Fund Transfers (717) 286 418 3 18 152
----------- ----------- ---------- ---------- ----------- -----------
Total Receivables 106 1,762 6,835 15,780 795 1,912
----------- ----------- ---------- ---------- ----------- -----------
Total Assets 29,879 66,140 400,127 118,892 17,639 81,888
----------- ----------- ---------- ---------- ----------- -----------
Net Assets Available for Benefits $ 29,879 $ 66,140 $ 400,127 $ 118,892 $ 17,639 $ 81,888
=========== =========== ========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Employer Iden36-3051915 #
Plan # 020
AON SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
(in thousands)
(Continued)
Fund Information
Common Real Estate International
Stock Index Securities Equity Participant
Assets: Fund Fund Fund Loans Total
- - - - - - - - - - - - - - - - - ------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Investments, at Fair Value:
United States Government and
Government Agency Securities $ 54,658
Common Stocks:
Aon Corporation 392,871
Other 12
Investments held in the Aon Funds:
Aon Money Market Fund 29,678
Aon Government Securities Fund 16,768
Aon Asset Allocation Fund 79,836
Aon S&P 500 Index Fund $ 114,739 114,739
Aon REIT Index Fund - $ 17,923 17,923
Aon International Equity Fund - - $ 17,234 17,234
Other Long-Term Investments - - - 14
Short-Term Investments 573 51 143 70,779
Participant Loans - - - $ 581 581
----------- ----------- ---------- ---------- -----------
115,312 17,974 17,377 581 795,093
Unallocated Guaranteed Insurance Contracts,
at Contract Value - - - - 43,526
----------- ----------- ---------- ---------- -----------
Total Investments 115,312 17,974 17,377 581 838,619
Receivables:
Company Contribution 3,439 507 649 - 14,754
Participant Contribution 121 21 27 - 479
Accrued Dividends and Income 2 - - - 260
Due from Broker - - - - 16,303
Fund Transfers (414) 103 151 - -
----------- ----------- ---------- ---------- -----------
Total Receivables 3,148 631 827 - 31,796
----------- ----------- ---------- ---------- -----------
Total Assets 118,460 18,605 18,204 581 870,415
----------- ----------- ---------- ---------- -----------
Net Assets Available for Benefits $ 118,460 $ 18,605 $ 18,204 $ 581 $ 870,415
=========== =========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
Employer Identification # 36-3051915
Plan # 020
AON SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1998
(in thousands)
Fund Information
Money Aon Investment Government Total
Market Balanced Stock Contracts Securities Return
Fund Fund Fund Fund Fund Fund
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income
Interest and Income from Unallocated
Guaranteed Insurance Contracts $ 146 $ 101 $ 6,417 $ 16 $ 105
Net Realized and Unrealized Appreciation
(Depreciation) in Fair Value of Investments (2) (20,997) 927 1,971 3,453
Aon Corporation Dividends - 7,479 - - -
Other Dividends 8,134 - - 2,303 4,685
Interest Expense - - - - -
Management and Administrative fees (135) (517) (176) (38) (135)
--------- --------- --------- --------- --------- ---------
Total Net Investment Income 8,143 (13,934) 7,168 4,252 8,108
Contributions
Company 1,513 6,302 1,350 1,064 3,487
Participants 3,945 16,251 3,221 2,806 10,028
--------- --------- --------- --------- --------- ---------
Total Contributions 5,458 22,553 4,571 3,870 13,515
Allocations
Leveraged ESOP Allocation - - - - -
ESOP Diversification 12 57 9 15 103
--------- --------- --------- --------- --------- ---------
Total Allocations 12 57 9 15 103
Other Changes
Benefit Payments (24,317) (27,999) (14,084) (4,080) (13,752)
Loan Activity (746) (3,944) (872) (247) (424)
Plan Mergers 134,646 67 7 17 61,012
Interfund transfers (19,062) $ (66,140) 559 3,715 29,390 26,714
--------- --------- --------- --------- --------- ---------
Total Other Changes 90,521 (66,140) (31,317) (11,234) 25,080 73,550
--------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Assets
Available for Benefits 104,134 (66,140) (22,641) 514 33,217 95,276
Net Assets Available for
Benefits at Beginning of Year 29,879 66,140 400,127 118,892 17,639 81,888
--------- --------- --------- --------- --------- ---------
Net Assets Available for Benefits
at End of Year $ 134,013 $ - $ 377,486 $ 119,406 $ 50,856 $ 177,164
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
<TABLE>
<CAPTION>
Employer Identification # 36-3051915
Plan # 020
AON SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1998
(in thousands)
(Continued)
Fund Information
Common Real Estate International ESOP ESOP
Stock Index Securities Equity Participant Allocated Unallocated
Fund Fund Fund Loans Account Account Total
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income
Interest and Income from Unallocated
Guaranteed Insurance Contracts $ 84 $ 10 $ 12 $ $ 138 $ 423 $ 7,452
Net Realized and Unrealized Appreciation
(Depreciation) in Fair Value of Investments 51,162 (5,855) 3,035 21,204 (30,333) 24,565
Aon Corporation Dividends - - - 3,767 807 12,053
Other Dividends 3,378 1,136 224 - - 19,860
Interest Expense - - - - (2,384) (2,384)
Management and Administrative fees (186) (28) (29) (371) (17) (1,632)
--------- --------- --------- --------- --------- --------- ---------
Total Net Investment Income 54,438 (4,737) 3,242 24,738 (31,504) 59,914
Contributions
Company 6,058 813 888 - 15,625 37,100
Participants 17,032 2,587 2,519 - - 58,389
--------- --------- --------- --------- --------- --------- ---------
Total Contributions 23,090 3,400 3,407 - 15,625 95,489
Allocations
Leveraged ESOP Allocation - - - 8,558 (8,558) -
ESOP Diversification 22 14 3 (235) - -
--------- --------- --------- --------- --------- --------- ---------
Total Allocations 22 14 3 8,323 (8,558) -
Other Changes
Benefit Payments (19,433) (1,248) (1,825) (15,714) - (122,452)
Loan Activity (1,112) (92) (109) $ 7,546 - - -
Plan Mergers 68,460 41 61 5,034 202,650 25,004 496,999
Interfund transfers 13,689 6,547 4,588 - - - -
--------- --------- --------- --------- --------- --------- ---------
Total Other Changes 61,604 5,248 2,715 12,580 186,936 25,004 374,547
--------- --------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Assets
Available for Benefits 139,154 3,925 9,367 12,580 219,997 567 529,950
Net Assets Available for
Benefits at Beginning of Year 118,460 18,605 18,204 581 - - 870,415
--------- --------- --------- --------- --------- --------- ---------
Net Assets Available for Benefits
at End of Year $ 257,614 $ 22,530 $ 27,571 $ 13,161 $ 219,997 $ 567 $ 1,400,365
========= ========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Employer Identification # 36-3051915
Plan # 020
AON SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1997
(in thousands)
Fund Information
Money Aon Investment Government Total
Market Balanced Stock Contracts Securities Return
Fund Fund Fund Fund Fund Fund
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Investment Income
Interest and Income from Unallocated
Guaranteed Insurance Contracts $ 12 $ 2,349 $ 55 $ 7,533 $ 8 $ 15
Net Realized and Unrealized
Appreciation in Fair Value of Investments - 11,026 118,016 85 559 15,437
Aon Corporation Dividends - - 7,057 - - -
Other Dividends 1,600 1,007 - - 833 1,281
Management and Administrative fees (42) (135) (419) (204) (25) (78)
---------- ---------- ---------- ---------- ---------- ----------
Total Net Investment Income 1,570 14,247 124,709 7,414 1,375 16,655
Contributions
Company 794 - 5,327 1,581 756 1,701
Participants 2,585 - 13,063 3,609 1,932 4,592
ESOP Diversification 5 - 76 124 13 29
---------- ---------- ---------- ---------- ---------- ----------
Total Contributions 3,384 - 18,466 5,314 2,701 6,322
Other Changes
Benefit Payments (9,129) (13,778) (32,525) (16,597) (2,131) (6,023)
Loan Activity - - - - - -
Interfund transfers 7,785 (29,983) (10,771) (7,479) 1,919 10,524
---------- ---------- ---------- ---------- ---------- ----------
Total Other Changes (1,344) (43,761) (43,296) (24,076) (212) 4,501
---------- ---------- ---------- ---------- ---------- ----------
Net Increase (Decrease) in Net Assets
Available for Benefits 3,610 (29,514) 99,879 (11,348) 3,864 27,478
Net Assets Available for Benefits
at Beginning of Year 26,269 95,654 300,248 130,240 13,775 54,410
---------- ---------- ---------- ---------- ---------- ----------
Net Assets Available for Benefits
at End of Year $ 29,879 $ 66,140 $ 400,127 $ 118,892 $ 17,639 $ 81,888
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
Employer Identification # 36-3051915
Plan # 020
AON SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year Ended December 31, 1997
(in thousands)
(Continued)
Fund Information
Common Real Estate International
Stock Index Securities Equity Participant
Fund Fund Fund Loans Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Investment Income
Interest and Income from Unallocated
Guaranteed Insurance Contracts $ 28 $ 6 $ 7 $ $ 10,013
Net Realized and Unrealized
Appreciation in Fair Value of Investments 23,751 1,935 143 170,952
Aon Corporation Dividends - - - 7,057
Other Dividends 1,730 572 651 7,674
Management and Administrative fees (111) (21) (25) (1,060)
---------- ---------- ---------- ---------- ----------
Total Net Investment Income 25,398 2,492 776 194,636
Contributions
Company 3,439 507 649 14,754
Participants 9,119 1,841 2,021 38,762
ESOP Diversification 31 3 5 286
---------- ---------- ---------- ---------- ----------
Total Contributions 12,589 2,351 2,675 53,802
Other Changes
Benefit Payments (8,346) (1,590) (1,863) (91,982)
Loan Activity - - - $ 375 375
Interfund transfers 14,437 9,519 4,049 - -
---------- ---------- ---------- ---------- ----------
Total Other Changes 6,091 7,929 2,186 375 (91,607)
---------- ---------- ---------- ---------- ----------
Net Increase (Decrease) in Net Assets
Available for Benefits 44,078 12,772 5,637 375 156,831
Net Assets Available for Benefits
at Beginning of Year 74,382 5,833 12,567 206 713,584
---------- ---------- ---------- ---------- ----------
Net Assets Available for Benefits
at End of Year $ 118,460 $ 18,605 $ 18,204 $ 581 $ 870,415
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 5 -
<PAGE>
AON SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998 and 1997
1. DESCRIPTION OF PLAN
A. GENERAL
The Aon Savings Plan (the Plan) was authorized by the Board of Directors
of Aon Corporation (the Company or Plan Sponsor). The Plan is subject to
the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
Effective January 15, 1997, Aon Corporation acquired Alexander and
Alexander Services, Inc., the plan sponsor of the Thrift Plan for
Employees of Alexander and Alexander Services, Inc. and Subsidiaries.
On January 1, 1998, the Thrift Plan for Employees of Alexander and
Alexander Services, Inc. and Subsidiaries was merged into the Plan.
Also on January 1, 1998, the Aon Employees Stock Ownership Plan (ESOP) was
merged into the Plan. The ESOP was a non-contributory, defined
contribution plan covering all employees of the Company except for
employees covered by a collective bargaining agreement. Features of the
ESOP carried over to the Plan.
Certain Plan assets are held by the Aon Funds, an affiliated, open-end
management investment company. The assets of the ESOP portion of the Plan
are invested primarily in common stock of the Company. Additionally,
certain assets are invested by the Trustees as deemed advisable in order
for the Plan to meet its cash flow needs. The acquisition of the Company
common stock for the ESOP was financed by loans obtained from various
lenders.
The following description of the Plan provides only general information.
Participants of the Plan should refer to the Summary Plan Description for
a more complete description of the Plan.
- 6 -
<PAGE>
1. DESCRIPTION OF PLAN (CONTINUED)
B. ELIGIBILITY AND PARTICIPATION
Participation is limited to employees who have completed one year of
service, attained the age of 21 and worked 1,000 or more hours in a
caledar year or employees who were eligible under another plan that was
merged into the Aon Savings Plan. An employee must be employed in the
United States on a permanent basis in order to participate.
C. CONTRIBUTIONS
PARTICIPANT - Participant contributions are made by means of regular
payroll deductions. Non-highly compensated Participants, as defined by the
IRC, may elect to make contributions between 1% and 16% of their
compensation, as defined by the Plan. Highly compensated Participants, as
defined by the IRC, may elect to make contributions between 1% and 8% of
their compensation, as defined by the Plan. Participant contributions are
limited to amounts allowed by the IRS. Accordingly, the maximum
Participant contribution was $10,000 in 1998 and $9,500 in 1997.
COMPANY - The Company will contribute an amount equal to 100% of the first
3% of a Participant's compensation that a Participant chooses to
contribute to the Plan. The Company will make a further contribution to
the ESOP portion of the Plan equal to 75% of the next 3% of compensation
that is contributed to the Plan However, if the Company contributions
defined above (with certain restrictions) plus the dividends and
investment gains on the assets of the ESOP portion of the Plan are
insufficient to pay the interest and principal payments on the notes
payable, the Company may make additional contributions as necessary to
fully fund these payments when they become due. The Plan requires that a
Participant be actively employed and contributing to the Plan as of the
last day of the Plan year in order to receive a Company contribution.
Contributions to the ESOP portion of the Plan are automatically invested
in common stock of the Company.
D. ALLOCATION OF ESOP SHARES TO PARTICIPANTS
The common stock of the Company allocated to Participants as a result of
debt service paid by allocated share dividend monies is based on account
balance. The common stock of the Company allocated to Participants as a
result of debt service paid by Participants' cash balances is based on
cash balance. The common stock of the Company allocated to Participants as
a result of all other debt service is based on eligible compensation. A
Participant's eligible compensation is limited to amounts allowed under
the Tax Reform Act of 1986. Accordingly, the maximum Participants'
eligible compensation was $160,000 for 1998 and 1997.
- 7 -
<PAGE>
1. DESCRIPTION OF PLAN (CONTINUED)
E. INVESTMENT OPTIONS
Contributions to the Plan, other than for the ESOP portion, may be
invested in one or more of the following investment funds in any whole
percentages:
Money Market Fund - Invested principally in shares of the Aon Money
-----------------
Market Fund of the Aon Funds. The portfolio invests in various types
of high-quality, short-term money market instruments, including
certificates of deposit, commercial paper, U. S. Treasury and Agency
securities and other similar instruments.
Aon Stock Fund - Invested principally in common stock of the Company
--------------
that is purchased on the open market or in private transactions.
Investment Contracts Fund - Invested principally in unallocated
---------------------------
guaranteed insurance contracts, U. S. Treasury bills and short-term
investments. In 1995, members of the Company's Investment Department
became managers of this Fund. The Investment Manager is a fiduciary
within the meaning of ERISA Section 3(21). Certain restrictions and
penalties may apply with regard to the termination of unallocated
guaranteed insurance contracts prior to scheduled maturity date.
Government Securities Fund - Invested principally in shares of the
---------------------------
Aon Government Securities Fund of the Aon Funds. The portfolio
invests in intermediate and long-term debt securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities.
Total Return Fund - Invested principally in shares of the Aon Asset
-----------------
Allocation Fund of the Aon Funds. The portfolio invests in equity
securities, long-term debt securities and money market instruments.
Common Stock Index Fund - Invested principally in shares of the Aon
-----------------------
S&P 500 Index Fund of the Aon Funds. The portfolio invests in common
stocks traded on the New York Stock Exchange and the American Stock
Exchange and, to a limited extent, on the over-the-counter markets.
Real Estate Securities Fund - Invested principally in shares of the
---------------------------
Aon REIT Index Fund of the Aon Funds. The portfolio invests
primarily in the securities of REITs comprising the Morgan Stanley
REIT Index, which are principally engaged in or related to the real
estate industry, including ownership of significant real estate
assets. The portfolio does not invest directly in real estate.
- 8 -
<PAGE>
1. DESCRIPTION OF PLAN (CONTINUED)
International Equity Fund - Invested principally in shares of the
--------------------------
Aon International Equity Fund of the Aon Funds. The portfolio
invests primarily in equity and equity-related securities of
companies that are organized outside of the United States or whose
securities are principally traded outside the United States.
F. PARTICIPANT ACCOUNTS
Each Participant's account is credited with the Participant's
contribution and a) an allocation of the Company's contributions, b) an
allocation of Plan earnings, and c) an allocation of Forfeitures of
terminated Participants' non-vested accounts. The benefit to which a
Participant is entitled is the benefit that can be provided from the
Participants account.
G. VESTING
For the ESOP portion of the Plan, a Participant vests in 20% increments
and becomes 100% vested after completion of five years of Plan Service.
Forfeitures of non-vested accounts are allocated to the remaining
Participants. The amount of forfeitures allocated to Participants was
35,293 and 31,696 shares of the Company's common stock in 1998 and 1997,
respectively.
For the non-ESOP portion of the Plan, Participants are fully vested in
their contributions plus actual earnings thereon. Participants become 100%
vested in the remainder of their account balance after five years of Plan
Service, according to a graded schedule. Forfeitures of non-vested
accounts are allocated to the remaining Participants. The amount of
forfeitures allocated to Participants was $821,000 and $823,000 for 1998
and 1997, respectively.
H. BENEFIT PAYMENTS
For the ESOP portion of the Plan, a Participant's entire account shall be
paid to him or his beneficiary in a lump sum upon his normal retirement,
permanent disability or death. The Participant may elect payment in the
form of shares or cash.
For the non-ESOP portion, on termination of service, a Participant may
elect to receive either a lump sum amount equal to the value of his or her
account and/or monthly installments over a period not to exceed ten years.
I. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and
to terminate the
- 9 -
<PAGE>
1. DESCRIPTION OF PLAN (CONTINUED)
Plan subject to the provisions of ERISA. In the event of Plan termination,
Participants will become 100% vested in their accounts.
J. PARTICIPANT LOANS
Under the loan provision of the Plan, each Participant is permitted one
loan in a twelve month period and the outstanding balance of all loans
made to a Participant may not exceed the lesser of $50,000 or 50% of the
vested portion of the Participant's account excluding the ESOP portion of
the account. The interest rate for each loan is equal to 1% plus the prime
rate as quoted in The Wall Street Journal for the last day of the month
-------------------------
preceding the loan request. Loans are made for a period of up to five
years, except for residential loans which always have a repayment period
of ten years.
2. SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The financial statements of the Plan are prepared on an accrual basis in
accordance with generally accepted accounting principles.
B. INVESTMENT VALUATION
Investments, except for unallocated guaranteed insurance contracts, are
carried at fair value, which for marketable securities is based on
quotations obtained from national securities exchanges and various other
sources. Investments in unallocated guaranteed insurance contracts are
valued at contract value, which represents contributions made under the
contract, plus interest at the contract rate, less any withdrawals and
administrative expenses. Participant loans are valued at cost which
approximates fair value.
Interest income is recorded as earned. Dividend income is recorded on the
ex-dividend date. Realized gains or losses on investments are the
difference between the proceeds received and the cost of investments sold
as determined on a first-in, first-out basis. The change in the difference
between fair value and the cost of investments is reported as unrealized
appreciation or depreciation of investments.
C. ADMINISTRATIVE EXPENSES
Administrative expenses of the Plan, including expenses of the Trustees,
are allocated from the Plan assets, except to the extent that the Company,
at its discretion, may decide to pay such expenses. Administrative
expenses include $1,444,000 and $860,000 in 1998 and 1997, respectively,
paid to subsidiaries of the Company.
- 10 -
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3. ALLOCATION OF ESOP SHARES TO PARTICIPANTS
All ESOP shares are held by the Plan in a suspense account and are
allocated to the Participants on an annual basis as interest and principal
payments are made. The common stock allocated each year will equal the
number of unallocated shares immediately before such allocation multiplied
by the ratio of interest and principal paid on the notes during the
current Plan year to the sum of the current year payments plus principal
and interest to be paid in future years. The number of shares allocated to
Participant accounts was 733,941 and 709,143 for 1998 and 1997,
respectively.
Estimates are used to determine the amount of shares to allocate to the
Participants. These estimates are based on preliminary figures provided by
the Company and are continually reviewed and adjusted in order for the
Plan to maintain its IRS qualification. Because the allocation to
Participants is based on estimates, the ultimate allocation may vary from
the estimate. The variances are not material and are adjusted in the
following year.
4. INVESTMENTS
The Northern Trust Company is the custodian of the Plan assets and Trustee
for the Aon Stock Fund. The remaining Trustees for the Plan are members of
the Company's Investment Department, and they have been given the
discretion and authority to manage the investments. The Trustees are named
fiduciaries under ERISA.
- 11 -
<PAGE>
4. INVESTMENTS (CONTINUED)
The Plans investments (including investments bought, sold and held during
the year) appreciated (depreciated) in fair value as follows (in
thousands):
<TABLE>
<CAPTION>
December 31
1998 1997
-------------------------------------------------------
Net Realized Net Realized
and Unrealized and Unrealized
Appreciation Appreciation
(Depreciation) (Depreciation)
in Value in Value
Current During Current During
Value the Year Value the Year
-------------------------------------------------------
Investments, at fair value:
United States Government
<S> <C> <C> <C> <C>
And Agency Issues $ 92,425 $ 927 $ 54,658 $ 97
Other Bonds -- -- -- (192)
Other Investments 5 -- 14 --
Common Stock:
Aon Corporation 588,097 (30,126) 392,871 118,016
Other -- -- 12 10,871
Preferred Stock -- -- -- 335
Investments in the Aon Funds:
Aon Money Market Fund 133,933 -- 29,678 --
Aon Government Securities Fund 49,186 1,971 16,768 559
Aon Asset Allocation Fund 164,318 3,453 79,836 15,437
Aon S&P 500 Index Fund 251,594 51,162 114,739 23,751
Aon REIT Index Fund 19,603 (5,855) 17,923 1,935
Aon International Equity Fund 27,014 3,035 17,234 143
Unallocated Guaranteed Insurance
Contracts, at contract value:
Combined Insurance Co. of America 5,438 -- 5,077 --
Commonwealth Life Insurance Co. .. -- -- 3,065 --
Life Insurance Company of Virginia -- -- 12,457 --
Protective Life Insurance Company 5,406 -- 5,035 --
Provident Life and Accident
Insurance Company -- -- 5,255 --
Prudential -- -- 6,119 --
Sun Life Insurance Company -- -- 5,316 --
Travelers Insurance Company 611 -- 1,202 --
Short-Term Investment Funds 26,706 (2) 70,779 --
-------------------------------------------------------
Total $ 1,364,336 $ 24,565 $ 828,038 $ 170,952
=======================================================
</TABLE>
- 12 -
<PAGE>
4. Investments (continued)
The fair value of individual investments that represent 5% or more of the
Plan's net assets available for benefits is as follows (in thousands):
December 31
1998 1997
---- ----
Aon Corporation, Common Stock $ 588,097 $ 392,871
Investments held in the Aon Funds:
Aon Money market Fund 133,933 -
Aon Asset Allocation Fund 164,318 79,836
Aon S&P 500 Index Fund 251,594 114,739
Short-term Investment Fund - 70,793
- 13 -
<PAGE>
<TABLE>
<CAPTION>
4. Investments (continued)
In accordance with SOP 94-4, the following represents disclosures for fully
benefit responsive guaranteed investment contracts:
1998 1997
1998 1997 Crediting Crediting
Average Average Interest Interest Contract Approximate
Description Yield Yield Rate Rate Value Fair Value
- - - - - - - - - - - - - - - - - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Combined Insurance Company of America 6.88% 6.88% 7.12% 7.12% $5,438,192 $5,438,192
Protective Life Insurance Company 7.10% 7.10% 7.36% 7.36% 5,405,528 5,405,528
Travelers Insurance Company 4.42% 4.02% 4.00% 4.00% 611,005 611,005
Commonwealth Life Insurance Company ---- 5.21% 5.35% 5.35% ---- ----
Life Insurance Company of Virginia ---- 5.51% 5.67% 5.67% ---- ----
Provident Life & Accident Insurance Company ---- 5.63% 5.79% 5.79% ---- ----
The Prudential ---- 5.07% 5.20% 5.20% ---- ----
Sun Life Insurance Company ---- 5.84% 6.02% 6.02% ---- ----
==========================
$11,454,725 $11,454,725
==========================
</TABLE>
The Plan Administrator believes contract value approximates fair value.
- 14 -
<PAGE>
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to Form 5500 (in thousands):
December 31,
1998
---------------
Net assets available for benefits per
the financial statements $ 1,400,365
Amounts allocated to withdrawing participants (4,508)
Net assets available for benefits per Form 5500 $ 1,395,857
===============
The following is a reconciliation of benefits paid to participants per the
financial statements to Form 5500 (in thousands):
Year Ended
December 31,
1998
---------------
Benefits paid to participants per the
financial statements $ 122,452
Add: Amounts allocated to withdrawing participants
at December 31, 1998 4,508
Less: Amounts allocated to withdrawing participants
at December 31, 1997 -
---------------
Benefits paid to participants per Form 5500 $ 126,960
===============
Amounts allocated to withdrawing participants are recorded on Form 5500
for benefit claims that have been processed and approved for payment prior
to December 31 but not yet paid as of that date.
6. NOTES PAYABLE
The Plan originally borrowed $90,000,000 from various financial
institutions to purchase 5,383,326 shares of the Company's common stock.
The notes are unconditionally guaranteed by the Company. Pursuant to the
ESOP note agreement, there is a provision for an interest rate adjustment
in the event there is a change in the Federal Tax Rate. During 1998 and
1997, the interest rate on the notes was 8.35%. The notes were segregated
into two series, Series A and Series B. During 1998 and 1997, interest
paid was approximately $2,384,000 and $3,533,000, respectively.
The Series A note allowed the Plan to borrow up to $43,900,000. Final
payment was made on June 15, 1996.
- 15 -
<PAGE>
6. NOTES PAYABLE (CONTINUED)
The Series B note allowed the Plan to borrow up to $46,100,000. Principal
payments are scheduled to be repaid annually beginning September 15, 1997.
Principal repayments during 1998 were $15,600,000. Interest is paid
semi-annually. At December 31, 1998, the Series B note balance was
$17,500,000. The final principal payment of $17,500,000 is due to be paid
on June 15, 1999.
7. FEDERAL INCOME TAXES
The IRS ruled on April 10, 1995 that the Plan qualified under Section
401(a) and (k) of the IRC and therefore, the related trust is not subject
to tax under present income tax law. Once qualified, the Plan is required
to operate in conformity with the IRC to maintain its qualification. The
Plan Administrative Committee believes the Plan is qualified under the
relevant sections of the Code and is not aware of any course of action or
series of events that have occurred that might adversely affect the Plan's
qualified status.
8. YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain
steps in order to ensure that the Plan's information systems are prepared
to handle year 2000 dates. The Plan Sponsor is taking a two phase
approach. The first phase addresses internal systems that must be modified
or replaced to function properly. Both internal and external resources are
being utilized to replace or modify existing software applications, and
test the software and equipment for the year 2000 modifications. The Plan
Sponsor anticipates substantially completing this phase of the project by
fall of 1999. Cost associated with modifying software and equipment are
not estimated to be significant and will be paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that
they have developed plans to address their own year 2000 problems as they
relate to the Plan's operations. All third party service providers have
indicated that they will be year 2000 compliant by late 1999. If
modification of data processing systems of either the Plan, Plan Sponsor,
or its service providers is not completed timely, the year 2000 problem
could have a material impact on the operations of the Plan. Plan
management has not developed a contingency plan, because they are
confident that all systems will be year 2000 ready.
9. SUBSEQUENT EVENT
Effective August 1, 1999, INVESCO was appointed custodian and record
keeper of the Plan.
- - - - - - - - - - - - - - - - - - 16 -
<PAGE>
<TABLE>
<CAPTION>
Employer Identification:36-3051915
Plan # 020
AON SAVINGS PLAN
Line 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1998
Number of Shares
---------------- Cost Current Value
Identity of Issuer Principal Amount (thousands) (thousands)
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET FUND
- - - - - - - - - - - - - - - - - -----------------
MUTUAL FUND
Investments held in the Aon Funds
Money Market Fund* 133,932,863 $ 133,933 $ 133,933
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 57,301 57 57
------------ ------------
Total Money Market Fund $ 133,990 $ 133,990
============ ============
Aon STOCK FUND
----------
COMMON STOCK
Aon Corporation
Common Stock, $1.00 par* 6,654,553 $ 149,120 $ 368,496
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 4,228,490 4,228 4,228
------------ ------------
Total Aon Stock Fund $ 153,348 $ 372,724
============ ============
INVESTMENT CONTRACT FUND
- - - - - - - - - - - - - - - - - ------------------------
UNALLOCATED INSURANCE CONTRACTS
Combined Insurance Co. of America
Contract #CG1000
7.12% due 6/30/99 5,438,192 $ 5,438 $ 5,438
Protective Life Insurance Company
Contract # GA-1065
7.36% due 3/31/99 5,405,528 5,406 5,406
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
---------------- Cost Current Value
Identity of Issuer Principal Amount (thousands) (thousands)
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travelers Insurance Co.
Contract #GR-9039
4% 611,005 611 611
------------ ------------
Total Unallocated Guaranteed Insurance Contracts 11,455 11,455
------------ ------------
U.S. GOVERNMENT AND GOVERNMENT
AGENCY ISSUES
U.S. Treasury Security -
Stripped Interest Payments
due 3/25/1999 50,000,000 49,660 49,733
U.S. Treasury Bill
due 3/25/1999 25,000,000 24,731 24,759
U.S. Treasury Bill
due 2/4/1999 18,000,000 17,921 17,933
------------ ------------
92,312 92,425
------------ ------------
OTHER
Wachovia Real Estate Fund 10 7 5
------------ ------------
7 5
------------ ------------
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 13,479,474 13,479 13,479
------------ ------------
Total Short-Term Investments 13,479 13,479
------------ ------------
Total Investment Contract Fund $ 117,253 $ 117,364
============ ============
GOVERNMENT SECURITIES FUND
- - - - - - - - - - - - - - - - - ----------
MUTUAL FUND
Investments held in the Aon Funds
Government Securities Fund* 4,601,111 $ 48,695 $ 49,186
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 335,248 335 335
------------ ------------
Total Government Securities Fund $ 49,030 $ 49,521
============ ============
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
---------------- Cost Current Value
Identity of Issuer Principal Amount (thousands) (thousands)
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL RETURN FUND
- - - - - - - - - - - - - - - - - -----------------
MUTUAL FUND
Investments held in the Aon Funds
Asset Allocation Fund* 9,757,576 $ 153,174 $ 164,318
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 3,864,722 3,865 3,865
------------ ------------
Total Total Return Fund $ 157,039 $ 168,183
============ ============
COMMON STOCK INDEX FUND
- - - - - - - - - - - - - - - - - -----------------------
MUTUAL FUND
Investments held in the Aon Funds
S&P 500 Index Fund* 13,931,034 $ 189,562 $ 251,594
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 423,312 423 423
------------ ------------
Total Common Stock Index Fund $ 189,985 $ 252,017
============ ============
REAL ESTATE SECURITIES FUND
- - - - - - - - - - - - - - - - - ---------------------------
MUTUAL FUND
Investments held in the Aon Funds
REIT Index Fund* 1,826,960 $ 23,645 $ 19,603
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 1,111,719 1,112 1,112
------------ ------------
Total Real Estate Securities Fund $ 24,757 $ 20,715
============ ============
INTERNATIONAL EQUITY FUND
- - - - - - - - - - - - - - - - - -------------------------
MUTUAL FUND
Investments held in the Aon Funds
International Equity Fund* 2,203,453 $ 24,224 $ 27,014
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
---------------- Cost Current Value
Identity of Issuer Principal Amount (thousands) (thousands)
- - - - - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 205,828 206 206
------------ ------------
Total International Equity Fund $ 24,430 $ 27,220
============ ============
ESOP ALLOCATED FUND
- - - - - - - - - - - - - - - - - --------------------
COMMON STOCK
Aon Corporation
Common Stock, $1.00 par* 3,965,719 $ 65,865 $ 219,601
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 2,323,882 2,324 2,324
------------ ------------
Total Esop Allocated Fund $ 68,189 $ 221,925
============ ============
ESOP UNALLOCATED FUND
- - - - - - - - - - - - - - - - - ----------------------
SHORT-TERM INVESTMENTS
Short-Term Investment Fund,
Collective Trust Funds of
The Northern Trust Company* 676,660 $ 677 $ 677
------------ ------------
Total ESOP Unallocated Fund $ 677 $ 677
============ ============
PARTICIPANT LOANS (7%-11%) -- -- 13,161
$ 918,698 $ 1,377,497
============ ============
</TABLE>
* Party in interest transaction not prohibited by ERISA.
20
<PAGE>
<TABLE>
<CAPTION>
Aon Savings Plan Employer Identification # 36-3051915
Plan # 020
Line 27d - Schedule of Reportable Transactions
Year Ended December 31, 1998
Current
Value of
Asset on
Purchase Selling Cost of Transaction Net Gain
Identity of Party Involved Description of Assets Price Price Asset Date (Loss)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Category (i) - A single transaction in excess of 5% of Plan Assets
- - - - - - - - - - - - - - - - - -----------------------------------------------------------
The Northern Trust Benchmark Diversified
Company* Asset Portfolio $ 279,900,000 $ $ 279,900,000 $ 279,900,000 $
63,860,493 63,860,493 63,860,493 -
Category (iii) - Series of transactions in excess of 5% of Plan Assets
- - - - - - - - - - - - - - - - - -----------------------------------------------------------
U.S. Treasury Security 9.0% due 2/15/98 and 2/19/98 38,530,440 - 38,530,440 38,530,440 -
- 39,000,000 38,530,440 39,000,000 469,560
Aon Corporation Common Stock 29,399,024 - 29,399,024 29,399,024 -
- 46,551,327 10,081,669 46,551,327 36,469,658
Aon Funds Money Market Mutual Fund 155,634,503 - 155,634,503 155,634,503 -
- 51,380,000 51,380,000 51,380,000 -
Aon Funds Asset Allocation Mutual Fund 96,835,416 - 96,835,416 96,835,416 -
- 13,400,000 10,400,648 13,400,000 2,999,352
Aon Funds S&P 500 Index Mutual Fund 110,467,054 - 110,467,054 110,467,054 -
- 24,250,000 17,086,406 24,250,000 7,163,594
The Northern Trust Benchmark Diversified
Company* Asset Portfolio 543,630,541 - 543,630,541 543,630,541 -
- 587,703,541 587,703,541 587,703,541 -
<FN>
There were no category (ii) or (iv) reportable transactions during 1998.
*Represents Party in interest to the Plan not prohibited by ERISA.
</FN>
</TABLE>
- 21 -
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-27894) pertaining to the Aon Savings Plan of Aon
Corporation of our report dated June 11, 1999, with respect to the financial
statements and schedules of the Aon Savings Plan included in this Annual
Report (Form 11-K) for the year ended December 31, 1998.
ERNST & YOUNG LLP
Chicago, Illinois
June 28, 1999
<PAGE>
June 25, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: REPORT ON FORM 11-K FOR THE AON SAVINGS PLAN
REGISTRANT: AON CORPORATION
COMMISSION FILE NO.: 1-7933
Gentlemen and Ladies:
Enclosed with this EDGAR transmission is the above referenced Form 11-K
for the Aon Savings Plan.
Pursuant to Securities Act Release No. 33-7331, no filing fee is being
paid herewith as it was eliminated effective October 7, 1996.
Please contact the undersigned at 312/701-3835 if you have any questions.
Very truly yours,
/S/ JEROME S. HANNER
Jerome S. Hanner
Senior Counsel
JSH/adc
Enclosures
<PAGE>
