SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 9, 2000
AON CORPORATION
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(Exact name of Registrant as Specified in Charter)
Delaware 1-7933 36-3051915
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
123 N. Wacker Drive, Chicago, Illinois 60606
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (312) 701-3000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On April 18, 2000 the shareholders of Aon Corporation ("the Company") approved a
Certificate of Amendment of Second Restated Certificate of Incorporation (the
"Amendment"), increasing the authorized shares of all classes of the Company's
stock to 775,000,000, of which 25,000,000 shall be designated serial preferred
stock and 750,000,000 shall be designated common stock.
The Amendment is being filed as an exhibit hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The Company is filing herewith the following exhibits:
(c) Exhibits.
The exhibits accompanying this report are listed in the accompanying
Exhibit Index.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Aon Corporation
Dated: May 9, 2000 By: /s/ Harvey N. Medvin
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Name: Harvey N. Medvin
Title: Executive Vice President and Chief
Financial Officer
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EXHIBIT INDEX
The following exhibits are filed herewith.
Exhibit No. Exhibit
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3 Certificate of Amendment of
Second Restated Certificate of
Incorporation
12(a) Statement regarding Computation
of Ratio of Earnings to Fixed Charges
12(b) Statement regarding Computation
of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
99 Press Release regarding First Quarter, 2000
Earnings
<PAGE>
Exhibit 3
Aon Corporation
CERTIFICATE OF AMENDMENT
OF
SECOND RESTATED CERTIFICATE OF INCORPORATION
Aon Corporation (the "Company"), a corporation organized and
existing under and by virtue of the General Corporation Law of the
State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Company, at a regular meeting
and in accordance with Section 242 of the General Corporation Law of
the State of Delaware, adopted the following amendment to the Second
Restated Certificate of Incorporation of the Company (the
"Certificate"), declaring said amendment advisable for the Company. The
Board of Directors of the Company recommended to the stockholders that
the amendment be approved and adopted. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Board of Directors deems it advisable that
the first full paragraph of Article Fourth of the Company's
Certificate of Incorporation be amended to read in its
entirety as follows:
(a) Classification of authorized shares. The total number of
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shares of all classes of stock which the Company shall have
authority to issue is seven hundred seventy-five million
(775,000,000) of which twenty-five million (25,000,000) shares
shall be designated Serial Preferred Stock, par value $1.00
per share, and seven hundred fifty million (750,000,000)
shares shall be Common Stock, $1.00 par value per share.
SECOND: That thereafter, pursuant to the resolution of its Board of
Directors and pursuant to notice in accordance with Section 222 of the
General Corporation Law of the State of Delaware, the annual meeting of
the Company was held and the necessary number of shares required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, Aon Corporation has caused this Certificate to be
signed by Kevann M. Cooke, its Vice President and Corporate Secretary
and attested by Jerome S. Hanner, its Assistant Secretary, this 18th
day of April 2000.
Aon Corporation
By: KEVANN M. COOKE
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Kevann M. Cooke
Vice President and Corporate Secretary
Attest: JEROME S. HANNER
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Jerome S. Hanner
Assistant Secretary
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<TABLE>
<CAPTION>
Exhibit 12(a)
Aon Corporation and Consolidated Subsidiaries
Combined With Unconsolidated Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
Three Months Ended
March 31, Years Ended December 31,
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(millions except ratios) 2000 1999 1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before provision for income taxes (1) $ 218 $ 96 $ 635 $ 931 $ 542 $ 446 $ 458
Add back fixed charges:
Interest on indebtedness 31 21 105 87 70 45 56
Interest on ESOP - - 1 2 3 4 5
Portion of rents representative of
interest factor 12 13 49 51 44 29 21
-------- ------- -------- ------- ------- -------- -------
Income as adjusted $ 261 $ 130 $ 790 $1,071 $ 659 $ 524 $ 540
======== ======= ======== ======= ======= ======== =======
Fixed charges:
Interest on indebtedness $ 31 $ 21 $ 105 $ 87 $ 70 $ 45 $ 56
Interest on ESOP - - 1 2 3 4 5
Portion of rents representative of
interest factor 12 13 49 51 44 29 21
-------- ------- -------- ------- ------- -------- -------
Total fixed charges $ 43 $ 34 $ 155 $ 140 $ 117 $ 78 $ 82
======== ======= ======== ======= ======= ======== =======
Ratio of earnings to fixed charges 6.1 3.8 5.1 7.6 5.6 6.7 6.6
======== ======= ======== ======= ======= ======== =======
<FN>
(1) Income from continuing operations before provision for income taxes and
minority interest includes special charges of $163 million for the three
months ended March 31, 1999 and $313 million, $172 million and $90 million
for the years ended December 31, 1999, 1997 and 1996, respectively.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
Exhibit 12(b)
Aon Corporation and Consolidated Subsidiaries
Combined With Unconsolidated Subsidiaries
Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends
Three Months Ended
March 31, Years Ended December 31,
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(millions except ratios) 2000 1999 1999 1998 1997 1996 1995
-------- -------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Income from continuing operations
before provision for income taxes (1) $ 218 $ 96 $ 635 $ 931 $ 542 $ 446 $ 458
Add back fixed charges:
Interest on indebtedness 31 21 105 87 70 45 56
Interest on ESOP - - 1 2 3 4 5
Portion of rents representative of
interest factor 12 13 49 51 44 29 21
-------- -------- ------- -------- ------- ------- --------
Income as adjusted $ 261 $ 130 $ 790 $1,071 $ 659 $ 524 $ 540
======== ======== ======= ======== ======= ======= ========
Fixed charges and preferred stock dividends:
Interest on indebtedness $ 31 $ 21 $ 105 $ 87 $ 70 $ 45 $ 56
Preferred stock dividends 17 17 70 70 82 29 38
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Interest and dividends 48 38 175 157 152 74 94
Interest on ESOP - - 1 2 3 4 5
Portion of rents representative of
interest factor 12 13 49 51 44 29 21
-------- -------- ------- -------- ------- ------- --------
Total fixed charges and preferred
stock dividends $ 60 $ 51 $ 225 $ 210 $ 199 $ 107 $ 120
======== ======== ======= ======== ======= ======= ========
Ratio of earnings to combined fixed
charges and preferred stock dividends (2) 4.4 2.5 3.5 5.1 3.3 4.9 4.5
======== ======== ======= ======== ======= ======= ========
<FN>
(1) Income from continuing operations before provision for income taxes and
minority interest includes special charges of $163 million for the three
months ended March 31, 1999 and $313 million, $172 million and $90 million
for the years ended December 31, 1999, 1997 and 1996, respectively.
(2) Included in total fixed charges and preferred stock dividends are $16
million for the three months ended March 31, 2000 and 1999, $66 million
for the years ended December 31, 1999 and 1998, and $64 million for the
year ended December 31, 1997, of pretax distributions on the 8.205%
mandatorily redeemable preferred capital securities which are classified
as "minority interest" on the condensed consolidated statements of income.
</FN>
</TABLE>
<PAGE>
Exhibit 99
Aon Reports First Quarter 2000 Earnings
Chicago, IL -- May 4, 2000 -- Aon Corporation (NYSE:AOC) today reported dilutive
net income per share of $0.47 for the quarter ended March 31, 2000, up from
$0.19 in the first quarter of 1999. The prior year quarter included special
charges of $0.39 per share and a one-time gain of $0.07 per share from the sale
of tax-exempt securities.
Record first quarter revenues of $1.8 billion increased 7% versus first quarter
1999 results. Net income for the first quarter of 2000 was $123 million compared
with $50 million in the year ago quarter after special charges.
Patrick G. Ryan, Chairman and CEO, stated "Our outstanding client service
capabilities are reflected in our strong organic growth. Technology investments
are on plan, and the pricing environment in our brokerage segment is firming in
line with expectations."
Insurance brokerage and other services revenue grew 8% year-over-year in the
first quarter to $1.1 billion, while pretax income declined slightly to $180
million from $184 million before pretax special charges of $119 million in the
year ago quarter.
Consulting revenue was up 13% in the quarter to $176 million, and pretax income
grew 12% to $19 million from $17 million before special charges of $44 million
in first quarter last year.
Insurance underwriting revenues increased 7% to $530 million versus the prior
year quarter, driven particularly by life, health and accident underwriting
revenues. Pretax income for insurance underwriting grew 5% to $67 million.
Corporate and other revenue decreased 39% to $30 million in the first quarter of
2000 from $49 million in the year ago period. As reported in the earnings
release last year, first quarter 1999 results included a $30 million one-time
gain, or $0.07 per share, from sales of tax-exempt securities. Adjusted for this
one-time gain, corporate and other revenue grew due to increased valuations from
equity investments in limited partnerships. These investments have generated a
more variable income stream due to the inherent volatility of equity securities,
but have generated favorable returns over time.
<PAGE>
Aon Corporation (www.aon.com) is a holding company that comprises a family of
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insurance brokerage, consulting and insurance underwriting subsidiaries. Aon's
common stock is listed on the New York, Chicago, Frankfurt and London stock
exchanges.
This press release may contain certain statements relating to future results,
which are forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical results or those anticipated, depending on a
variety of factors such as general economic conditions in different countries
around the world, fluctuations in global equity and fixed income markets,
downward commercial property and casualty premium pressures, the competitive
environment and the actual cost of resolution of contingent liabilities. Further
information concerning the company and its business, including factors that
potentially could materially affect the company's financial results are
contained in the company's filings with the Securities and Exchange Commission.
-oOo-
CONTACT: Sean P. O'Neill
Vice President - Financial Relations
312-701-3983
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<TABLE>
<CAPTION>
Aon CORPORATION
CONSOLIDATED SUMMARY OF OPERATIONS
FIRST QUARTER ENDED
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(millions except per share data) MARCH 31, 2000 MARCH 31, 1999 PERCENT CHANGE
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<S> <C> <C> <C>
REVENUE
Brokerage commissions and fees .............................. $ 1,205 $ 1,112 8 %
Premiums and other .......................................... 468 437 7
Investment income ........................................... 137 150 (9)
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TOTAL REVENUE ............................................ 1,810 1,699 7
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EXPENSES
General expenses ............................................ 1,271 1,146 11
Benefits to policyholders ................................... 252 239 5
Interest expense ............................................ 31 21 48
Amortization of intangible assets ........................... 38 34 12
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TOTAL EXPENSES. .......................................... 1,592 1,440 11
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INCOME BEFORE SPECIAL CHARGES .................................. 218 259 (16)
Special charges ............................................. - 163 -
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INCOME BEFORE INCOME TAX AND MINORITY INTEREST ................. 218 96 127
Provision for income tax . .................................. 85 36 136
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INCOME BEFORE MINORITY INTEREST . .............................. 133 60 122
Minority interest - 8.205% trust preferred capital securities (10) (10) N/A
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NET INCOME ..................................................... $ 123 $ 50 146 %
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Preferred stock dividends ................................... (1) (1) N/A
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NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS ................... $ 122 $ 49 149 %
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NET INCOME PER SHARE:
Basic net income per share .................................. $ 0.47 $ 0.19 147 %
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Dilutive net income per share:
Net income before special charges ....................... $ 0.47 $ 0.58 (19) %
Special charges ......................................... - (0.39) -
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Dilutive net income per share ........................ $ 0.47 $ 0.19 147 %
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Dilutive average common and common equivalent shares outstanding 260.5 261.8
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</TABLE>
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<TABLE>
<CAPTION>
Aon CORPORATION
BUSINESS SEGMENTS
FIRST QUARTER ENDED
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(millions) MARCH 31, 2000 MARCH 31, 1999 PERCENT CHANGE
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<S> <C> <C> <C>
REVENUE
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Insurance brokerage and other services (1) ................. $ 1,074 $ 997 8 %
Consulting (2) ............................................. 176 156 13
Insurance underwriting ..................................... 530 497 7
Corporate and other ........................................ 30 49 (39)
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TOTAL REVENUE ............................................ $ 1,810 $ 1,699 7 %
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INCOME BEFORE INCOME TAX
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Insurance brokerage and other services ..................... $ 180 $ 184 (2) %
Special charges .......................................... - (119) -
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Including special charges 180 65 177
Consulting ................................................. 19 17 12
Special charges .......................................... - (44) -
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Including special charges ................................ 19 (27) N/A
Insurance underwriting ..................................... 67 64 5
Corporate and other ........................................ (48) (6) N/A
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TOTAL INCOME BEFORE INCOME TAX EXCLUDING SPECIAL CHARGES.. 218 259 (16)
SPECIAL CHARGES .......................................... - (163) -
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TOTAL INCOME BEFORE INCOME TAX ........................... $ 218 $ 96 127 %
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<FN>
(1) Includes investment income of $43 million and $39 million for the first
quarter ended March 31, 2000 and 1999, respectively.
(2) Includes investment income of $1 million and $1 million for the first
quarter ended March 31, 2000 and 1999, respectively.
</FN>
</TABLE>
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