8-KAcquisitions & DispositionsExhibits & Filings

Aon plc 8-K Report, Acquisition Completed (Dec 6, 2006)

Filed December 6, 2006For Securities:AON

Summary

Aon Corporation has announced the completion of two significant asset dispositions on November 30, 2006. The company successfully sold its Aon Warranty Group (AWG) business, which underwrites and administers extended warranties and related insurance products, to TWG Holdings, Inc. for $710 million in cash. Additionally, Aon divested its Construction Program Group (CPG) business, a managing general underwriter, to Old Republic Insurance Company for $85 million in cash. These transactions represent a strategic move to streamline operations and focus on core business areas by exiting non-core or specialty segments. The financial impact of these sales is substantial, with Aon receiving a total of $795 million in cash, subject to a post-closing adjustment for the AWG sale. The company also transferred approximately $330 million in net unearned premium and claims reserves related to the CPG business. Investors should note that unaudited pro forma financial statements have been filed to reflect these divestitures, providing a clearer picture of Aon's financial position and performance as if these transactions had occurred earlier.

Key Highlights

  • 1Aon Corporation completed the sale of its Aon Warranty Group (AWG) business on November 30, 2006.
  • 2The AWG sale generated $710 million in cash, with the final price subject to a post-closing adjustment.
  • 3Aon also sold its Construction Program Group (CPG) business on November 30, 2006.
  • 4The CPG transaction yielded $85 million in cash.
  • 5Approximately $330 million in net unearned premium and claims reserves were transferred with the CPG sale.
  • 6These dispositions are part of a strategic effort to divest non-core assets.
  • 7Unaudited pro forma financial statements have been filed to reflect the impact of these sales.

Frequently Asked Questions

Aon Corporation received a total of $795 million in cash from the combined sales of its Aon Warranty Group (AWG) and Construction Program Group (CPG) businesses. The $710 million from AWG is subject to a post-closing adjustment.

Aon sold two distinct businesses: the Aon Warranty Group (AWG), which focused on underwriting and administering extended warranties for consumer goods and specialty insurance products, and the Construction Program Group (CPG), a managing general underwriter.

The unaudited pro forma financial statements are presented to show the financial impact of the AWG and CPG sales as if they had occurred earlier. This helps investors understand Aon's financial position and results of operations without the divested businesses, facilitating a clearer view of the company's ongoing core operations.

The final purchase price for the AWG business is subject to a post-closing adjustment based on the net worth (excluding goodwill) of AWG at the closing date, compared to a target net worth of $420,011,470. This means the actual cash received could be higher or lower than $710 million depending on AWG's financial position at the time of sale.