8-KMaterial AgreementsExhibits & Filings

Aon plc 8-K Report, Material Agreement (Jun 6, 2008)

Filed June 6, 2008For Securities:AON

Summary

Aon Corporation (Aon) has filed an 8-K report detailing an amendment to a prior settlement agreement with several state agencies, including New York and Connecticut attorneys general, and Illinois regulators. This amendment, specifically Amendment No. 6 to the March 4, 2005 Settlement Agreement, addresses Aon's ability to accept contingent compensation following acquisitions of insurance brokerages that engage in such practices. The core of the amendment allows Aon to continue receiving contingent compensation from the existing customer base of an acquired brokerage for a period of three years post-acquisition. However, this is subject to significant restrictions. The acquired entity must cease accepting contingent compensation from its existing clients (for whom it wasn't already receiving such compensation) and new clients. Furthermore, within 180 days of acquisition, or at the next policy renewal if immediate compliance is not feasible, the acquired company must implement other business reforms agreed upon in the original settlement. Aon is also required to publicly disclose its acceptance of contingent compensation from these acquired entities and provide relevant details.

Key Highlights

  • 1Aon amended a March 2005 settlement agreement with New York, Connecticut, and Illinois state agencies.
  • 2The amendment permits Aon to accept contingent compensation from acquired insurance brokerages' existing customers for a three-year transition period post-acquisition.
  • 3During the transition, the acquired brokerage must stop accepting contingent compensation from its existing clients (if not already doing so) and any new clients.
  • 4The acquired company must adhere to other business reforms outlined in the original settlement within 180 days or by the next policy renewal.
  • 5Aon is required to disclose its acceptance of contingent compensation and details about the acquired company on its website and in public statements.
  • 6The filing indicates that the amendment was entered into on June 3, 2008, and the report was filed on June 5, 2008.

Frequently Asked Questions

The primary purpose of this 8-K filing is to inform investors about an amendment to a material definitive agreement. Specifically, Aon has amended a settlement agreement with several state agencies to clarify rules regarding contingent compensation acceptance following the acquisition of insurance brokerages.

The amendment provides a defined, three-year grace period for Aon to continue receiving contingent compensation from the existing customer base of an acquired insurance brokerage. This offers some flexibility in integrating newly acquired businesses that utilize contingent compensation models, while also imposing restrictions and a clear phase-out plan.

Key restrictions include: the acquired company must cease accepting contingent compensation from its existing clients (if not already receiving it) and new clients during the three-year transition. Additionally, the acquired company must implement other business reforms agreed upon in the original settlement within a specified timeframe, and Aon must provide public disclosure regarding the acceptance of contingent compensation.

Contingent compensation typically refers to payments or fees that are dependent on achieving certain outcomes or performance metrics, often related to the placement of insurance policies or the generation of premiums. The amendment clarifies how Aon can handle these arrangements after acquiring businesses that rely on them.