Aon Environmental Decontaminates Former Army Base

CHICAGO, April 17  /PRNewswire-FirstCall/ -- Old Army bases never die; they are just re-developed.

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That process can be more complex than it sounds when you're dealing with 12,000 acres littered with exploded and unexploded munitions.   For the first time, Aon, the private sector and the insurance industry have joined forces to develop an insurance product to cover this most specific of risks.

Aon's Environmental Services Group, representing its client, LFR Inc./Weston Solutions and the Fort Ord Reuse Authority (FORA) in conjunction with American International Group, have created an insurance product that mitigates the risks inherent in preparing a 45 square-mile area contaminated with unexploded munitions for a multi-million dollar mixed-use development. The former military installation is on the EPA's  "national priorities" Superfund site list.

"This program needed an innovative contracting structure coupled with a unique environmental insurance product which prefunds the cleanup costs. Aon was able to navigate the complexities of the deal while addressing the needs of all the stakeholders," says Frank Lorincz, chief executive officer of LFR Inc.  "In fact, the team worked so well together in defining the program I wouldn't be surprised if this became the model for remediation of other federal lands and Department of Defense sites around the country."

Monterey County's Ft. Ord, a former U.S. Army military installation, was closed as part of the U.S. Defense Department's Congressionally-authorized Base Realignment and Closure (BRAC) initiative.  The California legislature subsequently created the Fort Ord Reuse Authority to oversee the redevelopment.

Before FORA's reuse plan -- which encompasses everything from endangered species habitat conservation to retail, residential and light industrial development -- can be implemented, the site must be decontaminated.

"The unexploded ordnance and munitions represent a clear and present danger to the developers," says Aon Environmental Services Group Managing Director Greg Schilz.  "There was no specific insurance product available to address development cost overruns that could result from the presence of this hazardous material.  We worked for two years with a team from AIG, LFR/Weston and FORA to develop a product to protect a multimillion-dollar development investment over 15 years.   This has never been done before."

"We're in the business of trying to figure out solutions to client problems," said Joe Boren, CEO of AIG Environmental.  "While we have worked at many U.S. military bases, this presented a new and unique opportunity that we were able to get comfortable with and should be the prototype for similar problems at similar bases at other parts of the country."

Schilz says other military sites have involved ordnance removal, but none have been as a result of this sort of public-private partnership, and none on this scale.  "When we first went to market we were looking for more traditional environmental insurance products," he says.  "But we found there wasn't a product designed to meet these needs."  The end result is an insurance product with limits of $125 million over a 15 year period.

Michael Houlemard, executive director of FORA, states "The 3,500 acres will offer great opportunity for additional commercial and retail development as well as a full array of housing. We're very happy with the end result being such a positive benefit for the safety of all the citizens of the Monterey region."

While there is no heavy artillery at the site, Schilz says fully decontaminating the area will require the removal of a broad range of munitions.

About Aon

Aon Corporation (http://www.aon.com/) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting.  There are 43,000 employees working in Aon's 500 offices in more than 120 countries.  Backed by broad resources, industry knowledge and technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce productivity solutions.

This press release contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future 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 either historical or anticipated results depending on a variety of factors. Potential factors that could impact results include: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to execute the stock repurchase program, our ability to obtain regulatory or legislative changes to permit continuous sales of our supplemental Medicare health product, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, ERISA class actions, the impact of the analysis of practices relating to stock options, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company and its business, including factors that potentially could materially affect the Company's financial results, is contained in the Company's filings with the Securities and Exchange Commission.

  Al Orendorff
  312 381 3153
  

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DATASOURCE: Aon Corporation



CONTACT: Al Orendorff of Aon, [phone], 



Web site:  http://www.aon.com/ 

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