Reinsurance Rates on Line Likely Flat to Lower, Slight Excess of Capacity at Mid-Year Renewals: Aon Re Global Analysis

CHICAGO, March 30  /PRNewswire-FirstCall/ -- Reinsurance rates on line for personal lines, standard commercial lines and complex commercial lines are likely to be flat to lower during mid-year renewals of property catastrophe reinsurance programs, according to an Aon Re Global analysis.  Additionally, Aon Re expects a slight excess of capacity relative to likely reduced demand for peak Florida capacity.

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Aon Re Global's market expectations, detailed by region, for the June 1 and July 1 renewals:

                                   ROL         Capacity      Retention
                                 Changes       Changes        Changes
  United States:
   Personal lines             Flat to -20%    +10 to +25%    Voluntary
   Standard commercial lines  Flat to -15%     +5 to +20%    Voluntary
   Complex commercial lines   Flat to -10%    Flat to +20%   Voluntary
  Europe                      Flat to  -5%     Plentiful     Voluntary
  United Kingdom                  Flat         Plentiful     Voluntary
  Japan                       Flat to  -5%     Plentiful     Voluntary
  Asia Pacific (Ex. Japan)    -10% to -15%     Plentiful     Voluntary
  Australia                    -5% to -10%     Plentiful     Voluntary
  Canada                      Flat to -10%     Plentiful     Voluntary
  South America                -5% to -20%     Plentiful     Voluntary
  Mexico                      -10% to -20%     Plentiful     Voluntary
  Caribbean                    -5% to -10%     +5 to +20%    Voluntary

  Assumes no changes to exposures reinsured.
  Rate of change measured from June and July 1, 2006 terms



The drivers at play in the property catastrophe reinsurance market leading up to the June 1 and July 1 renewals include:

  * A nearly loss free reinsurance year in 2006

  * Restoration of reinsurers' capital bases

  * Significant participation in the catastrophe reinsurance business from
    non-traditional sources, such as hedge funds, high net worth individuals,
    institutional money managers and the asset backed securities market

  * $10-$14 billion of reinsurer capital freed up as a result of additional
    reimbursement contract capacity provided through the Florida Hurricane
    Catastrophe Fund, a state-controlled agency that acts as a reinsurer of
    Florida residential risks

  * $8-$12 billion of reinsurer capital freed up or expected to be freed up
    from the actual and expected growth of a newly competitive Citizens
    Property Insurance Corporation, a state-controlled agency that acts as
    an insurer of Florida residential and commercial risks

  * Substantial easing of a major rating agency's capital requirements for
    insurers related to required capital for property catastrophe risks

  * Improving confidence from reinsurers in the revised catastrophe
    reinsurance models

  Several factors are working contrary to these dynamics, including:

  * Increasing pressure for property catastrophe reinsurers to return
    capital to shareholders as market conditions soften

  * The potential for reinsurance industry consolidation and related capital
    management measures that may reduce capital and capacity

  * Expectations that non-traditional investors such as hedge funds will be
    disciplined as expected returns on collateralized products decrease as
    market conditions soften



"Four months ahead of the Jan. 1, 2007 renewals, Aon Re Global correctly predicted the return of a functioning worldwide property catastrophe reinsurance marketplace," said Bryon Ehrhart, president and chief executive officer of Aon Re Services. "In such a marketplace, cedents would generally find sufficient capacity at terms and conditions that represented accretive underwriting capital for their organizations. We believe Aon Re Global's ability to provide expectations in advance of key renewal dates provides significant value to our clients."

About Aon Re Global

Aon Re Global, the world's leading reinsurance intermediary, provides clients with a full range of services in the design, structure and implementation of risk-transfer programs through a network of offices in more than 40 countries. In addition to traditional treaty and facultative placement services, Aon Re Global offers clients a range of advisory and consulting services -- such as catastrophe information forecasting and financial analysis. Aon Re Global, a subsidiary of Aon Corporation, was named best reinsurance broker in 2006 by readers of Business Insurance and Reinsurance and in 2007 by readers of US Insurer.

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.

  Media Contacts

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  312.381.2684                   [phone]
          

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DATASOURCE: Aon Corporation



CONTACT:  Chicago: Rahsaan Johnson, [phone],

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