DOW JONES NEWSWIRES 
 

Aon Corp.'s (AOC) fourth-quarter net income plunged 95% on an expected $116 million loss related to plans to dispose of its property- and casualty-insurance operations, and higher restructuring costs.

The insurance brokerage's chief executive, Greg Case, said the company had solid results despite the soft market and was well-positioned for 2009.

In general, as catastrophes continue to run below long-term averages, insurance brokerages have been grappling with how to price policies low enough to attract customers less concerned with risk. The resulting price wars have been taking a toll on insurers.

Fitch Ratings last month projected profitability for insurance brokerages to be flat to modestly lower this year as the economic turbulence challenges growth and pinches margins.

Aon, one of the world's largest insurance brokerages, posted net income of $10 million, or 3 cents a share, down from $207 million, or 64 cents a share, a year earlier. Last year's results included $34 million in restructuring charges. Excluding items, earnings per share rose to 81 cents from 68 cents.

Earnings include results from Benfield Group Inc. since the close of Aon's purchase Nov. 28.

Revenue decreased 4.1% to $1.92 billion amid the effects of a stronger dollar.

On average, analysts surveyed by Thomson Reuters expected earnings of 78 cents on revenue of $2.06 billion.

Organic revenue, a closely watched indicator that excludes recent acquisitions and divestitures as well as currency fluctuations, rose 2%.

At Aon's largest unit, risk and insurance brokerage services, organic revenue rose 2%. The segment's profit slid 21% amid a 14% decline in investment income.

Organic revenue in the consulting business rose 3%, while earnings slid 8.3%, on lower compensation and health and benefits consulting.

In the latest quarter, restructuring costs more than doubled to $87 million from a year earlier.

The company again boosted its estimate for how much it would save through its restructuring plan to $240 million to $260 million this year and $370 million in 2010.

Aon has been undergoing major restructuring for more than a year, including job cuts and sales of some of its businesses. Last month, Aon completed the sale its Auto Insurance Specialists Inc. network.

As part of its plan to boost the reach of its reinsurance operations, Aon bought U.K. reinsurance broker Benfield Group Ltd. for $1.51 billion. It planned to cut 500 to 700 jobs as part of the combination.

The deal marked a major consolidation in the reinsurance broker market, where intermediaries arrange cover for insurers for risks that are too big to keep on their own balance sheet. It was the latest round of consolidation in the sector, after U.K.-based Willis Group Holdings Ltd. (WSH) agreed to buy Hilb Rogal & Hobbs Co. of the U.S. in June.

Aon's shares closed Thursday at $36.45 and haven't traded premarket. The stock is off 20% so far this year.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com