December 3, 2008 - Aon Corp. (AOC-NYSE) through its subsidiaries, provides risk management, insurance and reinsurance brokerage, human capital, and management consulting services worldwide.

In addition, it operates as a broker that provides reinsurance services, including advice, placement of reinsurance and alternative risk transfer arrangements with capital markets, actuarial, financial, and regulatory consulting; portfolio analysis; catastrophe modeling; and claims services to insurance and reinsurance companies, and other risk assumption entities.

AonCorporation's consulting services include employee benefits, compensation, management consulting, communications, strategic human resource consulting, financial advisory and litigation consulting, and human resource outsourcing. The company, formerly known as Combined International Corp., was founded in 1919 and is based in Chicago, Illinois.

Obviously, Aon offers plenty of insurance services. In fact, it's the world's second largest insurance broker. As it's grown through acquisitions and internally, profits continued to increase over the last 4 years. Analysts see better growth ahead.

For 2008, earnings estimates by the 14 analysts covering the company average $2.87, up from $2.83 last year. Next year, they're estimated at $3.48. Over the last 5 years, eps have improved by an average of 8.9% a year. Over the next 5 years, analysts predict that number will go to 10.5%.

For this quarter (ending in December), look for 83 cents a share, up from 69 cents last year in the same period. For the March quarter, expect 99 cents, up from 71 cents a share in the same quarter this year.

Even with difficulties in the insurance industry and tough economic times, Aon reported $1.847 billion in revenues for the third quarter, up from $1.775 billion in the same quarter last year. Analysts see total revenues in 2008 at $7.83 billion, down from $9.31 billion last year. For 2009, they expect a bounce to $8.55 billion.

The company has been on a cost cutting campaign, with ambitions of saving $75 million to $80 million this year, $220 million to $245 million next year, and up to $300 million in 2010.

It recenly bought Benfield Group, a British independent reinsurance intermediary, for about $1.75 billion, $1.6 billion in cash and the assumption of $170 million of Benfield debt. The industry is consolidating and with this purchase, Aon is increasing its presence, becoming even more dominant.

The company is buying back stock. In the third quarter, it purchased $426 million of stock, leaving about $850 million from the original authorized amount. There are 269,782,261 shares of stock outstanding. Insiders own 9.23% and institutions have 76.3%.

More numbers: Market Cap is $11.8 billion. Forward P/E is 12.51. Price to Book is 1.99. There's total cash of $2.42 billion making $8.99 a share. Total debt is $1.96 billion. The current ratio is 1.28. Book value is $22 a share. The Beta is .55, making for a defensive stock over the last year. The high in the last 52 weeks was $51, the low was $32.83. There's a dividend of 60 cents a share annually for a yield of 1.4%.

Aon is a growing, profitable insurance brokerage company. With its new cost cutting programs, stock buybacks and growing market share, the company should do well over the next several years. Of course, if global economies continue to erode, AON will suffer along with the rest of the industry. If you're looking to diversify your portfolio and don't have any insurance companies, AON should be worth your time to study further.

Company Web site: www.aon.com

- Ted Allrich