CHICAGO, Nov. 16 /PRNewswire-FirstCall/ -- Aon Consulting, the human capital consulting organization of Aon Corporation (NYSE: AOC - News), found that U.S. pension plan managers have been more aggressive than their U.K. counterparts when it comes to investing in equities.

According to a new analysis by Aon Consulting, 62 percent of pension plan assets for U.S. Fortune 100 companies were invested in equities at the end of 2005, compared to 58 percent of the 200 largest pension plans in the U.K. (including those in the FTSE100). This is similar to the total proportion of pension plan assets invested in equities in 2004, when the U.S. and U.K. were at 62 percent and 59 percent, respectively. However, Aon Consulting believes these total figures disguise a trend in the U.K. With stock markets performing well relative to most other markets in 2005, one would expect the total proportion of equities in pension plans to increase (all things being equal). However, in the U.K., this has been offset by 12 percent of companies in this analysis reducing their allocation to equities by more than 5 percent. Nearly all of these switches were from equities to bonds.

"Our data indicates that the average U.S. pension plan exposure to equities -- net of the impact of market movements -- has remained relatively stable over the last few years, suggesting plan sponsor risk tolerance has not changed much despite the market downturn of 2001 and 2002," said Jim Scott, senior vice president with Aon Consulting. "However, the allocation to traditional domestic equity has reduced modestly in favor of international equities, alternatives and real estate, as sponsors seek higher returns and better diversification."

"Historically, many U.K. pension funds have had a very high exposure to equities and it makes sense to consider whether this is still appropriate," said Andrew Claringbold, principal at Aon Consulting U.K. "Increasing the exposure to bonds is obviously one way of reducing risk, albeit with a lower expected return. However, there are also opportunities for pension plans to invest in other assets with similar return expectations to equities, but with different risks such as properties or hedge funds."

Aon Consulting also analyzed the impact pension plans have on company balance sheets in the U.S. and U.K. For U.S. companies analyzed, overall pension plan assets are, on average, approximately 15 percent of the market capitalization of the company, which is comparable to 16 percent in 2005. However, this is less than U.K. companies analyzed, where the overall pension plan assets are, on average, about 23 percent of the market capitalization, down 1 percent from the end of 2005. When combined with the somewhat lower allocation to equities, this shows U.K. companies were exposed to slightly less pension plan risk during the last year.

"The U.S. market has been anticipating pension reform for some time and it finally happened this year," said Scott. "It will be interesting to see if sponsors will now begin to change the allocation of assets more in favor of fixed income in order to better match liabilities with assets, but at the expense of higher expected returns."

For more information, contact:
Joe Micucci, Aon Consulting, 312-381-4786, joe_micucci@aon.com .

About Aon

Aon Corporation ( http://www.aon.com ) provides more insurance brokerage, reinsurance brokerage and risk management services than any other company in the world, and is a leader in human capital and management consulting and specialty insurance underwriting. Aon has 45,000 employees in 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.

Aon Consulting Worldwide ( http://www.aon.com/hcc ) is among the top global human capital consulting firms, with 2005 revenues of $1.255 billion and 6,800 professionals in 117 offices worldwide. Aon Consulting is reshaping the workplace of the future through benefits, talent management and rewards strategies and solutions. In August 2006, Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine.

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 consummate the pending sale of the Aon Warranty Group, 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, and ERISA class actions, 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.

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Source: Aon Corporation

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