Exhibit 99.1
Aon Corporation
Pro Forma Statement of Financial Position
As of September 30, 2006
(unaudited)
(millions) |
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| Pro Forma |
| Pro Forma |
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ASSETS |
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| Historical |
| Adjustments |
| Adjusted |
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Investments |
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Fixed maturities at fair value |
| $ | 2,962 |
| $ | — |
| $ | 2,962 |
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Short-term investments |
| 3,647 |
| — |
| 3,647 |
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Other investments |
| 463 |
| — |
| 463 |
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Total investments |
| 7,072 |
| — |
| 7,072 |
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Cash |
| 461 |
| 795 | (2) | 1,256 |
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Receivables |
| 8,907 |
| — |
| 8,907 |
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Deferred Policy Acquisition Costs |
| 524 |
| — |
| 524 |
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Goodwill & Other Intangible Assets |
| 4,546 |
| — |
| 4,546 |
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Assets Held for Sale |
| 4,672 |
| (4,672 | )(1) | — |
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Property and Equipment and Other Assets |
| 2,501 |
| (63 | )(3) | 2,438 |
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TOTAL ASSETS |
| $ | 28,683 |
| $ | (3,940 | ) | $ | 24,743 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Insurance Premiums Payable |
| $ | 9,332 |
| $ | — |
| $ | 9,332 |
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Policy Liabilities |
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Future policy benefits |
| 1,764 |
| — |
| 1,764 |
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Policy and contract claims |
| 1,468 |
| — |
| 1,468 |
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Unearned and advance premiums and contract fees |
| 364 |
| — |
| 364 |
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Other policyholder funds |
| 23 |
| — |
| 23 |
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Total Policy Liabilities |
| 3,619 |
| — |
| 3,619 |
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General Liabilities |
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General expenses |
| 1,544 |
| 60 | (4) | 1,604 |
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Notes payable and short-term borrowings |
| 2,343 |
| — |
| 2,343 |
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Pension, post-employment and post-retirement liabilities |
| 1,734 |
| — |
| 1,734 |
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Liabilities held for sale |
| 3,976 |
| (3,976 | )(1) | — |
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Other liabilities |
| 763 |
| — |
| 763 |
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TOTAL LIABILITIES |
| 23,311 |
| (3,916 | ) | 19,395 |
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Stockholders’ Equity |
| 5,372 |
| (24 | )(5) | 5,348 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 28,683 |
| $ | (3,940 | ) | $ | 24,743 |
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Aon Corporation
Pro Forma Statement of Income
Nine Months Ended September 30, 2006
(Unaudited)
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| Pro Forma |
| Pro Forma |
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(millions except per share data) |
| Historical |
| Adjustments |
| Adjusted |
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Revenue |
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Brokerage commissions and fees |
| $ | 4,852 |
| $ | — |
| $ | 4,852 |
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Premiums and other |
| 1,423 |
| — |
| 1,423 |
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Investment income |
| 266 |
| — |
| 266 |
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Total revenue |
| 6,541 |
| — |
| 6,541 |
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Expenses |
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Compensation and benefits |
| 3,344 |
| — |
| 3,344 |
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Other general expenses |
| 1,394 |
| — |
| 1,394 |
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Benefits to policyholders |
| 864 |
| — |
| 864 |
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Depreciation and amortization |
| 166 |
| — |
| 166 |
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Interest expense |
| 99 |
| — |
| 99 |
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Provision for New York and other state settlements |
| 2 |
| — |
| 2 |
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Total expenses |
| 5,869 |
| — |
| 5,869 |
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Income from continuing operations before provision for income tax and accounting change |
| 672 |
| — |
| 672 |
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Provision for income tax |
| 234 |
| — |
| 234 |
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Income from continuing operations before accounting change |
| 438 |
| — |
| 438 |
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Discontinued operations |
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Income from discontinued operations |
| 92 |
| (79 | )(6) | 13 |
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Provision for income tax |
| 34 |
| (27 | )(6) | 7 |
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Income from discontinued operations |
| 58 |
| (52 | ) | 6 |
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Income before accounting change |
| 496 |
| (52 | ) | 444 |
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Cumulative effect of a change in accounting principle, net of tax |
| 1 |
| — |
| 1 |
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Net income |
| $ | 497 |
| $ | (52 | ) | $ | 445 |
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Basic net income per share |
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Income from continuing operations |
| $ | 1.37 |
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| $ | 1.37 |
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Discontinued operations |
| 0.18 |
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| 0.02 |
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Cumulative effect of a change in accounting principle |
| — |
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| — |
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Net income |
| $ | 1.55 |
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| $ | 1.39 |
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Diluted net income per share |
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Income from continuing operations |
| $ | 1.29 |
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| $ | 1.29 |
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Discontinued operations |
| 0.17 |
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| 0.01 |
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Cumulative effect of a change in accounting principle |
| — |
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| — |
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Net income |
| $ | 1.46 |
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| $ | 1.30 |
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Weighted average number of common shares: |
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Basic |
| 319.9 |
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| 319.9 |
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Diluted |
| 345.0 |
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| 345.0 |
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Aon Corporation
Pro Forma Statement of Income
Twelve Months Ended December 31, 2005
(Unaudited)
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| Pro Forma |
| Pro Forma |
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(millions except per share data) |
| Historical |
| Adjustments |
| Adjusted |
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Revenue |
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Brokerage commissions and fees |
| $ | 6,646 |
| $ | (180 | )(6) | $ | 6,466 |
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Premiums and other |
| 2,848 |
| (1,089 | )(6) | 1,759 |
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Investment income |
| 343 |
| (72 | )(6) | 271 |
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Total revenue |
| 9,837 |
| (1,341 | ) | 8,496 |
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Expenses |
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Compensation and benefits |
| 4,585 |
| (155 | )(6) | 4,430 |
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Other general expenses |
| 2,329 |
| (416 | )(6) | 1,913 |
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Benefits to policyholders |
| 1,551 |
| (599 | )(6) | 952 |
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Depreciation and amortization |
| 277 |
| (17 | )(6) | 260 |
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Interest expense |
| 125 |
| — |
| 125 |
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Provision for New York and other state settlements |
| 5 |
| — |
| 5 |
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Total expenses |
| 8,872 |
| (1,187 | ) | 7,685 |
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Income from continuing operations before provision for income tax |
| 965 |
| (154 | ) | 811 |
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Provision for income tax |
| 323 |
| (82 | )(6) | 241 |
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Income from continuing operations |
| 642 |
| (72 | ) | 570 |
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Discontinued operations |
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Income from discontinued operations |
| 230 |
| — |
| 230 |
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Provision for income tax |
| 135 |
| — |
| 135 |
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Income from discontinued operations |
| 95 |
| — |
| 95 |
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Net income |
| $ | 737 |
| $ | (72 | ) | $ | 665 |
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Preferred stock dividends |
| (2 | ) | — |
| (2 | ) | |||
Net income available for common stockholders |
| $ | 735 |
| $ | (72 | ) | $ | 663 |
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Basic net income per share |
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Income from continuing operations |
| $ | 1.99 |
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| $ | 1.77 |
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Discontinued operations |
| 0.29 |
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| 0.29 |
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Net income |
| $ | 2.28 |
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| $ | 2.06 |
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Diluted net income per share |
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Income from continuing operations |
| $ | 1.89 |
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| $ | 1.68 |
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Discontinued operations |
| 0.28 |
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| 0.28 |
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Net income |
| $ | 2.17 |
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| $ | 1.96 |
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Weighted average number of common shares: |
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Basic |
| 322.5 |
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| 322.5 |
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Diluted |
| 341.5 |
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| 341.5 |
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Aon Corporation
Pro Forma Statement of Income
Twelve Months Ended December 31, 2004
(Unaudited)
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| Pro Forma |
| Pro Forma |
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(millions except per share data) |
| Historical |
| Adjustments |
| Adjusted |
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Revenue |
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Brokerage commissions and fees |
| $ | 6,822 |
| $ | (231 | )(6) | $ | 6,591 |
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Premiums and other |
| 2,788 |
| (1,046 | )(6) | 1,742 |
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Investment income |
| 321 |
| (47 | )(6) | 274 |
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Total revenue |
| 9,931 |
| (1,324 | ) | 8,607 |
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Expenses |
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General expenses |
| 6,969 |
| (634 | )(6) | 6,335 |
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Benefits to policyholders |
| 1,516 |
| (576 | )(6) | 940 |
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Depreciation and amortization |
| 303 |
| (24 | )(6) | 279 |
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Interest expense |
| 136 |
| — |
| 136 |
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Provision for New York and other state settlements |
| 180 |
| — |
| 180 |
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Total expenses |
| 9,104 |
| (1,234 | ) | 7,870 |
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Income from continuing operations before provision for income tax |
| 827 |
| (90 | ) | 737 |
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Provision for income tax |
| 282 |
| (32 | )(6) | 250 |
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Income from continuing operations |
| 545 |
| (58 | ) | 487 |
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Discontinued operations |
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Income from discontinued operations |
| 10 |
| — |
| 10 |
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Provision for income tax |
| 9 |
| — |
| 9 |
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Income from discontinued operations |
| 1 |
| — |
| 1 |
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Net income |
| $ | 546 |
| $ | (58 | ) | $ | 488 |
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Preferred stock dividends |
| (3 | ) | — |
| (3 | ) | |||
Net income available for common stockholders |
| $ | 543 |
| $ | (58 | ) | $ | 485 |
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Basic net income per share |
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Income from continuing operations |
| $ | 1.70 |
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| $ | 1.52 |
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Discontinued operations |
| — |
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| — |
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Net income |
| $ | 1.70 |
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| $ | 1.52 |
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Diluted net income per share |
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Income from continuing operations |
| $ | 1.63 |
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| $ | 1.46 |
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Discontinued operations |
| — |
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| — |
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Net income |
| $ | 1.63 |
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| $ | 1.46 |
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Weighted average number of common shares: |
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Basic |
| 319.6 |
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| 319.6 |
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Diluted |
| 336.6 |
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| 336.6 |
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Aon Corporation
Pro Forma Statement of Income
Twelve Months Ended December 31, 2003
(Unaudited)
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| Pro Forma |
| Pro Forma |
| |||
(millions except per share data) |
| Historical |
| Adjustments |
| Adjusted |
| |||
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Revenue |
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Brokerage commissions and fees |
| $ | 6,545 |
| $ | (222 | )(6) | $ | 6,323 |
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Premiums and other |
| 2,609 |
| (870 | )(6) | 1,739 |
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Investment income |
| 310 |
| (41 | )(6) | 269 |
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Total revenue |
| 9,464 |
| (1,133 | ) | 8,331 |
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Expenses |
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General expenses |
| 6,569 |
| (522 | )(6) | 6,047 |
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Benefits to policyholders |
| 1,427 |
| (483 | )(6) | 944 |
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Depreciation and amortization |
| 307 |
| (28 | )(6) | 279 |
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Interest expense |
| 101 |
| — |
| 101 |
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Unusual credits - World Trade Center |
| (14 | ) | — |
| (14 | ) | |||
Total expenses |
| 8,390 |
| (1,033 | ) | 7,357 |
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Income from continuing operations before provision for income tax and minority interest |
| 1,074 |
| (100 | ) | 974 |
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Provision for income tax |
| 396 |
| (35 | )(6) | 361 |
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Income from continuing operations before minority interest |
| 678 |
| (65 | ) | 613 |
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Minority interest - 8.205% trust preferred capital securities |
| (36 | ) | — |
| (36 | ) | |||
Income from continuing operations |
| 642 |
| (65 | ) | 577 |
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Discontinued operations |
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Loss from discontinued operations |
| (19 | ) | — |
| (19 | ) | |||
Income tax benefit |
| (5 | ) | — |
| (5 | ) | |||
Loss from discontinued operations, net of tax |
| (14 | ) | — |
| (14 | ) | |||
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Net income |
| $ | 628 |
| $ | (65 | ) | $ | 563 |
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Preferred stock dividends |
| (3 | ) | — |
| (3 | ) | |||
Net income available for common stockholders |
| $ | 625 |
| $ | (65 | ) | $ | 560 |
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Basic net income (loss) per share |
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Income from continuing operations |
| $ | 2.01 |
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| $ | 1.81 |
| |
Discontinued operations |
| (0.04 | ) |
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| (0.04 | ) | |||
Net income |
| $ | 1.97 |
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| $ | 1.77 |
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Diluted net income (loss) per share |
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Income from continuing operations |
| $ | 1.94 |
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| $ | 1.75 |
| |
Discontinued operations |
| (0.04 | ) |
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| (0.04 | ) | |||
Net income |
| $ | 1.90 |
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| $ | 1.71 |
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Weighted average number of common shares: |
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Basic |
| 316.5 |
|
|
| 316.5 |
| |||
Diluted |
| 331.8 |
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|
| 331.8 |
|
Aon Corporation
Notes to Pro Forma Financial Information
1. Reflects book value of assets and liabilities of AWG and CPG.
2. Reflects cash proceeds received at closing for AWG and CPG. The proceeds for AWG are subject to a post-closing adjustment as described in Item 2.01 of this report.
3. Reflects the estimated income tax effect of the transactions.
4. Reflects the estimated transaction costs.
5. Reflects the estimated after-tax loss of the transactions and equity-related items.
6. Reflects elimination of the results of operations of AWG and CPG.