NEW YORK (CNNMoney.com) - Insurance broker Aon was once considered a distant competitor to giant Marsh & McLennan.

Then came a little corporate scandal courtesy of Marsh & McLennan (Research)'s infamous bid-rigging followed by a long-overdue change of guard in Aon (Research)'s management team and suddenly Aon went from competitive underdog to a full-fledged competitive threat to Marsh & McLennan's profitability.

Is Aon the next Marsh?

When it comes to comparing pure market share, don't bet on it. Marsh & McLennan is still leaps ahead with Aon only accounting for about 15 to 20 percent of the insurance broker market while Marsh has a steady lead with about 40 percent of the market, said Steve Roukis, managing director and senior portfolio at Matrix Asset Advisors, which owns over 2 million shares of Marsh.

But, Aon has a distinct advantage over Marsh & McLennan: Aon can sell itself to clients as the untainted alternative to Marsh.

That's helped the company's earnings soar over the last year and has sent the stock up over 93 percent from its 52-week low of $20.64 last May and over 60 percent in the last year.

Not to say that Aon hasn't had its own legal struggles as Spitzer threw out a wide net over the insurance industry in late 2004 over the misuse of contingent commissions. Aon settled with the AG's office last year for $190 million and paid out an additional $38 million to resolve a class action lawsuit, in its hometown of Chicago, that alleged Aon had violated its fiduciary duty to clients by collecting contingent commissions from insurers without telling its clients.

"Marsh's hands were a lot deeper in the cookie jar... it was clear that they set up a bid rigging operation," said Donald Light, senior analyst at Celent LLC. "With Aon, you would have to plow through the settlement agreement to find that they did some dubious things. People within the game see them as slightly less tainted."

And Wall Street also cheered the company's decision to replace its former chief executive Pat Ryan -- who ran the company for over 40 years -- with Gregory C. Case, a former McKinsey & Co. consultant who had never run a corporation before.

Despite initial caution over the appointment, Wall Street was looking for new blood at the company. Aon had been suffering from dismal profit margins, trailing its peers, and costs were high as it failed to successfully integrate acquisitions.

But in the last year, Case narrowed the company's focus, selling off non-core units, reduce IT redundancies from previous acquisitions and cut costs through a round of layoffs. Aon said it expects annual cost savings from its three-year restructuring plan of about $180 million by 2008.

The company's earnings have already spiked higher, with its fourth quarter earnings hitting a four-year high. In its recent fourth quarter report, the company earned 67 cents a share, triple its profit from the year before and well above analysts expectations of 56 cents a share.

"We have been fortunate the past year... we have had an increasing margin and we've been able to capture share as we increased our margins," Case said in an interview with CNNMoney.com. "While we have experienced some success, frankly its nothing compared to where it should be."

He said the company is focused on building out its brokerage business -- which was already its star performer last year, clearly beating Marsh in terms of organic revenue growth -- and also attracting more clients and talent to the company.

But he downplayed any speculation that the company was actively targeting Marsh or any other competitors, such as Willis Group Holdings (Research).

"Delivering client value is our maniacal focus," he said. "We have been fortunate but it's not like locusts circling around Marsh."

Still analysts are far more bullish on the company than Marsh & McLennan.

"They will be able to restructure this company to be more aggressive while Marsh still struggles to stabilize," said Cliff Gallant, equity analyst at Keefe, Bruyette & Woods. "As problems at Marsh continue in 2006, Aon is standing in the right place."

Gallant added that the stock is also poised to continue its strong run. He expects Aon's stock to climb to the mid-to-high forties over the next year.

While Aon may have room to grow, don't rule out the return of Marsh & McLennan in the next few years. Marsh, for its part, sees 2006 as a turnaround year. During the company's fourth quarter earnings call, Marsh CEO Michael Cherkasky said he expected higher revenue and higher margins in 2006 and even more growth in 2007.

He added that while the company's client retention improved significantly in the fourth quarter, Marsh still hadn't seen any real increase in new business development. But early interest from new clients in January made the company "cautiously optimistic" about its prospects in 2006, Cherkasky said.

Matrix Asset Advisor's Roukis added that a lot of the business that Aon picked up last year were clients that Marsh had decided to exit as part of its reorganization plans and that flood of available clients looking for a new broker has dried up. He said there were also reputational concerns that wounded the company but with Marsh's $850 million settlement in the past, the company is now focused on turning the business around.

"Aon will still have earnings growth," Roukis said. "But you'll start to see (Marsh) fighting back in 2006."

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