DOW JONES NEWSWIRES

Aon Corp.'s (AOC) second-quarter net income increased almost five-fold on the sales of two insurance-underwriting businesses.

The results beat Wall Street's expectations and Aon also repurchased $1.1 billion in common stock.

"Our core assets are now strategically aligned as we completed the sales of our remaining insurance underwriting businesses. Our 2007 restructuring program is on-track and beginning to deliver benefits, driving margin improvement, while funding investments to generate future revenue growth," said Chief Executive Gregory Case.

Aon, one of the nation's largest insurance brokerages, reported net income of $1.13 billion, or $3.71 a share, up from $240 million, or 75 cents a share, a year earlier.

The latest results included a $1 billion after-tax gain from the sales of Combined Insurance Company of America and Sterling Life Insurance. Net income from continuing operations fell to 55 cents a share from 57 cents. Excluding certain items, net income from continuing operations jumped to 71 cents a share from 57 cents.

Revenue rose 6.1% to $1.98 billion. Revenue from commissions, fees and other items grew 7.7% while investment income dropped 24%.

Analysts' mean estimates were for per-share earnings of 69 cents on revenue of $1.93 billion, according to a poll by Thomson Reuters.

Organic revenue growth, a closely watched indicator that excludes recent acquisitions and divestitures and currency fluctuations, was 2%.

Operating expenses rose 9% to $1.7 billion, including a $77 unfavorable impact from the weaker dollar. But the weaker dollar compared with the euro increased net income by 6 cents a share, Aon said.

Restructuring costs more than doubled but savings from the company's 2005 restructuring program were estimated at $67 million and Aon expects total savings of $270 million in 2008. Savings related to the 2007 restructuring program were estimated at $16 million; that is expected to result in $50 million to $70 million in savings this year.

Organic revenue growth generated by Aon's biggest unit, risk and insurance brokerage services, was 2%. The unit's profit fell 15% to $235 million.

Consulting earnings declined 2.3% to $43 million. Organic growth in consulting services was 2%.

Companies have been trying to expand their brokerage revenue in the past few years as insurance prices have dropped in the face of fierce competition.

Aon's shares were at $45.81, up 94 cents, in after-hours trading.

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; Kathy.Shwiff@dowjones.com

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  07-31-08 1644ET
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