London – 12 October, 2004 – The current predicted level of losses from the 2004 hurricane season may not be enough to reverse the current trend of declining insurance rates in the UK, says Aon Limited, the UK’s leading insurance broking, risk management and consulting company.

Total insured losses from the four major storms to hit North America are still unquantified but likely to be in the range of  $20bn to $25bn. What the overall impact of the losses on the UK insurance industry will be is still unknown, although insurance premiums are unlikely to rise for UK companies unless they have global insurance programmes with exposures in North America.

Nick Maher, Chairman of Aon’s Global Property Practice Group, said: “We do not think that the accumulated losses from the four major hurricanes this year will be enough to significantly affect insurance premium rates for UK companies, although the situation may differ for international UK companies with exposures in the Caribbean or Southern United States. The most likely outcome would be a stabilising of premium rates, whereas before we were seeing significant reductions.

“The hurricane season is not over yet however and the storms in Japan may also impact the situation,” Maher added.

Paul Miller, Executive Director within Aon’s Natural Catastrophe Solutions team, commented; “The 2004 hurricane season to date has already been above normal and the combined losses may exceed the damage of Hurricane Andrew that caused a record $16bn of insured losses in 1992. The big difference today however, is the improved understanding of risk exposure by insurers and reinsurers who are able to more accurately predict what the likely outcome of a major weather event will have on their balance sheet and price their risks accordingly. In addition, the creation of the Florida Hurricane Catastrophe Fund and improved building standards have both helped to reduce the likely financial impact on the insurance market.”

"$20bn plus is a big number but many people are overlooking the fact that this is the total of four separate events.  The impact of each of these events on the market will be diluted to a great extent by the application of specially designed deductibles introduced and/or reinforced during the recent hard market. These deductibles are significantly higher than those that would have been applied 12 years ago, when Andrew hit.  Some companies with multiple locations in the path of these hurricanes may find themselves with four separate losses and four separate deductibles to absorb.

“When all is done it will be interesting to see how much was borne by the market and how much was actually retained by buyers," Maher concluded.

Notes to Editors

About Aon
Aon Corporation (www.aon.com) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. The company employs approximately 52,000 professionals in its 600 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.

This press release contains certain statements relating to future results, 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 the general economic conditions in different countries around the world, fluctuations in global equity and fixed income markets, exchange rates, rating agency actions, resolution of regulatory issues, including those related to compensation arrangements with underwriters, pension funding, ultimate paid claims may be different from actuarial estimates and actuarial estimates may change over time, changes in commercial property and casualty markets and commercial premium rates, the competitive environment, the actual costs of resolution of contingent liabilities and other loss contingencies, and the heightened level of potential errors and omissions liability arising from placements of complex policies and sophisticated reinsurance arrangements in an insurance market in which insurer reserves are under pressure.  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.

Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only.