Aon study finds year-over-year price increases for the first time in over five years

CHICAGO, March 2 /PRNewswire-FirstCall/ -- Directors' and officers' liability insurance costs for the S&P Financials Sector increased 50 percent in the fourth quarter of 2008 compared to that of 2007 according to the Quarterly D&O Pricing Index released today by Aon Corporation's Financial Services Group.

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Aon experts believe that a number of unprecedented events contributed to these significant price increases, including:

• The Department of Labor reported that 1.3 million jobs were lost from Oct. - Dec. 2008
• Bernard L. Madoff was arrested and charged with securities fraud after it was revealed that his securities business was allegedly a Ponzi scheme resulting in investment losses estimated at $50 billion and affecting as many as three million investors
• The Dow Jones Industrial Average, S&P 500 Index, S&P Financials Sector Index and the NASDAQ Composite Index all closed down significantly for the year
• Stanford Law School's Securities Class Action Clearinghouse announced that 225 federal securities class-action lawsuits were filed in 2008

The Index shows that the average price for $1 million in coverage limits increased 3.15 percent from Q4 2008 compared to Q4 2007. This is the first time in 21 consecutive quarters that prices have increased year over year and the first time since 2003 that price increases in the financial sector have been significant enough to move the entire Index.

"In the short term, we expect to see D&O pricing for the financial sector continue to rise," said Mike Rice, managing director of Aon's Financial Services Group and an author of the Quarterly D&O Pricing Index. "It is possible, however, that a tough underwriting environment could emerge for all public companies as the economy continues to negatively impact both financial results and stock prices."

Aon's analysis found that rates for D&O liability insurance in non-financial sectors actually declined by 6.3 percent in Q4 2008 compared to Q4 2007.

The Quarterly D&O Pricing Index is designed as a hands-on tool to provide the directors, officers and risk managers of publicly traded corporations with a better understanding of current and historic pricing conditions for directors' and officers' liability insurance.

About Aon

Aon Corporation is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 37,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007 and 2008, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.

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SOURCE: Aon Corporation

Web site: http://www.aon.com/