LONDON - 17 June 2005  - Companies sensitive to changing weather conditions such as food and drink businesses, could be taking more action to protect both their revenues and supply chain from the financial impact of weather risks according to Aon Limited. At the same time, the insurance industry has an opportunity to provide more innovative products to support the need of these companies in managing and transferring weather risks, particularly in the light of expected climate change and its impact on the unpredictability of weather.

Unseasonal variations in weather can cause a build up of unpurchased seasonal stock such as ice cream or cold drinks, which can then impact the financial performance of businesses. Whilst short-term weather forecasting in the UK can be difficult, econometrics exercises can help to assess the effect of the weather on the future sales of seasonal goods such as ice cream, lager and barbeque meats. Although such forecasting is available and many companies acknowledge the risk weather presents to their businesses, few are taking steps to hedge this risk, which is increasing leaving companies exposed to shareholder   dissatisfaction.

Peter Jackson, Managing Director, Consumer Products Group, Aon Risk Services said: “The Met Office has recently warned the British public to expect a heatwave this summer and with increasing evidence of climate change, companies are going to find that the weather will play a greater part in the performance of their businesses. Whilst some companies have a natural hedge to the weather within their product mix, very few have taken any positive action to mitigate the risk posed by weather. Companies need to start planning ahead.”

Weather products that can protect bottom line profit exist in financial and insurance forms yet in the UK the markets remain relatively untapped.

“We believe that a number of measures could be taken by both the companies affected by these weather risks and the insurance industry in its provision of improved risk transfer products. The use of forecasting information should be exploited to improve a company’s ability to account for the weather and its affect on revenue,” said Jackson. “Historically, insurers have provided weather products in countries with more predictable weather patterns, but in our view they have been reluctant to replicate these products and capacity in the UK because we traditionally have accepted the variations in our weather”.

Notes to Editors
 

About Aon

Aon Corporation ( http://www.aon.com ) is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 47,000 employees working in Aon's 500 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 related to future results, or states our intentions, beliefs and expectations or predictions for the future 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: general economic conditions in different countries in which we do business around the world, changes in global equity and fixed income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding of our various pension plans, changes in the competitive environment, changes in commercial property and casualty markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of regulatory investigations brought by state attorneys general and state insurance regulators related to our compensation arrangements with underwriters and related issues, the impact of class actions and individual lawsuits including client class actions, securities class actions, derivative actions, and ERISA class actions, the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate paid claims in our underwriting companies from actuarial estimates.  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.

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