LOS ANGELES, June 18, 2009 — Aon Corporation (NYSE: AOC), the leading global provider of risk management services, announced today the release of its Surety Marketplace Update. The overview reports that, although the surety industry has demonstrated stable loss results since the first quarter of 2006, the overall financial impact of the credit crunch – including rating agency downgrades and bankruptcies – will likely impact surety providers in 2009.

“As surety companies begin to recognize negative underwriting trends, many are modifying terms accordingly. This is resulting in increased pricing, more onerous indemnity provisions, reduced capacity and additional collateral requirements for our customers,” said Paul Rodriguez, regional director of Aon Construction Services Group.

Doug Wheeler, regional director of Aon Construction Services Group, added, “As a result of sector-specific declines, many surety companies have all but eliminated unsecured surety credit for industry groups, such as automakers, airlines, homebuilders, mortgage brokers, retail businesses and certain financial institutions.”

In the contract surety space, reinsurance partners are bracing for increased losses as ongoing instability in the credit market continues to restrict economic development. Declining backlogs, increased competition, compressed margins and higher overhead expenses are increasing challenges in the construction marketplace. The most competitive surety segment in 2009 will be larger, well-managed middle-market accounts with bonded backlogs of up to $350 million.

For the commercial sector, losses may be significant over the next 18 months based on a projected rise in bankruptcies. However, higher levels of collateral in place and pricing discipline will ensure that industry losses should not replicate those produced between 2001 and 2004. The commercial sector is likely to experience material growth in overall industry premiums in 2009 based on higher-level pricing and an increase in bond opportunities.

Aon’s Surety Marketplace Update is available for download at: http://www.aon.com/thought-leadership/thought-leadership.jsp

Media Contact
Cybil Rose, 312.755.3537, cybil.rose@kemperlesnik.com
 

About Aon Construction Services Group
Aon Construction Services Group employs over 540 employees dedicated to the construction industry in 25 offices across the country. Backed by broad resources, industry knowledge and technical expertise, Aon professionals understand every major sector of the construction industry and help a wide range of clients develop effective risk management and workforce productivity solutions.

About Aon
Aon Corporation (NYSE: AOC) 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 and 2009 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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