LONDON, 24 July 2006 – The increased regulatory focus on the practice of executives backdating their stock options could have a major impact on the D&O market, with ramifications not just confined to North America, according to Aon Limited, a leading insurance broking and risk management specialist.

The US Securities and Exchange Commission (SEC) and the US Department of Justice  (DOJ) is investigating at least 54 companies who have allegedly allowed their executives to backdate their stock option grants to benefit from the advantageous movement in share price. On 20 July 2006, the SEC and DOJ filed their first civil and criminal actions related to stock option backdating. Prior to the SEC and DOJ litigation, several civil cases had already  been commenced by shareholders.

Insurers offering D&O policies are gearing up for increased claims activity from both criminal and civil actions. Some carriers are even contemplating whether to include backdating as a policy exclusion going forward.

While the ongoing litigation is currently US based, it is likely that the UK and Europe (where backdating is not allowed) will feel the ripple effect as major institutional investors, who have already been lobbying US regulators for stricter regulations and limitations on executive pay, prior to the backdating scandal, will be considering whether to join in any class action lawsuits in the US to protect their funds’ investments.

Adam Codrington, executive director within Aon’s Professional Risks unit, said: “At the moment there have been no insurer pay outs from a D&O perspective.  However underwriters are paying a great deal of interest to this issue. As the scandal unfolds, we are likely to see much more focus on the cost of D&O insurance and a possible restriction of terms and conditions.

“At the very least, insurers will want to see very strict procedures and processes in place when it comes to the offering of stock options.”

Notes to editor:

About Aon

Aon Corporation is a leading provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. There are 46,000 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, our ability to implement restructuring initiatives and other initiatives intended to yield cost savings, our ability to execute the stock repurchase program, 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 investigations brought by state attorneys general, state insurance regulators, federal prosecutors, and federal regulators, 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.